What should we know about homebuilding before we start?
December 21, 2009 7:28 PM Subscribe
We've never built a home before. Help us not look or act like n00bs!
My guy and I are thinking about building a home through Shea Homes using an FHA loan. We're both in our mid-to-late 20s and live in the suburbs of the Phoenix, Arizona, USA area.
Using a price sheet for options sent to us by a Shea sales representative, it looks as though we would be spending less than $200,000 to get exactly what we want in a home (we qualify for a loan of over $300,000). The base price for the home is about $157,000. We're estimating that we want approximately $55,000 in additional features like laminate flooring throughout the home, upgraded countertops, and the like. Shea is offering $25,000 for upgrades as an incentive, bringing our cost down to the $180's.
Neither of us are considering this a "starter house." We both agree that, unless something big and unforeseeable happens, this will be our "forever home." We haven't decided whether or not children are in the cards for us, but this house would allow for familial expansion should we elect to have any.
What do we need to know about the building and design processes? Is there anything we need to know about FHA loans that isn't readily available online? What questions should we be asking? What can we negotiate (base price, upgrade costs, etc.), if anything?
We welcome any and all advice on the topic of building in a preplanned community with a large builder such as Shea. Thanks for your insight!
My guy and I are thinking about building a home through Shea Homes using an FHA loan. We're both in our mid-to-late 20s and live in the suburbs of the Phoenix, Arizona, USA area.
Using a price sheet for options sent to us by a Shea sales representative, it looks as though we would be spending less than $200,000 to get exactly what we want in a home (we qualify for a loan of over $300,000). The base price for the home is about $157,000. We're estimating that we want approximately $55,000 in additional features like laminate flooring throughout the home, upgraded countertops, and the like. Shea is offering $25,000 for upgrades as an incentive, bringing our cost down to the $180's.
Neither of us are considering this a "starter house." We both agree that, unless something big and unforeseeable happens, this will be our "forever home." We haven't decided whether or not children are in the cards for us, but this house would allow for familial expansion should we elect to have any.
What do we need to know about the building and design processes? Is there anything we need to know about FHA loans that isn't readily available online? What questions should we be asking? What can we negotiate (base price, upgrade costs, etc.), if anything?
We welcome any and all advice on the topic of building in a preplanned community with a large builder such as Shea. Thanks for your insight!
Almost forgot... RIDE THEM. They will try to cut corners. They will try to not do things you asked for. Be prepared to be on-site at least once a week (especially during the finishing periods.
If something is not how you want it you SPEAK UP!. They will make you feel like an asshole. Get over that immediately. You won't know them after this process is done but you'll have your house.
The subcontractors they use may pee on your subfloor. They will put beer bottles behind your dry wall. Let them know that you are observant and a stickler for perfection... they'll work harder for you.
Make sure you get a 1 year warranty in your purchase contract from the builder... and use it!
posted by shew at 7:41 PM on December 21, 2009 [1 favorite]
If something is not how you want it you SPEAK UP!. They will make you feel like an asshole. Get over that immediately. You won't know them after this process is done but you'll have your house.
The subcontractors they use may pee on your subfloor. They will put beer bottles behind your dry wall. Let them know that you are observant and a stickler for perfection... they'll work harder for you.
Make sure you get a 1 year warranty in your purchase contract from the builder... and use it!
posted by shew at 7:41 PM on December 21, 2009 [1 favorite]
If it's a 'forever' home, you might want to look at solid wood flooring versus laminate. There is some difference in cost, but the laminate I've been around has gotten scratched and didn't wear anywhere near as well as real live wood.
Also, put in conduit for network and AV wiring. Get the biggest electrical service you can manage. Add more power outlets then you'd ever think necessary. Then add some more!
You need an attorney. Since you're dealing with a builder, you especially need an attorney. It is possible to complete a transaction with a builder, but they are in the business of taking as much of your money as possible. You need someone who is working for you. Not a RE agent, but someone who is licensed to practice law. I don't know exactly what a RE agent would do for you, other then fill out some forms. RE agents can not give you legal advice. RE agents will take a percentage, usually attorneys will negotiate a flat fee. I don't like RE agents.
While we're on the subject of professionals, hire an engineer (PE) for your home inspection instead of a 'licensed inspector'. A PE is the only person (in my eyes at least) who is qualified to make declarations about the structural integrity of a house.
When your house is a hole in the ground, see if water seeps in. Determine if your house needs drains, and get all that drainage work done now when it is easy to do, and not in a few years when your fancy basement is soaking wet and they need to do tens of thousands of dollars of external excavation.
posted by Geckwoistmeinauto at 7:54 PM on December 21, 2009 [2 favorites]
Also, put in conduit for network and AV wiring. Get the biggest electrical service you can manage. Add more power outlets then you'd ever think necessary. Then add some more!
You need an attorney. Since you're dealing with a builder, you especially need an attorney. It is possible to complete a transaction with a builder, but they are in the business of taking as much of your money as possible. You need someone who is working for you. Not a RE agent, but someone who is licensed to practice law. I don't know exactly what a RE agent would do for you, other then fill out some forms. RE agents can not give you legal advice. RE agents will take a percentage, usually attorneys will negotiate a flat fee. I don't like RE agents.
While we're on the subject of professionals, hire an engineer (PE) for your home inspection instead of a 'licensed inspector'. A PE is the only person (in my eyes at least) who is qualified to make declarations about the structural integrity of a house.
When your house is a hole in the ground, see if water seeps in. Determine if your house needs drains, and get all that drainage work done now when it is easy to do, and not in a few years when your fancy basement is soaking wet and they need to do tens of thousands of dollars of external excavation.
posted by Geckwoistmeinauto at 7:54 PM on December 21, 2009 [2 favorites]
Consider that any upgrades done through the builder and rolled into your mortgage will increase the amount of the monthly interest you will be paying. If you plan on staying in the home for a while and you have the money available, it may be cheaper in the long run to handle some or all of the upgrades after closing as opposed to having the builder doing them. You will also have more choices than what will be available through the builder.
For example, paying back the $55,000 in upgrades at a rate of 6% for 30 years will cost you $330 a month or $118,800 if you were to take the full 30 years to pay it back (which practically no one does, but it illustrates the point). The longer you plan to stay in the home, the more sense it makes to pay the upgrades out of pocket rather than rolling them into your mortgage and paying interest on them.
If you plan to only stay a few years, then including the upgrades in your mortgage may be more advantageous.
Depending on the builder and local code, you can often have the builder give you a credit for whatever they don't install that you plan to put in later. For example, if you want to do laminate flooring and the builder is allowed to let you close on the home with no flooring installed, they might be willing to give you a credit for the carpet they would have installed.
posted by cecic at 8:12 PM on December 21, 2009
For example, paying back the $55,000 in upgrades at a rate of 6% for 30 years will cost you $330 a month or $118,800 if you were to take the full 30 years to pay it back (which practically no one does, but it illustrates the point). The longer you plan to stay in the home, the more sense it makes to pay the upgrades out of pocket rather than rolling them into your mortgage and paying interest on them.
If you plan to only stay a few years, then including the upgrades in your mortgage may be more advantageous.
Depending on the builder and local code, you can often have the builder give you a credit for whatever they don't install that you plan to put in later. For example, if you want to do laminate flooring and the builder is allowed to let you close on the home with no flooring installed, they might be willing to give you a credit for the carpet they would have installed.
posted by cecic at 8:12 PM on December 21, 2009
If you are serious about it being a "forever" house, build in some aspects of universal design. A house that still works well if one (or both) of you has limited mobility because of age or injury can make the difference between staying and moving.
I agree with Geck' about laminate, too. (Honestly, my first reaction was surprise at the idea of laminate being an "upgrade.") There are tons and tons of flooring options (wood, concrete, even unusual choices liked packed earth) that will last longer and age gracefully; laminate starts off looking cheap and gets worse from there.
And make sure that the design you select takes your climate into account. You don't need to go full-on-hippy and build an earth-bermed solar-powered dome, but even a few nods towards passive solar and smart roof and landscape choices can give you enormous flexibility later. For example, what happens to your dream house if energy costs skyrocket?
posted by Forktine at 8:22 PM on December 21, 2009
I agree with Geck' about laminate, too. (Honestly, my first reaction was surprise at the idea of laminate being an "upgrade.") There are tons and tons of flooring options (wood, concrete, even unusual choices liked packed earth) that will last longer and age gracefully; laminate starts off looking cheap and gets worse from there.
And make sure that the design you select takes your climate into account. You don't need to go full-on-hippy and build an earth-bermed solar-powered dome, but even a few nods towards passive solar and smart roof and landscape choices can give you enormous flexibility later. For example, what happens to your dream house if energy costs skyrocket?
posted by Forktine at 8:22 PM on December 21, 2009
I heard of a couple in your area who had a clause in their contract that if the builders took longer than what was stated in the contract they (the builder) were charged a daily penalty. This can be important if you are renting while you are waiting for your house. I've heard of people left scrambling for a place to stay when the construction wasn't done on time and their lease was up. This was around 10 years ago, so I don't know if it is still a problem but better safe than sorry.
I also agree with being on site as much as you can, and get to know the people working on your house. I'd lean more to killing them with kindness instead of riding them. Maybe show up unexpectedly with donuts and coffee. That way they know you won't let them cut corners, but they might actually like you and want to do good work.
Pay extra for a big yard, it is so much nicer. A corner lot if you can swing it. A corner lot on a cul-de-sac is prime real estate. Finish the back yard right away. A lot of new homes will have great front yards (since the landscape in the front is usually included) but nothing but dirt in the back. It totally ruins the view from all the back windows. If you can afford it, a pool is amazing. My parents are in Phoenix and use theirs constantly in the Summer. A heater would make it a year round backyard vacation.
Basements are not common in the Phoenix area, but make sure there are no drainage issues. Those Monsoon rains can be a pain and some of these communities are in the line of a flood.
Laminate floors can actually be nicer than real wood if you take into account the care and upkeep, but make sure you won't change your mind and want wood in 10 years. It is much easier to take care of it now. Also, go for the upgrade on the tile for the bathrooms. You might want to look into the nicer wall finishes, even if you have to hire your own contractor. There are some really amazing things that can be done with plaster, but again it's easier to do before you move in.
I don't know what plumbing or electrical you would need, but if I was building a house in Phoenix I would put in a misting system for the back patio area.
posted by TooFewShoes at 8:26 PM on December 21, 2009
I also agree with being on site as much as you can, and get to know the people working on your house. I'd lean more to killing them with kindness instead of riding them. Maybe show up unexpectedly with donuts and coffee. That way they know you won't let them cut corners, but they might actually like you and want to do good work.
Pay extra for a big yard, it is so much nicer. A corner lot if you can swing it. A corner lot on a cul-de-sac is prime real estate. Finish the back yard right away. A lot of new homes will have great front yards (since the landscape in the front is usually included) but nothing but dirt in the back. It totally ruins the view from all the back windows. If you can afford it, a pool is amazing. My parents are in Phoenix and use theirs constantly in the Summer. A heater would make it a year round backyard vacation.
Basements are not common in the Phoenix area, but make sure there are no drainage issues. Those Monsoon rains can be a pain and some of these communities are in the line of a flood.
Laminate floors can actually be nicer than real wood if you take into account the care and upkeep, but make sure you won't change your mind and want wood in 10 years. It is much easier to take care of it now. Also, go for the upgrade on the tile for the bathrooms. You might want to look into the nicer wall finishes, even if you have to hire your own contractor. There are some really amazing things that can be done with plaster, but again it's easier to do before you move in.
I don't know what plumbing or electrical you would need, but if I was building a house in Phoenix I would put in a misting system for the back patio area.
posted by TooFewShoes at 8:26 PM on December 21, 2009
Oh yeah, radiant heat floors are AMAZING.
posted by TooFewShoes at 8:30 PM on December 21, 2009
posted by TooFewShoes at 8:30 PM on December 21, 2009
One thing I would say is: before you start making your Dream Upgrades list, set a budget cap. At some point in the uncertain future, you will be so glad you have a mortgage below your current means. One of you may wish to stay home with a child, or one of you may lose a job, or one of you may need to take an extended career leave to care for a parent, etc. So, if your real cap is 200K all in, stick with that.
When calculating what you can afford in payments each month, remember you'll want to put an extra $X00 a month into the House Fund. This covers sudden ownership costs you never expect like exterminators, roof leaks, tree trimming, plumbing issues, and all that jazz.
From there, you prioritize - not by what you want most, but by what it makes sense to absolutely do now (AV wiring, basement plumbing and wiring) vs what you can do later (48" cabinets you'll replace over the life of your home anyway, wood floors, landscaping).
If underfloor flooring sounds gorgeous but you can't do it in your 200K budget, don't do it. I really, really wanted underfloor heating but we couldn't fit it in our reno budget. Every single month I love my tiny mortgage payment; about two days a year I think "damn, this floor is cold." (And OK, every single day I look out at the back patio and sigh, but that's a self-contained job and we'll get there when we can pay for it. Plus if you can't do it now, you can do it when you put the pool in!)
But really: set the budget based on money, not based on wish lists.
Get flood insurance. If you can't get flood insurance in your area, don't buy the house. The value of our house just went up because after 214 houses ended up under water, a huge percentage of the houses in this city can no longer be insured against flooding. This is a serious and increasingly relevant issue.
posted by DarlingBri at 9:35 PM on December 21, 2009
When calculating what you can afford in payments each month, remember you'll want to put an extra $X00 a month into the House Fund. This covers sudden ownership costs you never expect like exterminators, roof leaks, tree trimming, plumbing issues, and all that jazz.
From there, you prioritize - not by what you want most, but by what it makes sense to absolutely do now (AV wiring, basement plumbing and wiring) vs what you can do later (48" cabinets you'll replace over the life of your home anyway, wood floors, landscaping).
If underfloor flooring sounds gorgeous but you can't do it in your 200K budget, don't do it. I really, really wanted underfloor heating but we couldn't fit it in our reno budget. Every single month I love my tiny mortgage payment; about two days a year I think "damn, this floor is cold." (And OK, every single day I look out at the back patio and sigh, but that's a self-contained job and we'll get there when we can pay for it. Plus if you can't do it now, you can do it when you put the pool in!)
But really: set the budget based on money, not based on wish lists.
Get flood insurance. If you can't get flood insurance in your area, don't buy the house. The value of our house just went up because after 214 houses ended up under water, a huge percentage of the houses in this city can no longer be insured against flooding. This is a serious and increasingly relevant issue.
posted by DarlingBri at 9:35 PM on December 21, 2009
I notice that you say your "guy" and you are buying a house. If you are not married to your "guy" you should have a contract between the two of you that spells out everything about your partnership including what happens if the partnership is dissolved. If you are not married the "partnership agreement" between the two of you isn't worth the paper it is(n't) written on.
posted by snowjoe at 6:46 AM on December 22, 2009 [1 favorite]
posted by snowjoe at 6:46 AM on December 22, 2009 [1 favorite]
commodity homebuilders generally have a limited menu of custom options; you can try asking for stuff off of this menu, but don't expect to get it. You are not a special snowflake to them. If they do allow additional stuff, expect it to cost more than it would from an independent contractor. you are a hostage to the homebuilder if you want a home on property they are developing.
While you generally can't modify the home very much, you can (and should) do everything in your power to slant the terms of the contract in your favor. the contract is your only recourse if the builder deviates from their promised schedule, amenities or other terms. they are going to try to build the house as cheaply as possible and charge you as much as possible, or get off scot-free if they can't, because this is their business. don't let your emotions about house-buying or your camaraderie with the sales staff make you an easy mark. Push at every opportunity for language that assesses financial penalties if they fail to perform as promised.
opinion: please, please don't add to the housing stock by building a brand new house in a greenfield subdivision. it's bad for the region's economy, it's bad for traffic, it's bad for the air, for the desert, for everyone's quality of life. please please please. not to mention you can get a better house, closer to work, culture, transportation and other amenities, for less money. it doesn't have to be new. really. please.
posted by Chris4d at 7:01 AM on December 22, 2009 [7 favorites]
While you generally can't modify the home very much, you can (and should) do everything in your power to slant the terms of the contract in your favor. the contract is your only recourse if the builder deviates from their promised schedule, amenities or other terms. they are going to try to build the house as cheaply as possible and charge you as much as possible, or get off scot-free if they can't, because this is their business. don't let your emotions about house-buying or your camaraderie with the sales staff make you an easy mark. Push at every opportunity for language that assesses financial penalties if they fail to perform as promised.
opinion: please, please don't add to the housing stock by building a brand new house in a greenfield subdivision. it's bad for the region's economy, it's bad for traffic, it's bad for the air, for the desert, for everyone's quality of life. please please please. not to mention you can get a better house, closer to work, culture, transportation and other amenities, for less money. it doesn't have to be new. really. please.
posted by Chris4d at 7:01 AM on December 22, 2009 [7 favorites]
Interesting point raised by TooFewShoes, and that is a good example of how an attorney can help you. They know all the tricks to get you what you want, and many more that you didn't know existed. A good attorney will know how to ask for exactly the limit the law allows, without getting personal with the builder and causing ill will.
posted by Geckwoistmeinauto at 8:16 AM on December 22, 2009
posted by Geckwoistmeinauto at 8:16 AM on December 22, 2009
This is one of the biggest purchases you will ever make. Shop around and let them know you're shopping around. Negotiate a better deal, a much better deal.
Look at "green" housing options. Put in way more insulation than planned; this will save a lot and pay for itself over time. Check out the tax credits for insulation, solar panels, on-demand water heater, better windows & doors.
posted by theora55 at 8:25 AM on December 22, 2009
Look at "green" housing options. Put in way more insulation than planned; this will save a lot and pay for itself over time. Check out the tax credits for insulation, solar panels, on-demand water heater, better windows & doors.
posted by theora55 at 8:25 AM on December 22, 2009
I first wanted to comment on the above comment on a PE. I am a licensed PE in Arizona and Oregon. I am not a structural engineer however. I am not qualified to comment on the structural integrity of a house in a profesional capacity. What you want for this is a sturctural engineer. I personally would go pay a structural engineer 50 bucks to tell me who the best contractor in the area is and Hire him/her to do my house inspections. Which I would do if I felt I couldn't do my own(seriously, the biggest purchase you are going to make and may live in for the rest of your life?-get a qualified professional to work on your behalf, not paid through the builder).
However if you are building a stick frame house (one that uses wood studs for the structure) you mostly just need to buy a book on framing for that part. Seriously the building code makes these things so overbuilt that fairly major screw ups don't threaten the integrity of the house (although some will...). I would recommend any of the books by Taunton Press on housebuilding-and get a subscription to Fine Homebuilding today.
If you are going to build a house look into alternative building methods (shea probably wont offer these or will charge way too much) better suited for the sonoran desert than conventional stick frame homes. For the Phoenix area I would recommend Insulated Concrete forms (ICF) as the way to go. THe initial cost will not be much more for a one or two story home but the long term cost of heating/cooling (especially cooling) are much less and maintenance is also less. The soundproofing is amazing as well. It is even easier to stucco them (the typical outside finish in phoenix). Talk to a a heating/cooling contractor about how well heat pumps work in pheonix (I have no idea-but if they do they can offer serious long term savings). Reinforce your roof for later installation of Photovoltaic solar systems and consider a solar hot water heater system right now (these work serious good in Phoenix-good enough to heat your home in winter). The other method to consider would be Structural Insulated Panels (SIPS). Best bet here is go pay a PE (which stands for Professional Engineer-not a trivial accomplishment)that is also LEED(another non trivial qualification) certified to discuss these methods. It is at least worth a few hours reading up on them online to decide if you want to tackle them. Good luck, enjoy the adventure and dont shy away from paying a professional for their opinion. Doing it right at the beginning really pays huge down the road.
posted by bartonlong at 10:30 AM on December 22, 2009 [1 favorite]
However if you are building a stick frame house (one that uses wood studs for the structure) you mostly just need to buy a book on framing for that part. Seriously the building code makes these things so overbuilt that fairly major screw ups don't threaten the integrity of the house (although some will...). I would recommend any of the books by Taunton Press on housebuilding-and get a subscription to Fine Homebuilding today.
If you are going to build a house look into alternative building methods (shea probably wont offer these or will charge way too much) better suited for the sonoran desert than conventional stick frame homes. For the Phoenix area I would recommend Insulated Concrete forms (ICF) as the way to go. THe initial cost will not be much more for a one or two story home but the long term cost of heating/cooling (especially cooling) are much less and maintenance is also less. The soundproofing is amazing as well. It is even easier to stucco them (the typical outside finish in phoenix). Talk to a a heating/cooling contractor about how well heat pumps work in pheonix (I have no idea-but if they do they can offer serious long term savings). Reinforce your roof for later installation of Photovoltaic solar systems and consider a solar hot water heater system right now (these work serious good in Phoenix-good enough to heat your home in winter). The other method to consider would be Structural Insulated Panels (SIPS). Best bet here is go pay a PE (which stands for Professional Engineer-not a trivial accomplishment)that is also LEED(another non trivial qualification) certified to discuss these methods. It is at least worth a few hours reading up on them online to decide if you want to tackle them. Good luck, enjoy the adventure and dont shy away from paying a professional for their opinion. Doing it right at the beginning really pays huge down the road.
posted by bartonlong at 10:30 AM on December 22, 2009 [1 favorite]
Response by poster: A little clarification:
We're not married and our finances are kept entirely separate. The financing and house will be in his name only; he is not counting on my income to help make mortgage payments. Should our relationship end, the house will be his and he will be able to afford it. That's not to say that we shouldn't get the agreement in writing, but that we've considered the problem.
We both like the idea of treating the people working on our home with kindness--showing up with donuts, coffee, and bottled water once a week or so to both build a rapport with the construction workers and let them know that we're watching.
Please keep the ideas coming.
Oh, and we're still in the consideration stage, Chris4d. If we find something already built that fits our budget and needs and is also closer to work, we'll go with that. Thanks for your plea and reminder :)
posted by Aleen at 10:34 AM on December 22, 2009
We're not married and our finances are kept entirely separate. The financing and house will be in his name only; he is not counting on my income to help make mortgage payments. Should our relationship end, the house will be his and he will be able to afford it. That's not to say that we shouldn't get the agreement in writing, but that we've considered the problem.
We both like the idea of treating the people working on our home with kindness--showing up with donuts, coffee, and bottled water once a week or so to both build a rapport with the construction workers and let them know that we're watching.
Please keep the ideas coming.
Oh, and we're still in the consideration stage, Chris4d. If we find something already built that fits our budget and needs and is also closer to work, we'll go with that. Thanks for your plea and reminder :)
posted by Aleen at 10:34 AM on December 22, 2009
This thread is closed to new comments.
Do you have a realtor? He/She should be doing that for you! If you dont' have a realtor, try getting them to give you part of the buyer's agent's commission (or else they get it all!)
Also - pay for upgrades that you want but aren't on the 'price sheet'. Some things are simple (cheap) that are a huge luxury and very expensive later. A list from my home include:
1) Add a second shower head in the master bath (I believe this cost <> 2) Pre-wire more networking and television cables than you think you need (minimum a 'four-pack' in each room).
3) Pre-wire for cable/satellite (4 RG6 lines to outside where you think the satellite dish might go!... dont let them do just one!)
4) Pre-wire all your audio (I mean it, doing it later sucks)
5) 48" cabinets
6) Taller base cabinets in the master bath (I forget the exact measurements but it makes for a more professional feel in the master)
7) Undercabinet lighting!
8) Audio pre-wire to your patio
9) Outlets, outlets, outlets. Seriously consider where you want critical outlets (Do you have a flat panel TV going anywhere? the outlet is key)
10) Don't forget the basement. Please dig the basement. Please rough-in the plumbing for the basement.
11) Don't pay your builder for Air Conditioning. Have them pre-wire/rough it in and pay an outside contractor to do it.
On a personal level... take pictures! You'll forget all the stages the home went through so having the pictures at each phase will help!
Good luck and congratulations!
posted by shew at 7:38 PM on December 21, 2009