How to build a custom home?
Steps to consider
Choose Your Area to Live In:
- Take a look at the schools you may desire your children to go to and
explore those areas. This can be important, but pricepoint of your home may draw you to another area. This is the biggest
personal investment you will make. Remember, our kids aren't here very long, they grow up fast and only spend 3 +/- years
in each school. Staying in touch with your children can be much more important than which school they go to. I have 4 children,
youngest is 24.
- Go to the bank to get prequalified to determine how much you
can spend on a home. This is real important in these times. Just because your house costs "X" doesn't mean the appraiser
will appraise it for what it costs you. This will add additional cash down requirements if your appraisal is short of your
costs. Keep in mind that most custom home buyers spend 10% over original budget.
to pick an area that will support the pricepoint of your home you want to build. You do not want to overbuild an area, although
I do it regularly. A fine line here.
- Shop for a lot. I am available to
help you with this with a phone call. I usually know of all lots available, approximate pricing, and will it work
for the type of home you want to build. Because I build spec homes, I am always checking around and pricing. It's a common
mistake to pick out the perfect lot to find out that you now cannot afford to put a house on it. The lot price is historically
20% of total house price. If you sign a contracto to Purchase your lot, be sure to make it contingent on obtaining a
plan, builder, and price to your satisfaction before closing on the lot. Usually you can buy your lot with your construction
loan because it is a package construction loan until built including the lot.
serveral builders to get a feel of how they run their business. You may not like that guy right away or think this guy is
perfect. I'm just a likeable guy so it's an easy choice. LOL. You are going to get to know each other pretty well before the
house is done. Ask around a little. Ask about their normal payment process. Do they maintain mostly the same subcontractors
and suppliers for each house or do they bottom feed for the lowest bidder, each time, which can cause possible problems and
frustrations, not to mention the fact they will probably never come back to fix anything.
- Design the house for the lot you choose, "not the plan has to fit the lot". Keep focused on your family
needs on each floor and consider alternatives. You picked this lot for important reasons.
- Remember "Street Appeal". So many homes are built throwing this thought aside. It really doesn't
cost much more to do a little extra. Spend a dollar to get $10 back here.
loose site of your family needs. "Family 1st, Friends 2nd".
Now for process:
- Get pre loan approval and know what you can afford
lot contingent on loan approval and builder contract with Specification Sheet. Buy lot with construction loan if possible.
- Decide on builder, get contract signed, which includes plan with each floor, elevations of exterior, and site
plan on lot along with detailed Specification Sheet of what you are getting with Allowance Items listed. Ask if your allowance
items are comparable with one of the homes he just showed you.
- Obtain construction
loan from your lender. Keep in mind that most lenders will not lock your rate more than 60 days. If rates go up before you
are completed, be prepared for it. 2009 will be a wildcard on rates. 4 1/2 % to 6 % will probably be our range. This is only
for loans below $417,000. Above this is called a jumbo. Historically, a jumbo rate is bumped 1/2% above normal rates and 80%
loan to value. In todays world, the rate can be 2% higher and 70% loan to appraised value (not hard costs or purchase
price). Capitol Federal Savings is the only bank presenlty in Lawrence that has jumbo rates that start at $900K
instead of $417K which means their rates are really good. Give them a call. Also consider the "KU Credit Union",
they also do jumbo loans without the large rate bump of banks with an 80% loan to value loan.
- Apply for building permit and any Architectural Control requirements for your area. Be sure your home conforms to
the convenants and architectural requirements of your area.
- Start construction,
be sure to discuss how the house sets on the lot, where it sets, and how high above the curb the top of foundation will be.
Most homes have the garage and drive on the uphill side of lot with foundation 18" +/- above the curb from drive entrance
at curb. Over 3' is steep and needs to be talked about. Find one with your grade change to look at.
- Once a month, Builder will submit a construction draw for all the bills he's received on your house construction.
Look it over and be sure you understand each bill, who it is from, and what they did. Ask if his work is complete in accordance
with the bill. Be sure the back of check has a lien waiver stamp filled out with a date and your address for work completed
to that date. Most builders are reputable enough to trust their guidance. Lawrence is still a small town.
- Each monthly construction draw, ask the builder who will be working on your home the coming month and what decisions
he will need from you.
- Ask for monthly updates at construction draw time for
home completion. If it is going to fail completion time, you want to know about as soon as possible to make plans. Sometimes
a builder can only get you in a range. Weather and subcontractor availability are not completely controllable. Understand
that sometimes, it's just not possible to go any faster without a totally messed up house. Each crew can only go so fast
and all crews today are a lot smaller than they have been in the past. Bringing in more, under qualified, workers to try to
go faster is a recipe for disaster.
- When making decisions or changes to be
made, be sure you "tell your builder". Sometimes, everyone on the homebuyer's world (husband, wife, kids,
mom, dad, friends) knows the decision, but no one tells the builder, the one that makes it all happen.
- Completion: Every builder needs at least 1 week, preferably 2, after carpet goes down or you are going to know
all the painters, trim carpenters, hired help, etc. by first name after you move in.
- Make a list a week before closing and go over it before you move in. Ask for it to be completed. The squeaky wheel
gets loobed before maintenance wheels do.
- Keep in mind, it's impossible
to completely, absolutely, finitely, finish a home to perfection. The last guy out will bang his ladder or tool box on the
front door on the way out. Us Builders can not produce the "Perfect House". There are just too many parts and pieces
that only get placed once instead of thousands from a stamp at a factory.
It's easy, just too many decisions to make! I actually get relieved when I build a custom home instead of a spec home
because the Custom Home Buyers make most of the decisions. I offer help and opinions when asked. I do listen and remember.
The fun and creativity of it all far exceeds all the rest! It's supposed to be a fun and exciting experience!
This is what I try my hardest to achieve! A happy homeowner is a satisfied one.