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Home Buyers Tips
Shopping Around top
The old saying, "You better shop around," takes on new meaning when searching for a new home. But take heart, you've already made one smart move--doing your homework. You should drive around and look at different homes, builders and communities. If you are building a custom home, make sure to get bids from at least 3 builders, that way you have a choice and a comparison. Make sure the location of your future home is convenient to shopping, schools, recreation, hospitals and transportation. It's a good idea to contact the local Chamber of Commerce for more details on the area. Also, consider property taxes, which vary from county to county.
Custom vs. Volume top
With so many types of home building companies out there, it’s a little tough to figure out who does what and who builds what. Here’s a quick run-down on how to tell the difference between custom and production home building companies.
Custom home builders generally:
- Build on land you own. Some custom builders also build on land they own.
- Build one-of-a-kind houses. A custom home is a site-specific home built from a unique set of plans for a specific client. Some custom builders may offer design/build services.
- Build single-family homes.
- Are generally small-volume builders (those that build 25 or fewer homes a year).
- Tend to build high-end homes.
Production home builders generally:
- Build on land they own.
- Tend to use stock plans, but usually offer a variety of plan choices and options.
- Build all types of housing — single-family, condos, town houses, and rental properties.
- Are large-volume builders (those that build more than 25 homes a year).
- Generally build for all price points — entry level, move up, luxury, etc.
Determining a Budget top
Figure out how much you can spend and be sure to communicate it ahead of time to everyone involved in the project. Letting the contractor know your budget helps him/her save time in creating the estimate and determining what is acceptable if changes are required. It is the contractor’s job to track the actual construction budget against the contract price. However, you need to have a game plan to determine how you will respond to an “unplanned change” or schedule delay. You must be clear on what the outcome will be to your purse and/or the project’s quality. Expect changes. Most contracts include a minimum of ten percent additional costs due to changes during the job. Be sure to include that amount of money in your budget.
Looking at Lifestyle top
Determine whether a home and neighborhood lend themselves to your lifestyle. Think about how you spend your time. Do you need a dining room for entertaining? Do you need a basement for storage? Does your ideal home have a large yard? What about restrictions and covanents in your new neighborhood. More and more new home communities are adopting covanents that may not work with your lifestyle. For instance, many do not allow boats to be parked in driveways. Others may require you to buy an expensive landscaping package. Thinking about your present and future needs will make your new house a happy home for years to come.
Choosing a Site/Lot top
Selecting a site on which your home will be built is only one step in your overall homebuilding prcess, but it's by far one of the most important. Choosing the right lot will ensure a successful project with little, if any, surprises.
Some prospective new custom home builders will select a site before they have established a budget or gone through the process of interviewing/selecting a custom home builder. By selecting a site before you select your builder, your project may become overly expensive due to hidden factors. Doubtful soil conditions, easements and other restrictions and theunavailability of certain utility services might not be apparent to you, but an experienced custom builder would be fully aware and know which potential hazards to avoid.
Your home site will affect the locaiton of rooms in your home, the orientation of your home with respect to sunlight and the location of the driveway or garage. Don't use hindsight to find the right site.
Buy from a Member top
Call the Charleston Trident Home Builders Association (CTHBA) at (843) 572-1414 to verify that the homes you're looking at are built by a professional builder member. Although the CTHBA has no legal authority over its members, it does have a Code of Ethics and it strives to resolve homeowner problems, should they arise, through communication with the builder. Membership in the CTHBA is voluntary and indicates that a builder is committed to quality, service, professionalism and fair business practices. In addition to keeping its members abreast of regulatory changes, membership in the CTHBA offers educational courses and technical resources for builders.
Choosing a Builder top
Buying a new home is one of the biggest and most meaningful investments you'll make in your lifetime. It only makes sense for you to learn all you can about the builder of your new home. Qualify potential contractors before wasting their time with the estimating process. A great bid but a poor job record is not going to get you anywhere. This is why it’s so important to ask for and check references. Ask tough questions like how far off was the original bid from final price? Limit the bidding process to no more than three contractors. This will give you time to research and determine the contractor who is best suited to your project. Ask your potential builder these crucial questions:
- What is your company’s best quality?
- How long have you been in business?
- Have you done this type of project before?
- Is this project within the typical scope, size, and price of the jobs you’ve done?
- Are you licensed, bonded and/or insured?
- May I interview two past clients and view the finished work?
- Have you been sued by past clients?
- Have you been sued by trade contractors or vendors?
- How do you determine how much to charge for change orders?
- On average, how much do the total change orders cost as a percentage of the original estimate?
- What process do you use to communicate change orders or price changes?
- Who will be my primary contact during the job?
- On average, do you go below or above your estimates?
Research your Builder top
Talk to homeowners who live in some of the builder's recently completed homes. Ask friends and family for information about the builder. Again, don't hesitate to ask questions. Check references and do a little homework of your own, such as finding out how long the builder has been in business. Drive to communities where the builder has built. Pay special attention to details that are important to your family. Visit on a weekend when families might be out and about, and don't be shy about approaching them. Ask residents how they like their home and if they could easily contact their builder to answer questions. Most people will be happy to talk with you about their new home and their experience with their builder.
Know the Timeline top
The building of any 2 custom homes rarely goes at the same pace. How long your home will take depends on the choices you’ve made. For a 4,000 sq. ft. home in the Charleston area, you can expect it will take eight to twelve months or even more. . If it is taking longer than eight months, does that mean your builder is lazy? Probably not. Weather is a huge factor in both the delivery and installation and can have a ripple effect on the entire construction schedule. Plus, moving forward is dependent on the inspections and the local building department as well as your timely decisions and payment. You will inevitably make changes to the plan, the complexity of those changes after construction has begun can also greatly affect the timeline. Below is a sample of what you can expect, so you can knowledgably watch the construction of your dream home!
Pre-Construction: Sign contract, finalize plans and specifications, site plan, construction and permanent financing- one week to two months
Clear the Lot, layout building on property- one week
Lay foundation- 2-4 weeks
Frame carpentry, roof trusses and roofing- 4-6 weeks
Mechanical Components: rough-in electrical, plumbing, HVAC- 3+ weeks
Exterior Finishes: doors, windows, exterior trim and siding, porches – 4+ weeks
Finish Inspections, install insulation and Sheetrock- 4+ weeks
Interior Finishes: prime paint, install molding, install interior doors, finish paint, cabinet and countertop work, finish mechanicals, electrical, hvac, install fixtures and appliances – 8+ weeks
Complete Exterior Finishes: landscaping, driveways – 2+ weeks
Floor coverings, tile, hardwood – 2+ weeks
Finishing Touches: final Walkthrough, cleaning, punch list – 2+ weeks - until
Communicating With Your Builder top
It's just as important to know how to communicate with your builder, as it is to choose the right builder for your new home. Remember--your builder wants you to be happy with your new home.
By communicating with your builder from the start, you can also minimize surprises down the road. For example, you may have budgeted $7,000 for site work. But, unless your builder is involved, you may not realize your site requires swapping dirt out or stabilizing areas, which increases your site work costs to $13,000.
It’s these surprises that can hit you the hardest. You’ve hopefully researched your applicance or lighting package and know what you’ll be paying. It is also a tangible expense, one you can see what you’re paying more for. But, site work complications or the addition of impact glass to meet building code is harder to see and you probably wouldn’t know about it unless your builder told you. Your budgeted window package may have been $12,000, but, the entire Charleston area is now required to have impact glass to withstand high winds and rain. That can double the cost of windows, from your original $12,000 to $28,000.
The last thing you want is a costly surprise in the final stage of construction. More and more Charleston-area neighborhoods have Architectural Review Boards (ARB) that require specific shutters, mailboxes or landscaping packages. Your builder will know whether your home falls into one of these neighborhoods and will be able to plan and help you budget accordingly right from the start to help you avoid that extra $10,000 in the final stretch.
No matter what, there will be surprises along the way, for both you and your builder, but if you’ve done your research and communicated well with each other, you’ve cut down on surprises significantly.
Ask Anything
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Remember--the only stupid question is the one left unasked. Don't let the terminology and process of buying and building a new home intimidate you. Use a list of questions, good communications and note taking to help you through. The home buying process may last months, and you will talk to many people along the way.
Read Everything top
Read your contract carefully to understand its terms and conditions. Read any warranty and building performance standards offered by the builder to understand what is covered and for how long. It's important to read and clearly understand all written documents involved with your new home. If in doubt, ask questions.
Should you Remodel or Build? top
If you want to change your home, your other option besides remodeling is to find a new one. But more and more American families are deciding to stay put and improve their existing home. Here are some of the reasons:
- Remodeling allows you to customize your home to meet your needs and desires. The only similar, but much more costly alternative, is to have a brand new custom home designed and built.
- Remodeling means that you don't have to give up a familiar neighborhood and schools.
- Remodeling is a more efficient use of your financial resources. According to the American Homeowner Foundation, selling your home and moving typically costs about 8-10% of the value of your current home. And much of this goes into moving expenses, closing costs, and broker commissions - items that have no direct impact on your home's quality.
- Remodeling can be stressful, but few experiences are more stressful than moving.
While there are many reasons that people choose to remodel, the bottom line is that remodeling makes your home a more enjoyable place to live. The intangible value of this pleasure needs to be considered, along with any resale value you hope to gain.
But there is no doubt that, as far as improving the sale of your home, all remodeling projects are not created equal. The general rule of thumb is that any remodeling project that brings your home up to the level of your neighbors' is a worthy investment. But it doesn't pay to be the most expensive house on the block - real estate experts recommend that a remodeling investment should not raise the value of your house to more than 10-15% above the median sales price in your neighborhood.
Remember that potential buyers will compare your home to ones newly built. Therefore, you'll want to look at the design trends and amenities being built into new homes. Great rooms (open kitchen/family room arrangements), master bed and bath suites, and higher ceilings are a few of the features sought by today's home buyers.
Learning the Lingo top
Certificate of Occupancy: A document from an official agency stating that the property meets the requirements of local codes, ordinances, and regulations.
Change Order: An authorization by the architect and/or owner to change the basic contract because of additions or deletions.
Closing: A meeting to sign official documents--this is when the transfer of ownership takes place and your new home officially becomes yours.
Closing Costs: Expenses in addition to the sales price of your new home, such as attorney's fees, appraisal fee, document preparation and hazard insurance.
Conditions, Covenants, and Restrictions (CC and Rs): The standards that define how a property may be used and the protections the developer has made for the benefit of all owners in a subdivision.
Cycle Time: The number of days between the first day on the jobsite and a home's completion. Controlling cycle time enables us to provide accurate estimates and helps the builder stay within budget.
Developer: The professional who initially purchases the land, prepares it for building, installs streets and utilities and divides it into lots to be sold to builders.
Earnest Money: Money paid to the builder that shows your commitment to buy your new home. This money is used as part of your total payment at closing.
EarthCraft House: The green building certification program endorsed by the Charleston Trident Home Builders Association. Currently, there are 11 EarthCraft House certified builders in the region.
Expressed (or explicit) warranty: An additional warranty provided by some builders that outlines the terms, procedures and responsibilities for maintaining a home after the sale. The warranty also offers a procedural outline, should you experience problems with the structure, finishes or mechanical systems of the house wihn a specified time frame, usually to 20 years.
Green Building: A design and construction practice that promotes sustainability and energy efficiency in your home.
Implied Warranty: By state law, an implied warranty assumes that the builder is responsible for the condition and building code compliance of each home they build. Simply, an implied warranty provides assurance that the home has been built to basic safety and health standards.
Lien Releases: A document that shows the builder has paid the agreed or negotiated costs of labor and materials in full. This process relieves you of any responsibility for outstanding money owed to the lumberyard, electrician or others the builder has hired to help build your house.
Mortgage: Money you owe on your new home loan after closing, which is the sales price less the down payment. The mortgage is a legal claim by the lender on your new home.
Orientation/Walk-Through: A familiarization and final inspection of your new home with your builder prior to closing in which you learn about your new home and identify the items, if any, needing adjustments, corrections or repairs.
Per-Square-Foot Basis: A way to estimate costs to determine preliminary budget. Based on standard industry formulas and a contractor's experience, a per-foot cost estimate provides a starting point from whcih we can start to formulate a more accurate and reliable budget and specfic prices based on your needs, tastes and finances.
PITI: Principal, interest, taxes, and insurance (the 4 major components of monthly housing payments).
Punch List: A list of unfinished details that is developed before close of escrow and move-in. These items will be completed as soon as possible. Many builders also create and satisfy punch list items throughout the building process so the house is complete as possible during your final walk-through.
R-Value: The resistance of insulation material (including windows) to heat passing through it. The higher the number, the greater the insulating value.
"Rough-in": The behind-the-wall structural and mechanical work, such as framing the walls and roof and installing the heating ducts. During this time, you can add upgraded or extra service, such as wiring for a high-speed Internet or digital cable network. Installing these systems during the rough stage of construction costs significantly less than installing it once the house is finished.
Staging: Organizing the schedule and delivery of materials, rather than a builder having everything delivered at once. Staging can help reduce waste and theft, save time andhelp to keep better of costs.
Wrapping it Up top
Before closing on your new home, you and your builder will conduct an orientation to educate you about your new home and identify any necessary adjustments, corrections or repairs. The orientation, often called a "walk-through" will take place prior to closing to allow adequate time to make any necessary adjustments. Remember--although your home is new, no house is perfect. Pay careful attention to the following items because, after you move into your new home, you are in control and the builder may not be responsible for any adjustments, corrections or repairs on these items.
Grading
- Does the ground around the foundation slope away from the house?
- Make sure the water does not pond in swales. To check, water the areas with a hose, if possible.
- Are there signs of erosion?
- Is the shrubbery placed at least 2-3 feet from the foundation?
- If the house has a basement, are the basement window wells clean and graveled?
Roof and Gutters
- Are the shingles flat and tight?
- Is the flashing securely in place?
- Do the gutters, downspouts and splash blocks direct water away from the house?
Exterior Appearance
- Are the windows and doors sealed and protected by weatherstripping?
- Are the trim and fittings tight? Are there any cracks?
- Does the paint cover the surface and trim smoothly?
- Has landscaping been installed according to the terms of your contract?
Doors and Windows
- Are all doors and windows sealed?
- Do they open and close easily?
- Is the glass properly in place? Is any loose or cracked?
Finishes
- Is the painting satisfactory in all rooms, closets and stairways?
- Did the painters miss any spots?
- Are the trim and molding in place?
Floors
- Is the carpet tight? Do the seams match?
- Are there any ridges or seam gaps in vinyl tile or linoleum?
- Are wooden floors properly finished?
Appliances, Fixtures, Surfaces, Etc.
- Do all of the appliances operate properly?
- Are all of the appliances the model and color you ordered?
- Check all faucets and plumbing fixtures, including toilets and showers, to make sure they operate properly.
- Check all electrical fixtures and outlets. Bring a hair dryer to test the outlets.
- Do the heating, cooling and water heating units operate properly? Test them to make sure.
- If the home has a fireplace, do the draft and damper work?
- Are there any nicks, scratches, cracks or burns on any surfaces, including cabinets and countertops?
- Test the doorbell. Also test the intercom system, garage door opener and any other optional items.
Basement and Attic
- Are there indications of dampness or leaks?
- Is there significant cracking in the floors or foundation walls?
- Are there any obvious defects in exposed components, such as floor joists, I-beams, support columns, insulation, heating ducts, plumbing, electrical, etc.?
Certificate of Occupancy
- Has your local municipality signed off on your house?
Agree on Adjustments top
Agree with your builder on a timetable for any necessary adjustments, corrections or repairs. Again, clear communications--perhaps in writing--are important to prevent any misunderstandings.
Take Charge top
As a new homeowner, you have made a major investment of heart, soul and money. You've also accepted a new set of responsibilities. Your new home requires time and attention from the day you move in. Periodic maintenance is necessary, and making minor adjustments now may save you time and money in repairs later. Taking care of your new home properly will ensure its lasting value and your continued enjoyment.
Understand the Bells and Whistles top
Read manufacturer's warranties and operating manuals for all appliances and products in your new home. Understand how all of your appliances and major systems work.
Your Maintenance Responsibilities top
When you bought your home, you probably received a warranty from the builder on workmanship and materials. This warranty applies to problems related to the construction of the home, but it does not apply to problems that arise because of failure to perform routine maintenance. For example, if your roof begins to leak after six months because of faulty workmanship, your warranty would cover that. If you develop a problem because water backed up in clogged gutters that you should have cleaned, the builder is not responsible for repairs. Also, some items, such as appliances, may be covered by manufacturers' warranties and are not the responsibility of the builder. The following items are just some of the areas you'll want to check, service and repair on a regular or seasonal basis to keep your new home in good condition. "How-to" books on many of these subjects are available.
Basement
Bathroom and kitchen drains
Carpentry and trim work
Ceramic tile
Concrete
Doors
Driveways, walks and steps
Electrical system
Exterior paint
Faucets
Flooring
Garage door
Grading
Gutters and downspouts
Heating and cooling systems
Hot water heater
Humidifiers
Interior paneling and walls
Insulation and caulking
Landscaping
Paint and wall coverings
Plumbing
Roof
Security system and smoke alarms
Sink disposal
Toilets
Windows
Happily Ever Aftertop
There's a reason owning a new home is such an integral part of the American dream--it's a fresh, new place to start your day and new dreams. It's where your family will build it's future and it could become your family's greatest financial investment. But as with any other dream worth having, there's work involved. The effort you'll take finding the right builder and the right home will pay off--as long as you take the time to understand the process and communicate your questions and ideas clearly. Fulfilling your responsibilities as a homeowner will keep you happy in your new home for years to come.
Frequently Asked Questions
How do I chose the best builder for the job?
It is the most important decision you will make in this entire process – the home of your dreams rests in their hands. Make sure you chose a builder early in the process so you can consult with him. Check out his reputation and client list, if he’s not willing to share them, he’s not the builder for you. Make sure the company you select is financially viable and will be in business for years to come. Don’t hesitate to visit the contractor’s projects or past homes he has built and above all, make sure he is licensed, bonded and insured.
Deep down most of us would love to build a custom house that meets our individual needs. Is building a custom home out of range for ordinary homeowners?
That depends on the location of your property as well as where and what type of utilities are required. Will your property require a septic or sewer design? Set-backs may limit buildability of the lot or property. There may be wetlands or other conservations issues to contend with or zoning and other land use regulations as well as easements. On the other hand, if you buy a lot in a development, the costs of sewer and water are incorporated into the cost of land.
How can I finance a custom home? Is there a minimum financial commitment I have to make?
To finance your project, you´ll also need to have a complete set of plans that includes the site, foundation, framing, wall detail, roofing, electrical, plumbing, and finish details. If engineering is needed a plan is required for that as well. Complete design plans for septic or utilities location and costs will also be needed. Finally, if geotechnical recommendations are required by the city or county, you´ll have to supply plans or reports for those.
The following figures show the potential ranges, but depending on your circumstances and resources may be less or substantially more:
|
Cost Range |
House Plans |
$600–$6000 |
Engineering |
$500–$8000 |
Geotechnical survey |
$1000–$10,000 |
Utilities |
$1500–$12,000 |
Septic recommendations |
$1850–$45,000 |
Building permits and fees |
$1800–$9500 |
The minimum financial commitment requires that your property be paid off (or be a family gift). Typically, many financial institutions want to see that you have full ownership of the property. If you are working with a cooperative seller with respect to the property, you may be able to subordinate the loan into the construction financing through your lender, then pay off the seller at the first draw. In any event, the minimum cost for starting the project usually runs between $5000 and $12,000.
Do I need an architect? Or can I have a builder take existing plans and modify them for my house?
I would say that most of the time, you would need an architect to draw the plans up because most builders don´t know all the codes and engineering that has to correlate with the plans. The engineering comes first; then the plans can be drawn up from the engineer´s recommendations.
Is building a custom home worth it?
It´s a painstaking commitment of time and energy to make hundreds of decisions ranging from the huge to the relatively minor including endless decisions about color, flooring, cabinetry and so on. There will be timing problems and scheduling issues. The unexpected occurs regularly so flexibility is also necessary. The reward is that you have what you want, the way you want it. You choose the neighborhood and the site orientation as well as the materials and the style. The builder has to listen to you, the homeowner about how you want things incorporated. The builder wants to work with you to provide what you want.
Q: What’s your price per square foot?
A: Unfortunately, the figure is unique to each house since no 2 custom homes (or the lots they’re built on) are identical. In the Charleston area, you should be prepared to pay anywhere from $85 per square foot and up.
Q: Is your price negotiable?
A: Not likely. While each builder uniquely calculates where he plans to make his profit margin, it’s rare to experience a discount in builder services. Choosing the lowest price is not always the best option, it can end up costing you more in the long run if there are problems or mistakes.
Q: Can I buy my plans from a magazine or website?
A: Most municipalities in the Charleston area do not require sealed architectural drawings, so these kinds of plans should be acceptable. If a seal is required, a local architect will need to draw the final plans, apply the proper codes and include a list of approved building materials.
Q: How much should I spend on options/upgrades over and above the base price?
A: A rule of thumb used in the industry is to spend no more than 20% of the total price in options and upgrades.
Q: Is a third party warranty necessary?
A: The answer depends on how long you plan to stay in the house and if you’re willing to take the risk of structural problems upon completion. Warranties offer peace of mind. Plus, a warranty is a great resale tool if it’s still in effect when you’re ready to sell.
Q: Can I tour any of the homes you’ve built?
A: This will depend upon the builder and the willingness of his previous clients. If the answer is no, make sure you get references and call them. You can learn a lot about a builder by talking to people he has worked with in the past.
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