The Top 10 Questions You Need Answered When Building A Custom Home In The Denver Metro Area.

Are you planning to build a luxury or custom home in the Denver Metro Area? Ready to proceed but unsure of what steps to take? That’s alright- every one of us started somewhere, and last time we checked, people weren’t born with an innate knowledge of the Denver custom and luxury home building industry. Remedy your condition with this list of the 10 most important custom home building questions. 

We’ll focus primarily on Denver and its surrounding cities and suburbs, but the underlying fundamentals should hold true for almost any market in the US.  In this FAQ On Building A Home In Denver you will find everything you need to guide you. 

FAQ On Building A Home In The Denver Metro Area FAQ #1 – What is the difference between a spec home and a custom home?

The first thing we’ll cover is the significant difference between a true custom home and a spec home. Depending on how early in the build you purchase the spec, you may get limited options to select – you may get none. you’re severely hampered in your ability to craft your home around your lifestyle. Custom homes offer more freedom and are purpose-built to suit you and your family’s needs. 

A custom home is a unique, one-of-a-kind home designed for a customer from the start. The customer gives input on the design, gets to select all finishes and features, inside and out, making it a truly customized home. A spec home is a home a builder builds, then lists on the market, speculating that an interested buyer will come along and purchase the home.

What are spec homes?

Spec homes are those homes built for a general buyer, without a specific individual in mind. Its design, features, and specifications are a mix of what the builder thinks will appeal to the widest possible audience to maximize what they can charge for the homes and ensure they’re able to move units off their books quickly after finishing construction. Buyers are typically given a few different options (or no options if the home is completed or nearing completion), as far as home plan layouts, colors, products, and some fixtures- much like you’d have when choosing options when you’re buying a car- only it is upgraded Kohler faucets and Miele coffee makers instead of heated leather seats and chrome wheel trim. 

However, you should keep in mind that these homes are built with one thing in mind- profit. The builder is not running a charity and will do everything they can to maximize what they make from each house they sell. It’s not uncommon to see entire developments of spec homes that are built to code, but with little regard to the “user experience” that you’ll have actually living in the home. Little things like electric outlet placement, the range on your stove, and the railings to your stairs seem like inconsequential details, but they can have a major impact on how you live in and enjoy your home.

Your choices are fairly limited with spec homes and you’ll be restricted in your ability to build your home to suit your individual lifestyle. That’s not to say that spec homes are by necessity inferior to custom homes- builders create some fantastic spec homes- it is just that buyers are often left wanting more, particularly in the luxury space where you’re spending a $2M+ million dollars to get into a home. 

What are Custom Homes?

A custom home is purpose-built to suit you and your lifestyle. When you decide to move forward building the custom home of your dreams, you have the opportunity to be involved in every decision- from high-level decisions like the number of bedrooms and bathrooms to the tiniest details, like the orientation of light switches or the color of the molding in the guest bedrooms. Put another way, a custom home is your dream home brought to life.

Building A Home In The Denver Metro Area FAQ #2 – What costs are involved in building a custom home?

Building a custom home comes with a multitude of different costs, many of which will be highly influenced by the local market- it’s cheaper to build a single-family home in Wichita or Omaha than it is in Denver or Boulder. Let’s cover some of the costs you can expect to shell out for when building a custom home, with a special eye on the areas in and around Denver and the Front Range. 

Denver Custom Home Building Facts

It can cost anywhere between $100 and $200 per square foot to build a home, with this number rising to as much as $500 per square foot for luxury homes in high cost of living areas. As the Denver area has grown in national prominence, home construction costs have crept up. Additionally, supply chain issues and labor shortages have played a big role in costs rising locally, with most local builders reporting costs of somewhere between $200 and $500 per square foot.

Smaller custom-built homes can be had in the Denver region for roughly $200 to $275 per square foot, with the average size home ranging between $275 and $350 per square foot. Once you hit $350 a square foot you’ve entered the range of custom luxury homes, with most luxury builds costing between $300 and $500 per square foot.

Hard Costs vs. Soft Cost

The construction process begins with the acquisition of land and the adoption of a building plan. The cash you outlay in this initial stage is also referred to as your “soft costs.” Once you’ve got a plan in place, your construction and installation costs are referred to as “hard costs.”

Custom Home Hard Costs

The term “hard costs” refers to any financial costs incurred as a result of the physical construction of your home as well as any associated costs, like labor or materials. This includes things like electrical systems, indoor and outdoor plumbing, roofing, your home’s foundation, and so on. We’ll cover a range of these costs below by square foot with data sourced from Home Builder Digest.

*Data sourced from Home Builder Digest and Homeguide.com

You may also have to pay for other interior construction costs, like interior walls, interior details, and other special features and fixtures. These costs can run you $80,000 or more, depending on your personal tastes and the materials and labor you utilize.

Custom Home Soft Cost

The term “soft costs” refers to the intangibles within home construction. Things like land permits, tax bills, construction blueprints, and custom designs all cost money. These fees, and others like them, will be accumulated during each phase of the project, from land costs to architectural fees.

Custom Home Building Costs: Land Costs

Land costs are probably going to be your biggest ticket item in your custom home construction journey, particularly these days, as land costs outpace the not insubstantial rises in the cost of labor and materials. While the average size of a home in Colorado sits at 2,142 square feet, according to Bob Vila, the average luxury home is much larger, and they generally require lots of 4,000 square feet and up in the Denver metro area. 

Denver land costs range between $62 and $111 per square foot, with most buildable, desirable areas sitting on the higher end of that range.  Land costs go beyond the purchase price of the lot, you also need to plan for things like tapping into local water, gas, electric, sewage, and internet lines, the costs of which can be substantial in some out of the reach or less developed parts of the region.

Custom Home Building Costs: Design and Architecture Fees

Once you’ve chosen your land, it’s time to find an architect or design firm. The architect, working in conjunction with an engineer, will handle the vast majority of the design work for your new home. According to Homeguide.com, architects’ fees are broken down like so:

 -$2,000 to $20,000 to draw basic plans

– $15,000 to $80,000 (or more) for full services and house design

– 8%-15% of construction costs for house plans

– 10%-15% to draw remodel plans

– In addition to hourly rates between $100 and $250 or $2 to $15 per square foot.

Custom Home Building Costs: Permit and Other Fees

Almost all construction projects in the city of Denver require general construction permits as well as trade-specific permits. Without these, you cannot begin construction. If you’re looking to build in Denver County, you can visit the records counter in person, located on the 2nd floor of the Wellington Webb Municipal Building at 201 W. Colfax. You can also visit their website, here, and login and submit a variety of construction-related documents including those for:

– Minor electric work

– Replacements

– Roofing

– Siding

If your project may affect the exterior of a building in a designated historic district or local landmark you need to submit a permit to the Landmark Preservation department, here. 

Below is a list of the current building permit fees pulled directly from the city website on 3/10/2022. Make sure to check their website for the most up-to-date information.

Building A Home In The Denver Metro Area FAQ #3 – How long does it take to build a custom home?

To determine how long it takes to build a custom home you need to consider the home’s size, structure, complexity, and location. Your custom home will be unique- and so will its overall construction time. Since every home is different, it is hard to put a fixed number on how long a build will take- particularly as the entire industry is suffering from supply chain issues that reduce the availability of materials and the speed at which contractors are able to acquire said materials. 

Here at Thomas Sattler Homes, you’re likely to set foot in your brand new custom luxury home roughly a year or a year and a half after we get the process started for you. The pre-construction phase that you read about above will typically take somewhere between 3 and 5 months. After plans are finalized it takes about 9-12 months to physically construct the home. Larger homes, those larger than 10,000 square feet, can take 13 months or more. Check out our FAQ to read more about our construction process, including timelines, design options, our warranty, and all the nitty-gritty details you need to know before buying you get started. 

If you’d like a no hassle-free estimate on the length of time your potential project would take, reach out to a member of our team and we’ll get back to you immediately.

Building A Home In The Denver Metro Area FAQ #4 – How do I find a buildable lot for a custom home?

Finding a buildable lot is similar to a standard home purchase, with several important caveats. If you’ve already reached out to a builder they will likely have some ability to help, whether that involves connecting you with the name of a newly opened unbuilt sub development, recommending an agent or broker, or the builder themselves may have a shovel-ready property for you to purchase. This last route can help avoid many headaches involved with the process, as the builder would have done proper due diligence to ensure that the property in question is buildable without any major hiccups in its future. 

At Thomas Sattler, we are able to provide limited support services when it comes to finding your dream lot. However, in most cases, our clients purchase lots from available custom home lots in developed communities- we recommend going straight to the community in question, rather than through a realtor or broker if you’re looking at developed communities. If you’re purchasing raw land, you can employ the services of a broker to find a piece of property and assist in the negotiation and diligence, but you can also save some bucks and search on your own using the resources listed below.

Building A Home In The Denver Metro Area FAQ #5 – What is the best way to find a builder for custom homes?

A custom home represents a large investment, both in financial terms as well as in the sweat equity you put into your efforts to get your home from the planning stages to shovel ready to move-in ready. There are several ways to find your next builder. First, we would recommend heading over to ThomasSattlerHomes.com to see concrete examples of delivering success for our clients– and helping them build and move into the house of their dreams. With that being said, before any major purchase, especially one of this magnitude, you should always shop around- but we get the feeling you’ll come back to us.

Building A Home In The Denver Metro Area FAQ #6 How do I evaluate a custom home builder?

Do your research before you move forward with any builder. Your custom home builder should have a demonstrated track record of success, longevity in the marketplace, and ideally awards from industry or consumer groups. When it comes to finding the right builder, Google is your friend. You should also lean heavily on friends and family for any positive referrals or testimonials. 

One trick you can use when working with a new builder is asking for the names and phone numbers of their last few completed homes- you can then get the dish straight from the horse’s mouth, so to speak. Let’s help you create your own winning game plan for vetting prospective custom home builders.

Sizing Up The Builder at an Initial Consultation

Should I hire a designer to build my custom home? Once you’ve narrowed down your list of potential builders, you should set up an initial consultation with the builder, either in-person, via phone, or an ever more popular option, via Zoom or other video meeting apps. In the first meeting, you’ll discuss your plans for your home on a high level. 

Things like its possible location, size, styling, budget, and timeline should all be covered. At the same time, your contractor should be keeping you engaged and asking you questions about your future home. 

Ideally, you want a contractor that:

-listens well

-communicates well

-demonstrates honesty and integrity

-knows their stuff when it comes to building a home in your desired location

-clicks well with you personally- in many cases, you’ll be working intimately with them over a period of months or years- so you want to be able to at least have a basic rapport

If you’re interested in setting up a no-hassle, pressure-free consultation with Thomas Sattler Homes, reach out here.

Check Out Their Online Presence

In 2022, it’s almost a requirement for a builder to maintain a web presence, including a website and social media pages on networks like Facebook, Twitter, or LinkedIn. Their website should show the services they provide, happy client testimonials, information about their warranty, pictures of previously built homes, contact info, and plenty more.

Verify Their Credentials

While most builders operate above board, you still want to verify they have all the proper licenses required to complete your custom home build. Every stage has different procedures for licensing, but you can typically find the department responsible for verification by googling “<state name> builder license verification.” You can find the Colorado page for builder license verification here.

Contact Their References

Any builder worth their salt will have a wealth of strong references, clients for which they have completed a successful build. Your builder should be willing to provide their contact information. You can reach out to the reference by phone or email and you can use these questions to make the most out of the interaction.

-Did your build finish above, under, or right on budget? If not, what happened?

-How did they handle any change orders?

-When did you start work and how long did it take to finish?

-What type of home did the contractor build?

-Would you work with this builder again?

To meet some of Thomas Sattler’s thrilled past clients, you can check out their experiences on our website, here.

Building A Home In The Denver Metro Are FAQ #7 – Can I get a warranty for a custom home build?

Absolutely- and if you find a builder that does not offer a warranty on their work, steer clear. The vast majority of builders, including Thomas Sattler Homes, offer a 1-year warranty on all completed work. Additionally, many of the appliances and fixtures within the home come with a longer warranty, which will be dependent on the manufacturer.

What makes the Thomas Sattler Warranty Unique?

At Thomas Sattler Homes, we pride ourselves on going above and beyond for our clients. We have nearly 40 years working with customers and standing by our work. Through the years, we’ve worked to refine the warranty process to make things easier for our customers, acting swiftly, efficiently, and with the lowest impact to homeowners. 

After spending their first 60 days in a home, we connect with the homeowner and remedy any issues that may have arisen in that time period- like a cabinet drawer or door that needs adjusting. We then coordinate with our subcontractors as needed to come in and complete the work, ideally all at the same time. After a year, we check in to see if there is anything else we can do to ensure that your home is in tip-top shape before the warranty expires. Learn more about our gold-standard warranty, here.

Building A Home In The Denver Metro Area FAQ #8 – Do custom homes have a harder time selling?

This is entirely dependent on the custom home in question. For instance, if you’re talking about a custom-built geodesic dome that sits 40 miles outside of Denver, the answer is probably yes, as your pool of buyers for such a property is incredibly limited. Several factors influence the sale-ability of a custom home, including its location, design, style, features, and finishes.

A well-designed custom home, with appealing features and excellent finishes, located in a prime spot will almost always sell easily. Conversely, a wonky design or unpopular/dated style, like the geodesic dome mentioned above, will have a harder time selling. Keep in mind that tear-downs, i.e. buying the home for the underlying lot, are not uncommon in the luxury and custom home space in Denver. Location is often the biggest demotivator in a tear-down situation, or if the existing home is not high-quality or has major trade-offs. At Thomas Sattler Homes, we aim to make sure all of these variables are in your favor to maximize future resale value- that means using well-liked, practical styles, high-end fixtures and features, and building in prime locations throughout Colorado.

Do custom homes appraise for less?

The answer to this question depends on the market in question. Each appraiser is different, and even though they use the same criteria for evaluating the worth of a property, they may come to radically different conclusions in some instances. Most appraisers will rely heavily on comparables, or “comps” which are comparable properties within a specific area. In the Denver metro area, assuming demand remains strong, luxury custom homes appraise very competitively. 

Appraisers in Denver are tuned in to the particulars of the local marketplace, and how those variables influence the true value of a home. They take into account things like the cost of labor, materials used, market demand, the quality of luxury designs, features, quality of the finishes, and the frankly superior craftsmanship offered by Thomas Sattler homes when compared to your standard cookie-cutter tract home. These “one size fits all” properties more often than not will look like something designed by a committee trying to maximize their profit- which is exactly how a tract home is designed.

Building A Home In The Denver Metro Area FAQ #9 – How do you finance a custom home?

Financing a custom home is a bit different than financing a traditional home, due to the unique nature of the construction process and how it is handled by lenders. Unless you’re lucky enough to be paying all in cash, you’ll require a construction loan. A construction loan is usually a short-term loan for the duration of construction, in most cases a year or so. This loan is used to cover the cost of building your home. 

During the construction process, the loan is released slowly as work on the home progresses. In most cases, you’ll only pay interest on the loan during this time period. It keeps payments low but means you are not actively reducing the principal loan balance. 

Rates for construction loans are variable in most cases, and they tend to be higher than traditional mortgage loans due to some of the risks involved in a construction project. After the home is complete, you can either refinance the construction loan into a new permanent mortgage, or you can get a new loan to pay off the initial construction loan, this is also known as an “end loan.” 

Here at Thomas Sattler Homes, we work with a list of approved lenders that our customers can turn to if they require financing. These lenders have been vetted by our team and are familiar with our process, making the act of financing your home much easier. If you prefer alternative lending options, we can discuss those as well. 

In most cases, you, the customer, will get an approval amount from a bank early on, both to ensure you’re able to get the exact home you desire and that you’re able to stay on budget while building your dream home. After the home is designed and the contract is executed it gets sent to the lender for final approval, which will take between 30 and 60 days, after which the loan closes. Oftentimes the loan for the lot and the construction loan are combined into a one-time close with permanent financing.  

Our approved lenders offer both lot and construction loans that are rolled into a one-time close with permanent financing. Their rates and products do vary slightly. Stand-alone construction loans are possible as well, typically when the homeowner in question already owns the lot. For more information relating to financing options at Thomas Sattler Homes, click here.

Building A Home In The Denver Metro Area FAQ #10 – How does Denver measure up to other markets for custom and luxury homes?

While the Denver custom and luxury market remains robust, seeing significant growth over the past few years, we are still trailing the heavy-hitters in the space, California and New York, in terms of demand and price. However, given the unsurpassed natural beauty, scenic attractions, cultural clout, weather, and jobs offered by the Denver metro area, we’re still seeing strong demand- and just as important- incredibly limited supply. 

The average custom/luxury home is pricey, and Thomas Sattler Homes are in that arena, but that is not stopping, or even slowing the local growth in the custom/luxury market- primarily due to the record-high demand to live here. We expect to see more new luxury custom homes here than in most parts of the country, and we expect to follow trends that are gaining steam in affluent markets across the country, from Atherton to West Palm Beach.

These answers should provide you with a strong fundamental knowledge base regarding the custom home process before you buy. If you still have any questions related to luxury or custom home construction, or if you’re ready to get started on the journey to your Denver dream home, reach out to the team at Thomas Sattler today- we’re always on call and happy to help.