A recent customer reminded me of something I take for granted, but he pointed out that most people aren’t aware of many of the potential pitfalls to avoid when hiring a builder to build a new home on your land. Since my customer happens to be a banker, and has seen the good, bad, and ugly of home building practices, I thought I would share what he shared with me. First, he reminded me that many home builders are not on solid financial footing, and that can be risky for someone hiring such a home builder to build on land that you own. Most people don’t realize that if the builder doesn’t pay his bills for some reason, the owner of that partially-built home is going to be on the hook.  How would you like to pay twice for your new home?

So, the question is how do you know you’re dealing with a builder who isn’t going to leave you hanging? The good news is there is a fairly simple technique: find out if your home builder has a line of credit with a bank to build homes on his own. If the bank is willing to lend the builder money to build speculatively (meaning building homes that aren’t sold prior to construction), then the chances are that builder is reliable.  A reputable bank has built-in methods of analyzing a builder’s finances that can detect if a builder is likely to go out of business and leave you with the bills. So, ask the builder point blank: do you have a line of credit, and if so, with whom?  If you get a blank stare or some story about how banks just aren’t lending, it’s time to move on.

Thanks for reading!

Tim

Hey everyone in Central Oklahoma! I am so fired up about the buzz surrounding the 2010 Parade of Homes I felt compelled to write about it, and to say thanks to everyone who has visited this week!  We have been covered up with optimistic new home buyers. If you haven’t been out looking at all the new homes in Edmond and Oklahoma City, don’t miss your chance. I’ve seen some really nice work done by many of the great home builders around Oklahoma City and Edmond, and if you don’t get the chance to check out new homes too often, this is a great opportunity.

Despite what you hear in the media regarding what’s going on in the national economy and national market for new homes, we’re going great guns here in Oklahoma, especially in Edmond and Oklahoma City.  Our economy is good, our unemployment is low, and we didn’t experience the craziness that much of the nation did with the run-up in new home prices.  People in Oklahoma kept their sanity, and didn’t do a lot of crazy financing or speculating when buying new homes.  As a result, we didn’t get a big pile of unwanted inventory, and we have all enjoyed solid value in our homes.

Come out and visit the Parade of Homes 2010!  You’ll be glad you did, and we will be happy to see you!

Thanks for reading!

-Tim

I just read an interesting article about media hype and whether anyone thinks now is a good time to buy a home… Guess what the conclusion is?  7 out of 10 people in the United States think now is a good time to buy a home – that’s more than in 2003!  Does that mean now is a good time? I’m a home builder – what do you think I’m going to say?

This might come as a surprise coming from someone who makes his living building new homes, but my honest opinion is, only you can determine whether now is a good time.  I’ve said this before, but if you’re looking for a home for your family, then the time to buy is when you have the need and the resources to get what you want and need.  Are there bargains out there?  Maybe.  Can you live in a bargain?  Your family probably deserves something other than a “bargain”, and if you are in a position to invest in a home for your family, and your family has a need, then it’s time to buy.

Now, let’s make the distinction between “bargain” and “value”: to my way of thinking, everyone deserves to get the most for her or his money, regardless of the product. When I hear the word “bargain”, I think of all that junk in the big bin at the front of the store.  You know, the bin you can’t resist looking through until you realize it’s all the junk the store couldn’t sell for full price?  Value, on the other hand, means (to me, anyway) something that you are happy to pay good money for.  Have you ever heard anyone say, “I want to make sure I get less for my money”?  The bottom line is you want to get the most of whatever is most important to you for your dollar.  In the case of a home, that might be square footage, convenience, amenities, or any number of things.  Again, and I’m repeating myself (please forgive me), you are the only person who can decide what’s most important and whether you are getting a good value.  None of that has anything whatsoever to do with whether anyone else thinks it’s a good time to buy.

Did I answer the question whether it’s a good time to buy?  I hope not.  That’s your call.  You can read the original article here http://bit.ly/dsDtx5 .

Thanks for reading!

Tim

Higher quality costs less.  Period.  That’s a paradox at the very least, if it’s not down right incorrect.  Or is it?  We’ve been led to believe for years, at least by the homebuilding industry, that high quality costs more.  But is it true?  It doesn’t have to be.  In fact, it never should be.

To make clear what I’m talking about, let’s first define quality.  To do that, think of a car: a “high-quality” car should go at least 100,000 miles before needing any major maintenance, maybe further.  My wife and I had a 2000 Honda Odyssey minivan that was still going strong at 169,000 miles before we go rid of it (OK, a minor fender-bender, and the insurance company calls it a “total”- not the car’s fault).  Now, that van didn’t have many bells and whistles (we knew the kids would trash it anyway), but the main thing is that it cost $26,000 and we drove it for 10 years.  That’s $2,600 per year for a car that needed nothing more than an oil change for over 150,000 miles.  That’s the definition of quality, and it was a lot less money than the equivalent Chrysler that would have spent half its life in the shop.

Why should you expect less from your home, something that cost several times more money than my minivan?  Right about now I would bet that many of you are thinking, “my house has crown molding”, or “yes, but I want granite counter tops”… That’s all well and good, but that’s not quality. That’s how the homebuilding industry defines it, and how many home buyers define it, but those items are bells and whistles.  If your granite counter tops have a nasty seam that looks like a speed bump, then those counter tops are low-quality. If your neighbor has Formica counter tops that have invisible seams, then your neighbor’s Formica counter tops are higher quality than your granite ones.  Which one costs more?  This brings us to the underlying reason why high quality costs less.

Imagine you are the granite counter top installer.  You arrive at the job site and discover that the person who installed the cabinets, upon which you are about to install the beautiful granite counter tops, didn’t bother to make sure the cabinets were straight and level.  Now, your counter tops are as flat as a pool table, but the surface that will support them is about as flat as the Rocky Mountains.  How’s that going to work out?   Do you think you’re going to have a problem doing a quality job?  Maybe you can cobble something together with some wood shims and so forth, but do you think that’s going to take more or less time than it would if the cabinets were level to begin with?  If it takes you more time, are you going to want to be paid more or less for doing the job?  All of a sudden, a poor quality job just cost more than a high quality one!

The same principle applies to every stage of home building.  How many times does a framing carpenter have to compensate for a foundation or slab that isn’t level and square?  How many times does a cabinet maker have to figure out how to install cabinets in a corner that isn’t square?  If you were one of those contractors, wouldn’t you charge more for working on those jobs where you had to compensate for someone else’s sloppy work?  While your at it, would you really bother trying to do a high-quality job if the builder didn’t insist upon high quality work from the contractor that came before you?  From now on, when you look at new homes, ask yourself how much of that high price (probably more than $100 per square foot!) is because of poor quality craftsmanship.  More importantly, ask yourself whether you deserve better. I think you already know the answer.

Thanks for reading!

Tim

What is the price per square foot for a new home in Edmond?

If I had a nickel for every time someone asked me that question… well, you know how that goes.  So, I bet you think I’m going to give a simple answer?  I wish I had one!  The reality is that there are a lot of variables that affect the price per square foot of a new home in Edmond or anywhere else.  The market for new homes in Edmond isn’t unique; just like any piece of real estate, the three most important factors are: location, location, and location.   OK, joking aside, the fact that a new home is located in Edmond has a great deal do with the price per square foot.  To begin with, since Edmond is a desirable place to live, the land on which you build your new home will be more expensive than elsewhere around Oklahoma City.

The next biggest impact on the price per square foot is the number of square feet.  How does that work?  Think about it this way: let’s say the lot you’ve selected for your new home in Edmond costs $30,000, and you want to build a new home that is 3000 square feet.  Now, the dollar amount that the cost of the lot contributes to the cost of the new home is $30,000 divided by 3000 square feet, which equals $10 per square foot (you see why I picked those numbers now…makes the math easy!).  To see the impact of the lot cost on the price per square foot, now imagine you want your new home to be 1500 square feet.  The same lot cost of $30,000 is now only spread out over 1500 square feet; $30,000 divided by 1500 square feet equals $20 per square foot.  The size of your new home in Edmond went down by half, but the cost per square foot doubled!  The same thing applies to all the other items in the home that have a fixed cost.  To say it another way, the cost of anything that goes in your home regardless of the size of the home (appliances, toilets, cabinets, etc.) must be spread out over whatever square footage your home has.  An oven costs what an oven costs, whether your new home is 3000 square feet or 1500.  If you spread that cost out over more square feet, then the cost per square foot goes down.  In general terms, all other things being equal, the bigger the new home, the lower the price per square foot.

As you can imagine, the cost of the materials you choose for your new home in Edmond or anywhere else also has a huge impact on the price per square foot. Let’s say you cover the floors with hardwood instead of carpet.  Depending on the wood, that’s going to increase the price by $5 – $20 per square foot (or more, depending on how exquisite your taste).

There you have it – the answer to the question, “what is the price per square foot of a new home in Edmond?”.  You can phrase the question another way, such as “how high is up?”.

Thanks for reading!

Tim

I read an interesting article on “How to vet a builder” a few days ago.  The link to the article is below.  It’s short and sweet, but covers the main points very well, in my opinion.  I thought it might be useful to give a builder’s take on the subject.  Here goes:

The first point in the article mentions hiring a “good real estate attorney” to review the contract.  This is an interesting point, and I’ve had a few customers take my contract (a version of the State Homebuilders’ Association form) to an attorney for review (although I’ve never had one ask for any changes afterward).  Even though most builder’s contracts are standard forms approved by the state Homebuilders’ Association, I suppose an unscrupulous builder might try to throw something in there that works to the customer’s disadvantage.  Hiring an attorney isn’t cheap, but if it makes you feel better, it’s worth it.  Here’s the single caveat I’ll throw in, though: if you don’t trust the builder, and think you need to have an attorney review the contract, then why are you letting him or her build your home in the first place?  If you think there’s something in the contract that’s going to cause a problem, what do you think is going to be in the house?  Unless you are a uniquely savvy buyer, and have all day, every day, to watch the construction, there’s no way to check every detail of the home being built.  What’s my point?  Hire a builder you trust, and you won’t have to worry about getting cheated.

Other great points in the article, with which I agree completely, as will any reputable builder: Investigate!  Search the builder’s name on the internet to find any information, good or bad.  Also, ask other home owners in the neighborhood who bought from that particular builder.  The big question to ask: did the builder meet your expectations?  It’s all about expectations, and a good builder knows to set the customer’s expectations up front, then live up to them (and exceed them).

Here’s the link to the original article: http://www.realtor.org/RMODaily.nsf/pages/News2010083005?OpenDocument

Thanks for reading, and have a great weekend!

Tim

Many of us tend to think old-school when thinking about how long it takes to build a new home.  Take your time and do it right.  I agree with that sentiment wholeheartedly.  So, when you take your time and do it right, it should take longer to build a new home, right?  Wrong!  Want to know why?  Read on…

“Doing it right” means planning every detail, down to the last stick of lumber, the last tile, and the last light bulb.  It means painstaking work designing plans, poring over them to find mistakes and problems that will crop up during construction.  It means re-drawing plans, visualizing how the heat & air ducts will run, where the plumbing will be, and figuring out whether a particular framing member will be in the way of a vent, fixture, duct, or wire.  Most builders skip these critical, time-consuming steps, knowing that they can always solve the problems “in the field”.  The problems always crop up, causing the builder to go back and re-work something, like having to remove framing components to route an air duct, which takes time, costs money, and reduces the overall quality of the job.

When you fix problems like these on paper, rather than on the job, the job moves more smoothly; when the job moves more smoothly, it moves faster.  Many builders will tell you it takes them a long time to build a home because they take their time and do it right.  Don’t be fooled.

Thanks for reading!

Tim

We’ve all heard the old saying, “Measure twice, cut once”, but it’s really just an old saying, isn’t it?  Well, it’s not, and it doesn’t just apply to your backyard home-improvement projects. We usually think of the saying as it applies to cutting a particular piece of material, such as a board, but the assumption is that we know how long the board needs to be in the first place.  How do we know how long the board needs to be so we can even measure it once, not to mention twice?

To answer that question, I’m going to shift gears a bit.  Think about the assembly line where a Lexus or BMW is built.  Do you think the person on the factory floor installing the car’s doors figures out how big to make the door, what material to make it out of, what tool to use to cut the shape, and what type of fasteners to use to attach the door to the car?  That’s ridiculous, isn’t it?  Even the worst car in the world isn’t built that way.  Who would buy a car that was built that way?  Nobody, yet chances are that is exactly how your house was built.  Your house!  I’m willing to bet your house cost more than the least-expensive new car, but for some reason, it’s OK to let the guy with a tape measure and a pencil figure out what kind of material is best for the most critical elements of your home!  That’s a bit scary, isn’t it?
When you’re shopping for a new home, ask your builder who designs and fabricates the critical structural components: a licensed Professional Engineer and a team of trained technicians, or a framing carpenter (who, in Oklahoma, practices without any formal training or license)?  In most cases, you’ll be shocked at the answer, and yet you’ll be expected to pay six figures for a product that was designed and built on the fly by people who simply don’t have the qualifications necessary to make the decisions they’re expected to make.

Don’t settle for half-baked, seat-of-the-pants construction techniques. It’s your home we’re talking about.  You deserve better.

Thanks for reading!

Tim

The more things change, the more they stay the same… Those words strike a chord during these economic times, and it’s no different when you’re talking about your home.  Whether the economic news is good or bad, one thing never changes: people always want (and deserve) the most for their money.  That applies to a home, whether new or used.  How does that affect you?

Well, since each home is unique, there is really only one thing that’s common from one house to another: square feet.  Put your Buyer hat on for a moment: if you’re shopping for a home in a certain neighborhood, and you come across two that you want to compare, what’s one way to determine which is the better value?  Price per square foot, all other things being equal.  How does that affect you when you are the Seller?  Think about this: what’s the first thing an appraiser does when trying to determine the value of your home?  She measures it.  She doesn’t look at the landscaping, doesn’t look at the lovely stainless appliances or the high-end travertine tile.  If you want to maximize re-sale value, the safest bet is square footage.  You want the most house you can get for the money.  Ever heard the old saying, “Buy low – sell high”?  It applies to square feet too!  If you can get a lot of square feet for the money, it’s like buying at the bottom of the market; those square feet will always have value, but the stainless appliances and stained concrete might not.  Think about those avacado-colored appliances your parents or grandparents had.  Think those add value to a home today?  What do you think might happen to the things that are in style today?  Guess what – square footage never goes out of style.

Thanks for reading!