How to Build a Custom
Home
A Consumer Seminar
Sponsored by
Racine Kenosha Builders Association
November 1, 2006
How to Build a Custom Home
A Consumer Seminar
Sponsored by
Tabletop Sponsors
84 Lumber
Attn: Brad Parker
Ph: 847.360.8420
Fx: 847.360.8421
Bank of Elmwood
Attn: Shakil
Haider
Ph: 262.554.5819
Fx: 262.554.5866
Bank Mutual
Attn: Linda
Sanders
Ph: 262.639.1975
Fx: 262.639.2890
Edward Jones
Investment
Attn: Mike Locher
Ph: 262.878.0977
Fx: 888.446.7295
Francis
Construction
Attn: Jim McCann
Ph: 262.534.9600
Fx: 262.534.3107
First Call Heating
& Air
Attn: Julie Venn
Ph: 262.634.9025
Fx: 262.634.3769
Gustaveson
Homes
Attn: Mike
Gustaveson
Ph: 262.697.0474
Fx: 262.697.1325
Forever Floors
Attn: Dan Becker
Ph: 262.654.6311
Fx: 262.654.6371
Johnson Bank
Attn: Julie Meyer
Ph: 262.884.7833
Fx: 262.884.7842
Karlsen Plumbing
Attn: Dave
Karlsen
Ph: 262.633.1951
Fx: 262.633.6370
Newport Builders
Attn: Chris
Marweg
Ph: 262.632.7373
Fx: 262.632.8430
Southport Bank
Attn: Judi Monroe
Ph: 262.942.4345
Fx:
262.3942.8237
Knight-Barry
Title
Attn: Sheree
Hagen
Ph: 262.657.2599
Fx: 262.657.2580
North Shore Bank
Attn: Ron May
Ph: 262.942.4473
Fx: 262.942.4466
Southport Heating
& Cooling
Attn: Dave
Bennett
Ph: 262.843.1840
Fx: 262.843.1841
J.D.D.
MasterCraft
Builders
Attn: Karen
Lawrence
Ph: 262.652.1220
Fx: 262.652.3946
Modern Homes
Attn: Brian
Lolmaugh
Ph: 847.356.8886
Fx: 847.265.8886
Perma-Structo
Attn: Patti
Beaudin
Ph: 262.886.2258
Fx: 262.886.3026
Robinson
Development
Attn: Tom
Robinson
Ph: 262.620.2025
Stanich
Development
Attn: Doug
Stanich
Ph: 262.697.8708
Presented by Tom Robinson
Robinson Development
Developer of the Meadows at Hunters Ridge
and Cavanagh Court West, Kenosha
www.robdev.com
How to Build a
Custom Home
A Buyers Guide to a Successful
Custom Home Project
Four Types of New Homes
Production
Home
Spec
SemiSemi-Custom
Custom
Home
Production Home
Most square feet for the dollar
Limited choices of options
Little or no floor plan changes
Many identical or similar homes in the
neighborhood
No custom changes
Materials as selected by builder
Buyer can look at model similar to purchase
Homesite limited to the Builder’
Builder’s neighborhood
(c) copyright Robinson Development
2006
1
Spec – PrePre-Built New Home
Builder selects all materials and colors
Buyer can see exactly what house looks like
No imagination required
Materials can be anywhere on scale from
custom materials to production.
Usually can move in quicker
May pay for options do not want
SemiSemi-Custom
Start with Builders Standard Plans
Builder usually allows extensive customization of
standard plans – move walls, increase size, alter
elevations
More selection of materials and colors
Usually offer limited options of fixtures and
materials
Takes longer to design and build
More imagination required – risk
Can be a lot less stress
Custom Home
A
custom Home is a
home designed and built
for a specific
homeowner on a
specific lot.
(c) copyright Robinson Development
2006
2
Custom Home
Starts with a design from blank piece of
paper
Unlimited floor plans and exteriors limited
only by lot
Unlimited selection of materials, features,
manufacturers, colors, layout, size (limited
by covenants)
Buyer selects level of quality
Can be exactly what you want it to be
Challenges
Takes more time to design and a lot of design
decisions – a lot of imagination and vision required
You can design things you like on paper but not in
your house. Do not discover until house is built.
Cost to remodel.
Takes longer to build – first time builder has built
the plan before and has not worked out the bugs.
Custom materials have longer lead times.
Challenges
Your eyes can get bigger than your budget
and you may believe you are settling for less
than you wanted when you have to adjust.
It cost a lot more than the other types of
homes.
More risks – cost overruns, changes, bugs in
the plans
(c) copyright Robinson Development
2006
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Cost vs. Value
Production
Home
Spec
SemiSemi-Custom
Custom
Home
Production or Spec
Production
Most sf for the $
Limited selections
Limited Changes
Not unique
Quality level by
Builder
Can see model
Spec
Already built
Can be less
expensive
Unwanted colors
and options
No budget risk
See exactly what
buying
Custom or SemiSemi-Custom
•Semi-Custom
•Quicker
•Less expensive
•Less risk to budget
•Can have custom
materials
•Can have custom
look
Custom
Takes longer
Most expensive
Budget risks
Truly unique
Can be whatever
Buyer, budget and
covenants will allow
(c) copyright Robinson Development
2006
4
Can I do it Myself
Anyone can build a House, right? It is all
build by subcontractors.
All the subs will want to work directly for the
owner.
The subs take all the risk.
I can save money.
I can do it faster ‘cause it is the only one I am
building
I can build it better because I care more.
Risk of Building Yourself
Would you hire a builder who had never
built a house before?
Subs work cheaper for the builders who give
them more work and schedule properly
Subs take risk for their work but not the
interface and scheduling – trip charges
Trades loyal to repeat business
Builder experience – schedule, quality
First Step
Set the Budget
What payment can we afford
Available equity - existing house
Talk with your financial advisor – Bank,
Mortgage Company
(c) copyright Robinson Development
2006
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Location Location Location
Select the neighborhood
Where do I want to live
Schools, schools, schools
How far am I willing to travel
Shopping, recreational opportunities
Police and fire services
City sewer and water vs. well and septic
Lot Selection
Lot specific characteristics
Level lot, walkout, lookout, reverse slope
Trees
Soil conditions
Drainage
Water features, ponds, lakes, wetlands
Utilities, front or side yard, overhead or buried
Homeowners Association, Covenants
When do I pick the Builder for my
home?
Architect has design experience
Builder knows what it cost
If hired separately they can work against each
other. If Builder hires Architect, Buyer has
single source of responsibility for budget and
errors
In general, the sooner you select a Builder the
better
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2006
6
Plan your Project
With a Builder
Set Budget
Select general area
Interview builders
Finalize lot selection with your builder
Confirm all budgets with builder and get prepreapproval of financing
Sign contract with builder
Finalize construction and mortgage financing
Builder starts Construction
Construction Process
Pre construction conference
Payouts
Schedule site visits
Selections, schedule, communication
PrePre-drywall
Homeowners orientation
Attend closing
Move in
Plan Your Project
without a builder
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Set Budget
Select general area
Purchase lot
Hire architect
Interview subs and suppliers and other vendors – about 40 different companies
Take bids, analyze and rere-set budget
Select colors and coordinate with al subs.
Notify all subs of interfaces – exampleexample- faucet borings for counter tops
Hire engineer to do grading plan
Apply for permit
Obtain insurance, liability and property damage
Draft construction schedule
Draft +/+/- 40 contracts
Pay for permit
Notify subs of schedule
Order long lead time items, windows, cabinets, fixtures……………………
fixtures……………………
Start Construction
Send notices to all subs and suppliers when they will be needed on the job
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2006
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Plan Your Project
without a builder page 2
Visit job daily to inspect for quality and confirm work is on schedule
schedule
Follow up with ordered materials to confirm manufacturing and deliveries
deliveries
Monitor schedule and notify subs of changes
Schedule deliveries so they are not on the job too early – damage and theft – or too late – schedule
Schedule inspections
18.
19.
20.
21.
22.
Silt fence
Footing
Backfill
Insulation
Rough final
Other local requirements
1.
2.
3.
4.
5.
6.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
Meet with inspectors
Notify subs of inspection failures and schedule corrections
Schedule rere-inspections
Prepare construction draws
Arrange bank inspections
Approve and process payouts
Schedule Closing, walkthrough, Mortgage inspection, final building
building inspection, closing
Clean house and wash windows
Manage and complete warrantee items.
Visit your doctor for hypertension treatments.
Competitive Bids
Minimum interpretation of drawings
Sets the Builder and Architect in adversarial
positions
Who pays for mistakes
Builders who bid need to increase margins to
pay for bids do not get.
Reduces professional relationship between
Builder and Owner
Selecting a Builder
Experience
Financial stability
Commitment to his industry
Member of local association
Building style and size
Warranty
Schedule
Availability during construction
(c) copyright Robinson Development
2006
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Financing Your Home
You finance
Lot loan
Construction loan
End Loan
Combined loan for all three
Builder finance
Can be one loan
Must buy lot from Builder
Earnest money can be substantial
If You Finance
Schedule of values
Who inspects and approves? Bank or Title
Co.
Construction Escrow
Payment Schedule – monthly, milestone
Change orders - procedure
Insurance
If on your lot, require Liability and
Workman’
Workman’s Compensation insurance
certificate from Builder – your bank will
likely require – Minimum $1,000,000
Builder’
Builder’s Risk insurance (fire and casualty)
Must be purchased by owner of lot.
May be covered by existing Homeowner’
Homeowner’s
Insurance
Full replacement cost
(c) copyright Robinson Development
2006
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Option and Colors
The more custom the more difficult and
longer the process
All selections should be made in accordance
with Builders Schedule – Delays?????
Making selections outside Builders normal
suppliers is costly
Can I supply my own bathtub?
During Construction
Establish line of communication
Phone? cell phone? fax? email?
When can you meet with Builder? How often is
reasonable?
How does the Builder get paid and when.
Deposits/progress payment
Who
hold deposit
Monthly, Milestones
Procedure and approvals
Schedule
How long will it take
Design
Selections
Construction
No
time to forever
Follow
100
builders schedule
days to forever
Timely selections
Size and complexity of the home
Weather and site conditions
Contingency plan if delays occur
(c) copyright Robinson Development
2006
10
New Home Orientation
An introduction to the home
Switches, Furnace, Water shut off, Appliances,
Landscaping, DO NOT BRING FAMILY AND
FRIENDS.
Corrections or incomplete items
What are standards
Completion schedule
Move in before complete
Homeowners Manual, NAHB standards
Independent Home Inspectors
Standards/Insurance
Warranty
Get a written warranty
Understand what is covered and what is not
Understand length of warranty – extended
third part warranty
Make service requests in writing, understand
Builders policy
Understand difference between maintenance
and warranty
Maintenance
It is not new forever
Regular Maintenance
Furnace filters
Water landscaping
Caulking
Circuit breakers
Lubricate door hardware and windows
Disconnect hoses
(c) copyright Robinson Development
2006
11
Tom is Almost Done
Select the type of home that meets your
needs, budget and temperament
You can build a house on your own.
You will likely get a better job quicker, less
expensive and with less risk if you hire a
quality builder
Procedures will vary with each Builder
Do your homework but do not overdo it
Tom is Almost Done
Building a new home is a wonderful/terrible
thing.
Understand yourself and your family
Hire the best
Be flexible
Enjoy the ride
Custom Home
101
A Buyers Guide to a Successful
Custom Home Project
(c) copyright Robinson Development
2006
12