Contributor in DREAM HOME SOURCE – Fall 2013 Your Home

200 Exclusive Home Designs from
Visbeen Achitects
• Frank Betz Associates
• Dan Sater
and a special collection from
•
•
Donald A. Gardner Architects
Your Home Design Ideabook
Where the
Designers Live:
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home!
10 Ways to reduce your home’s
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FALL 2013
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Ready, Set, Build! Your Guide to Choosing a Design,
Financing, Selecting a Contractor, and more
HOW-TO
Ready, Set, Build!
From concept to finished home, this design
by Visbeen Architects is beautiful all the
way. Learn more about this home by going
to www.DreamHomeSource.com and entering plan code DHSW075796.
Why build your own home?
Do you remember the Burger King slogan, “Have It Your Way”? That perfectly sums up what
a custom home is all about. From roof color to landscaping, you get to make every decision about
your dream home. You also get to put it exactly where you want, whether that’s on a piece of land
you already own or in the location of your dreams.
But building your own home isn’t for everyone. It takes patience, imagination, and yes, money.
So where do you even start? We enlisted the help of experts to explain, step-by-step, what to expect.
Of course, this is just a beginning. For a list of resources including books and Web sites, turn
to page 16.
1. Find your lot
“I think land is the most important first step,” says Francisca Alonso, co-founder and CEO
of AV Architects and Builders, a high-end design/build firm. “What you cannot change is your
location.” Just as in real estate location is paramount, so it is here too, though perhaps for a slightly
different set of reasons.
In any search for a new place to live, your neighborhood, distance from work, and perhaps
quality of schools nearby are key factors. But when you’re building your new home from scratch,
the land itself is all-important. It will determine the kind of home plan for which you’ll search,
how you decide to position your home on the lot, and even what everyday life in your home is like.
Build thoughtfully on your site, and you’ll have a home that makes the most of your unique locale.
The plan should fit the land (not the other way around)
Is your site hilly? Make the most of it with a plan that calls for a walkout basement (or if it
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SEE MORE IMAGES AND BROWSE THOUSANDS OF PLANS AT WWW.DREAMHOMESOURCE.COM
HOW-TO
A guide to making your dream home a reality
slopes towards the front, a drive-under garage on the bottom level). Do you have a terrific view of
mountains? Look for designs with porches and decks on the side that faces the vista, preferably on
all levels of the home. Some homes made for great views utilize what’s called an “upside-down”
layout where the bedrooms are on the bottom level and the main living spaces on top.
Are you building in an established neighborhood? Lots are frequently small or narrow in such
a situation, and you’re likely quite close to your neighbor. A plan with a side porch or patio that is
integrated into the footprint of the house gives you room to hang out outside, even if you’re got
no backyard.
What shouldn’t you do? Avoid “moving dirt around,” says Alonso, as that can be an expensive
project. Similarly, she says ripping out trees can be pricey and alters the character of the land. Some
locales may even restrict tree removal.
By Aurora Zeledon
TIPS:
Avoid moving dirt
around
Sun orientation is key
Work with the site
features
Site it right
How you place the home on the lot matters tremendously. “Sun orientation is key,” advises
Alonso. Ideally, the main living areas should be on the south side of the home, where they will
receive plenty of light.
Bottom line: figure out where you’ll build before you decide what to build.
2. Secure Financing
Construction loans are very different from typical home loans. With a traditional home
loan, you make a down payment, take possession of the home, and then make a payment to the
lender each month. With a construction loan, you are asking the bank to estimate the value of
something that does not yet exist—and then lend you money for it. A lot can happen during the
CUSTOMIZE YOUR DREAM HOME! CALL 1.800.447.0047 OR VISIT WWW.DREAMHOMESOURCE.COM TO LEARN MORE
9
HOW-TO
A hillside lot can be a
tremendous opportunity. With a walkout
basement and walls
of windows, plan
DHSW075740 captures
the view on a site that
slopes down in back.
Turn to page 109 to learn
more about this home.
10
typical 12-month construction process, from construction delays and cost overruns to a change in your
employment situation or your builder going out of business. The risk to the bank is much greater, so it
exercises greater caution in loan decisions.
A construction loan is really a reimbursement process. The bank does not advance construction
funds; it will only pay for construction items that are complete. Each month, you’ll submit a draw request
along with supporting documentation to prove that construction is progressing. The bank reviews the
documentation, a third-party inspector visits the building site, and only then will the bank issue a
reimbursement for the construction phases that are complete. See Financing 101 on pages 12 to 13 to
learn more about construction loans.
HOW-TO
Financing 101 by Rob Mackle
Construction Loans vs. Home Loans
Think back to high school geometry. Remember that the three angles in a triangle must add up to 180°?
Qualifying for a construction loan is similar. There are three major elements of a construction loan, and if any
one of these doesn’t measure up, you won’t be able to close the deal. One element represents the construction
loan amount, including land equity and your down payment. The second element is the construction budget,
including all the costs associated with building a new home. The final element is the appraisal value, or the
estimated value of the new home when completed.
1. Construction Loan Amount
As in the traditional mortgage market, the days of sub-prime loans and stated income mortgages are gone.
Construction lenders today want to see full documentation and asset-based qualifications. Your employment,
credit scores, debt-to-income ratio, and other qualifications will be reviewed. With a maximum debt-toincome ratio of 38 percent, including both the payment on your current home and future loan payments,
many homeowners will have to sell their current home in order to qualify for a construction loan.
2. Cost to Complete
The Cost to Complete is your construction budget, and comprises the following elements:
• LAND—If you are buying land or if you own a building lot you need to consider the purchase price or
land payoff costs in your new construction budget. Be aware that land improvements like water, sewer,
grading, and utilities should be included in your construction budget. Land development costs can easily
be overlooked and underestimated.
• SOFT COSTS—These include home plans, site plans, permits, engineering, and other items that you will
likely need. These expenses are often overlooked as part of the construction budget, as you will probably
have to pay for them prior to closing on your construction loan. Construction lenders in today’s market
will want to verify that your house plans are complete and have been approved by your local building
department.
• HARD COSTS—These are the typical costs used in per square foot cost breakdowns, and they include site
work, excavation, building materials, labor, and general contractor fees. Your contractor may give you a
fixed price contract for these items. Homeowners and builders tend to focus only on these costs when they
are developing their budgets, mistakenly overlooking the soft costs and land development expenses.
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HOW-TO
• RESERVES—Most construction lending programs require you to have a reserve fund. Your contingency
fund should be 5 to 10 percent of your total hard and soft costs. This amount should be added to your final
construction budget. The contingency fund gives both you and the lender some security for unforeseen
expenses. Many lenders also want an interest or cash reserve. The cash reserve can vary, but most
programs will require you to have at least an additional six months of principle and interest payments in
cash reserves.
• LOAN CLOSING COSTS—Every loan has fees that are charged to the borrower: appraisal fees, title fees,
underwriting fees, origination fees (points), and construction loan administration fees, to name a few. The
lender will produce a Good Faith Estimate (GFE) to disclose all the fees and costs to you. They can add up
to as much as 4 percent of the loan amount.
3. Appraisal Value
The plans and specifications will need to be reviewed by an independent appraiser. They will calculate the
value of your building lot and completed home and compare it to recently sold and comparable homes in the
area. The construction lender must verify that the completed home value will conform to the local market.
Your dream of building a new home is not out of reach, but in today’s market you must plan, prepare, and
make a strong presentation to the construction lender. Market values and construction cost details will have
to meet underwriting guidelines. Be sure they are accurate, and verify all of your qualifications in advance.
Make good use of the resources available, especially local and regional banks. Local banks understand your
housing market; develop a relationship with them, and they can help guide you. Valuable online resources
are also available. Check out www.startbuild.com, a comprehensive resource that can provide assistance with
local construction loan options as well as project planning, construction budgeting, and project management.
Rob Mackle, CEO of StartBuild, is a residential construction expert with over 20 years of experience in the
industry. StartBuild is Dream Home Source’s exclusive resource for the industry’s most accurate cost to build
data. Visit www.DreamHomeSource.com and check out the Cost To Build Estimator.
CUSTOMIZE YOUR DREAM HOME! CALL 1.800.447.0047 OR VISIT WWW.DREAMHOMESOURCE.COM TO LEARN MORE
13
HOW-TO
3. Hire a builder
ACTING AS YOUR
OWN BUILDER
Why might you decide to be both
owner and builder? William A.
Trimble, author of the delightfully
titled guide Screw It: I’ll Be My
Own Contractor answers that
“The obvious main reason is an
attempt at saving money and
the second, less obvious, is the
challenge of using one’s building
skills, decorating or designing
skills and interests to make a
personal contribution to the
project.” So, this might appeal to
you if you’re thrifty, or handy, or
both.
Thinking of going this way?
You’d better be organized.
Trimble warns, “Most ownerbuilders who have big problems
get into trouble because they
didn’t put controls in place
right out of the gate.” In fact,
“The biggest underestimation is
the importance of laying out a
program of project management
BEFORE the building starts. The
two headlines here are schedules
and budgets.”
If you really want to save money,
“Do as much of the work yourself
that you can do well. Don’t
attempt things beyond your skill
level because it almost always
costs more money in the end.”
For more information, check out
Trimble’s book.
14
Unless you’re planning on acting as your own contractor (if so, see the sidebar)
you’ll need to hire a builder. This person will be your close partner in making your new
home come true. Like a spouse, you need him or her to be honest, accountable, and good
at communicating. But how do you decide whom to use? What should you ask in an
interview?
“The fact is that how you hire a contractor is just like hiring any other employee,”
says Kevin Daum, co-author of Building Your Own Home for Dummies. Don’t base your
decision solely on the previous work that he or she has done. Rather, look for a personality
that will mesh well with your own, since communication is “critically important.” For
example, Daum warns, if you tend to micromanage and you hire a builder with the same
trait, you’re likely to butt heads.
Don’t be afraid to ask questions about how the builder works. “There needs to be a
process where the client is going to be empowered,” says Alonso. She suggests probing
with questions like these: How am I going to decide on all the finishes of this house?
Who’s going to help me with that? Where am I going to go? The more details the builder
can give you about the process and the more he or she will help you in the process, the
better. By contrast, she warns, beware of a builder whose only answer is a list of vendors.
Such a person is unlikely to be a good guide through this complicated project.
Timing matters too – the earlier the better, according to Alonso. Hire early so that
you can get a good handle on the budget and really hammer out all the details before the
construction stage, when changes are expensive. Make material selections up front, she
urges, instead of just settling for cost allowances from the builder, which she believes can
lead to cost overruns.
Of course, your builder isn’t the only one who will work on your home. “When a
client is thinking about building their home they need to look at it as a team effort. There
are many players that make up the team to build a home” says Alonso, so ask “what kind
of team is this builder bringing?” These might include an interior designer, landscape
designer, kitchen designer, vendors, and craftsman. “It really takes a village.” She believes
the most successful projects are done by a “team that is in sync with each other.”
Bottom line: Start early, ask lots of questions, and decide details as early as you can
to stay on budget.
4. The fun part: choosing a plan
Imagine a home perfectly tailored to the way you live. That’s the promise of building
your own home, and the reason for going through the long process of getting there.
But with so many design options out there – from hiring an architect or designer to
purchasing already drawn plans from a site like www.DreamHomeSource.com – you
need to narrow it down.
Plans from scratch vs. pre-drawn designs
Hiring an architect or designer to draw plans is a great way to make sure the home
fits your lot, but it can also be quite expensive. Typically, design fees run 10-15% of your
total building budget. If you want a hand in detailing every part of your plan, this may be
worth it for you. Also, if you have a very complicated lot – say, you’re building on a cliff
in an earthquake-prone region – or you’re located in a region with a lot of restrictions
and regulations, then it may be simpler to start from scratch.
Pre-drawn plans (sometimes called stock plans) are much more affordable. The
plans sold on www.DreamHomeSource.com vary widely but typically cost somewhere
between one thousand dollars (or less) for a simple design to a few thousand for a
grander home. With over 28,000 designs to choose from, you’re bound to find your
dream home. Best of all, most designs can be modified to meet your exact specifications,
offering you a personalized design at a fraction of the cost of a custom-drawn plan. Like
the layout but want a bigger master bedroom? Wish the garage loaded from the side
HOW-TO
instead of the front? Want to change the exterior style of the home? These are all possible.
See page 182 to learn more.
Keep in mind that pre-drawn home plans are designed to meet widely-accepted
international building codes, but are not necessarily engineered for your area’s unique
conditions and codes. You may need to have your plans reviewed and even modified by a
local engineer in order to meet your building department’s requirements.
TIPS:
Hire your builder early
Choose a flexible layout
Modify your plan to make
it perfect
Resources
Books
Building Your Own Home for
Dummies by Kevin Daum, Janice
Brewster, and Peter Economy
For Dummies, 2005
Screw It! I’ll be My Own Contractor
by Bill Trimble
Maricopa Publishing, 2008
Web Sites
The Dos and Don’ts of deciding on a layout
You’ve probably already perused design or idea sites like Houzz and Pinterest (check
out our boards at www.pinterest.com/dreamhomesource) for inspiration, and these are
certainly good for gathering your thoughts and sharing your finds with friends. However,
when it comes time to actually pick a design, function is more important than form.
DO ask yourself lots of questions. How many bedrooms do you need? Are there children
in the home, and if so, for how long? Do you anticipate housing an older parent in the
future? A two-story home may work now, but will you still want to walk up and down
stairs years from now?
DON’T forget to think ahead. It’s hard to anticipate exactly what the future will bring,
but building flexibility into the layout helps you adapt to these kinds of changes. Bonus
rooms, finish-later basement space, and in-law suites are terrific features of a home that’s
designed for the long haul.
DO save money by cutting out what you don’t really need. Do you really have to have both
an office and a guest room, or can one space do the trick? How many times in the last
year have you used your formal dining room – would it be more efficient to opt for a big
nook near the kitchen? Living rooms are going the way of the dodo, so unless you’ll use
it, lose it.
DON’T skimp where it matters. If you love to cook, a beautifully designed kitchen will
serve you every day. Is the bathroom your peaceful place? Make that your priority.
“DON’T get wrapped up in the trends” says Daum. He reminisces about houses that
were built to include intercoms, what he calls the “technological equivalent of shag green
carpeting.” If the gadget you want is constantly being updated, think twice about designing
your house around it.
Francisca Alonso
www.avarchitectsbuild.com
www.youtube.com/
user/360HomesLiving/videos
DO think about building a smaller home than you might have expected. Alonso believes
it’s best to “focus on the size of the home and not make it big just because it has to be big.”
Kevin Daum
www.kevindaum.com
5. Construction and after
Startbuild.com
Cost-to-build estimates and
financial information
www.startbuild.com
Dream Home Source
Search over 28,000 plans, save your
favorites, and more
Click on “Resources” for
informative articles and videos that
go into greater depth on the topics
discussed here
www.DreamHomeSource.com
After all, she says, “The best way to save money is to invest in design.”
So once you’ve finally broken ground, how long will it take before you’re home free?
It varies quite a bit, Daum says, on factors like location (he says urban areas with more
regulations take longer), labor, lending timelines, and materials, but “consistently…
anywhere from six months to six years. It really just depends on all of those factors.” Keep
it in perspective. “Really, do you want your contractor rushing through it?”
Wrapping it all up
What it comes down to is desire. It may seem daunting, but if it’s what you
want even after understanding the process, keep doing your research (start at www.
DreamHomeSource.com/house-plans/dhs/resources/ to learn much more about all the
topics discussed above) and don’t be afraid. Daum puts it succinctly. “Plain and simple: I
think that people who do custom homes need to be powerfully motivated.”
But when you’ve finally moved in and settled down, take a look around. Prepare a
meal in your new kitchen, sit down on the porch, or stretch out in the tub. Now wasn’t
it worth it?
Robert Mackle contributed to this article.
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