The Top 5 Mistakes Buyers Make When Building a New Home
Mistake #5 - Not THOROUGHLY investigating your potential builders.
In my opinion the first thing you should do if you are considering building a new home is to gather names of potential builders – From friends, future neighbors, your neighborhood architectural control committee, internet searches, signs on houses currently under construction, etc. Try to obtain 4 to 6 possible Builder options. Once the names have been gathered place a phone call or send an email to EACH OF THEM on the same day. Odds are several will not ever return your call or email – ELIMINATE THEM. Every builder out there wants to sell another house – so if they don’t return your call now that is a good sign of how things will be during construction.
At this point the list will be narrowed down from the original 6 to 4. Of these 4, have several discussions with them about your wants, needs and ideas. Before you have even met any of the possible 4 builders, casual conversation will tell you a lot. You will be working very close with the builder you select for many months through the design and building processes and for an additional number of years through the duration of the warranty period. Go with your gut!! Personality conflicts now or uneasy feelings most likely will mean trouble later.
From the original 6 we eliminated 2 because they never called back. We then eliminated 2 more from simple conversations and our gut feeling. Without even meeting the potential builders you have eliminated the most unorganized and unprofessional of the original list. Now we are down to 2 or 3 pre-qualified potential builders. From these 2 or 3, request customer references from homes built over the past 10 years as well as some homes currently under construction. Take the time to call all of them. Ask questions. How was the initial design process? How was the serviec during and after the build? How well was the communication durign the build? These type of questions will tell you a lot about the builder. Odds are you will be able to eliminate at least one more at this point.
Now we are down to 2 pre-qualified, responsive, organized and prompt potential builders. Now go tour as many of their homes as they allow you to. Check out the quality of their work as well as the consistency of their work. Ask questions – try to get a sense of their experience, knowledge, flexibility, and overall professionalism.
After all these steps have been taken – 1 will stand out as the obvious, most experienced and qualified builder for your Family to work with for your dream home.
Mistake #4 - Experimenting with Building Materials and Methods
I am a firm believer in the old adage – “if it aint broke don’t fix it”. Many construction methods have been around for decades and work without fail.
One example is traditional stucco. For over a hundred years stucco has been applied in basically the same way. It is now a code requirement that all areas to receive stucco have a double moisture barrier. At Timeless Luxury Homes, we start with DuPont Tyvek, then staple on a 2.50# (Not the industry standard 1.75#) felt-backed metal lath to accomplish the double moisture barrier code requirement. We then apply a “scratch coat” of concrete stucco. Next, a “brown coat” of concrete stucco is applied. Lastly, we apply the finish coat of concrete stucco with the customer’s desired texture/finish. Many builders are now using a stucco process referred to as EIFS (exterior insulation and finishing system) and/or Dryvit System. These methods are designed to be faster and cheaper than the traditional method of concrete stucco. EIFS uses a foam panel or “T-Ply” moisture panel product directly over the studs. Next, a bonding agent is applied to the foam and/or T-Ply and then a thin layer of colored synthetic stucco or Dryvit is applied. This method is in fact quicker and cheaper but in no way compares in quality and longevity to the traditional method of concrete stucco application.
A second example is mudset showers and tub surrounds. This is the old fashioned way of constructing a shower and/or tub surround. At Timeless Luxury Homes, we start with a Moisture Resistant product on the walls of all showers and tub surrounds. Next, we utilize a rubber membrane/liner at the bottom of the shower and approx 12” up all walls. Then, we install a felt backed metal lath on all walls, overlapping the rubber membrane. Next, we install a hand mixed concrete mix approximately 5/8” – 3/4” thick and screeds off the excess so the walls are perfectly flat and smooth. Lastly, the owner selected tile is applied with the proper tile adhesive and grouted. A shower constructed in this manner will last a lifetime. However, not all tile installers know how to do this method. The newer, faster, and cheaper method is to install hardy-backer board directly over the sheetrock (usually standard sheetrock) and then apply the tile with thinset and grout. A shower constructed in this manner will last 5-10 years, maybe. In even more extereme cases, I have seen builders install tile direclty over the sheetrock. This method will ensure mold issues within a very short period of time. Anythgin other than a “Mud-Set” shower is in fact quicker and cheaper, but in no way, compares to the quality and longevity of an old fashioned Mud-Set shower.
Mistake #3 - Selecting a Builder Based on Price
Many consumers naively believe it is in their best interest to hire their own residentiual designer and/or architect to design their dream home and then solicit bids from multiple builders in an effort to obtain the best price. There are many flaws in this way of thinking. One of which is that, inevitably, all of the bids will come back higher than what they wanted to spend. In most cases it is not a little bit higher. I experience this about a dozen times each year when new customers bring me a finished set of plans they have already had designed. In most cases, the bids from builders are 2-3 times higher than what they originally shared with their plan designer. This NEVER yeilds great results, as most people then gravitate towards the builder with the lowest estimate in an effort to salvage the plans and the time and money they have already spent.
This is the beginning of a miserable experience. Everyone has heard a horror story or two about a bad building experience – most of them started this way. Adhering to the procedure described in MISTAKE# 1 will ensure this does not happen to you
Mistake #2 - Entering into a Cost-Plus Contract
I personally am a consumer advocate, and never want to see anyone taken advantage of. A truly custom home is a huge undertaking and one in which most buyers have little to no experience with. This makes it easy for immoral and unethical builders to say that right things, get a contract signed, start building, and then the buyer realize that they are not getgin what they thought they paid for or what they thought was included in the contract price.
This all starts with the bid process. I typically spend between 30 and 50 hours of my time preparing a proposal and specifications for a new home. This is because I believe in a fixed price contract. This means my price does not change or fluctuate with market changes. Building materials are similar to many consumer products – the price always goes up over time. It takes a lot of confidence, experience, and knowledge to sign a fixed price contract with a customer for any priced home. With a Fixed-Price contract. all of the monetary risk remains with the builder, the way it should be, as the builder is the expert.
Many builders prefer a cost-plus contract. With this method the buyer is responsible for paying the cost of construction plus a percentage of that cost to the Builder. These builders will tell you that you benefit when the price goes down (which it never does). Many potential buyers are attracted to this type of arrangement thinking they will help negotiate the prices and therefore save money.
Builders who use this type of contract can typically provide a proposal in a few hours or a few days, as they have no incentive to perform accurate quantity takeoffs and discuss details with their subcontractors and try to anticipate any potential problems with the plans. These builders are able to provide an educated guess as to the cost of each item in the house. Initailly their price is VERY appealing and often times can be as much as 20% lower than other bids. I lose jobs every year to builders that utilize a cost-plus contract. I cannot tell you how many of those owners eventually call or email to let me know they wished they had chosen Timeless Luxury Homes instead.
I have NEVER heard of an occasion when a consumer benefited from a cost-plus type of construction contract. I repeat NEVER. I do have first hand knowledge of consumers going 30%, 50% and even 100% over the original cost-plus estimate. This does not make customers happy. And to top it off the builder just made more profit – as he is paid a percentage of the actual cost. This is a win-win situation for the builder only.
Mistake #1 - Trying to Buy a Home by the Square Foot
I am often asked what my homes cost per square foot. This is a great question to ask. However, it is not a good way to shop builders and especially select a builder for your dream home. In 2011, I came up with an analogy that is perfect in my opinion:
A BASIC 2011 FORD TAURUS SE 4DR SEDAN
has a curb weight of 3285 pounds
and an MSRP of $25,170.
A BASIC 2011 LEXUS GS 4DR SEDAN
has a curb weight of 3505 pound
and an MSRP of $58,050.
You have probably already figured out where I am going with this. The Taurus is priced at $7.66 per pound and the Lexus is priced at $16.56 per pound. Most of us are aware of the many differences between a Taurus and a Lexus: the tires, the brakes, the steering wheel, the sterio system, the leather, the creature comforts, the road noise, the longevity, the driving experience, the motor reliability, and even the service experience.
This sounds too simple but it is exactly the same with homes. There is virtually no way for a consumer to compare Builders on an apples to apples basis. There are literally hundreds of differences between Builders: from the foundation, to the structural components, to the energy efficiency, to mud-set showers, even to the type of wood floor adhesive, there are literally hundreds of ways to cut cost and appear to be a better value. But in the long run poor quality materials and workmanship only lead to continual costly repairs.