STEP 1 - FIND A REALTOR
Building a home can be a tricky process. From the time you decide to build to the time you move in, there are countless hours of planning, meetings, and negotiating that take place. Finding a Realtor who's done it all before will ensure the process goes smoothly and the final product is exactly what you wanted. And it doesn't cost you anything!
Finding the right Realtor to represent you is important. As you look for the right agent, pay close attention to their experience in the home-building process and the area that you want to move to. Do they know the builders? Do they know their floor plans? Have they helped others through these same steps?
Finally, make sure that you have your Realtor secured before you go and look at any model homes. Due to home developer rules, you MUST bring your realtor with you IN PERSON the FIRST time you tour a model home. If you come unrepresented, your Realtor will not be allowed to represent you during the build process, in most instances.
For more information about why using a Realtor when building a home really pays, visit the Why Use a Realtor When Building section of DiscoverSunCrest.com
STEP 2 - FIGURE OUT YOUR FINANCING
Before you go out looking for homes, it's important to know what you can afford. Meeting with a mortgage lender, you will determine not only the amount that you qualify for, but also how to structure the best possible loan product to fit your short and long term goals. When building, you may have the option of purchasing the lot yourself, or doing subordination, or purchasing the build job and lot combined in permanent financing. This can be a complicated decision with a lot of factors (including price range, interest rates quoted etc.) Once decided, you should pursue a letter of pre-approval from your lender. This will buoy your position at the bargaining table and provide the builder with necessary information as to your strength. Some builders will offer incentives for using their "preferred lender". It is always a good idea to get comparative bids on a "Good Faith Estimate" since your loan can be with you for a very long time.
The biggest favor you can do for yourself when figuring out your financing is to keep one question in mind: "What do I want to pay each month?." Ask your mortgage lender about monthly payments, not just the total loan amount or interest rate.
I recommend avoiding the pitfall of thinking, "How much do I qualify for?" This method of "maxing out" your monthly income can tie you into a high monthly payment and leave little discretionary cash for you to spend each month and little money ready for the unexpected emergencies that can deplete people's savings accounts quickly.
Remember also that many things like monthly charitable contributions, lifestyle choices (eating out frequently, child care, frequent vacations, expenses of starting up a company to name just a few) won't ever show up on a lender's radar when they're determining how much you can afford and in the consideration of your debt load. Approaching your mortgage with a monthly payment mentality vs. a total loan amount mentality will help you find a house that will truly make your life comfortable and allow you to continue your current lifestyle and goal attainment.
STEP 3 - DETERMINE YOUR NEEDS
What do you need in your new home? Some considerations:
Home Features
- Square footage
- Floor plan
- Style of home
- Number of bedrooms/bathrooms
- Bonus rooms- home theatre, game room, sauna
- Acreage of lot
- Maintenance of home/yard
- Garage size
- Closet space, storage
- View
- Guest rooms/guest house
- Ability to entertain small or large groups
- Decks/patios/porches
- Hot tubs
- Fireplaces
Neighborhood Features
- Location - proximity to freeways, work, pubic transportation, local attractions
- Setting - neighborhood, quiet street, busy frontage
- Traffic
- Corner lot vs. middle of the street
- School boundaries
- Nearby parks
- Sense of community - seniors, young couples, mixed
Financial Features
- Price
- Homeowners' Association fees
- Taxes
- Potential for home appreciations
- Value of nearby homes
- Frequency of home sales
- Time frame to complete construction
Consider each of those points carefully and create the profile for your perfect home. You may even want to write down you list of prioritized home characteristics with others affected with the move (spouse, kids, parents etc. This will help you and your real estate agent come up with possible development candidates.
STEP 4 - FIND THE PERFECT HOME
It's time to hit the ground running. Working with your Realtor, select developments that fit your search criteria. A good Realtor should know what developments are available, and what development may soon be coming available that will fit your needs.
The Lot
In each development you visit, consider the lot size, the view, the potential for value appreciation,
the topography, and the impact of future development. Don't be afraid to ask questions. If your agent
doesnt know, they'll certainly find out from the builder.
The Floor Plan
One of the basic measurements of any floor plan is the cost per square foot. Compare those costs across
different developments. You'll be surprised to see the difference!
What do you want in a floor plan? How functional is it? How will the floor plan you select affect the home's resale value? Statistically, people move every 4.7 years. (That includes people who have built their dream home and who are "never moving again.")
Finally, what does the price of the floor plan you've selected include? What are the builder's specifications? The devil is in the details, so make sure you know what's included when you agree to a floor plan and builder.
STEP 5 - MAKE YOUR OFFER
You've got the lot. You've got the floor plan. Time to make the deal! Your Realtor will help you write your offer, and will make sure you understand the inclusions and exclusions, time frame needed for the selection you've made, and help you plan the best strategy if you have an existing home to sell. An experienced Realtor will also help you get the best possible terms and watch for the pitfalls that building nightmares can be made of. If they know the neighborhood, they know what concessions the builder has made in the past, what things to watch out for and realistic expectations. They can advise you on the best items to include in your permanent financing (maximize the inclusions in the initial purchase price ie. Landscaping, blinds, basement finish.)
STEP 6 - PRECONSTRUCTION MEETING
Here's where things start moving quickly. Once the offer is settled, you'll meet with the builder to set up the specifics of your home's construction. You will decided where to place the home on the lot you've selected, make any red-line changes to your blueprints, give a construction deposit, receive a construction schedule with your deadlines for design choices, and make an appointment at the builder's or subcontractor's design centers to begin your home's personalization.
STEP 7 - CONSTRUCTION
This is where the rubber hits the road, or rather where the bulldozer hits the ground. Experience has shown that your involvement in this phase has a visible effect on the positive outcome of your home and your overall building process.
The construction phase means lots of decisions need to be made. You'll need to meet certain design deadlines. What color carpet? What type of tile? What design for your doorknobs?
In this phase your Realtor becomes an invaluable asset. As you do your 4-way walk-through, subsequent walk-throughs, and punch-list walk-through, your Realtor knows what the home should look like each step of the way. They can immediately pick out any problems and serve as a buffer to the builder to get them fixed. This arm's-length mediation can save you many headaches and sleepless nights. Re-assurance is invaluable and experience pays!!
STEP 8 - SUBSTANTIAL COMPLETION/FINAL WALK-THROUGH
Once the home is substantially completed, it's time to get your approval and make final plans. You'll make a final walk-through, see that the punch-list items are completed, get the builder's warranty, and make sure you understand what the builder is obligated to fix during the first year of ownership and how their process works. If there are any problems, remedy for them is much easier if you understand your builder's method of resolution.
STEP 9 - CLOSING
Closing is the meeting in which you'll be asked to sign final documents to complete the sale and transfer title ownership. This usually takes place at a title company.
Note that in most instances, you won't actually take possession of the home until your loan has funded through the bank and the title transfer has been recorded at the county. Once this happens you will be given keys and codes. You will be responsible for setting up utility accounts, changing mail etc. Keep all your instruction manuals handy and organized for warranties etc. and operational instruction of all the new appliances etc. included in your home
Congratulations! You've built your home! Hopefully, a home that you will be proud to live in and enjoy for many years to come.
