Thinking About Building?
A true story from Marty’s experience:
Several years ago, I worked with some clients who had advised me that if they decided to build, they would work directly with the builder. After spending 3-4 months in planning a home with their builder, they came back to me and expressed their dismay that the final estimates were $35,000 over what their budget was; and over what the builder had promised originally he could construct their home for. I borrowed their plans, reconfigured some aspects of the layout (which increased the finished size), upgraded the specifications, worked with a fine builder I knew and we built their home for $35,000 less than the builder they had wasted 4 months with.
Each year approximately 25% of my business volume consists of new construction. I work very closely with my clients in the design and cost analysis aspects of building a new home, as well as reviewing site selection and blueprints.
New construction issues to be aware of:
- Tax Advantages: Since property taxes are behind on the value of the property as of January 1st of the prior year, your first year (plus several months into your second year) in your home you will only be paying a “lot tax,” which is generally only several hundred dollars.
- Hidden Costs: When computing the cost of your new home, don’t forget to calculate the cost of window treatments and landscaping – often 3-8% of the total cost.
Many buyers think that if they work directly with a builder, they can save money.
However, most builders in the Twin Cities are represented by licensed realtors to market their homes. Without being represented, the agent representing the builder generally keeps 100% of the commission which is included in your final price.So why not have a knowledgeable representative along to help protect YOUR interests; someone working on YOUR behalf?
Successful Bidding in 4 Easy Steps
Step 1: Find at least 3 reputable builders to bid your job
Obtain names of licensed professionals in your area by calling the National Association of Home Builders at 800-368-5242. You can also rely heavily on referrals from neighbors and friends. Interview several contractors to get a feel for what their priorities are and what their schedules are like. Doing some preliminary investigating will give you an idea which contractors you might like working with.
Step 2: Submit a written request
The more concise and detailed you are when you ask for an estimate, the more accurate and reliable the bids will be. Verbal relaying of what you want leaves too much room for miscommunication, especially in regards to the interpretation of quality. Your written request should include brand names, model numbers and color specifications on all products and types of materials to be used in construction and finishing, and hidden costs such as site preparation, permits and fees, and the payment of taxes and utilities during construction. Make sure to submit the same request to each builder that you solicit for bids along with a set of plans, and give a deadline for bids. One to three weeks is standard.
Step 3: Insist on a formal bid
Beware of ambiguity. Bids should be descriptive and cover everything in your request.
Step 4: Compare bids
There should be very little variance – only 5% to 10% in the bids you receive. Consider the builder’s qualifications and referrals and do not automatically throw out the highest bids. Take into account other factors, such as when the cotnractor plans to complete the job and what his reputation is for finishing on time. Visit job sites and finished projects, carefully studying the workmanship involved. If you are more confident with a builder that bid higher, find out why his bid was higher; the builder may have included higher quality materials or labor intensive details that other bidders did not.
Read Testimonials from Marty’s clients
Marty Siegel, GRI, CRS
Coldwell Banker Realty