By Jason LaFollette, CEO, LaFollette Custom Homes
Before we started recording this week, Steve and I were talking about grandkids. My grandson just made his first visit to pre-K, backpack, lunchbox and all. I saw a picture of him at age one, sitting in a swing. Four years, gone in a flash.
And Steve just found out he’s going to be a grandpa for the first time. I’ve got five grandkids, so he’s been jealous for a long time. He says if it’s a girl, he’ll probably just hand her his wallet and the keys to his truck.
That has nothing to do with home building, except that we’re a family-run business. We know what being a parent is like, and some of us know what being a grandparent is like. We think about that every time we help a family design a place where they’ll make those memories.
Now, today’s topic: how to avoid cost overruns. Nobody wants to spend more than they have to.
Most Cost Overruns Start Before Construction
Most people think cost overruns happen sometime during construction. That can happen. But more often than not, they start in the planning stage.
Usually it comes down to two things: assumptions and a lack of clear communication.
When a couple comes in, they have their must-haves at the top of their mind, and they’re excited about those. But there’s a whole lot more to a house than that. You need a builder who talks with you about the things that aren’t top of mind, so you don’t move forward on assumptions.
How Accurate Is That First Estimate?
It’s an estimate. Early on, there are going to be some assumptions and some unknowns. You’ve only met with your builder once or twice.
The goal is that as you work through design, those assumptions turn into facts. The more details you nail down, the closer your design and your estimate line up.
Do people come in with unrealistic expectations? Not really. They come in with dreams, and they’re hoping it fits their budget. Everybody loves beautiful homes and nice finishes. As a builder, we’re not dream crushers. Our job is to bring alignment.
That means a good builder speaks up early, not at the end. As Steve put it, sometimes your builder needs to say, “Hold on a minute. We can do that, but it’s going to increase your overall investment.” And if it’s a true must-have, let’s look at what else you might give up so you can have it. That’s giving you options.
Bring Your Builder In Early
I’ve had plenty of people spend hundreds of hours and thousands of dollars with an architect or plan designer, then bring us their plans. We price it out, and sometimes their budget and their design are far apart. That’s an awkward conversation for everybody.
Architects and designers can design some absolutely beautiful things. But they aren’t always thinking about cost or how buildable it is. When your builder is involved from the start, the design and the estimate grow together.
Already have a floor plan? That’s okay. People bring us plans all the time. We still sit down, ask why you designed it that way, and go through every finish and fixture choice so we can give you an accurate number.
Here, we have a draftsman and an interior designer on our team from day one. If your builder doesn’t, that’s fine. Just get everybody around the same table from the start. It might take a little longer up front, but it beats redesigning your house two or three times.
The Stuff Nobody Thinks About
People usually know the stone and the countertops they want. They fell in love with the cabinets at their sister-in-law’s house. But they may not have thought about ceiling heights, window types (single hung, double hung, casement, clad), doors, floors, cabinet wood, or what’s behind the walls, like electrical and audio-video.
Then there’s the dirt, which is the less exciting part of building:
- Getting there. If your house sits an eighth or a quarter mile off the road, you need a road to build it and a drive to live there. You might need a culvert or some clearing too.
- The slope of your land.
- Soil and foundation. We hire an engineering firm for a geotech soil analysis and an engineered foundation. You don’t get that right, nothing else matters.
- A survey. Where does the house sit relative to property lines and easements?
- Utilities and drainage. What will it take to get electric, water, and sewer or septic to your house? How will water drain around it?
Take notes. If your builder doesn’t ask about these things, you ask.
QUICK NUMBER · INDUSTRY DATA
In NAHB’s 2024 national survey, site work and foundations together made up about 18% of construction cost (7.6% site work, 10.5% foundations). That’s a big chunk of your budget most people never picture. (NAHB)
Ask What’s Actually in the Number
Steve said it well on the show. When you get a price, ask: Does this include the geotech analysis? The engineered foundation? Water, electric, septic, the driveway?
Some prices are just for the house. Make sure yours is, in Steve’s words, “keys to a fully functioning home with a driveway that gets me there,” where you can flush your toilets and it goes to the right place.
Yes, You’ll Change Your Mind
Do people change their minds after design starts? Never. Once they make up their mind, that’s it.
I’m kidding. Almost everybody changes their mind about something, and that’s okay. You’ll see something on Pinterest, at a neighbor’s house or on the Parade of Homes and think, “I’ve got to have that.” That’s part of building custom. Just tell your builder.
The big takeaway: cost overruns usually start with assumptions. Clear communication early is how you avoid them.
Fun Facts
- From the episode: I have five grandkids. Steve is about to get his first, and he’s already planning to spoil her rotten if it’s a girl.
- Industry data: Builder profit was about 11% of the average new home’s sales price in NAHB’s 2024 survey. Construction itself was 64.4%. (NAHB)
- Industry data: Interior finishes were the biggest single slice of construction cost in that same survey, at 24.1%. (NAHB)
Next episode: how long does it take to build a custom home?
Watch or listen to Episode 6
Steve and I dig into every one of these in the episode.
Thinking about building in the Brazos Valley? I’d love to talk. Reach out to our team or call (979) 589-8343.
Sources
- NAHB, “Cost of Constructing a Home in 2024” (Jan. 2025): https://www.nahb.org/news-and-economics/housing-economics-plus/special-studies/special-studies-pages/cost-of-constructing-a-home-in-2024
