One big question new home builders ask when they discover I’m a real estate agent is, “What type of home should I build?” It’s a very important question and one that needs to be looked at from a long term data-driven approach going back at least 365 days. What that means is doing a deep dive into different home styles, price per sq ft, days on market, percentage of closing costs paid and comparing and contrasting each one of those to see which is the most efficient based on your goals as a builder.

In general, there are four different types of 3 bedroom homes that you can build:

  • Basement with a Garage
  • Basement without Garage
  • No Basement with Garage
  • No Basement and no Garage

There are of course” A La Carte Style” additions that you can add to every home. Examples of this could include adding a pool, a deck, and perhaps a finished basement. You could even take this a step further and consider adding a screened-in back porch or perhaps going for a three-car garage versus a two-car garage. The options are truly endless but for the sake of comparison I will only be looking at the data for the above 4 examples so there can be an “apples to apples” comparison.

The primary reason 4 and 5 bedroom new construction builds were NOT included is this group is because, on average, they have the lowest price per square foot profit ($244 sq ft) and the highest percentage of closing cost paid out at a staggering 67% of all sales!

  • Basement – No Garage:

The big benefit of this build offers the highest price per square foot ($306) of any of the homes that were analyzed. It does however come with several drawbacks that need to be carefully considered. Specifically, this style has a significantly higher DOM (290), or days on market, and 1/3 of those built had seller paid closing costs associated with the sale with an average of $7,360. With its average sales price in the “ballpark range” of first time home buyers, it’s expected that some of these sales would need seller paid concessions in order to close.

Of the homes that have been build and were listed on the MLS, the sizes range from 1,144 to 1,500 sq ft with the overall average being 1,227 and the average sale price of $374,469. Lastly, the average “sale to list price” is 99.96% indicating a very low rate of reducing the price was needed to secure a contract.

  • Basement – Yes Garage

Coming in second with respectable $290 per square foot, this particular build seems to be the bright spot within the different home build options for several reasons. With an average sale price of $591,197 and finished sq ft of 2,032, this home has a lot space and storage options to offer buyers. The higher price point also appeals to a buyer with a more favorable “dept to income ratio” and which reduces the need for closing costs required to help the buyer complete the deal. In fact, of the homes in this segment sold in the last 365 days, ZERO had closing cost assistance associated with the sale. With an average “sale to list price” ratio of 99.63%, this home segment also has a very low rate of price reductions.

This particular build appeals to the greatest number of buyers due to the garage and unfinished basement. Those who have a growing family or need the additional space will see the benefit with a the basement. Those buyers who require a garage get that box checked as well. All this and with a 65 day average days on market makes this an attractive choice for builders.

  • No Basement – Yes Garage

As we move down the average list price bracket it becomes clearer that more closing costs are needed to assist buyers complete the sale. This home segment has an average sales price of $432,967 and 66% of all home sales had closing cost assistance associated with the purchase and the average offered was $4,500. With an average “sale to list price” of 99.52% there is a slightly greater chance that a price change will be needed in order to secure a buyer. The bright spot with this group of homes is the very low days on market coming in at 33. The average home size in this segment is 1,637 sq feet.

If building this particular footprint is your passion, it might be a good plan to leave space on the property for a future garage. It is a question from buyers that does come up from time to time. By having the future garage site preplanned, those who might not be able to qualify for a build with a current garage understand that they can make the home work for them in the future by adding a garage at a later date.

  • No Basement – No Garage

For a final comparison I looked at homes that did not offer a basement or garage. This group had the lowest average sales price of $350,913 and the highest amount of average closing cost assistance at $10,763. Not surprisingly, the average sales to list price is over 100% coming in at 100.68%. This is primarily due to the first time home buyer segment that typically requires closing cost assistance and is often rolled into the loan. The average home site is 1,381 and typically sells with a respectable 42 days on market.

An additional drawback of this home build is the price per sq ft which is the lowest in the segment coming in at $252 which is $50 less then the highest on the list. On the bright side, without the basement and garage, this style of home is one of the least expensive to build on average.

In conclusion, given enough time every home will sell. It’s important to understand that statistics change with market conditions: micro and macroeconomic factors, interest rates, and buyer’s feelings about the housing market. It’s also important to understand these statistics are representational of multiple different builds in the surrounding area and your build could fall inside or outside the range of the averages. As they say in the business, past performance is no guarantee of future performance!

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.” – Steve Jobs