One of the first things most people think about when building a new home is the cost - which invariably leads to the cost per square foot. Unfortunately, the cost per square foot method can be misleading. And, as you will find, builder estimates, when broken down into cost per square foot, can be very different.

There are three major reasons for variations in the price per square foot to build a home.

(1) Home veneer - A brick veneer and a siding veneer home, at the same square footage, would not cost the same to build. In addition, there are numerous other veneers, in all price ranges, that will impact the price.

(2) Home type - One story house plans and two story house plans of the same square footage would not cost the same to build.

(3) Specifications - With a 2,400 square foot home, the "basic" items that some builders don’t include in their price at the beginning, may add several thousands of dollars in "upgrades" that are added on to your price later - thereby raising your cost per square foot significantly.

Assuming that you’re comparing builder estimates for the same home veneer and type, reasons (1) and (2) should not apply; which means that specifications are probably the major reason your cost per square foot will vary.

For example, if one builder’s price doesn’t include specifications for features such as more energy efficient insulation, or even a water line for the icemaker in your refrigerator, and the other builder’s pricing already includes such specifications, the cost per square foot will differ.

Knowing the specifications that are included - and not included - will be one of the most important things you can know when deciding on a builder. Features you may not see right away, such as how well (or not well) the crawl space is built to drain water - and even the most obvious features, such as the quality of kitchen cabinets or the number of cable TV outlets - all have an impact on your cost per square foot to build a home.

In addition, should a builder condense or enlarge the house plans (to better fit the lot size, or to stay within the size restrictions for a certain neighborhood), be aware that condensing a house plan will drive the cost per square foot up, while enlarging (adding square feet without adding rooms or specifications) will probably reduce the cost per square foot.

So, as a rule, always compare the specifications for everything that is and is not included in your price. And, know the value and price of those features. Without doing so would be like buying your next car based on its cost per pound!