How to Avoid Being Burned by a Builder – How to Protect Yourself During the Construction Phase

Jun 24, 2015

When you move the construction phase of building your new home, there are a few things you’ll want to double check to ensure you have the best possible experience. The majority of builders aren’t out to screw you over. In general they’re honest hard working people, this list is simply here in order to protect both you and the builder. And I’m sure we’ve all heard horror stories of less than honorable independent contractors taking advantage of friends or family.

The best way to ensure you’re getting what you want, is to sit down with your builder before the process starts and outline exactly what your getting and what they are giving. That way you’re both on the same page and they’ll have the chance to tell you upfront if your expectations are too high. Once your on the same page the building process should be smooth, stress free, and by the end of it, you’ll have a new home to enjoy for years to come.

Get a detailed copy of the specifications. 

The specs are the specifications for the materials used in the build. Used as a reference for producing a budget and ultimately becomes the purchase order for suppliers at the time of construction. Be sure that these are as detailed as possible! Anything that isn’t detailed to your exact specifications leaves room for assumptions on the builders part. When assumptions are made there are a few different possible outcomes;

Outcome 1 – The assumption is acceptable to you. Great!

Outcome 2 – The assumption is below your expectations. Whether it’s due to the builder using the wrong type of finish or the performance doesn’t meet your expectations, this is just the beginning of greater problems down the road.

Outcome 3 – The assumption is above your expectations. While this can be good, if it’s too far above your expectations it will end up costing you money that you weren’t willing to spend.

A set of specifications should be between 10 and 20 pages and give a thorough explanation of all of the materials that will be used in your home.

Be sure to get a detailed copy of the Scope of Work.

This document will specify the exact work to be accomplished, including installing the finishes and other materials. This will generally be used as a guide for the builder and will be used as a checklist during the builder’s quality control process. The scope of work is sometimes included in the specifications, but there are still come guidelines to consider when looking the document over.

The scope should follow the construction schedule beginning with excavation, foundation, framing, etc. This way  you’ll have an idea of what will be done in what order and give you the ability to prepare.

Additionally your scope of work and specifications will act as a purchase order for any vendors and subcontractors that will work on your home. If the scope isn’t clear to them the purchase order will be vague and you’ll have a subcontractor that possibly hasn’t even spoken with you making assumptions on the correct way to install the materials in your home!

The scope doubles as an inspection list. The builder will determine how  they want the materials installed based on a number of factors listed in the scope – price, warranty issues, cost of ownership, etc.

Construction Plans

The construction plans are the guidebook for everyone working on your home. Included in the construction plans is the specifications and the scope of work. Other things that should be included in your plans are;

A one dimensional floor plan accompanied by cross sections. If the plan doesn’t clearly spell out what should be built, the crafts-person will make assumptions.

Be sure you and your builder sign each page and keep those signed documents on site. Any changes you’ve made to your plan after you’ve signed them need to be recorded on  a change order.

You can’t assume that once you’ve discussed something verbally with your builder that it will be incorporated into your new home. Be sure to include everything on the signed documents in your construction plan.

Change Orders

A change order is any deviation from the original construction plans, scope of work, or specifications in written form. I can be difficult for a builder to implement a change order for a variety of reasons.

The ability to make changes are schedule dependent, once your home has progressed past a certain point some changes may be impossible without tearing things down. The changes need to be priced, processed internally, and then sent  out do the vendors, the vendors then need to process the change and get the word out to the rest of their crew. Additionally change order have the ability to create the domino effect. A change in the foundation will affect everything else, the framing, drywall, millwork, etc.

No matter how difficult the change order may be to implement, it is still your home and you have the right to make changes. If your construction schedule does allow for a change order here are some things you need to consider;

• Always document your changes, never assume a verbal agreement is sufficient.
• You should know what the price difference will be before the change is made.
• You should sign and acknowledge the change order request.

Building a new home doesn’t have to be as stressful as some people make it out to be. Simply make sure you have these documents implemented in the building process and you should know exactly what you’re going to be getting.

The Hidden Costs of Purchasing a Used Home

Jun 9, 2015

Like used cars, used houses can sometimes seem like a better deal. And like used cars, used houses are often billed as “as good as new.” But like used cars, used houses typically come with hidden costs and unforeseen problems.

So, before purchasing a used home, be sure to take a look at some of the hidden costs of a used home and determine if, in the long run, building a new home is the better decision. The three main hidden costs of a used home include antiquated design, deferred maintenance, and the monthly utility bills.

Antiquated Design

When you’re looking at purchasing any home you need to make sure it fits your lifestyle. Be sure to take our Livability at a Glance quiz to determine what you should look for in a home. The main points you should consider are will it;

• Entertain the way you want it to?
• Offer flexible living that will allow you to use certain areas for multiple purposes?
• Offer enough storage space to help keep your life organized?
• Have the ability to bring you peace and calm at the end of the day through de-stressing

When purchasing a used home, finding the perfect floor plan, in the perfect location, at your ideal price range simply doesn’t exist. So, in the end, purchasing a used home is all about compromise. One of the main areas you’ll be forced to compromise in is the design. The used home you’re looking at now was built to someone else’s specification in a different time.

Often those who compromise on the design of the home can only stand it for a time before they decide that it really just doesn’t work for them. Additionally, after a time they may find out that their needs have changed but their home just isn’t able to keep pace.

Below is a list of different types of remodeling projects, their national averages, and sample costs of the remodel in your region. Taken from – http://www.remodeling.hw.net/cost-vs-value/2015/west-north-central/.

Deferred Maintenance

Roofs leak, ovens break down, furnaces give out (usually on the coldest day) and air conditioners need repair (usually on the warmest day).  An older home demands an average of 2-3% of its purchase price for annual upkeep — and that list can be never-ending.

Every component in a house has a usable life. When you buy a used house you’re buying the pro-rated life of each component (e.g. a furnace with a 10 year life expectancy).

Some costs associated with the normal “wear and tear” of an older house are listed below.

Used House Deferred Maintenance Items

• New electrical
• New roofing
• Central air
• New appliances
• New countertops
• New flooring
• New exterior paint
• New interior paint
• New furnace
• Light fixtures
• Plumbing fixtures
• Garage doors
• New windows

If you’ve owned a used house before you know the list goes on and on from there. You also know you end up spending most of your free time either repairing these things, having someone else repair them or shopping for new ones.

Energy Costs

I can’t give you exact numbers on how much higher your energy bills will be with a used house. But, here’s why you’ll pay more each month in a used house when it comes to writing that check to the utility company.

Electricity: Today’s light fixtures are designed for CFL bulbs and you’ll have the ability to completely outfit your home with CFL, LED or Halogen bulbs. Any of these options will save you dollars on your electric bill.

Heating Ventilation Air Conditioning (HVAC) systems all use fans to circulate air in your home. Today’s systems use dramatically less energy to turn all these fans saving you more dollars.

Water: All of today’s plumbing fixtures including shower, sink and toilets are designed to use less water and save you money. Landscape irrigation systems are designed with sensors to shut off watering times if the soil around your home has just been watered by Mother Nature.

Natural gas or Propane: Forced air furnaces and boilers are required to be 90%+ efficiency. These appliances not only keep more of your money in your pocket, they also provide better heating when combined with the correct ducting ventilation.

When you add;

• Remodeling costs
• Deferred maintenance
• Higher utility costs…

…to your monthly mortgage payment (after taxes), your costs are often substantially higher with a used house than with the purchase of a comparably sized new home. And with a brand new home, you can build your dream – not inherit someone else’s problems.