5 Reasons You Should Pay for a Pre-Drywall Inspection

When building a new home, there are architectural requirements along with city and state codes that the builder must follow; and while general builder inspections are required along the way, it’s still a good idea to pay for your own inspections, especially the pre-drywall inspection. 

If you’re building (or thinking about building) a new home, congratulations! Unlike buying an existing home, you get to select everything you want from top to bottom, inside and out, to create your dream home. We’re currently building our new home and recently had our pre-drywall inspection. You usually don’t hear much about these kinds of inspections, so I wanted to share with you why we did a pre-drywall inspection, and what we learned.

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Our soon to be new home!

Isn’t the Builder’s Pre-Drywall Inspection Enough?

During the builder’s inspection, the builder will go over anything you added during the design process,  explain how things work, and show you where things are located inside your walls before the drywall is added. It’s the perfect time to ask questions — but what if you don’t know what to ask? This is where a pre-drywall inspection is beneficial.

Think of it as more of a pre-drywall “walk through”  and not so much of a traditional inspection. The purpose is to look at every aspect of the home, not just the pretty parts. If there are potential issues with the foundation, plumbing, electrical or roof, it’s better to address them sooner and not after signing the papers and moving in.

(READ MORE: The Pros and Cons of Building vs. Buying as a First-time Homeowner)

What the Process Looked Like for Us

We used Chad Brittingham with Cardinal Home Inspections, LLC out of Charleston, SC. The timing of this inspection was perfect because we scheduled to meet with the builder for their pre-drywall walk through a few days later.

Mr. Brittingham went through the house several times and with each pass, looked at different building aspects. The first pass involved the foundation, followed by framing, plumbing, electrical, HVAC, and the roof. We walked with him and he explained the reason for certain building items, pointed out any issues and took pictures for his report, and also took the time to explain how certain systems worked. As an inspector, his job was to comb through the fine details and find potential issues that we as buyers may overlook because we just don’t know. 

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Chad Brittingham, home inspector, testing the window function.

5 Benefits of a Pre-Drywall Inspection

  1. It can address any issues: Once the drywall is installed it will be more challenging to fix any issues involving the internal items behind the drywall. Cracks in foundation, poor building materials, mold, etc., will simply be a lot harder to see later.
  2. It can check on any modifications you added during your design meeting: We added recessed lighting to some rooms, extra outlets, a security light and a few other things. But, during our pre-drywall inspection, we discovered that a few of those items were not there. It’s a lot easier to add them before the dry wall; like the builder put it, it would be like doing surgery on your house and then leaving scars!
  3. You can visualize where important pieces are in your wall: Word of advice, take pictures. When you move in and you need to find a stud, you’ll have a better idea where they are located within the wall. Most importantly, you’ll know where plumbing, gas lines, and electrical lines are located so you can avoid them before you hang anything or secure anything to your walls. 
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Taking pictures before hanging drywall will help you avoid any costly repairs when affixing items to the wall.

4. It can reveal workmanship and materials: While builders have a construction manager who oversees everything, each part is handled by a different subcontractor. Getting a chance to see the work of the electrical team, plumber, roofer, HVAC, etc can not only ensure they’re not only using the proper materials, but that these systems are installed within code.

5. It can protect your investment and your peace of mind: You’ll have a written record of the issues that were found and you can document how it was fixed. This is your home that you’re spending your money on and you want to know that your home is sound. After the inspection was over, we were more confident that we picked a great home for our family.

Man bending over pointing to the floor in partially constructed house. Man bending over pointing to the floor in partially constructed house.
Mr. Brittingham pointing out construction details.

After the Pre-Drywall Inspection: Next Steps

At the end of the pre-drywall inspection, Mr. Brittingham gave us a couple items that he felt were of a greater concern to keep an eye on, but overall felt that the items he found were typical for this stage in the building process. Mr. Brittingham provided us with a full inspection report, including the items he found with pictures of areas that needed to be addressed, which I forwarded to the builder prior to our walkthrough. As the buyer, we definitely felt our inspection better prepared us for the walk through with the builder.

While the builder is bound by certain laws and codes, and their own inspections, the pre-drywall inspection we paid for independently, is acting on our behalf as the buyer. I definitely don’t believe our builder is trying to “slide anything past us,” and we did our research on the builder prior to signing. This was just one more step to further protect our investment, which will ultimately protect our family. 

Need More Home Building Advice?

Be sure to check out the Homes.com “How to Build” section, with videos and articles covering a range of topics that’ll carry you on the building journey from start to finish!


Brooke has a lifestyle blog called Cribbs Style and currently lives in Charleston, SC. This wife, mom of two almost tweens, and mom of three fur children enjoys all things DIY and organizing. When she’s not helping others tackle the chaos of life, she’s either working out, at the beach, or just enjoying time with family and friends.

Source: homes.com

5 Ways to Win in a Purchase Money Market in the New Reality

During my recent conversations with sales leaders, managers across the board expressed concern about their originators adapting to the new environment of rising interest rates and the shift to purchase money.

Sherlock: not having an accurate view of sales performance is a recipe for disaster
Pat Sherlock

The decline in refinance business is a reality with mortgage applications dropping 43% in the last week, according to the MBA. This raises a critical question: how many lenders and originators will be able to transition to a purchase money marketplace when the easy money of refinancing is replaced by the hard work of finding customers who want to purchase and finance a home?

Every experienced mortgage lender has certainly witnessed big changes in interest rates over the last 20 years. Sometimes it happens quickly. Other times it can be a slow climb to higher interest rates. This time, it is a little of both. The global pandemic caused the Fed to drop interest rates to historic lows and now, with the end in sight, rates are inching back up.

The real question for lenders and originators that have 90%+ refinance business is: can they switch to the traditional purchase money market that still depends on local relationships or will they decide to sell out to other, better structured lenders? Frankly, the selling out strategy has likely already run its course, leaving lenders that have not invested in digital technology or sales training with few alternatives.

5 Steps to Success

That said, what changes should originators who have been living off of refinance lending make to succeed in a purchase money environment? Here are five recommendations:

  1. Develop a marketing plan. Yes, I know having a plan doesn’t seem like the right strategy when a loan officer is panicked and needs income. But, setting aside some time to analyze the market and identifying underserved opportunities is a worthwhile activity because where producers commit their time and marketing resources is always a balancing act. There are only so many hours in a day and spending them correctly matters a lot.
  2. Understand growth in the local area. An originator’s marketing plan should determine what home building activities in their local market are driving growth. Is it new construction, retirement homes, second homes, etc.? Every market is different and understanding where growth will be coming from is critical. Looking at the research the local municipality has already done is a good start.
  3. Identify underserved market opportunities and the people associated with them. Every market has underserved opportunities that some individuals have already recognized—you want to know these professionals. Rarely is an underserved market completely void of participants. An originator’s job is to develop relationships with the parties in the market before other loan officers decide to market to them. Building relationships takes time and requires originators to form relationships with builders, attorneys, real estate agents and other professionals.
  4. Don’t forget about previous customers. Since developing and building relationships is time-consuming, originators must also work their database of closed loans over the last several years. Former customers are already familiar with an originator’s service levels and a certain percentage might be interested in purchasing a second home or investment property. Some clients might be receptive to listening to a webinar on the latest trends in the local real estate market. This is a great opportunity for originators to partner with a realtor to target a particular audience. The real estate agent can provide his or her perspective as part of the webinar or live stream event. However originators reach out, they should avoid sending mass emails and direct mail. Consumers want a more personal, customized approach.
  5. Rekindle referral business. Originators who have a plan, determine their niche and develop relationships with referral sources and customers in an underserved marketplace are on the path to success in a purchase money environment. Working former customers is a smart way for producers to generate current business while establishing relationships with new referral sources.

Implementing all five strategies is a great way for originators to position themselves for robust performance in a purchase money market.

Pat Sherlock is the founder of QFS Sales Solutions, an organization that helps organizations improve their sales talent management and performance. For more information, visit https://patsherlock.com.

Source: themortgageleader.com

Hovnanian: Higher Mortgage Rates Will Just Lead to Smaller Homes

Posted on July 2nd, 2013

During an interview with CNBC this morning, Ara Hovnanian of K. Hovnanian Homes expressed that he’s not worried about higher mortgage rates hurting the housing market.

In fact, the mega home builder’s CEO actually thinks we’re in the “early innings” of the housing recovery, noting that housing starts are still way below the expected average for this decade.

He said we’re currently at a pace of around 900,000 annual starts, up from 500,000 just two years ago, but nowhere close to the 1.5-1.6 million expected.

At the same time, mortgage rates are still insanely cheap, as I pointed out yesterday.

Hovnanian recalled conditions back in 1983, when mortgage rates averaged 13.4% and housing starts were at a staggering 1.7 million.

So if you look at things from a mortgage rate point of view, there’s not enough supply to keep up with demand.

That would explain some of the recent home price gains, which are slated to keep increasing at a steady clip.

All in all, he didn’t seem too concerned about mortgage rates rising, so long as they don’t rise by some obscene amount in a short period of time.

Funnily enough, he actually called for 3% mortgage rates back in 2008 to solve the problem of supply and demand. Looks like he got his wish…

Customers Want Bigger Homes While Rates Are Cheap

At the moment, Hovnanian says customers have been buying the largest of their offerings, perhaps because housing is so affordable.

In fact, they’ve had to design larger homes to add to their lineup to keep up with that trend.

In Houston, customers can buy a 4,000 square foot home for $250,000, which is pretty darn huge (and cheap).

Seeing that rates on the 30-year fixed are averaging close to 4.5%, you’d be looking at a monthly mortgage payment of just over $1,000 if you put 20% down.

So it’s no wonder people will go bigger if they can. But if rates rise to say 5.5%, Hovnanian said the same customer might go with a 3,000 square feet house. If rates really shoot up, he said customers could even settle for a townhouse instead.

In other words, he doesn’t think higher mortgage rates will cool the housing market per se, they will just dictate what prospective buyers can afford.

[Check out my mortgage payment graphs to assess affordability.]

People Need Shelter…

Hovnanian seems to believe that the need for shelter is what’s driving the market recovery, though you have to wonder if it’s just that pesky bubble mentality creeping back in, what with home prices still “on sale” and rates so attractive.

Of course, inventory constraints seem to be the real issue, and Hovnanian is clearly pleased that the private equity funds are buying up scores of single-family homes throughout the United States.

Thanks to the likes of Blackstone and Colony American Homes, demand for his company’s homes is probably that much higher.

And he doesn’t think they’ll flip the homes they buy – conversely, he sees them holding and renting for years to come, and slowly unloading as prices rise.

However, he does think managing such a large number of homes will be challenging.

Finally, Hovnanian weighed in on potential winning real estate markets throughout the country, naming both Northern and Southern California, along with Phoenix and “many of the land-constrained Florida markets.”

Other winners in his eyes included Washington D.C., New Jersey, and suburban New York.

Of course, this should all be taken with a grain of salt, seeing that he’s the head of a major home building company. But he does have some decent points about rates and supply.

Maybe there is a lot more upside ahead, so long as the distressed inventory doesn’t rear its ugly head.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Are Home Prices Going to Surge in 2020?

It’s a new year, and with that comes old questions, like will mortgage rates go up or down in 2020? And will home prices rise or fall?

Well, a few months ago, you would have probably thought the answer to the home price question was a no-brainer.

After so many years of seemingly unsustainable appreciation, there’d just be no way home prices could eek out more gains, let along big ones.

But that logic has just been turned on its head thanks to a new report from Zillow, which claims we’re running out of homes again.

For-Sale Inventory Hits Lowest Point Since 2013

  • Uptick in housing inventory appears to have been short-lived
  • Lowest number of for-sale homes on the market since at least 2013
  • Supply is only expected to worsen from here with little home building and lots of demand
  • Could be the recipe for even higher home prices in 2020

This isn’t the first time we’ve run out of homes, but after an uptick in inventory over the past couple years, it appeared things were turning around.

However, that “inventory bump a year ago proved to be short-lived,” per Zillow, as we now have the lowest number of for-sale homes in at least seven years.

Yes, inventory is basically back to levels not seen since 2013, and if you recall, home prices were bottoming just before and around that time.

To make matters worse, supply is supposed to get even tighter before we see any relief.

While this is pretty much excellent news for existing homeowners, who will likely see their property values continue to surge, it’s especially bad news for renters trying to get into the game.

Zillow said there were just 1,489,417 homes listed for sale in December, some 120,000 fewer than there were a year ago.

That represents a 7.5% annual drop, and the lowest total dating back to 2013, when Zillow first began collecting such data.

The company referred to the temporary inventory relief seen in 2018 as a “false dawn,” led by a stock market swoon and a jump in mortgage rates, not the beginning of a “sustained trend.”

It turned out that the stock market only surged higher, and mortgage rates have since trickled down close to record lows again.

That has home buyers chasing after whatever’s out there, meaning demand continues to outweigh supply.

Where Housing Inventory Is Down the Most

Remember, real estate is local, and some metros are experiencing more inventory constraints than others.

In fact, housing supply actually went up year-over-year in four out of the 35 largest U.S. housing markets, including San Antonio (+8.1%), Detroit (+7.6%), Atlanta (+1.8%) and Chicago (+0.6%).

Here’s where inventory has dropped the most over the past year:

  1. Seattle (-28.5%)
  2. San Diego (-23%)
  3. Sacramento (-21.7%)
  4. Phoenix (-21%)
  5. Cincinnati (-16.8%)
  6. San Jose (-16.6%)
  7. Los Angeles (-16.5%)
  8. Portland (-15.7%)
  9. Austin (-15.6%)
  10. Riverside (-15.5%)

Home values increased the most in Phoenix (+6.5%), Columbus (+5.9%) and Charlotte (+5.9%) during 2019, and fell in only two markets, San Jose (-6.4%) and San Francisco (-1%).

Inventory is down quite a bit in the Bay Area, so it might not be everything when it comes to home price gains, especially when affordability hits the ceiling. But we’ll see how 2020 plays out.

Home Price Gains May Accelerate in 2020

  • Home prices rose 3.7% from December 2018 to $244,054
  • Significantly lower than the 7.6% annual increase seen a year earlier
  • With supply and interest rates low, we could see a reacceleration
  • Especially when you factor in the wave of coming-of-age home buyers

If 2019 was the year of slowing home price growth, 2020 might be the year it kicks back into gear.

Zillow pointed out that annual rate of home value growth slowed in December, marking the 20th consecutive month it had done so.

But perhaps more importantly, the gap seen between November and December was the smallest one-month decline since home price appreciation began to slow.

And with the traditional spring home buying season just around the corner, we could see a serious jump in home prices, given this supply and demand imbalance.

Last year, home prices rose 3.7% to an average of $244,054, markedly lower than the 7.6% increase seen a year earlier.

However, the value of the U.S. housing market is now a staggering $33.6 trillion. In the 2010s alone, U.S. property values increased by $11.3 trillion, a more than 50% increase.

Roughly 14% of the gain came from new construction, while the remainder was a result of higher prices on existing housing stock.

Now it appears we might be in for even more. This speaks to how long booms and busts take to actually play out.

You always assume it’s done before it goes up (or down) another notch. Just like the stock market, which continues to hit milestone after milestone. And I believe that’s what we’re seeing here.

Once you factor in the 45 million Americans reaching the average first-time home buyer age of 34 over the next decade, it becomes pretty clear. We need more homes, and fast.

Unfortunately, it also means trouble might be brewing since housing affordability has been a concern for several years now.

That might put us at a crossroads. Either we build more homes and deal with the supply issue head-on, or financing gets “creative” again to help more prospective buyers into homes they may not be able to afford.

If it’s the latter, that bust we were worried about in 2019 could be right around the corner. Just remember, it takes a little longer than you expect to get to the corner…

Read more: When will the next housing crash happen?

Source: thetruthaboutmortgage.com

Lawmakers Push For An Extension Of The $8000 First Time Homebuyers Tax Credit Into 2010 In Proposed Bill

Since earlier this year we’ve been talking a lot about the $8000 first time homebuyer tax credit that was passed as a part of the 2009 Economic Stimulus Package. The credit has been available for first time homebuyers since January 1st, and will continue to be available until November 30th. Now that the program is beginning to wind down, the rumblings about trying to get the program extended or modified have begun. A few months ago there was talk about the tax credit being increased to $15,000, but that never got off the ground.  Another bill that was introduced last month also never got out of committee.  So while there is interest in passing an extension, nothing has come to fruition yet.

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In order to create hundreds of thousands of badly needed jobs and move the economy to higher ground, the National Association of Home Builders (NAHB) today called on Congress to extend and expand the $8,000 first-time home buyer tax credit set to expire at the end of next month.

Testifying before the Senate Banking Committee, NAHB Chief Economist David Crowe warned that builders are reporting that business generated by entry-level buyers is already declining because it is now too late to complete a new home sale in time to take advantage of the tax credit.

To spur job growth, help reduce foreclosures and excess housing inventories and stabilize home values, NAHB is calling on Congress to extend the home buyer tax credit for an additional year through Nov. 30, 2010 and make it available to all purchasers of a principal residence.

The drop in business seen by home builders is real.  The number of building permits for new homes dropped significantly in September

Applications for home building permits, a gauge of future construction, fell in September by the largest amount in five months — a discouraging sign for the housing industry.

The decline, in part, reflected uncertainty about whether Congress will extend a tax credit for first-time homebuyers.

The applications for building permits fell 1.2 percent in September. That’s the biggest decline since a 2.5 percent drop in April and underscored worries that the fledgling housing revival could be derailed by rising unemployment, tighter bank lending standards and the expiration on Nov. 30 of the government’s $8,000 tax credit for first-time homebuyers.

Is The Tax Credit A Good Idea? Some Think It Won’t Make Much Of A Difference

Many in the building and real estate industries are clamoring for an extension of the credit, while others aren’t so sure that the cost of extending the program are worth it.

Housing Secretary Shaun Donovan said at a congressional hearing Tuesday that supporting the housing market “can be very expensive, especially at a time of significant budget deficits.”

The administration will make a recommendation on whether to extend the credit in the coming weeks, after studying data on tax filings from the Internal Revenue Service. While there would be some negative effects if it were allowed to expire, Donovan said, “I do not believe that a catastrophic decline would be the result.

Some analysts and lawmakers are skeptical about extending the credit, arguing that most homebuyers who receive it would have decided to buy anyway. And soaring unemployment is likely to dull the impact of any extension, Mark Vitner, a senior economist with Wells Fargo Securities, wrote in a note to clients.

“Many of the most likely buyers targeted have already taken advantage of the program,” he wrote.

The Newest Tax Credit Bill Piggybacks On Unemployment Benefits

So there is clearly division as to whether the program should be extended.    Other bills to extend the credit and increase the amount it gives to homebuyers have already died a slow death in committee never to again see the light of day.    This week Congress is once again considering another plan that would extend the credit through June of 2010.  Whether this new one will make it out of the committees remains to be seen.

The latest Senate proposal would drop the requirement that the credit be available only to first-time buyers, broadening the reach of the program but also adding to its cost, estimated by congressional analysts at $16.7 billion.

The backers of that idea, Sens. Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., chairman of the Senate’s banking committee, have suggested that their measure be attached to another pending bill aimed at throwing a lifeline to people hit by the recession, an extension of federal assistance to the millions in danger of exhausting unemployment insurance benefits.

….

The Isakson-Dodd proposal would extend the credit to June 30, 2010. It would also remove the first-time homebuyer requirement and raise the eligibility income limit to $150,000, or $300,000 for a couple. That’s double the current phase-out limits.

Provisions Of The New Proposed Homebuyer Tax Credit

So if this new bill that is piggybacking on an extension of unemployment benefits were passed, it would mean that the tax credit would be extended, and the new provisions would be:

  • You would not need to be a first time homebuyer – that provision would be removed.
  • It applies to homes purchased through June 30, 2010.
  • You must keep the home for three years.
  • The credit is refundable.
  • The credit is for $8,000 or 10% of the home’s value, whichever is less.
  • It phases out for incomes between $75,000 to $150,000 for single and $150,000 to $300,000 for couples.

So while it is still unsure as to whether this particular extension of the first time homebuyer tax credit will be passed, the momentum for an extension to be passed in some form is very real.  I would expect something to be passed at some point this  year.

UPDATE: A new bill has been “agreed to” by Senators, that would extend the credit and add a $6500 Tax Credit for current homeowners.  Details here.

What do you think?  Should the tax credit for homebuyers be expanded to all homebuyers, and extended until June of 2009?  Will the effect it has on our economy be worth it, or will it be just another large expenditure when we are already running huge deficits?  Let us know your thoughts in the comments!

Source: biblemoneymatters.com

New Construction: 10 Stages of Building a Custom House

In this article:

If you can’t find your dream home on the market or if you want to create a home that’s uniquely yours, you might consider building a house. Buyers who decided to build new homes were more likely to say that selecting the floor plan, having everything in the home be brand-new and customizing their home features were among their top reasons.* Before deciding if new construction is for you, you’ll want to learn about the different types of new-home construction and familiarize yourself with the process, from the initial land search all the way to selecting finishing touches. 

Typically, when someone says they’re planning to build their own home, they are referring to a fully custom build where they have a say in almost everything (short of items restricted by local laws and zoning regulations). But, in the realm of new construction, there are three different approaches buyers can take: 

Spec homes. With a spec home (short for speculative home), a home builder designs and constructs a single-family home without having one individual buyer in mind. Instead, they plan on selling the house to a buyer once it’s finished. Depending on how early in the process you are able to go under contract, you may be able to select some of the home’s final touches, like flooring, kitchen appliances and paint color. Sometimes these homes are listed for sale as “pre-construction.” 

Tract homes. With a tract home, a developer purchases a parcel of land and divides it into individual lots. Then, a home builder constructs all of the homes in that planned community. Tract homes can be condominiums, townhomes or single-family homes. Most homes in the community will look similar, and shared amenities are common. Similar to spec homes, you may be able to select some finishes in advance, depending on the timeline. 

Fully custom homes. With a fully custom home, you typically find the land on your own then hire a builder to build your dream home. You have total control over the floor plan, layout and finishes, but the process requires a lot of decision-making, attention to detail and disciplined budgeting — custom homes can be expensive. 

Since custom homes are the most complex new construction option out there, we’ll spend most of this article explaining the process.

Check your financing options

Once you’ve decided that building a custom home is the right choice for you, the next step is figuring out how you’ll pay for it — and a traditional 30-year, fixed-rate mortgage isn’t an option for custom home construction, at least not at first. 

Unless you can pay for the entire build with cash, you’ll likely be looking for a construction loan, which is also sometimes called a self-build loan or a construction mortgage. Getting a construction loan is often more difficult than getting a traditional mortgage, as you’re borrowing money for a concept and not a physical house. You’ll need to provide your lender with a timetable, budget, floor plans, materials needed and extensive details to be considered. Other things to know about construction loans:

  • They have variable rates that are often higher than typical mortgage rates.
  • A 20%-25% down payment is usually required.
  • The loan can include the land you’re purchasing or it can cover only the construction costs if you already own the land. 
  • There’s an opportunity to refinance into a traditional fixed-rate mortgage once construction is complete.

Locate the right lot

If you don’t already own the land you plan to build on, you’ll need to shop around for the right lot. A real estate agent can help you identify lots for sale in your area. 

As you narrow down lots you like, you’ll want to loop in your architect and builder to make sure the lot you select fits the needs of your home’s floor plan and design. They should be able to help you check zoning laws and restrictions and identify any attributes of the lot that might make it more expensive to build on — for example, a steeply graded lot may require more engineering, or a lot in a remote area may necessitate a septic tank.

Plan and design the home

Figuring out the size, layout and style of your home is a big task, and it can happen before or after the lot is selected, depending on your individual plans. When you’re building a custom home, the sky’s the limit, although you will need to keep in mind your budget and any limitations of your lot. And, if you don’t plan on living in the home forever, consider how design decisions will affect the home’s future resale value. 

The professionals on your team will be able to help you home in on the right style and layout, but it doesn’t hurt to get a feel for what you might want in advance. Drive around your area and identify homes you like. Look for interior design inspiration online or research the latest smart home features to see if you think they’re worth the added cost. 

Here are a few important design decisions that need to be made early on:

Number of bedrooms and bathrooms. How many people will be living in the house? Is your family growing, or are you downsizing? What about houseguests?

Single story vs. two story or more. Are there mobility issues that should be accommodated? Would a one-story home be easier for those with limited mobility living there? 

Outdoor space. How important is outdoor space and how much should you have? The bigger the yard, the more maintenance involved. 

Open concept or individual rooms. How open you want your house to be depends on your taste and lifestyle. Individual rooms give a more classic feel, while open concept homes are more modern. 

Home style. What aesthetic do you want your house’s exterior to have? Tudor, Cape Cod, craftsman, colonial?

Interior design. Are you partial to modern design, a more traditional look or something in between? If you plan on using the same furnishings you have now, will they match the look of the new home? 

Additional features. Think through other features that need to be decided on early in the process, like smart home compatibility, eco-friendly materials or solar panels. 

Future resale value. If you think you’ll sell the home at some point in the future, consider the home’s possible resale value. For example, if you add a pool or an upscale kitchen, will your home be priced too high for the neighborhood?

Hire professionals

Building a home isn’t an easy task, and it’s rare to take on the entire project yourself. So, you’ll need to have several different professionals by your side to ensure your home is structurally sound, follows local code and suits your needs.

Home builder

Hiring the right builder can make or break your custom home experience. Choose someone who is not only a licensed general contractor but also has a portfolio of custom homes and success stories in recent years. 

To find your builder, you can ask for a referral from friends and family, search online, or ask your real estate agent for recommendations. A good builder will help with:

  • Budget
  • Zoning laws, including acquiring permits
  • Infrastructure needs, like utilities and sewer

Architect

In most places, in order to even apply for permits, you’ll need architectural plans. Discuss the following details with your architect before they create your blueprints:

  • Square footage
  • Stories
  • Number of bedrooms and bathrooms
  • Layout
  • Functionality

Interior designer

You may also want to hire an interior designer who can help with the finishes once the framing and structural elements are in place. From flooring to bath tiles to fixtures, there are many design choices that need to be made, and it can get overwhelming for the average home buyer. If you do plan on making all the interior design choices on your own, don’t wait until installation time. Start researching finishes and fixtures early so you can set your budget.

Other professionals

In addition to these key players, there are other professionals involved in the custom-home-building process. Many of these people are hired by your home builder or general contractor:

  • Land clearing crew
  • Surveyor
  • Structural engineer
  • Inspector (from the city)
  • Plumbers
  • Electricians

Understand the process of building a house

After the designs and blueprints have been finalized and your permits have been approved, that’s when construction starts and your home begins to take shape, generally following these steps: 

1. Land prep
The first step in the construction process is getting the land ready. This includes clearing the area, digging trenches and making sure utilities are installed. 

2. Footings and foundation
Your foundation will be made of poured concrete reinforced with steel rods. Depending on the part of the country you’re building in and the design of your home, you may have a slab foundation, crawl space or a full basement. No matter what kind of foundation is poured, it will be sprayed with a waterproofing material and inspected by the city before framing begins. 

3. Framing
In the framing step, the bones of the home start to take shape. Framing includes the floor joists, subfloors, studs that form the walls and roof trusses. During this step, the crew will wrap the house to protect it from moisture. If construction is taking place during a rainy time of year, your builder may also install windows, roof shingles and siding during this step. 

4. Plumbing, electrical and HVAC
Once the home is “dried in,” subcontractors will start installing the home’s major systems, including plumbing pipes, electrical wiring and heating and cooling ducts. Each of these steps requires signoff from a local inspector. 

5. Insulation
Your home’s insulation needs will vary by climate, but in general, insulation will be applied to exterior walls, basements, crawl spaces and attics. Fiberglass, cellulose and foam insulation are all options. 

6. Drywall
Drywall panels are hung with screws, taped and mudded, and a spray texture is applied. Then the new walls are primed with paint.  

7. Interior finishes
In this step, most of the home’s interior features will be added. This includes doors, baseboards, casings, window sills, stair balusters, kitchen counters and cabinets, bathtubs, vanities, and hard-surfaced flooring. Interior painting and hardwood installation are sometimes done during this step, but they may be done later if there is risk of damage due to continuing construction. 

8. Exterior finishes
Driveways, walkways, patios and final grading to direct water away from home will all be completed. Landscaping and exterior decorating happen during this step too. 

9. Fixture installation
With the house close to completion, toilets, faucets, light switches, heat register covers, the hot water heater, the electrical panel and the HVAC systems are all installed. Many of these items require another round of inspection. Another task that happens in this step is the installation of glass fixtures like mirrors and shower doors. 

10. Flooring installation
Carpet and hardwood flooring are added in this late stage. Make sure to check with your builder on the status of your hardwood finishing process so you don’t accidentally damage them. 

11. Final inspection
Once construction is complete, a final inspection will be conducted by a local building official. Upon passing, you’ll receive a certificate of occupancy, which gives you the green light to move in. 

12. Final walkthrough
Before you move in, you’ll want to do a final walkthrough with your builder to identify punch list items that need to be repaired for the job to be considered complete. Common punch list items include electrical defects like nonfunctioning outlets, damage to drywall and paint, or missing fixtures.

Skip construction and buy renovated

Building a custom home is a complicated process, and it can take well over a year depending on your location, lot complications, house size, laws and the permit-approval process. Another option is to buy a home that has already been renovated — you get a fresh and updated feel without having to do the work yourself.

Shop Zillow-owned homes

Buyers of Zillow-owned homes can be confident that the homes they buy have been professionally renovated by local contractors. With Zillow-owned homes, you can avoid the stress of a custom build and make yourself at home.

*Zillow New Construction Consumer Housing Trends Report 2019

Source: zillow.com

New Construction: Tips for Working With a General Contractor

The general contractor is the conductor of your home-building project. If you pick the right general contractor (GC), construction of your new home will be harmonious, with all subcontractors playing their parts in sync. Here’s how to get the band together:

Traits of a good general contractor

Picking a general contractor is a little like finding a mate, a combination of legwork and luck. And since we’re talking about relationships, not every GC and client will click. But there are some general GC qualities that will make the project run smoothly.

Communication: How long does it take for the GC to return your first call? If he doesn’t get back to you within 24 hours — after all, he’s trying to win your business — don’t expect prompt responses after you’ve signed on the dotted line and the work has begun.

Manner: This is personal. Some clients need a lot of handholding. Other clients aren’t looking for a new best friend and just want a straight shooter who delivers information in as few words as possible. When you interview GCs, make sure your personalities match. You’ll be spending a lot of time together over the next several months: Make sure you look forward to the interactions.

Referrals: Ask for at least three, satisfied customers who will take your calls and discuss their experiences with the GC. During your chats, ask what was the best and worst things about working with the GC — and pay special attention to the “worst” category, because that’s what will affect your building experience, too. Ask if the GC stayed on budget and met deadlines. Ask how the GC handled problems and change orders, which invariably crop up during every project. Ultimately, ask if the customer would hire the GC again, a clear sign of support.

Online lists: If you’re a member of a neighborhood listserve, ask the group for GC recommendations. Often, word gets around a neighborhood about who’s good and bad. Also, websites like Angie’s List maintains reviews of GCs and subcontractors.

How to work with a GC

Working with a GC is a partnership that depends on everyone playing their role. A lot of money and moving pieces are at stake, so it’s important to clearly state expectations up front.

Contract: When building a new house, GCs usually work under two types of contracts.

Fixed price: The GC estimates the cost of the project, including their supervisory fee, and you know what to expect from the beginning. Fixed-price contracts usually provide a budget for each part of construction — tile, flooring, plumbing fixtures — that guide homeowner selections.

Cost plus percent: Sometimes complicated designs are hard to estimate upfront. Cost-plus contracts charge clients the actual cost of materials and labor plus a percentage, which the GC or builder takes as profit.

Communication: Nothing is more frustrating for homeowners or GCs than waiting for calls to be returned. At the beginning, exchange phone numbers — cell phone, home phone and work phone — so each is reachable in an emergency. Agree on how often you’ll touch base — daily, weekly? — and when’s the best time to call. It’s a good idea to place a whiteboard and marker on the job site to add questions and comments.

Payment: Every project should have a budget and a payment schedule that’s often coordinated with bank draws. Make sure you agree upfront on how much you’ll pay at the beginning, middle and end of the project. And make sure you keep back 10 percent until all your punch list problems are solved at the end of the project.

Change orders: Some choices seem good on paper, but look terrible in reality and need to be changed. Whenever you change your mind about anything, you should fill out a “change order,” essentially a contract amendment that states the change, how much it will cost and how it might affect the schedule. The order is as mutual agreement that must be signed by both parties. If the change order alters an architectural feature, like room size or shape, attach new blueprints to the change order.

Finishes: Waiting around for clients to pick finishes is a top GC complaint and a schedule buster. Agree at the beginning on a finishes schedule and budget. Many GCs will write into contracts that they will pick finishes if the client doesn’t make timely choices.

Source: zillow.com

How To Design Your Dream Home: Tips To Bring a Blueprint to Life

When you design your own home from the ground up, the sky’s the limit when it comes to design. You get to choose the architectural style, the floor plan, and all the flourishes that make this place uniquely, well, you.

Sounds fun, right? It is, but figuring out what you want to build can also be incredibly intimidating. Before you start picking out tile and light fixtures, you need a plan.

In this final installment of our Guide To Building Your Own Home, we’ll help you focus on the joys—and potential pitfalls—of designing your space. We’ll show you where to get inspiration, how to narrow down your needs versus wants, ways to make trade-offs to stay on budget, and much more that will help your architectural plans come to life with as few hiccups as possible.

Where to get home design inspiration

You probably already have a picture in mind of your dream home—its style, feeling, and design. If not, scour sites like Pinterest and Houzz for visual ideas, suggests Elizabeth Sanchez Vaughan, creative principal at In-Site Interior Design. These sites often let you create “idea books” and save images you like.

“When you look at all these images as a whole, you will start to see a pattern of the things that you like, and it will inform your style decisions,” she says. “If there’s an element that repeats itself within those images, then chances are good that it’s really something you will like to live with.”

This process will at least give you a starting point. Sharing these images with your builder and designer will also help them get to know your style so that they can guide you through the process.

Questions to ask before you build a floor plan

Don’t get ahead of yourself when designing your dream home. Justin Riordan, interior designer, architect, and founder of home-staging company Spade and Archer Design Agency, suggests thinking broadly first.

Some questions to consider: Who will be living in the home and what will the home be used for? Are you planning to grow your family, or will you become an empty nester soon? Will you be working from home for the foreseeable future? The answers will help you choose a functional layout that will meet your needs now and in the future.

“Once all of these questions are answered, you can then start to create a bubble diagram to show how the spaces needed will be laid out to best accommodate the various uses of the house,” Riordan says.

This will guide the schematic design, which includes a floor plan. And a budget and timeline for construction can be set based on these drawings.

The biggest mistake people make when building a home is not spending enough time planning, Vaughan says. You may be eager to break ground and start the construction, but don’t skip the prep stage. After all, this is when the budget is set and gets everyone on the same page.

“If the plan is 100% right, then the rest of the construction process will go smoothly and not require time-consuming changes,” she says. “Really have the professional walk you through the space and describe what the flow will be.”

And don’t make these decisions alone—make sure your builder, designer, and anyone else on your team is involved, says Amala Raj Swenson, an interior designer working in Los Angeles and San Diego. “Designers, architects, and the builder will all have knowledge specific to their trade that can help the other plan details more accurately.”

Don’t pick trendy designs you might regret

Have you fallen in love with the latest home design trends on Instagram? Think twice before incorporating them all in your new home. Think about your long-term needs and whether you’ll get sick of decor fads down the road.

“I recommend a mix of long-term classic style incorporated with more trendy, modern styles,” Swenson says. “I find that adding accessories—sofas, throw pillows, and lighting—that are more trendy makes it easier to change in the long run, if you want to update anything.”

A big mistake homeowners make, she adds, is focusing on a specific aesthetic and not considering the functionality of the home.

“It’s so important to consider the use of the space, just as much as the look of it,” Swenson says. Functionality should drive the design, not the other way around.

Make trade-offs to keep your home construction on budget

If you have expensive tastes but a modest budget, you might have to rethink some of your design choices to avoid spending too much. That’s why making a list of needs, wants, and like-to-haves and setting a budget early on are such important steps.

All homes need a roof, for example, but Riordan says an inexpensive composition roof accomplishes this need, even if you have your eye on a pricier option like slate. Maybe you’d rather spend that extra money elsewhere.

Home fixtures and features like appliances, lighting, countertops, tile, and flooring come in all price ranges. Most likely you’ll find something you like that’s also budget-friendly.

“If you need to make trade-offs to stay in budget, I would focus on putting the finances toward anything that is structural,” she explains. “I advise against cutting corners on items like cabinetry, flooring, or paneling because these are the long-term items that will cost more in the long run to update or change.”

And keep revisiting your priority list. Vaughan says it’ll help you make all the important decisions along the way.

Check in on your construction site often

Building a home is a huge investment, so you should keep tabs on how it’s progressing. Vaughan suggests scheduling regular meetings with your builder, designer, and any contractors involved.

“Make sure you spend time in the space—without the contractor, as well as with them—just after framing and just after sheetrocking,” says Vaughan. “This is so critical to make sure the flow of the rooms feels right, as well as the size of the rooms.”

At this stage, think about how you might arrange your furniture and where electrical outlets should be placed. Visit more frequently when finishes are being placed to make sure everything is correct.

Regular check-ins can save you time and money in the long run, since your questions and concerns are being addressed along the way, Swenson says.

“The best way to have fun and not get too stressed about everything being Pinterest-perfect is just to remember what an achievement and blessing it is to be able to build your home,” she adds. “Have fun with the process, and truly take time to enjoy and take in all the details of options, layouts, and materials that are out there.”

Source: realtor.com

Gauge of U.S. pending home sales declines to a six-month low

A gauge of U.S. pending home sales fell to a six-month low in January as buyers competed for a limited number of properties.

The National Association of Realtors’ index of pending home sales decreased 2.8% from the prior month to 122.8, according to data released Thursday. December data was revised to a 0.5% gain after a previously reported decline. The median estimate in a Bloomberg survey of economists called for no change in January.

The decline is the latest sign that the housing boom may be starting to cool amid soaring prices, a lack of inventory and rising mortgage rates. The residential real estate market has been a bright spot in the economy as it recovers from the pandemic. Contract signings are still up 8.2% from a year ago on an unadjusted basis.

“There are simply not enough homes to match the demand on the market” Lawrence Yun, chief economist at the NAR, said in a statement. Still, Yun said he expects inventory to rise in the coming months.

The lack of inventory thus far has driven prices upwards, putting homeownership out of reach for some, said Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting.

“Various other data sources have pointed to higher median sales prices and record-high purchase mortgage loan sizes, all of which have started to create affordability challenges in many parts of the country,” he said. “While home building has picked up to attempt to meet the high demand, increased listings of existing homes will be needed in the coming months to alleviate this shortage of housing inventory.”

By region, contract signings fell in the West, Northeast and Midwest. In the South, the index for pending home sales rose to the highest since August.

Source: nationalmortgagenews.com

Want To Build Your Own House? The Pros, Cons, and Costs

Building a brand-new home may sound like a dream come true. You get to choose the ideal layout for your family’s needs, and have a say in each and every design element. However, the process may also be daunting if you’ve never done it before.

To help you through it, we’ve created this Guide To Building Your Own Home. It will provide all the detailed information you need at each stage of the home-building process so that everything goes as smoothly as possible.

In this first article, we’ll offer a glimpse into the pros and cons of building a house, including how much it costs, how long it takes, how it’s financed, and much more that will help you decide if this option is right for you.

Pro: You can get exactly what you want

Building a home is a popular option these days. Construction on single-family homes was up 10% in November 2020 compared with the previous year, according to the National Association of Home Builders. And, it makes sense: When you build your own home, you get exactly what you want: an in-law suite for when the grandparents visit, a decked-out office for working from home, midcentury modern style, and more. Anything is possible.

“You get a blank slate,” says Marc Rousso, CEO of JayMarc Homes in Seattle. “The fun part about building a custom home is that it can be whatever you want.”

That might sound overwhelming, so Rousso suggests starting with a vision board. Check out websites like Houzz or Pinterest, and drive around snapping photos of homes you like. Then think through how big you want the home to be, how many bedrooms and bathrooms you need, and the bonus spaces you want to live as comfortably as possible.

The best way to make sure you get what you want (and that it fits within your budget): Hire a great builder from the start. This crucial step sets the best possible foundation (in every sense of the word) for your new home. Builders help you select others on your team (such as an architect, interior designer, and landscaper) and serve as your point person throughout the process.

Not sure how find a homebuilder? NAHB offers an online directory, and its members are committed to ongoing education and ethical standards. Hiring builders who have been in business for several years is also a plus, as they’ve proven they can weather both the highs and lows of economic cycles.

Pro: You can build just about anywhere you want

Have you always dreamed of living by the water or having a mountain view? Or maybe you want no neighbors in sight? Building a home lets you set up your residence just about anywhere you want.

Talk to your builder before making a land purchase, though, Rousso urges. The builder will need to do a feasibility study on the land to make sure it’s a suitable place for the home you want to build.

“We’ve talked more people out of buying land than into buying land, because there are so many pitfalls,” he explains.

Builders help make sure the land is zoned for residential development and identify any issues with building on the site, such as connecting to utilities or developing the land before building can start.

Another thing to note: Land development can be costly. HomeAdvisor estimates it to be $1.30 to $2 per square foot of land, including surveying, drainage plans, utility and septic mapping, permits, soil testing, land clearing, excavation, and demolishing any existing structures.

Pro: New homes typically come with less maintenance

An obvious advantage of building a home is that everything is brand-new. That means maintenance and repairs will be minimal or even nonexistent for a while, saving you plenty of headaches and thousands of dollars a year. According to HomeAdvisor, in 2020, homeowners spent an average of about $3,200 on home maintenance.

Nonetheless, a new house isn’t entirely maintenance-free. You’ll probably still need to do yardwork to keep up your newly installed landscaping. And you may want to pay for some preventive upkeep, such as a maintenance contract on your HVAC system, costing $150 to $500 a year. But that could save you money in the long run.

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Watch: How Much a Home Inspection Costs—and Why You Need One

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Con: Building usually costs more than buying an existing home

Building a house is an expensive enterprise, and typically costs more than buying a preexisting home. As such, you’ll need to have some in-depth discussions with your builder on what you want, and whether it’s affordable for you.

“A builder can help guide the design process starting with schematic design to give the prospective client an idea of the budget,” says Tim Benkowski, senior project manager at Balsitis Contracting in Lake Geneva, WI. “That way, design revisions can be made early without the owner falling in love with a home design only to find out they need to cut out their favorite parts or reduce the project scope.”

Several factors determine how much your newly constructed home will cost: location, size, complexity, and design elements.

The NAHB estimates that the median price of constructing a single-family home is $289,415, or $103 per square foot. Labor typically constitutes about 40% of the cost, followed by permits, design fees, and materials. Here’s more on how much it costs to build a house.

Con: Getting a construction loan can be complicated

To finance building a home, you’ll need a construction loan, which is a little more involved than getting a traditional mortgage to buy a preexisting house, says Steve Kaminski, head of residential lending at TD Bank.

For starters, you’ll likely need a 20% down payment since construction loans are considered higher-risk. Along with the usual financial documents needed for your loan application, you need to provide project plans, costs, and land value. You also need a signed contract or purchase contract with the project’s plans, specs, and budget details, and a timeline for the construction.

“The lender is not only evaluating the borrower, but also the project plans and oftentimes the builder to ensure they will be financially solvent throughout construction,” Kaminski explains.

Construction loans are usually shorter-term, covering just the duration of the build, and may have higher interest rates, usually about 1% higher than conventional mortgages, according to the Consumer Financial Protection Bureau.

Once the home is completed, you can pay off the balance or convert the loan to a conventional mortgage. The interest rate and the type and terms of the mortgage will depend on your credit history and lender.

When shopping around for a mortgage for a new home build, Kaminski urges borrowers to go with a lender experienced in working with construction loans.

Con: Building a home takes a while

Generally, it takes a bare minimum of three months to build a simple house, and it can take much longer. But it’s a “sliding scale,” says Benkowski. “A 2,500-square-foot and under [home] can typically be completed in seven to nine months with proper planning. A 7,500-square-foot home and up would likely take 12 to 30 months.”

Planning as much as you can will keep the project on track. Still, delays do happen. Weather is the biggest one, with temperature shifts and rain or snow postponing work. Your own choices could also be to blame. If you’re taking too long to choose your favorite flooring or windows, it could make it all take a little longer.

Here’s more on how long it takes to build a house.

In the next installments, we’ll cover how to buy land, design tips, the ins and outs of mortgages for home construction, and lots more.

Source: realtor.com