You found the floor plan you want. You know the base price. Then you choose a homesite and discover that it costs another $25,000. Or $40,000. Or considerably more. Welcome to the lot premium. A lot premium is an additional amount a builder charges for a particular homesite because it has characteristics considered more desirable than other lots in the community. Those characteristics might include size, location, privacy, views or other features. The tricky part isn't understanding what a lot premium is. The tricky part is deciding whether this particular lot is worth the extra money to you.
Start With the Base Price
New construction pricing can be easier to understand when you separate the pieces. Think of your purchase price as:
- Base home price
- Lot premium
- Structural options
- Design upgrades
- = Your actual home price
For example:
- Base home: $450,000
- Lot premium: $25,000
- Structural options: $15,000
- Design selections: $20,000
- Total: $510,000
The house didn't suddenly become more expensive because the builder changed the base price. You made several separate decisions that changed the final price. That's why looking only at the advertised base price can give you an incomplete picture of what the home will actually cost.
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