So you’ve finally pulled the trigger. You’ve signed a contract and wait…

How much more is this house going to cost?

You’ve just earmarked all those hard-earned dollars for your down payment and all you get is the basic package?

Did the models even show you a what a basic package looked like? This is going to break the bank just to personalize the house and make it comfortable. So maybe you can scrimp and save a few more greenbacks to finish off your house how you’d like. But on a tight budget, what should you upgrade?

How do I get the best bang for my upgrade bucks?

First you need to know what can be upgraded.

Every builder is different. I’ve seen some who only offer a single upgrade, to those who let you customize the entire house. If the company is more of a mass production builder, you may find that you have less options.

This happens for a couple reasons. Sometimes production builders enter into contracts with suppliers to bulk order certain items. Allowing a customer to change that particular item could affect the deal that the contractor worked out with the supplier.

Many buyers will often request that a wall be moved or changed. While a custom homebuilder can often accommodate this, a production builder, who has his plans pre-card-filed with the city, may not be able to make those revisions and keep his schedules.

Also, custom builders operate differently from production builders. A custom builder makes far fewer homes in a given year, but they can focus more on the details of those particular homes. A production builder has a superintendent that manages the construction of numerous homes at any given time. This method requires the builder to stick with proven processes and consistent designs. If you try to make them deviate from this, the superintendent must take more time away from his busy schedule to deal with your custom request. Since most of the people working under such a system are not used to custom requests, they’ll almost invariably do it wrong the first time.

Some builders also use upgrades as a point of revenue. Many contractors walk a fine line between bankroll and bankrupt. To highlight this point, imagine that a contractor spends 6 months building a single family home. For many, if he can make $10,000 on that one house, he’s done good. That may sound like a lot, but when he or she is risking $350,000 over a 6-8 month period to make that $10k, it comes down to a risky 2-3% margin. Not all contractors can make that kind of margin consistently.

There are easier ways to make a living. For comparison, take a realtor. If they broker and sell that same home, they can make as much as $21,000 (6%) without risking more than the price of gas to take a client to visit the home.

That’s why so many builders go bust during a recession. The cost of their homes is tied to the real estate market. If the dirt their house sits on goes down in value by 4%, good bye builder.

It’s a tough career choice. It’s also why many builders try to make their money on upgrades. I’ve even seen builders who make you pay for the guest bathroom to be installed–in the bathroom.

Not all do this. We at Leisure Villas, don’t consider upgrades a profit center. We still offer upgrades, but much of our buildings are very nice, even without the upgrade options. In fact, we used to be part of the camp that offered as few upgrades as possible. We’ve added more options lately, mostly out of popular demand, but we like to build a home that is nice, even if no upgrades are added.

Next, you need to know the value of those upgrades.

But what if you do want to customize your house? This question is even more important if you’re on a tight budget. Imagine that you’re walking through a fixer upper, and you want to flip the house with as few renovations as possible. What would you spend your money on? Some of the same principles might apply.

If you’re flipping houses, you’ll know that the most important places to spend your money is on the following:

Kitchens:

In a remodel, nothing adds value more than updating that orange and avocado kitchen to modern cabinets and quartz countertops.

Therefore, it makes sense that if you’re looking at buying a new home, maybe you should look at dressing the kitchen up a little more. Instead of going with the flat panel doors, upgrade to cherry or white cabinets.

We put quartz countertops in our kitchens standard, but most builders don’t. So give your cabinets the proper accessory with granite or quartz.

Don’t forget to spend a couple hundred dollars extra on nicer appliances. An ugly appliance can take your rich kitch and make it feel cheap.

Bathrooms:

When is the last time you sat on a really old toilet? Maybe you still do. In that case, when is the last time you sat on a nice new toilet. There’s a big difference. And I’m not just talking about those old giant swimming pools that splashes your derriere like a bidet each time you excrete. But they flushing power of a modern toilet, even the water efficient ones, is so much nicer.

Now if you’re buying a new home, the toilet is probably the last thing you need to worry about. All the fixtures in that room will be new. So while a remodel will definitely require some attention here, you probably could skip some of the upgrades in this room on a newer home.

Front Doors:

I don’t know why, but if you paint the front door of a remodel in a bright color, it seems to add $3000 at a cost of only $100 to you. I don’t know if this translates into new homes as well, but if you think the color looks a little drab, imagine what it might look like with a splash of sunshine, at least in one of the spectrums.

Carpets:

Remodels almost always require new carpet. Mostly because people have turned their pets into a part of their families. Nobody’s pet is as clean as they imagine them to be. Then there is the normal use and abuse that is heaped on old carpets. And if the previous owner was a smoker, good luck getting that carpet to ever smell fresh again.

In new construction, you really should consider upgrading the carpet. Most builders have a “Builder’s Package” when it comes to standard carpets. They use these packages in their spec homes. It’s at a good price point for budget conscious buyers, so they feel it’s a safer play than installing a very expensive carpet. But if you can choose out your own carpet beforehand, I would always recommend doing so.

Higher thread counts per square inch can make any pad feel much softer and matt less.

If you’re worried about re-sale, play it safe.

There’s a lot of other things you can spend your money on. Some are good, some aren’t. Take for instance bathroom shower tile. Few people will argue that tile in showers is ugly. I don’t know how many times I’ve been asked to put tile in people’s showers. But then I ask them, “Are you sure you want to clean those grout lines?”

That’s when they stop, think for a second, then say, “Let’s do cultured marble instead.”

From 2” thick purple shag carpet to slate tiles everywhere, I’ve seen it all. If you’re not worried about resale, then deck your halls with glow in the dark paint for all I care. Some builders will suggest that you put in such upgrades after you’ve bought the house.

I know we’ve had to remove very personal upgrades, at our own expense, because a buyer backed out of a deal. If we didn’t, we would never have sold the home.

Since most people live in their homes for an average of 8 years, you or your kids may someday want to re-sell that house. Of course, by then it might be due for a make-over anyway, and it won’t matter.

But whatever you add, make sure you remember this one point:

Houses do not go up in value based on the upgrades you put into them!

I don’t know how many people I’ve talked to who’ve dropped over a $100,000 in upgrades into a house, then wondered why they can’t get more than $2,000 more from their house at resale vs their neighbor who has a similar house but with no upgrades.

People want square footage. Those fancy upgrades you chose, are just a bonus to whatever lucky buyer happens to share your tastes in décor.

Don’t let anyone tell you what you should or shouldn’t have.

In the end, do what you want. It’s your house, your money. Some builders, like us, provide professional decorators to assist you in the decision process. But they are human beings and are subject to their own personal biases.

Buying a home can be one of the most costly expenses of your decade. Only you can customize it to your comfort level. While some builders may not always be able to accommodate your wants or needs, once you own the building, you can always hire an independent contractor to fulfil your every whim.

I’ve sold some homes, only to walk in a year later and not recognize a thing. Sometimes this was for the better. Sometimes, I was really glad that I wouldn’t have to worry about the resale of that home.