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2013-02-24 1:33 PM

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Subject: Building vs buying a house?
Just curious if anyone has had a house built recently instead of buying and what some of the challenges were? We have been looking for a while at houses in our area and just don't see the dream home we are looking for...nothing thats on the market anyway, so we are thinking about buying a lot in our desired neighborhood and finding a builder. We aren't in any hury except for the fact that there are some pretty good deals on land and thought it may be a good idea to go ahead and buy the property and build when we're ready.

I did have my previous house built but that was 15 years ago and I don't really remember much about the process.



2013-02-24 2:49 PM
in reply to: #4634947

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Subject: RE: Building vs buying a house?

My 2 cents:  

-Buy the lot in your dream neighborhood, especially if there arent many left... if you dont end up building on it, chances are you will get your money back out of it (or a little more).

-You may be able to get more sq footage for your buck if you purchase a house, but if you want your dream house, build it.  Take your time and select a good builder.  Of course, walk through some of his houses to see if you like them.  And make sure all your expectations are on the table.  Ask questions like "How available are you when we want to contact you?"  

-Here's a website where you can look at some floor plans:  link  - If you build, make sure and add a secret room somewhere in the house!

-Some Q's you'll want to answer before you start:  How involved do you want to be?  Will you be picking out every little thing (trim, paint colors, hardware, doors, sink, etc).  Or will you leave a lot of it to the builder?  If so, make sure you like their style and taste.  What's your budget for the house?  Will your expenses increase? - like electric bill, water bill, property taxes, etc.

That's all I got for now...

2013-02-24 3:26 PM
in reply to: #4634947

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Subject: RE: Building vs buying a house?

I am in the same situation right now. I was looking at newer houses, but just didn't like the huge house on a small lot subdivisions with all the houses having garages out front and looking all the same.

Then I looked at buying land in a new subdivision, but I didn't like the builders restrictions, and all the rules about house size, colour, building time tables, no grass, no landscaping, no trees.

So, I bought a lot from a co-worker that she subdivided. Her house is 110 years old so the lot is in a great old neighbourhood with fantastic older character homes all along the street. It is in a very quiet neighbourhood with a school and community centre across the street. My lot has 3, 110+ year old trees on it with lilac trees all away around the perimeter of the property on 3 sides.

I am in the process of finding a builder to build MY dream home. It is going to be small (less than 1400 sqft) with a large garage for my NSX, motorcycles and all my bicycles, and a wood working shop. I love the prairie style, or mission style for homes so that is what I am going to get. I am going for the it looks like an old house, but it is completely modern inside and extremely energy efficient.

It is a lot of work to build your own home. If you act as your own general contractor and hire all the sub-trades you need pretty much a year off to be there to make all the decisions. Even if you hire someone to act as your contractor, it is still a very long process. But, very rewarding in the end. You get the house you want, with the features you want, and no compromises. If you are married, you probably won't be at the end of it all Tongue out.

Good luck with what ever you decide.

2013-02-24 6:42 PM
in reply to: #4634947

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Subject: RE: Building vs buying a house?

I had our house built 3 years ago.  I moved to this area 7 years ago and we rented half a house for 4 years.  Cheap but tough with the kids.  None of the houses we looked at appealed to both of us so I found a small lot near national forest that perked well and built.  I had done the layout 10+ years ago and knew what I wanted for utilities etc.  Its definitely a learning experience and there are things I would do different if I did it again. 

The builder I used was highly recommended by the bank and others but I found some short cuts that I wasn't aware of until after we were moved in.  That said he let me do whatever I wanted to tackle.  I stained and painted all trim and doors, did some of the stonework for the fireplace and made/installed the mantle, handled the geothermal installer, and installed the sandmound septic system.  All made for a lot of late nights.

I had it completed enough for us to move in and now take on 1-2 projects a year.  Put in the yard the first year.  Built the back deck the second.  Built a pole barn last year.  Finishing half the basement now and may do some decorative stonework and shutters this summer. 

 

2013-02-25 9:55 AM
in reply to: #4634947

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Subject: RE: Building vs buying a house?

fwiw, I hear good things about panelized homes. These are homes where a lot of the work is done in a factory and the home arrives in 8 foot ~ sections- not the boxy, trailer type homes usually associated with "modular".   One guy I know had a 2200 sq ft home under roof in less than a day.  Their industry claims that their quality and tolerances are superior because most of the work is done indoor, under stricter, better conditions, w/o weather, lighting or other factors that can sometime have a negative effect.  Other than the guy I mentioned, I don't have much other first-hand knowledge of these homes.  There are many websites and builders in this industry now and some of them have beautiful looking models. Obviously, proceed with caution, do your homeworker with whomever you go with, but I hear there are some savings going this route.

2013-02-25 11:37 AM
in reply to: #4634947

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Subject: RE: Building vs buying a house?
We are currently in the pre-process of building.  If nothing falls through at the last minute, then we will break ground within the next 2 weeks.  We have taken about 6-7 months to get this point:  selecting lots, interviewing builders, checking references, etc.  We were supposed to break ground about 3 weeks, but my wife found a lot she liked better at the last minute.  We decided to build for several reasons.  First, I designed our plan from top to bottom including cabinets, built ins and everything in between to fit our family.  It has been a dream of mine.  Second, we could not find a home to buy that quite fit our (my wife's!) wishes or style.  Third, there aren't many spec homes any more and my wife does not like "other people's dirt," as she calls it.  We still have a long way to go!


2013-02-25 12:37 PM
in reply to: #4634947

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Subject: RE: Building vs buying a house?

I design and manufacture post and beam home and addition kits.  post and beam house

The biggest problem that my clients have been facing is coming up with 30% down for the construction loan.  Many people have to wait for their current home to sell before they have the capital to build.  Its a catch 22 because once you sell your house, you will have the money, but no longer have a place to live while the house is being built.  

It used to be 20%, but because of the '07 crash, Banks need to make sure the house wont devalue below 80% loan to value to avoid PMI.  

2013-02-25 12:55 PM
in reply to: #4634947

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Subject: RE: Building vs buying a house?

We had ours built back in 2003 but I don't think much has changed as far as what to do and what not to do.

As you can imagine the experience will differ tremendously based on which builder you go with.  We had a wonderful experience with a great/reputable builder in our area and everything went perfect.  We even made several changes mid construction and he didn't charge us a thing.

However, we know some friends who went with different builders that had horrible experiences with the builder gouging them at every chance.

So my advice is to get references of people who have used a builder and hopefully you know some people personally that will feed you straight.

Now for the house itself, I strongly recommend looking at as many houses as you can and writing down the things you like and don't like.  This way when it comes time to build your house you have a list of things you want.  For example, some things we did on ours that we got from other houses:

  • added a storm shelter under the entryway stoop
  • extended the third stall garage to the back of the house effectively making it a four car garage
  • wood burning fireplace
  • river rock surrounding the fireplace mantle
  • all plumbing, furnaces, drains, electrical, etc... routed to a single utility room in the basement.  If you don't do this the utility companies bring things in wherever is easiest for them.

So, our experience was wonderful and I'll never not build a house I live in going forward, but we did a lot of homework ahead of time to make it happen.

2013-02-25 7:02 PM
in reply to: #4636051

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Subject: RE: Building vs buying a house?
bmass - 2013-02-25 12:37 PM

We are currently in the pre-process of building.  If nothing falls through at the last minute, then we will break ground within the next 2 weeks.  We have taken about 6-7 months to get this point:  selecting lots, interviewing builders, checking references, etc.  We were supposed to break ground about 3 weeks, but my wife found a lot she liked better at the last minute.  We decided to build for several reasons.  First, I designed our plan from top to bottom including cabinets, built ins and everything in between to fit our family.  It has been a dream of mine.  Second, we could not find a home to buy that quite fit our (my wife's!) wishes or style.  Third, there aren't many spec homes any more and my wife does not like "other people's dirt," as she calls it.  We still have a long way to go!
how did the construction loan process pan out, was it difficult? Most info on the web says they require at least 20% down and it's a little harder to secure a construction loan.
2013-02-25 7:51 PM
in reply to: #4636826

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Austin, Texas or Jupiter, Florida
Subject: RE: Building vs buying a house?
skipg - 2013-02-25 7:02 PM
bmass - 2013-02-25 12:37 PMWe are currently in the pre-process of building.  If nothing falls through at the last minute, then we will break ground within the next 2 weeks.  We have taken about 6-7 months to get this point:  selecting lots, interviewing builders, checking references, etc.  We were supposed to break ground about 3 weeks, but my wife found a lot she liked better at the last minute.  We decided to build for several reasons.  First, I designed our plan from top to bottom including cabinets, built ins and everything in between to fit our family.  It has been a dream of mine.  Second, we could not find a home to buy that quite fit our (my wife's!) wishes or style.  Third, there aren't many spec homes any more and my wife does not like "other people's dirt," as she calls it.  We still have a long way to go!
how did the construction loan process pan out, was it difficult? Most info on the web says they require at least 20% down and it's a little harder to secure a construction loan.

We're building too. Waiting on permits. Got a great layout in a great neighborhood. Danger is in the add-ons. Stuff like hardwood floors, changing floorplan stuff, etc.

I think there's something to be said for picking each item that you wanted and how you wanted it.

As for financing, I had a VA loan and rates are ridiculously low. It shouldn't be too hard to get a construction loan if I got one...

2013-02-25 8:10 PM
in reply to: #4634947


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Subject: RE: Building vs buying a house?
I just built a house 3 months ago. Pros and cons for both. A pro of buying a house is that you know what you are getting. You can walk through it and check out what you like and dislike about the house. Also, the price is set. When you build a house You may get off work to check out construction and notice things that you didn't have in mind and now its to late to change. I was on vacation when they did my foundation and it was 8 feet closer to the street than I wanted it. Also there are a few soft spots on my laminate wood floor that have some bounce. Additionally, when selecting wall colors you have no clue what its really gonna look like until the walls are painted. Luckily, the paint I selected goes well with the house. Futhermore, you will probably go over budget when building a house. You will want to upgrade to granite, You'll go to the cabinet, lighting, and flooring store and something will catch your eye that you have to have. I went way overbudget on my cabinets because I wanted beadboard. What was I gonna do? Buy crappy cabinets and tear them down in 5 years and put up the ones I originally wanted? Yeah, that would save alot of money. Not! That goes for granite, and flooring as well. Also, adding things like a deck,etc that are cheaper to put on during construction while builders are there vs. doing it a few years down the road for more will jack up your final sticker price. I think building is the better option but you have to be on the contractor's and sometimes be a royal . They just want to throw up your house. Make some cash and move onto the next one.


2013-02-25 8:10 PM
in reply to: #4636884

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Subject: RE: Building vs buying a house?
GomesBolt - 2013-02-25 8:51 PM

skipg - 2013-02-25 7:02 PM
bmass - 2013-02-25 12:37 PMWe are currently in the pre-process of building.  If nothing falls through at the last minute, then we will break ground within the next 2 weeks.  We have taken about 6-7 months to get this point:  selecting lots, interviewing builders, checking references, etc.  We were supposed to break ground about 3 weeks, but my wife found a lot she liked better at the last minute.  We decided to build for several reasons.  First, I designed our plan from top to bottom including cabinets, built ins and everything in between to fit our family.  It has been a dream of mine.  Second, we could not find a home to buy that quite fit our (my wife's!) wishes or style.  Third, there aren't many spec homes any more and my wife does not like "other people's dirt," as she calls it.  We still have a long way to go!
how did the construction loan process pan out, was it difficult? Most info on the web says they require at least 20% down and it's a little harder to secure a construction loan.

We're building too. Waiting on permits. Got a great layout in a great neighborhood. Danger is in the add-ons. Stuff like hardwood floors, changing floorplan stuff, etc.

I think there's something to be said for picking each item that you wanted and how you wanted it.

As for financing, I had a VA loan and rates are ridiculously low. It shouldn't be too hard to get a construction loan if I got one...

good to hear about the financing and the builder we have picked out has most upgrades as a standard for his builds things like hardwood floors, custom cabinets, granite counter tops, 8' solid core doors, high quality windows an complete landscape package front and back yard. Bad part is that all quality builders are expensive.

Edited by skipg 2013-02-25 8:24 PM
2013-02-25 9:58 PM
in reply to: #4634947

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Subject: RE: Building vs buying a house?

I was a custom home builder for 10 years, prior to starting a manufacturing company 17 years ago.  Here are a few thoughts:

- In today's market, it is MUCH cheaper to purchase a previously occupied house than to build a new one.  Used home prices are depressed but construction costs are not. 

- If you are set on building, find a builder with a good reputation.  Ask the builder for the name of the owners for the last 5 homes that he/she built (not just 3 references that he chooses).  I good builder will gladly furnish that information.  Do your homework on finding the right builder.  DO NOT think that you can "get a deal" or go with the lowest bidder with the naive notion that just because the builder signed the contract that you will get what he/she agreed to.  They are in busines to make $$$$, not do you any favors.  Be absolutely certain the everything is spelled out in the contract.

- Be realistic on what you want/expect.  I always found that most customers started the process thinking that they would be satisfied with much less than what they ended up getting.  Add-ons are more expensive along the way than they are if included in the original quote.  My happiest customers were realist about what they wanted or could live with in the beginning.....prior to signing the contract.

- DO NOT expect the builder to eat anything that you add-on.  It's your house, not his!!!

- It is usually more expensive to build it yourself than to have a builder build it.  Subs give their best prices and do their best work for builders who they know will hire them again and again.  Many of them will bend you over and........  Also, you will not get "builder's" pricing from lumber yards or most subs.  They will also show up/complete work for a regular customer/builder before they get around to doing your work. 

If you find a good builder, listen to his/her advise and are realistic; it can be a very satisfying experience.  Two of my best friends started out as customers.

Good luck!!! 



Edited by riltri 2013-02-25 9:59 PM
2013-02-26 7:38 AM
in reply to: #4634947

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Subject: RE: Building vs buying a house?
bmass - 2013-02-25 12:37 PM

We are currently in the pre-process of building.  If nothing falls through at the last minute, then we will break ground within the next 2 weeks.  We have taken about 6-7 months to get this point:  selecting lots, interviewing builders, checking references, etc.  We were supposed to break ground about 3 weeks, but my wife found a lot she liked better at the last minute.  We decided to build for several reasons.  First, I designed our plan from top to bottom including cabinets, built ins and everything in between to fit our family.  It has been a dream of mine.  Second, we could not find a home to buy that quite fit our (my wife's!) wishes or style.  Third, there aren't many spec homes any more and my wife does not like "other people's dirt," as she calls it.  We still have a long way to go!

how did the construction loan process pan out, was it difficult? Most info on the web says they require at least 20% down and it's a little harder to secure a construction loan.

 

The builder is getting the construction loan and buying the lot.  We have gotten pre-approved for the loan amount, and will be putting 10% down to initiate building.  The rest will be due upon completion at closing.  Fortunately, our credit is good.  We currently rent, own our cars, have no outstanding debts, and can put down 20% at closing; so, the loan pre-approval process took less than a half hour.

As for final construction cost, this was one of the major questions we asked all of the builders we interviewed and their reference list.  We specifically asked for a list of the last 10 families that the builders had completed homes for, instead of a "hand-picked" list from the builder.  Also, at our first meetings, we were very specific in what we wanted in each area of the house (hardwood, tile, ceiling height, granite, energy star certified, etc.)  This has left much less wiggle room for mark-ups.

2013-02-26 11:01 AM
in reply to: #4634947

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Subject: RE: Building vs buying a house?
Well I built a house two years ago and the buiding process was easy. The financing was a awful. My wife and I have very stable jobs and have a good income. The problem we had was with the appraisal. Our plans had to be appraised for the construction loan and it was going to cost more to build than what it appaised for because of what recent homes where selling for. We where using our land for the down payment, one person said our land was worth 50,000 and the appraised value of when we bought it 2 years earlier was $75,000. They told use we had to come up with $25,000 more. We had great credit and could of made a payment of twice the amount it was going to be but several banks wouldn't touch it. Finally we found a bank that let me pick the person to do the appaisal and I used the guy who appraised it the first time.
2013-02-26 7:18 PM
in reply to: #4634947

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Subject: RE: Building vs buying a house?

Depending on where you live, look closely at using an Amish builder.   My father-in-law lives in an area with a large Amish population, about 2.5 hours away from our house.  He frequently uses a particular builder when he's got construction projects at his business or his house.   When we were deciding on a builder we approached him to see if he was interested.  We were building just as the 2007-08 market was starting its implosion, and the builder had just had his first "week off" in about 7 years.   So, he was a little scared and decided to bid on our project, even though it would be a challenge.

We used most of his subcontractors (who were all mostly Amish) who also agreed to take the job despite the travel.  

Every local subcontractor that I hired (Heating and Air, Excavator, Septic) looked around the house and immediately asked "Who's building this house?"  They were all extremely impressed with the quality and speed at which the house was going up.    I was also very impressed.

Example:  Once the basement was poured, the framing crew (7 men and one woman)  showed up at noon on a Tuesday.  They had scheduled their first inspection (sill plates installed) for 2 PM.  They were ready for the inspector.  By 5PM that day, the entire first floor joists and decking were installed. (Including 3 steel ibeams that were 8" tall and over 15' long... installed by hand, I have no idea how)

After 8 working days, the entire house was framed, roof on, windows and exterior doors installed, ready for brick and interior work.

In the end, because they had to plan their travel carefully, the process took about as long as building with a local builder.   But while they were there working, things happened FAST.  

I couldn't be happier with the experience.  Do yourself a favor and check out an Amish builder, if available.



2013-02-27 10:43 AM
in reply to: #4636911

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Austin, Texas or Jupiter, Florida
Subject: RE: Building vs buying a house?
skipg - 2013-02-25 8:10 PM
GomesBolt - 2013-02-25 8:51 PM
skipg - 2013-02-25 7:02 PM
bmass - 2013-02-25 12:37 PMWe are currently in the pre-process of building.  If nothing falls through at the last minute, then we will break ground within the next 2 weeks.  We have taken about 6-7 months to get this point:  selecting lots, interviewing builders, checking references, etc.  We were supposed to break ground about 3 weeks, but my wife found a lot she liked better at the last minute.  We decided to build for several reasons.  First, I designed our plan from top to bottom including cabinets, built ins and everything in between to fit our family.  It has been a dream of mine.  Second, we could not find a home to buy that quite fit our (my wife's!) wishes or style.  Third, there aren't many spec homes any more and my wife does not like "other people's dirt," as she calls it.  We still have a long way to go!
how did the construction loan process pan out, was it difficult? Most info on the web says they require at least 20% down and it's a little harder to secure a construction loan.

We're building too. Waiting on permits. Got a great layout in a great neighborhood. Danger is in the add-ons. Stuff like hardwood floors, changing floorplan stuff, etc.

I think there's something to be said for picking each item that you wanted and how you wanted it.

As for financing, I had a VA loan and rates are ridiculously low. It shouldn't be too hard to get a construction loan if I got one...

good to hear about the financing and the builder we have picked out has most upgrades as a standard for his builds things like hardwood floors, custom cabinets, granite counter tops, 8' solid core doors, high quality windows an complete landscape package front and back yard. Bad part is that all quality builders are expensive.

Key seemed to be get the upgrades into the loan amount up-front.  Otherwise, you have to pay out of pocket for changes along the way.  

The Loan Companies were unable to do too much magic since the rates were so low.  They're all pretty much the same numbers.

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