Homes 101:
Building a New Home? Things you WANT to Know
Green building is spinning the wrong way…..
Recently Massachusetts passed what is know as the Stretch codes. They are additions to the existing Energy Code which pushes a more stringent code requirements for all new construction and renovations in the regions that adopted this code. The goal of course is to increase our focus on energy efficiency. Of course the sidebar to this is added cost. Cost will go up considerably to meet these new requirements. Pennsylvania last year passed a requirement to install sprinkler systems in all new homes. In areas that well output is limited it can be required that a second well is installed to supply the sprinklers in the event of a fire. Again this is a huge cost increase. The laws of unintended consequences apply here.
New homes are 100% more efficient that old homes even before these code changes. Watch your local papers and read about house fires, what homes are burning? is it new construction or old homes? So while all this good legislation is being passed to increase the efficiency and safety of new construction the added cost is putting home ownership further and further out of reach. Where do people on limited budgets go when they cannot afford new construction? Well of course to older more affordable housing. Our communities are burdened with old homes, these home take up valuable land space in prime areas. These homes area also the equivalent of driving gas guzzlers with no emissions control from the 1970′s. Meanwhile we are watching people purchase farm land in more rural areas to build on because it is more affordable. This reduces Green space, effects water tables, increases erosion and decreases uninhabited natural space.
So what is the cost of these new Green Building initiatives. More people living in more old homes that are as far from Green as you can imagine, increased urban sprawl, longer drive distances that increase fuel consumption etc etc. I am not so sure our efforts to be GREEN are as GREEN as we want them to be.
So I ask this question. Is all this new legislation to protect the environment really helping, or is it contributing to a bigger problem.
Don’t freak out……..
Today things are harder then they ever were when it comes to Real Estate, Mortgage Banking, Building permits etc. A number of our customers are learning this the hard way. Often times the customers we are working are in the process of selling their current house so that they can build their dream house. This process has a lot of pitfalls, and you could not pay me to be in the Real Estate business right now. Recently I was working with a customer who was selling their house, to someone who was selling their house to someone else. I watched this poor couple ride a roller coaster of ups and downs as they went through the process. You need to expect some of this. Between preliminary finance approvals, bank inspections, appraisals, final finance approval, the permit process etc. There are a lot of agencies trying their hardest to make sure deals go the right way. Though you will think their goal is sabotage. My only advice, “Don’t Freak Out”. Typically things fall into place. Our world still functions on people trying to make some money, money motivated people tend to find a way to make things work. Weather it is the buyers lawyer, the sellers lawyer, the title company, the appraiser, the Realtor, all of these people do not get paid when deals fall apart so they actual want the deal to go through and will work to make it happen despite all the obstacles. As the customer, you are often stuck sitting there just waiting for news and it will often look bleak. But be patient, if you have partnered with good people most of the time things work out just they was you planned. Don’t take the fun out of it by letting the stress get to you.
Because Value Wins…………
This may be a strange thing to say, but this horrible economy and worse housing market is proving to be a very good thing for our business. It used to be we have 50 visitors a week to our sales lot and we would say for every 25 visitors 3 will be people you work with and 1 might prove to be a customer. Right now if we have 20 customers in a week it is a good week. But the ratio of customers has changed dramatically. Why is that? Because in hard times you don’t see a lot of people dreaming unrealistically and the people who are dreaming of a new home are smart, educated people, looking for real value.
I was a sight builder long before I started building Modular (System built Homes) and it was not an easy transition to make. As builders our egos often influence our business sense. When you are doing really high end custom homes you start to see yourself as above more price conscious housing and for years that was all modular homes were. I will not bore you with the whole story but my first exposure to modular s was when someone I knew made a huge mistake and asked me to bail them out. They bought a modular home, just the house part then after giving a deposit and signing a contract realized they were in way over their heads in getting it built. So I reluctantly agreed to help them with clear expectations that I could do it but I was not going to be able to shine this pig and make it look like one of the houses I built. Well I was wrong. It was not a pig, in fact it was way more house then I could have built them for what they paid. That was what peaked my curiosity. A few years later I became a full time Systems home builder (modular) because I have always believed the public is smart, the public sees real value, and the public buys real value, and I knew, after years in the building business the homes have VALUE. Tons of it.
Here is one of my famous analogies that always has people nodding there head. Kia and Hyundai came into the American auto market and had very little success at first. They were Cheap cars and you got what you paid for right? Nobody wanted to own them because driving one screamed you were cheap. That was the only reason anyone would buy them right? Time proved that wrong. Now there seems to be more new Hyundia’s and Kia’s on the road then any other brand of new car. A similar thing happened in the late 70′s when to Jap car makers introduced cars in the US. Honda and Toyota, ever heard of them?
So how does this transition happen, easy, build a better product and sell it for less money and eventually the market will figure it out all by themselves. I think that is what is happening with our business right now.
The people who are building new homes in this market, are conservative people, who have saved their pennies, they do not make impulse purchases or get fooled by flash with no substance. They make smart decisions with their money and always buy value. Let’s hope I am right.
How to Select a Builder?
While talking with my customers I say this all the time. The most important decision you will make when building your new house is….The Builder, The Builder and the The Builder.
Why?…….. The construction business is about a billion little tiny things. Every piece of the process impacts the next one, however, if corners are cut or done wrong you will not know until after your warranty is over.
Say for example the excavator is having a bad day, and in one corner of the house he digs a little to deep, he realizes his mistake while leveling the base for the concrete guy and throws some dirt back in to bring it up, he does not have a vibratory compactor with him so he uses the bucket of the machine to pack down the dirt. I have seen this many times. However, the building code says foundations must be built on virgin ground (it no longer is once he digs through it) or be compacted to 95%. As big as the excavator may be, he cannot get that with the bucket. High compaction requires vibration which is why those machines bounce very fast. It is the only way to get high compaction. So the construction continues and no one will know. However, this requirement is in the building code for a very good reason. The test of time has shown us that ground that is not properly compact WILL settle over time.
So the house is completed and looks great, everything is back filled around the foundation, the house was built very well and looks so good when you move in. Weather cycles will cause loose ground to settle. 2 years later your see some cracks in the corner of the house. You call the contractor and he tells you that is normal houses settle. (no they do not!!!!!) a years later the door in that room does not close and the window binds when you open it. They drywall cracks more and more every year. You don’t see it but the trusses are also separating, and the floor starts to creak. None of these make the house a disaster, but the guy who cuts that corner will cut some more. Little by little time exposes there issues. Perhaps he does not get enough pitch on your perimeter drains, well then you would also get water in your basement, and he comes up a half load short of the stone for the septic. Then you have to have your system pumped every couple of years. There are so many ways short cuts will impact your house even if the trim work is perfect and the cabinets are so nice. You get my point.
The other short coming we see with contractors is an inability to estimate the cost of the project and commit to an absolute number. Make sure the contract you sign is concrete and has no room for cost increases. Some of the best builders out there obsess over the details of the construction, however, they lack the business skills to anticipate the cost of construction and get half way through a project when they realize the under bid parts of it.
So what can you do? This is hard, because builders are regional you will not find a consumer reports review on your builder. You may know people they built for (that is the best way) but be sure to ask all the right questions.
Did they finish on time?
Did they finish on budget?
Did they follow up if you had issues after you moved in?
How is the house holding up to the test of time?
Also ask for reference both new and old. Most builders will give you the ones they know will say good things. Ask to see a customer list and to select for yourself who you talk to.
But the most important tool you have is your gut. Many people get so excited about their new dream home, and if they find someone who tells them what they want to hear they just move ahead. You really need to trust your instincts.
Good luck
Mobile homes on Foundations
Often times when we have someone looking to build a house on a very tight budget they ask us about putting a mobile home on a foundation. I discourage it. While a mobile home is less expensive, I completed manufactures house on a foundation can often cost more. Yet it still happens all the time. Many businesses in our industry want you to focus on the house cost so they show you how much less expensive the house is with a mobile home, what you will learn later it that the site construction cost of putting it on a foundation is a lot more.
Mobile homes are designed to be supported under the trailer frame every 8 feet as opposed to a modular that is design to be supported on the perimeter (the foundation). So to build a mobile home on a foundation you need to install steel beams every 8′ across the foundation. In addition to the cost of the steel structure you will need to build the foundation higher to give head room under the house.
There is one other really important piece of information. For most people their home becomes their biggest savings account they have. You live in a house for 10 years, pay your mortgage and the value grows. Ten years later you find that you owe a lot less then your house is worth and you have an added $50-100,000 in wealth just by making your payments. That happens because the value of your house increases over time. However, Mobile homes depreciate. So in the case of a mobile home 10 years later your find that the house value does down at the rate (or faster) then you pay down on your mortgage. So perhaps you save $5000 on the purchase of the house but 10 years later you could have $80,000 less in value. Not a very good investment.
Modular versus Site Built after a hurricane
The home builder in this video is a respected modular home builder in Massachusetts who uses the same manufactures that we do. It is often said that Modular homes are better built houses, but that is just words. This video is pretty convincing. Check it out
http://www.youtube.com/watch?feature=player_embedded&v=BHDBRF9SZFw
A rose by any other name would smell as sweet…….
System built, is the new name for all homes built with some factory constructed elements. Panelized, Log, Timber Frame and even Modular homes are now being referred to as System Built. I am the guy that fought calling Trailers, Mobile Homes, and HUD Code Homes, manufactured housing (the new name of trailers). But sometimes there is value in the evolution of your identity. Trailers are no longer trailers because trailers have wheels and can be towered. Mobile homes are….well Mobile. Today’s are neither mobile or tow able so I guess it does not make sense to call them that.
Modular homes are still built in Modules, so why the name change? The answer has more to do with the perception then the reality. Modular homes when they first came out were a sister to mobile homes, most were built in Mobile Home Factories with Mobile Home products but they beefed them up a little so they met the residential building code. Truth is, they were not a lot better then their cousins. However, today we have factories that build just Modular homes and they build a house that is considerably better then a typical site built home, however, much of the market still perceives them as their adolescent brethren.
This is one of my favorite analogies that makes my point. My father was a builder and my grandfather before him. Back in my grandfathers day carpenters were craftsman with hand and tool skills that exceed what most of today’s carpenters have. Look at the windows in an old building. A carpenter built the wood frame the holds the glass, he morticed out where the glass would sit with a hammer and a chisel. The glass was cut by hand and glazed into place with putty. Then the sashes we installed into a hand built frame, pulleys and counter weights were installed to make it operate easily, it was built with real craftsmanship. That same window however is likely rotting, the glass is single pain and leaks air at a high rate, and it probably does not go up and down like it once did. It’s U-Value is likely very high. Today we use windows built in a factory, on jigs with molded vinyls, the windows are double thermal pain with argon gas seals and will last for hundreds of years with U-Values below 1.00. These are modular or System Built windows. Which one is better? You tell me, I hate sales pitches.
System built Homes are houses that use the most modern construction techniques and materials in a controlled environment where perfection is achievable. You don’t see framing contractors building walls on Jigs to assure plum, level and square, you don’t see them using a spray foam gun hanging from the rafters to assure a tight seal around the windows, outlets and connection points, and gluing in addition to nails all critical elements to get both an air tight seal and continuous structural adhesion. Nope site built homes are still the old windows my grandfather built. Yet the world still sees Modular homes as what they used to be. So the name change does not change who we have been for the past 10 years, but hopefully it will help the world understand today’s system built homes are the next generation or quality construction.
You can’t see Quality – Warning I might offend you
I have model homes for people to walk through and people always say the same thing. “I want to walk through your model to get a feel for the Quality of your houses”. You’re an idiot and you just told me so (see I warned you). I went to one sales seminar when I got into System Built housing because we have a retail location and weather I like it or not there is a sales element to it. Lesson 1- Identify the buyers buy decision and sell to it…. The biggest builders around the country all learned a long time ago that to “sell” to people you need to build to what they buy. Why? Because people are idiots…..(see I did it again) People BUY finishes so that is all you need to be concerned about, the rest of the house you can cut a lot of corners on. In no other industry is this as possible as it is home building. If Mercedes cars were really poorly built with lots of fancy stuff on them the public would know this. Because they are an international brand and the buying public has resources to find this information out. Sadly these resources don’t exist for home builders. So to make money in this industry the best path is to put a lot of high end finishes (Quality) into an inexpensive house and sell it for a lot of money. I visited a number of very high end houses this past weekend in a regional parade of homes where builders opened up houses they had built for the public to walk through. All of them were very expensive homes with lots of beautiful features. Most of them were exceptionally well built. A few were gorgeous and junk. Picture a 4 bathroom house with all the cosmetic upgrades you could dream about and enough hot water to take two showers before waiting for the tank to recharge. You could see daylight in areas you would never want to (around the fire box) and not in areas where you need to (the soffits were stuffed full of insulation, yes that roof will leak this winter but they will have some awesome looking icicles for the holidays).
The point is quality is behind the walls, under the floor, up in the attic and somewhere under the foundation, it is not in the quality of kitchen faucet and the amazing appliance package. Buyers need to dig deeper. The secret is to talk to older customers of a builder, someone who has lived in one of their houses for 3 or more years Most workmanship (quality) flaws do not expose themselves until long after the warranty has expired. On the front side learn to ask the right questions. I thre together a list. Not all of them apply to all houses but it is a good way to show your builder your smarter then their average buyer and the way the answer them will help you get a sense as to what is important to them as a builder. If they have no idea what you are talking about or how to answer your questions….move on.
- What is the process you use to design a septic system?……the answer should involve and engineer
- What is the compaction rate you look for under the foundation? ……..it should be 95% or build only on virgin ground
- What slump do you pour your concrete walls at? ………the answer should be under 7 but slump testing is not critical just as long as the contractor is not pouring soup into the forms because it is easier
- How do you adjust for low spots in the top of your foundation walls?……… no one gets concrete to pour perfectly level, some shimming of sill plates is required to make it perfect followed by no-shrink Grout to fill in
- How do you Seal your windows? ……..Ideally the answer is foam but fiberglass works as long as the guy doing it does it with some care.
- What is your typical air changes per 24 hours on your houses?……The code is 7 Max and energy star is 4 but most builders will have no idea
- How do you seal ledger boards against the house for decks?…….copper flashing or Grace paper both work
- How do you assure no ice back up on the roof?……. the key is ventilate ventilate.
- How much Ice guard do you put on the eave of the house?…… the code is enough to hit a line drawn vertical 24″ in from the inside of the outside wall
I could go on forever but there is little point. Chances are you will know after 3 questions if this is the right builder. It is important to note that doing these things right does not add more cost to the house. You can build a really inexpensive house and meet all of these criteria, and the code requires most of them, however, you cannot count on code enforcement to see these thing. This is just a matter of the mindset of the builder.
Begin with the End in Mind
Steven Covey in his “Seven Habits of Highly Effective People” calls this one of the seven habits, I love the expression and I spend my days working from the goals of the day backwards to the tasks I need to accomplish to achieve them. The same is true for building your new home. Everyone has an image of the house they want but that is not the end. The end is a house they want at a budget that they can pay for. Typically these two items do not line up, and since the budget most likely cannot change a lot, the house dream needs to adjust to the budget. Or, you can build your dream, live in it for a couple years and then give it to the bank, again this is probably not the END your were thinking of. So define the budget first and lets work backwards from there. Attached is a really fun math worksheet (how often do you hear that? fun Math?) that will help you fill in the blanks from where your budget is to the house you want. TRUST ME (never trust anyone who says that and has something to gain from it, in this case I do not) this is a much better path to your dream.
