Hidden Costs of Building a House Series: Part 3 – Plan Review and Permitting

In our previous two posts, we discussed the “hidden” costs of building a home during the initial phase leading up to closing on your lot, followed by costs associated with the design phase. In this last post of the series, we will discuss the various fees and costs associated with getting your home design approved to begin construction.

PLAN REVIEW AND PERMITTING PHASE

Once all the initial planning is done, it is time to submit those plans for review. This requires submitting the plans to the municipality where the property is located. If the property is located within a HOA (homeowners association), the plans will generally be subject to HOA review as well. Both the municipality and HOA will require the payment of fees in order to go through the plan review process. Oftentimes there is both an application fee and a plan review fee. Additionally, some HOAs will require the owner to commission a 3D model of the residence to be submitted for review, which will be an additional cost. One important to note is plan review encompasses more than just the livable structure or the main house. Plan review will also include retaining walls, fences, and covered areas. The City of Scottsdale, for example, charges a different per square foot rate for each of these elements of your project. In addition, plan review fees may also apply to items such as engineering plans and native plants.

PERMIT AND OTHER FEES

Once your plans are reviewed and approved by the municipality and HOA, the owner will be required to obtain a permit to commence construction. This fee will vary depending on the type of structure, size of the structure, and where the property is located. Municipalities, such as Scottsdale, will charge a permit fee on a square foot basis.In addition to permit fees, there are other common fees that an owner will be responsible for. These include fee such as an impact fees and fees for connecting the new home to utility services. Impact fees, or development impact fees, are charged by municipalities to help pay for the costs of providing public services to the new development. For utility fees, the owner will be responsible for the costs of installing a water meter, connecting their new home to the sewer system, and connecting to other basic utilities such as electrical and gas.

CONCLUSION

If you are looking at buying a lot to build a new home, there are many costs and fees that you need to be aware of and budget for. As an experienced custom home builder, A Finer Touch Construction can help guide you through the building process and help you understand all the costs and fees that go into building a custom home.