If You are building or plan to build your own home… You have to see this!
How to $ave Thou$and$ of Dollar$ On Building Your own Home, Before You Ever $tart Building or Breaking Ground.
(Without affecting the appraised value) . .
By Doug Leavitt
A “MUST READ”!
How can you save any money on building your own home before you ever break ground? How can you avoid the costly mistakes or surprises? As a retired Home Builder, I want to pass along several tips and recommendations you MUST Know. Even if you get a “GREAT DEAL” on the lot, there are many things to consider before you get started!
Buy a flat lot! Some of the savings will be in the lot or land you intend to build your house on. The flatter the lot is, the cheaper it will be to build on. If you buy a sloping lot, your tractor operator will spend more time leveling and moving dirt, which will cost you more money in hourly fees. Their fees are one of the most expensive hourly fees you will pay a contractor. Additionally, depending on how much you have to cut to level the lot, it may become necessary to retain the soil at the top of the cut. A retaining wall! There again, it is very expensive to have to install a retaining wall, not to mention the many different types of wall to install. From expensive to VERY EXPENSIVE, it could be a deal breaker!
Know as much as you can about the lot and the soil conditions to build on. Go to your city or county extension office and request a soils map for your desired area. They will know, before hand, the “general” makeup of the soil conditions. That is not to say that you will not run into lots of rocks or, perhaps even a rock shelf. It is just a precaution and a general condition of the area soil. You will want to inquire at the same time to make sure it is not or never has been a land fill. They should have this information. In most cases landfills will not be stable to secure your foundation. However, a structural engineer could engineer a foundation for you to construct on most any soil, but again, there is a considerable fee to hire an engineer. They are good at what they do, but they tend to “overdo” what they deem as necessary for a secure foundation. They seem to add more steel, piers, and whatever they can add to protect themselves against liability. If you feel more comfortable hiring an engineer to draw your foundation plans, have the extra funds to spend, and want the liability of the foundation structure to fall on the engineer, it may be worth it to you. Also check with your neighbors and find out if they received a soils test for their lot. This information may help you decide to buy or cross this lot off the list before you spend any money researching.
(See “(PIERS)” below, about a soils test)
Although we love the look and feel of trees and the shade they provide, it is more expensive for the tractor operator to plow down trees. In the area where I live, tree trash and vegetation haul off is also very expensive. There aren’t many places for the operator to dump tree debris. Sure you hire someone to cut them up for future firewood (Consider the time too. Remember you are paying daily interest fees on the construction/ building loan.) but, there again, that expense for someone to cut up the trees and stack the firewood out of the way can be a hefty fee. One word of caution: If you decide to CUT down the trees yourself you may be doing yourself a disservice. “Cutting” the trees down, leaves the roots and the entire root system under the area on which your house may be built. Your tractor operator can not easily, knock down the trees if the stump is the only thing left. Leaving the tops of the trees, helps the operator use the weight of tops to knock them down with ease, in addition to getting rid of a major part of the root system, thus, saving you time and money with the tractor operator. I have experienced a number of occasions when our tractor operator has shown up on a job site only to find the owners had spent their entire weekend cutting the trees thinking they were helping. NOT GOOD! Save yourself the time, money and a tremendous headache and let the tractor operator do the work. After the trees are down, then you might want to cut them up for firewood, but only after the tractor operator has done his work.
Bringing in all the utilities can be an added expense. Depending on if you are using overhead or underground electric, water, gas (natural or propane or?), cable, etc, this could be an enormous expense. You should request a meeting with a representative from each of the utility providers and know the expenses or estimates before you buy the lot. If you are building in the city, the electric service usually supplies the services to your building itself with no fees other than normal building fees and permits. Underground sewer lines or sewer taps, and water supply is usually NOT taken to the building. The City or coop water is usually responsible for the line up to the meter and you will be responsible from that point on. The water line and sewer line up to the house is usually is included in your plumbing fee. If you are building in the country and water services are not included, then you may need a water well. You should call a reputable well driller and get an estimate on how many feet they may have to drill or average drill depth for the area. They usually charge by the foot in depth and can give a pretty good estimate on how many feet they will have to drill. (For example, if they drill 6000 feet and the charge is $1.00 per foot you would pay $6,000 for the drilling, in addition to the expense for the pump. (The size or horsepower on the pump will also be extra.) The example is not representative of any actual drilling fee, you should discuss a quote with two or three providers before choosing one.
In some non stable soil conditions, you may have the need to stabilize your slab by having pier holes drilled into the ground and filled with concrete. A soils test from a geo-technical engineer may be required. A soils test is a process where as the engineer will come to the site where you intend to place your new home. In order to obtain average soil information, they will drill down several feet in 2-5 places and take samples to determine your particular soil conditions.
This test and their report will tell you:
Will you always need a soils engineer on every site?
No, not necessarily. If other houses are built close to your site or in the general subdivision/area, ask your neighbor what type of foundation they used and if they obtained a soils test on their lot. You might ask if they used piers in their foundation so you can gage your decision based on their information. Go to several neighbors and ask the same things. Piers and soils testing can get very expensive. Know your facts and conditions about your lot before you purchase! You’ve probably heard, as I have, all your life “Location, location, location” In most instances that is true, however if you have to go overboard to secure your foundation, it may be in your best interest to find another location. As a Home Builder, I would say it’s “location, location, LOT CONDITIONS.”
There are several ways to save in this category. One is to go to a plans store or online plans outlet, and search their “Stock Plans” or their Plans already drawn section. These are plans that they have already drawn and available for sale as is. This way if you find a set of plans that you like or will work for you and:
Another Money Saving Tip will be to use a “Plans Designer” for your blueprints and not an architect. The “Plans Designers” Usually charge Much Less than an architect. I have seen less than one-half the price of an Architect. Out of over 200 homes that I have built in the past, I can think of only ONE home that had “Architectural Plans Drawn” These plans were drawn for the buyer long before I got involved with the Buyer. I used a “Plans Designer” exclusively throughout my building career. I was very happy with that arrangement and would recommend it for anyone. That is not to say that I wouldn’t use and architect in a situation where the building was challenging, or the house was multi level or there were special or difficult request from the buyer. There are instances where it is necessary to use the services of a professional Architect. But to save cost and still have a home design you love, a plans designer is more than sufficient. However, if you are currently working with an architect I would recommend that you continue working with him/her if you like their work or ideas. There is value in that too.
CONSTRUCTION LOANS AND CLOSING
There are a number of construction loan possibilities (aka Interim loans). (Not as many options in this economy.) However, I have found it economical to use what is called a “One Time Closing” A “One Time Closing” is when a Mortgage Lender will include the construction loan or make it a part of the final or permanent loan. (Your 15-30 Year mortgage). So, the construction loan, together with your mortgage loan, is generally closed or partially funded in the front end. Leaving a simple modification and finalization of the loan documents after the house is completed. Typically you have a certain amount of time to complete you construction and draw funds on the loan. When you are finished with the construction, you simply let the lender know. At this point, they will send an inspector (usually a home appraiser) to verify that the home is completed. The inspector/appraiser will verify completion and provide and updated/final appraisal. Next, the title company prepares a modification agreement and you will be notified to come in and sign. You may be required to pay a small modification fee as required by the lender. Once you’ve signed the modification documents, you may move into your new home!
For Clarification, your “One Time Closing” is just that! A “One Time Close”. That also means that your closing fees are also “One Time”. You do not have to pay for all the closing fees to close on the lot then the interim construction loan separate. It is all “One Closing” = “One Time Closing” FEES! You will not pay twice for the closing fees, title policy, survey, appraisals, etc! You pay only ONCE, saving you the majority of the cost of the second closing!
Remember each Mortgage Company has their own set rules or arrangement from a one-time-close loan, so be sure to ask your loan officer. Additionally, shop around for the best loan and rate for you and know that you may get a better rate over the life of the loan, but, it can make your upfront fees cost more. At this time, Mortgage Companies are hungry, so shop around and compare. Share the information you’ve received with different loan companies as they may be able to do even better. Also note, that if someone is quoting you a low rate, check their closing fees. A very low or non competitive rate could mean that they have higher closing fees. As with any major purchase…“BUYER, BE WARE!” So, get all the facts to compare.
I hope this little bit of tips and information helps you save a ton of money, time, and frustration in your building endeavor. The processes of building a home/house is in most cases just using logic. You know you can’t put Sheetrock on before you install the electric in the walls or the insulation or you can’t install the roof until the decking is on. Logic, communication and scheduling the subcontractors is the key to a successful build job. Ask all and any of the questions you have. Most of the subcontractors will be glad to help.
(Written By Doug Leavitt and published on ezinearticles
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Last Updated : 06/07/2021 12:51:50