What You Must Know When Building Your Dream Home

Builders Beware: How to Build Your Dream Home

The greatest American dream has always been of owning land.  From the crossing of the Atlantic by brave Europeans, to the migrations of Western expansion, migrations into the cities, then out to the suburbs, and now into exurbia, Americans have a love affair with land.  Now that you’re ready to purchase your own piece of heaven, and build your Dream Home, there are some things to keep in mind to make sure you don’t wind up with a cup full of heartache.

            The first step in building a new home or buying an existing home is evaluating the site.  Look at the topography of the site.  Is it very steep; will you be able to get up a driveway in possible snow?  What type of exposure is the site optimized for?  Most home owners want southern exposure.  It has a “warming” affect in the winter and makes for a nice bright home year round.  So you’ll want to make sure the southern side of the site isn’t crowded with trees.  Do your research on zoning regulations and restrictions.  What are the set-backs?  Are there any large developments planned for or applied for in the area?  Consider the water table height and the drainage of the site.  If the water table is too high, having a basement is a bad idea.  If the drainage is poor you may want to select another site, or risk flooding.  Are you in a flood plain or wetlands?  Both are signs of a poor site.  A good indicator is the number of pine trees on the lot.  Pine trees avoid wetlands, and you should too.  Find out where the utilities are regarding your site.  Where’s the closest public sewer and water connection?  Will you have a well and septic system?  Where are the electric lines?  Having a perk test done, and a well drilled can be expensive.  If there is a well in place, find out how many gallons per minute it provides, to get an idea of how much water you’ll have on hand.  Also consider the area the site is in.  Are the schools good?  Even if you don’t have children this will affect your re-sale value and property taxes.  Are you close to a large city?  Are there any restrictions on what you can build on the property?  The most important part of buying a piece of land or a home is to get title insurance right off the bat.  If you don’t, you may be liable for a previous owner’s misdeeds.  If there are liens on the land or home, without title insurance, they’ll wind up becoming your responsibility.  Make sure you update the title report and do a title search.

            After you find a suitable site, it’s time to set the stage for construction.  This includes meeting with an architect to design the house and draw plans, or you may choose to use pre-packaged plans provided by the general contractor; selecting a general contractor or builder (many people are opting to take on this duty themselves, but it takes a lot of effort and research, something we’ll be detailing in a future article); creating a construction agreement; and securing a construction loan. 

            Will you need an architect to design “custom” plans for your house, or will you be choosing plans from several choices your builder might already have, or will you be using pre-packaged plans from one of the many catalogs of building plans?  If you decide to build a truly one-of-a-kind custom house, you’ll need an architect to help you design it and draw plans for it.  This would include its overall orientation to your site as well as designing the interior layout and picking suitable building materials based on what you’re trying to accomplish.  An architect will help you figure out the types of rooms you will require, their size, layout and function.  If the house will serve later as a retirement place, make sure you provide for that in the original design.  If you do a lot of entertaining, have numerous overnight guests, or like to make use of outdoor areas frequently, make sure your architect understands your needs and purposes.  Interview several architects and find out the types, styles, and sizes of the houses they have designed.

Selecting your general contractor (builder) is a very important decision.  Do not turn to the yellow pages.  Word of mouth is a great way to find someone reliable and reputable.  If you have friends in the area, see if they have any recommendations.  Another option is to drive around the area in which you are planning to build to see if you like any of the homes there, or even if some are under construction.  If you do, ask the owner who built it, or if a house is under construction, speak to the builder.  Ask if you can contact the owner, or if he can have the owner contact you.  Contact the local Home Builders Association for a list of builders and their qualifications.  Many areas have local Home Shows which you can attend.  Many planned communities require you pick a builder from a list of builders that build in their community.  Once you have a list of general contractors, meet with all of them.  This stage is almost like a first date.  If you have instant misgivings about a person, it’s a good idea to find someone else to work with.  Ask if they have a current builder’s license in their name and what their insurance limits are.  Inquire as to whether they are bondable and to what limits.  Find out how long they’ve been in business, and if they have experience in building the type and size of house you have in mind.  How often will the builder meet with you to discuss his progress or any problems?  Does he have a website from which you can monitor the progress of your house?  Do not ask for references.  Ask them for the contact information of their last three clients, so they can’t stack the deck with only sterling references.  How long is their work guaranteed?  Visit several of his houses that are 3-5 years old to see how they have held up.  Talk to the owners. When you have a couple general contractors you like, it’s time to start asking for construction bids, based on your building plans.

A “construction contract” is put in place to protect you and motivate the contractor, so make sure it does.  Critical points should include such things as what the penalties are for not meeting the agreed upon schedule; what happens if tools or equipment left on the site are lost or damaged; how does he secure the site during construction; who is responsible to get the building permit and paying the associated fee; what happens if someone is injured on the site; and what if you want to change something while they’re in the middle of building your house?  Make sure the contractor provides you with his insurance certificate, names you as an additional insured, and has a valid workmen’s compensation policy.  Ask the contractor for valid building licenses as required by each state.  Having an attorney review the contract is a must and well worth it.  There are plenty of sample contracts online to get you started.  Many contractors will have their own skeleton forms to start with, but you may want an attorney to draft your own contract to make sure your concerns are covered.

There are two types of general construction loans; construction only loans, or construction-permanent loans which are applicable to people planning on staying in the home for two or more years, as most do.  Regardless of what you choose, you should get a single-close loan.  With a single-close loan, even if you get one loan for the construction and one loan for your permanent mortgage, they are considered one loan and you avoid having to qualify twice and pay two closing fees.  Most loans are interest only until the construction is finished.  Your lender will require documentation in many areas, including but not limited to, the builder’s license and construction contract, the plans for the home, the purchase contract, and a property profile.

You’ve purchased the site, designed the home, picked the contractor, signed a construction contract and arranged for a construction loan.  Now, let’s make sure your money stretches as far as it can.  The building stage is the best time to save money over the long term.  Often, spending a little more money upfront can lead to huge savings down the road.  One way to save money at first is to use pre-packaged home plans.  If the area you’re building in allows it, bypassing the use of an architect to create signed and sealed documents can save you 10% of your total building costs!  A way to save money through the life of your home, add re-sale value, and create a healthier environment for you and your family is to invest in a radiant heating system.  Radiant heat comes up from the floors, either through water pipes, electricity, or air.  Savings of up to 30% of your heating bill can be had, there’s no airborne pollutants such as dust and allergens common with forced air heating, and best of all, the floor is toasty on your feet.  Maintaining air quality in your home has huge health benefits and will extend the life of your home.  Make sure the humidity level doesn’t exceed 50-60%.  Humid homes are hosts for mold and building rot.  Pay attention to what building materials are used.  Beware of interior plywood, particle board, and carpeting that emit gases after installation.  Invest in an air-purifier.  Incorporating design features in accordance with Universal Design standards will make your home easier to live in as you age, and add re-sale value.  Visit, www.PlacesOfValue.com for a great article on Universal Design, entitled “How to Design a Home that Lasts a Lifetime”. 

Based on today’s changing lifestyles, there are certain design features that are becoming very popular, and including them in your design will add value to your home.  Some current design trends include; grander eat-in kitchens and omission of the traditional dining room.  People are interested in open spaces where entertaining and family involvement flow from eating to living areas.  Outdoor spaces are becoming more and more integrated into the living areas, because you can expand the living areas at lower cost, whether that be as a porch, deck, or patio.  Bathrooms are also getting a facelift with “spa type” multiple head showers, higher larger toilets, and fancy jacuzzi soaking tubs.  They’ve been transformed from their utilitarian purpose into a place to hang out and luxuriate.  Many homes include workout rooms, home offices and home theaters.  Today, time has become a scarce commodity.  People are more interested in enjoying an active lifestyle than spending time maintaining their homes.  Exterior finishes and outdoor elements that require little or no maintenance are preferred.

The process of building a new home can be one of the most daunting and rewarding experiences a person can have.  Picking the site, and designing the home of your dreams and making it a reality can be achieved with the proper research and professionals, you just need to know where to look and what to watch out for.  Now you’re ready to go!  With planning and a bit of luck, you can live in the home you’ve always wanted and dreamed of!

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