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I have been looking for a new house for 5 months now. An average price per square foot in my area is $100. However, Rausch Coleman Homes is offering very nice and SUPER CHEAP houses for $75 per square foot. The only problem is they do not have gas.

So I don't understand, is it because Rausch Coleman houses do not have gas that the price is so cheap? Or what? Their prices are very tempting, but I'm hesitating to buy because I don't know where is the catch.

I asked my real estate agent about it, but she was not able to give me a meaningful answer.

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    The answer may be very specific to Rausch Coleman, but I don't know anything about that company. Have you looked at whether their homes are different in any other way? Are they smaller? Concentrated in less-desirable locations? Encumbered with restrictive homeowners' association covenants? In general, the mere identity of the company that builds the home can't make that much of a difference, or you could just buy the home from them at $75/sq. ft. and immediately turn around and sell it for $100/sq. ft. – BrenBarn Apr 23 '15 at 2:29
  • I live in Bentonville Arkansas. Their houses are really good : large, hardwood floors, granite counter tops . . I know there HAS to be a reason for such a low price per square foot . Maybe the walls are made of some "low quality what ever " . . I really want to know that . I want to buy their house . . but it's just doesn't feel right – user3191304 Apr 23 '15 at 2:53
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    A good real estate agent should be able to figure out the reason for this, but the agent you talked to might be unwilling to talk about it if she is a seller's agent. If you find an agent that you trust and sign him or her as a buyer's agent, he or she should be willing to talk. – Ben Miller Apr 23 '15 at 11:50
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    Hire a good, independent home inspector and tell him or her to go through the house with a fine-toothed comb. – mkennedy Apr 23 '15 at 17:13
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    Big building companies who are developing a subdivision (with only four or five different floor plans, all usually designed by in-house architects) get lots of discounts for buying in bulk (500 windows of one size, 700 of another, 100 dishwashers, etc). Also, work gets done more efficiently since it is the same job over and over instead of the slower pace of custom work where everything is different from the previous job. Of course, as BrianDHall points out, a lot of corners can be cut in insulation,cheap piping, appliances that are not as good as one might specify in a custom home etc. – Dilip Sarwate Apr 25 '15 at 3:09
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In northwest Arkansas, most of the houses this company offers do cost about 90 - 110 dollars per square foot. The exceptions use the Whitney plan, which has the following design features (and/or problems) which happen to save the builder a lot of money:

  • Most rooms only have "light on one side", not "light on two sides". And the few windows are rather small.
  • The porch is too shallow to be very useful.
  • The house is a square box, which reduces material and labor costs.
  • The house does not have a front walk directly from the sidewalk to the porch.
  • The builder has aggressively value engineered the house. The two porch posts are probably perfectly adequate structurally -- but aesthetically, three posts that are wrapped to be thicker would look better. Similarly, the roof slope is optimal for lower construction cost, but might not be visible enough from the street for optimal curb appeal. There are probably similar cost saving measures throughout the house.
  • Two of the bedrooms are over the garage.
  • Three bedrooms share one bathroom.
  • In the master bathroom, there is little privacy between the toilet area and the shower area. In particular, there is no door between them, and the toilet area does not have its own sink.
  • Would you really find the "bonus room" useful? It counts for a lot of square footage. (In Seattle, Asian families that custom build tend to include similar rooms, but most other families do not include big central bonus rooms like this on the bedroom floor.)
  • Do you really need a separate "Breakfast" area and "Dining Room", neither of which is an actual room?
  • Almost all of the plumbing is in a very small fraction of the house.
  • All of the doors are swing doors, even where pocket doors (with visible handles) would make more sense.

One very nice feature is the U-shaped stairway in the center of the house. It is easy to find, and has an angled landing. It might be a bit narrow, though.

Does the builder bother to put rebar in the brickwork? Arkansas is in earthquake country.

What are the floors like? Is the first floor a slab concrete floor with vinyl flooring (and/or carpet on thin pad) immediately above the concrete? Is the second floor bouncy, due to using long-span joists of code-minimum size?

Does the builder bother to make the rear windows look as nice as the front windows? As mentioned earlier, the builder only bothers to have one side window.

Where to learn more:

Fernando Pagés Ruiz is a Nebraska homebuilder who wrote a book on Building the Affordable House: Trade Secrets for High-Value, Low-Cost Construction (The Taunton Press, 2005). He has also written many articles in Fine Homebuilding, including "Building Affordable Houses".

True North Consulting specializes in helping builders eliminate waste and "value-engineer" their designs. True North often works with Tim Garrison, the self-proclaimed "builder's engineer".

5

A 25% variance in price, in most markets, isn't so crazy as to require it be some sort of terrible scam, but that doesn't mean much else. It could be the inclusion of floor plans that are carefully designed to add square footage at minimum cost and thus reduce the average cost per square foot without actually being cheaper otherwise, less insulation, thinner walls, cheap piping, minimized wiring, or they are just efficient and competitive. As you pointed out they don't have gas, so that's certainly one way you know they cut costs - no gas lines to install!

As the article from NAHB: Cost of Constructing A Home points out, though, what this figure includes can vary. Does it include the finished lot? If so then a smaller lot would mean lower square footage building price - because the land is smaller and cheaper, not the house!

Is any kind of financing quoted in the price? Compare also change-plan costs, any penalties for delays in construction, grade of materials, floor plans, customization costs, fees or premiums to pick colors/floors/counters/cabinets/fixtures, and so on. What about central cooling and heating - are they quoting an electric furnace? How does electrical heating in your area compare to the cost of gas heat? (relative pricing of electric and gas vary widely by region and climate)

In short: often square footage price isn't the whole story of what it would cost to construct a home. Ensure you are comparing everything that's important to you and you are getting a full quote, not comparing small isolate sales-pitch figures with no clear details.

If it turns out the price is 25% lower than other builders in your area and they give you what you are wanting, and you have the good sense to have a qualified home inspector and/or structural engineer inspect the home thoroughly before you take possession, then you might just have found a good builder! I'd encourage you to personally visit some of their past construction work, such as houses they build 2-10 years ago and ensure they are in the sort of condition you'd expect.

5

I am a realtor and work for Rausch Coleman and can answer this question for you.

We are a production builder. We build in communities with typically 5-9 Floorplan options per community and a select set of option and finishes that we offer. Because of the set options, we buy the materials in bulk and are able to receive cost savings on that from our suppliers which we can pass on to you. We use the same trades consistently through out our division which means they have our plans and process down to a science. They know the product, which means less likely to make mistakes and less likely to miss things.

Our heart is affordability in that we understand that not everyone can afford granite, gas, hardwood floors, etc. so we allow you to be able to customize your monthly payment, and that you are not financing something you may not want or need or to allow you to get in to a home you may not be able to afford otherwise. We work a lot with the first time buyer and we want to provide the best quality for the best value. We start our homes at a base model and allow you to customize the way you want (adding granite, gas, hardwoods, fireplace, etc.) and in doing that we allow you to choose whether you want to pay $90 or $101 per square foot or whatever that may be.

I can tell you in Northwest Arkansas we are the best value and the quality shows. I pull comps consistently and in fact have another builder in the same community as I sell in. Our homes in this community for single stories is about $88-$95 and two story homes are on average $78-$86. Two stories are more cost efficient in that the square footage goes up and not out so there is less concrete, which is one of the most expensive parts of the homebuilding process.

This other builder consistently sells their homes for $101-$105 per square foot, and uses the exact same materials we do. The difference? Yes granite and hardwoods and gas and custom cabinets come standard, you have no choice in that. Would you rather have the option for a lower priced home if you didn't want granite? Or if you'd rather have carpet?

We build in 5 different markets over 4 states and are in our 61st year of business. I'd love to meet with you and can walk you through a community and show you our homes (at all stages of construction) where you can see the product and quality in our homes. I am in our Dixieland Crossing community here in Northwest Arkansas. You can check out our website for other information at www.rauschcoleman.com

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    Welcome to Money.SE. Thank you for the disclosure of your affiliation, and for the detailed answer. Usually, a question so specific to a single company would be closed. In this case, it was left open and you've really helped. – JoeTaxpayer Feb 24 '16 at 12:51
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    I bolded the parts of Charli's answer that give reasons for price variations (per square foot) among Rausch Coleman houses in the same community. – Jasper Jul 13 '16 at 0:23
  • @Grade'Eh'Bacon - done! – JoeTaxpayer Nov 22 '16 at 18:01
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The reason Rausch Coleman homes are generally cheaper, is because they are a high volume dealer. Their communities usually have 5 to 7 floor plan options only. They get exceptional deals on their materials because of the volume of material bought. They have it down to a science when it comes to the numbers. As far as the quality of their homes, I cant answer that. I have never been in one or known of anyone that has bought one.

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Not only are they high volume but also most finish materials are very basic. For example lighting fixtures, most builders put ceiling fans in all bedrooms ($75) where Rausch coleman uses a flush mount ($15) in the spare bedrooms. Same with flooring they use a vinyl plank where most builders use wood. This can be $1sqft or more cheaper. Cabinets, carpet, tile, countertops, faucets, all they same. These are all cosmetics and you can save a ton of money while building by doing this and still build a quality home. Rausch Coleman builds a quality home at an affordable price by keeping the cosmetics basic.

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They are cheap because they are made from cheap material. All the homes in my addition are Ruasch Coleman and a lot of them are having issues (Oklahoma). Several are around 5 years old and have already had to get new roofs. On our neighborhood FB page there have been complaints with the plumbing system and flooding in yards that weren't leveled properly once the ground settled. I know I regret my purchase. You get what you pay for.

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Research the company that is all I can say this company has horrible reviews. They show on their Facebook page great reviews but if you really look through all reviews the high ratings are from past and current employees. All other reviews from actual home owners are bad. They make a lot of false promises and build very cheap homes that will not last without several costly problems within the near future. Most people that buy one of their houses sell it within a few years because they start having so many problems. They have outside vendors doing all the work and do not make these vendors very accountable. I know I was a manager with Rausch for several years. STAY AWAY!

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I have lived in my RC Home since 2008 and I have had ZERO PROBLEMS! We are in the process of building another RC home in a different community. The only thing I've done was replace the roof ONLY because of a very bad hail storm (baseball sized) that came through OKC. My mom also purchased a RC home in 2007 and didn't have any problems. What buyers have to do is be involved the whole time before, during, and after the build. Take lots of pictures of the entire process if you can. We went by our build daily (we didn't live that far), but if you can go by your build at least once a week, it helps. During my inspection, there was a hairline crack in the baseboard and it was corrected immediately. If you have a good inspector and sales rep that genuinely cares, you will be just fine and will love your home. Good Job RC HOMES!

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I walked into my sister's new Rausch Coleman house this afternoon to help her move in and told her to make sure that they put on the hot water heater room door in the garage on when they come back to take care of the final touch ups. I also said and don't let them forget to paint the garage because I noticed while driving through her neighborhood that everyone had taped and mudded garages but no paint. She told me that Rausch Coleman was not coming back to do any touch ups. I said what about this stuff?!?!!!!! My sister said the house does not come with a door for the hot water heater or the garage being painted. Are you SERIOUS?????? That's like not putting the covers on your electrical outlets...your kidding me that this does not come in the base package. Shame on you Raush Coleman. Your prices are not that cheap to not include that. That is what I call bad customer service and ripping off your clients. The paint job is hideous. Let's just say my 9 year old could do a better job than that. The mirrors in her bathrooms are not hung centered and is so obvious. She went to open her dishwasher and it came out of the hole because it was never anchored down. I could go on and on!!!!!! Do not use this builder!!!!!!!

protected by JoeTaxpayer Nov 22 '16 at 18:01

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