Building Cost Per Square Foot

The Trouble With Calculating Building Cost Per Square Foot

Building Cost Per Square FootWhen you buy a home or when you look at the eventual cost of building a home, you will either be quoted a cost per square foot or you would be tempted to figure it out yourself. While you should consider the sale price per square foot to determine its fairness or unfairness, you cannot really look at a building cost per square foot. There is an inherent error in calculating business cost per square foot. That is because you may be using the livable area and thus the square footage of that matters but the building or the property has not been developed solely for that livable area. There is a broader or larger area that has also been constructed or attended to in myriad ways whose costs have to be accounted for.

Let us presume that you wish to construct a new home or you are buying one outright so you need to know the building cost per square foot. Now, here are the problems with this approach.

  • First, the building cost per square foot will not tell you the land cost. The land cost will be accounted for but the calculation will not tell you explicitly how the cost has been taken into account. Also, it creates misleading perceptions as to what kind of construction the property has. Beyond the land cost, there is the cost to develop a site, including the clearing, drives, utilities, landscape, patios, decks and the costs of permits among others. If you are being quoted a building cost per square foot, you will have ambiguous understanding of these associated costs. If you are calculating a building cost per square foot yourself then you will have to additionally include these associated costs which will skyrocket the earlier building cost.
  • A building cost per square foot doesn’t take into account excavation, basement costs, the super built area which will include porches, basements, garage, crawlspace and any bonus or extra space that is not exactly livable or within the ambit of carpet area. You have to account for these costs and a square foot approach will not be appropriate.

Finally, any building cost per square foot doesn’t factor in the range of prices of materials and their finishes, cost of installation and the various fixtures or appliances you would have. Since the focus is too much on the area or square foot as a unit, the whole spectrum gets ignored.

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