Building a House: Own The Lot, Control The Price.

Outcomes are determined by control. The residential home building process is  all about control.  Your satisfaction of the process will depend on your ability to maintain control and your wisdom to relinquish control to responsible people.

When you control the building site, you have the upper hand in everything from design (to the extent building restrictions permit) to completion date. If the outcome matters, this might be a strategy to employ.

  1. Locate a building site that fits your lifestyle, and is not connected to a builder. Unless the builder will let you build with a builder of your choice on the lot she or he is selling to you, keep looking.
  2. Get an accepted offer with necessary contingencies to do your due diligence on the lot, and include a contingency like this:  This Offer is contingent upon buyer executing a residential building contract with a builder of buyer’s choice within ________days of acceptance of this Offer. (Allow sufficient time for design, pricing, and selecting a builder.)
  3. Before you  close and take ownership of the lot, you want to know the lot is sufficient for your purpose and you have a plan that can be built by a responsible builder at a price, with the amenities you can afford.
  4. Work with an architect to design a plan.  Architects will save you time and money even if the plan is relatively simple. They should know the current building codes and have smart ideas on wise use of the space. An architect will specify materials and construction methods.
    1. While the architect is working on your plan, study up on Building Science.  Be prepared to know best practices in construction.
  5. Take your plans and specifications to builders of your choice. Ask them questions about their construction practices. Knowing a little bit about Building Science will help you ask prudent questions.
  6. The time you spend getting your specifications nailed down will come back to you in dollars and cents. Every decision made with builder’s bidding against each other is one less place for the builder you choose to have you accepting her/his price later.
  7. You’re going to get a bid from a builder. Make sure that bid includes a copy of the builder’s warranty, construction schedule, and a copy of their contract. At the end of the day, it’s a leap of faith you take with the builder you choose, but the contract is your rule book…your attorney may have some ideas to keep the rules favorable.
  8. Take out your own construction financing. If the builder tells you they can save you money by acquiring the lot from you and you buy the house as a “turn-key” finished product, ask for proof. Remember, he who has the control of the lot has the control of time and money.
  9. Include the architect in the process of reviewing the construction. The building plan is called a plan for a reason. Contractors may choose to deviate from the blue print for their benefit, but the cost to the next subcontractor on the job is your problem. Someone, and don’t expect it to be the builder, has to make sure the house is built to plan. Builders charge for change orders. You can charge for deviations and the corrections to get back to the plan.
  10. The builder gets the final payment at the time you take occupancy. If you work with an attorney on your side, you will not make the final payment without 100% of the work finished. If you do take occupancy with loose ends, an escrow of more than sufficient funds is a good idea.

As you navigate this building process, keep control in mind. Either you have it or someone else does. Control is divisible by nothing.

 

The Financing Contingency is NOT a contingency to get financing

The Financing Contingency is not what it says it is. From the date of acceptance of the Offer, until the moment the lender approves disbursement of funds (at the end of the hour of closing when all…

Source: The Financing Contingency is NOT a contingency to get financing

The Financing Contingency is NOT a contingency to get financing

The Financing Contingency is not what it says it is. From the date of acceptance of the Offer, until the moment the lender approves disbursement of funds (at the end of the hour of closing when all papers are signed) the buyer and seller are proceeding with a leap of faith.  The buyer does not have a protection of their obligation to close being contingent on obtaining the funds to close from a lender. And, satisfaction of the Financing Contingency is  no assurance that the seller will receive any money on the date of closing.   The Wisconsin Offer to Purchase Financing Contingency, unless modified, is only a contingency for the buyer to be able to obtain a Commitment Letter….nothing is said about the offer being contingent on getting the money.

Financing Unavailable. It happens that the loan approval process uncovers a reason that the otherwise ready and able lender is not willing to issue a mortgage commitment letter for the buyer on the terms of the Offer, or on any terms. According to the contingency stated in the contract, the buyer agreed to send written notice to the seller stating the financing is unavailable and provide a copy of the lender’s rejection letter. The next step is for the seller to take up to 10 days to finance the transaction on the same terms…unless the buyer’s agent filled out the Offer as suggested with a name of loan source.  Because it is common practice to write in “Conventional Loan” even though the offer prompts in capital, bold letters (INSERT LOAN PROGRAM OR SOURCE), buyers are sometimes in an unattractive spot waiting up to ten days for sellers to release them from the contract.

 

 

 

 

 

Will It Work?

Nahum Waxman, author of Cooking Dumb, Eating Dumb gets asked, “Will the recipe work?” His answer is deeper and clearer than a yes or no. Nathan says in essence,  It is they who must work, and think. They must apply intelligence to ideas.

The moment you sit down with a blank real estate contract and a client with hopes, you apply your intelligence, your insight, your creativity to crafting a plan. Whether the plan works depends on whether you think, work, apply your insight.

You can do it.

She’s 78 And Selling 262 Homes in WI

Born in 1938, at the height of the Great Depression Fannie Mae has aged well. Like your grandma, Fannie Mae is kind, easy to get along with, and unlike Grandma Lucy, she has about  262 homes in  Wisconsin for sale. Fannie is smart. She didn’t set out to be a titanic real estate owner, she got there the new fashioned way…people she guaranteed would never, actually did, walk out on their home mortgages. (NOTE: No judgment (on the public) here. Public policy, corporate greed, lender malfeasance, illegal real estate practices, forced people into decisions they would never have made.) And just like that Fannie’s phat with homes for everyone. And by phat, I mean she’s EXCELLENT!

Want to be a home home owner or  a hero to someone? State at Homepath.com . Fannie is internet savvy. She built a fast, accurate, easy to use on-line process for finding homes and making offers. It’s so easy, us Realtors® can use it. Full disclosure, my first time through I challenged the system because, well because I do that. And I learned for you…don’t do that. Don’t challenge the system . Roll with it. Fannie isn’t demanding you jump through hoops; more like fill in the boxes. Follow these steps and you’re on the path home:

  1. Fill out your State Offer to Purchase Form
    1. Skip the inspection contingency and financing contingency…Fannie has her own
  2. Fill out the Fannie Mae Addendum…basically this form says we agree everything we  have for conditions in our State Offer to Purchase form attached is over ridden by this Addendum. That’s cool. The Addendum is easier on the Buyer than the WI Offer to Purchase which has a seller advantage slant.
  3. Fill out any other (there may be one other) Fannie Mae form
  4. Have your buyer sign in ink. If Fannie is accepting digital signatures today I’m not aware. Do it old school…sign in ink. Black ink. Use your best penmanship…Fannie want’s Catholic school quality cursive.
  5. Find the home you’ve written the offer for on Homepath.com and click on Make An Offer
  6. You  are now just entering digits and short summaries of contingencies…that’s easy!
  7. Last you upload your documents:  Affidavit of owner occupancy (investors are not permitted for the first 20 days), pre-approval letter, Offer to Purchase, Fannie Addendum)
  8. Submit your Offer and wait mere hours for a response…Fannie doesn’t work on weekends, but she’s efficient.

Go and be bold. Be fearless. Be Humble. Fannie is fair but firm…play by her rules and you’ll be happy. She guarantees it.