Meeting with the Builder: Bid Review #2

The purpose of this meeting was to review some changes to our bid and discuss some ways we could potentially save some money. This was by far the most tension we felt going into the meeting, but to spare the details, it turned out better than expected. I’ll just note a few takeaways from the meeting.

Going in we thought we were going to need to discuss the issue over the first floor ceiling height. If you read my last post you know that we had wanted 9′ ceilings and were told the bid was for 8′ ceilings. Well, it turns out there was some miscommunication and the bid was for 9′ ceilings on the first floor all along. The second floor has 8′ ceilings, which we were aware of and are fine with. So the lesson to be learned here is to not overreact, but just ask for clarification especially if something doesn’t seem right.

I’m not sure if I mentioned this yet, but we have some unique features to the house, one of them being a gym in the basement. Well in order to have a gym you need to span some pretty long lengths without vertical support poles (that wouldn’t work so well while playing basketball). The initial plan and what was bid on was to use floor trusses to span the 33′ width of the basement. This was a good plan and there are some benefits to using floor trusses, however, the builder presented a new plan that would use floor joists on each side of the huge steel beam that runs the length of the foundation . Apparently this plan can save us a few thousand dollars (we’ll have the actual numbers in a few days). So this was good news and definitely something we’re interested in taking advantage of. On top of that, we are going to get numbers on a new roof structure that could save us several thousand dollars as well. The original drawings called for a modern style shed roof that would need to be custom engineered. We are going to see what a more traditional yet modern prairie style roof would cost in comparison.

The lesson to be learned here is to be patient with your builder and try not to get overly emotional as details unfold, especially when you’re dealing with money. Fortunately, it seems we are working with a builder who is willing to work with us and look at alternative ways of doing things to save us some money without sacrificing quality and performance.

I hope I can report good news in the coming weeks. We feel we are getting close to signing off on this build so stay tuned.

Cost Freakout

So we’re moving along in the process and have started seeing some real numbers in the past couple of weeks. At this point our plans (or what our builder calls drawings – future post on this) are pretty much done and have been sent out to the contractors to bids and the contractor has put those numbers together in a bid/proposal. For us, this is a spreadsheet that lays out each part of the build and all the inclusions and then options for upgrades or downgrades. There is no way around it, when money comes up tensions rise. This part has easily been the most tense and frustrating part of the entire process.

Because this is our first experience building a home, I can’t say whether this is going smoothly or whether the builder is doing a good job or not. What I can say is that there are a lot of moving parts and a lot of unknowns here. What we’d really like is transparency and I’m afraid we are  not going to get it. But maybe we will, maybe we just need to ask. Anyway, the numbers came back and they are quite a bit higher than what we hoped for. We are in the process of unpacking the details of these items and trying to find places where we can save. This has been a little difficult because there were some mix-ups in numbers and expectations in the initial bid so we are just disappointed when things don’t line up like they should.

For instance, there was a  line item for three additional paint colors and it had an up-charge for that. The builder said he thought that charge should have been included in the base price thus there would be no explicit up-charge. It was then our understanding then that if we decided not to go with the three additional colors we would be credited that cost. We decided not to go with the three color option, but then it was later determined the the three color option was not included in the base price thus we weren’t given the credit. Another big item hit home on the newest proposal. Throughout this process we had expressed interest in 9′ ceilings, but it was never explicitly written down. So when we asked it be detailed they said it included 8′ ceilings. So now, if we want 9′ it’s going to be an additional cost.  Some of these things are par for the course, especially for a custom build, but it’s a bit frustrating to have to come to terms with.

Nonetheless, we are kind of freaking out about the cost and are wondering what to do next? We have a meeting with the builder tonight and are trying to figure out how we should approach it? The last thing we want to do is get on the bad side of the builder. I think we could try negotiating with tact or ask for the pricing to be broken down so there is more transparency moving forward.

I will let you know how the meeting went.

Home Buying Decisions: Is a Condo Right for You?

When we got married we were staying in a one bedroom condo that was suitable for the moment, but didn’t offer many accommodations nor did it leave room to grow our family. It didn’t take long and we were house hunting. During that process we saw many homes; and while we definitely saw some we liked, none made us think “dream home.” The homes that were within in our budget at the time were generally 10-20 years old and many were at that point where substantial work would need to be done real soon.

After several months of searching we came to the realization that we either had to spend more money than we planned on or we were going to end up in a less than ideal home. During this same time period we began investigating new homes and it was rather surprising to see how competitive building a new home was compared to buying a pre-owned one. That said, we soon learned that there are many hidden costs involved in each so comparing the price is a bit trickier and takes a lot of work (more on that to come in a future post).

At the end of several months of looking for a home, which included an unsuccessful offer to purchase, we were getting tired of the process. It was at that moment we came across a wonderful 3 bedroom 3 bath condo in an excellent neighborhood. This condo came close to matching what we were looking for in a single-family home. It had the space, a decent sized yard with a deck, and was in really good shape. Moreover, it was one of two units in the association so we had a 50% say in anything that was done. The best part was that it was 50-100k cheaper than the single-family homes we had liked and the association fees were only $90.

For us, going the condo route at that time in our lives turned out to be a really good decision financially. We were able to put 20% down on the purchase to avoid PMI and that left use with a very manageable monthly mortgage payment. There are many other factors that go into buying a condo or home, but I would encourage anybody who is on the fence about a condo to do some looking and see what is available on the market. For us, it has been the catapult to the position we are in today: preparing to build our dream home.

 

 

How to Buy Land – Practical Tips to Save Money and Avoid Risk

Deciding to build a home is a huge decision. If you’re anything like us, we didn’t know where to start. We didn’t have land, a builder, an architect, or anything for that matter. Some people suggested finding a builder first so they could help with purchasing land, others said buy land so you can hire an architect to draw plans. We. Were. Lost.

We decided to buy land first because of the following reasons:

  • We wanted flexibility to choose the right builder and compare prices without being locked in to the builder that owned the lot
  • We wanted to spend time finding the perfect land
  • We wanted to find a good deal and save money on the land so we could invest more into the house
  • We didn’t want subdivision land, which is what most builders would have pushed us into
  • We decided to fit the house to the lot instead of the lot to the house, thus putting more importance on location than design

Next came the fun part, Time to go shopping! Here are a few practical tips to help you avoid risk and hopefully save money on land:

  • You get what you pay for: If it looks too good to be true, it probably is. Subdivision land is priced by a developer so you’re probably not getting any deals there. Individual sellers if anything, tend to over value their land. If the price is low, you’ll often find additional hurdles or issues with the land; like there’s soil problems, it’s in a floodplain, or there’s a train nearby.
  • Call the city planner that governs the land: The city planner will have the most information on any land for sale. Call the town or city planner and ask as many questions as possible. They are a great third party resource and aren’t typically going to give you bad information. They will fill you in on background info, soil issues, building codes, setbacks, etc.
  • Check if the land is considered a Wetland or Conservancy area: This would mean that the DNR or federal agencies could have some governance over the land as well. They should be able to view the parcel and tell you if any building restrictions are on the land.
  • Know your setbacks and building restrictions: Again, call the governing agency that is in charge of the land and talk to the planer. They will be able to give you the pertinent information you need to have in order before you can build a home.
  • Talk to the neighbors: This one can be kind of uncomfortable at times, but if reasonable go talk to the neighbors and ask them what they know about the land and what the area is like. We were considering buying land near a railroad and the neighbor told us that it was loud and the whistles blew all through the night. This was very valuable information. Besides, if nothing else you get to meet the folks you might be living next to for a very long time.
  • Get your finances in order: Know your budget and what you’re pre-approved for. Keep PMI in mind if you don’t have a large enough of a down-payment to get that waived (usually 20%). If your purpose for buying land is to build a home you’re going to live in (you’re not an investor) on it, then I’d be very careful not to strain your finances to get the land. It’s too much of a risk to sink a lot of money into something that has not utility and can lose value very quickly. The best way to avoid risk is to pay with cash—it makes closing a cinch as well.
  • Work with an attorney or real estate agent: when researching and making an offer to purchase to buy land you need to make sure you know what you’re getting and that they transaction is legit. An experienced lawyer or real estate agent can help you make sure you’re getting what you expect and that the transaction is completed in a professional and timely matter.

If you have other tips or questions regarding purchasing a land please leave a comment in the comments section. Happy hunting!

Ready, Set, Build

Ugh…not so fast there sport.

Alright, where do I start? Who should I call? Wait, should we get land first? How do I pick a builder? Should we hire an architect? And the questions go on.

For over a year my wife and I have been seeking answers to the above questions (and many more) about the home building process. Finding answers to these questions hasn’t always been that easy and many times the answers we got left us more confused. That’s why I’m starting this blog. In doing so, I hope it can be a resource for the prospective home builder to collaborate and easily find answers to many of the questions around building a home.

I hope it can be a resource for the prospective home builder to collaborate and easily find answers to many of the questions around building a home.

I am not certain what will become of this or what it might look like down the road, but I do hope it is collaborative and community like. I want people to share their home build story. In addition, I am motivated to create this website for my own interest in documenting the building process. If we ever decide to go down this road again I want to know what worked and what didn’t work, what we enjoyed and what we dreaded. So far, this has been a very exciting and enjoyable experience. I want to share that experience and begin writing my home build story.

In the following weeks I hope to cover how we decided to build a home, the lot buying process, and choosing a builder. Until then, toodle-oo.