HOUSE-N-HOME-BUILDING.COM NEWSLETTER #211
House Building Contract
New House Building: Money Saving, Convenience and Healthy House Tips
Beginning with the April 2002 edition, newsletters are now archived
online at: http://www.house-n-home-building.com/newsletters/newsletters.html
1. Money Back Credit Cards
An simple idea that will save you hundreds
2. The 10 most common mistakes in the building of a new home, Mistake #3
Guest article by Chris McMinn, Professional Cost Analyst and Consultant
3. Construction Contracts
Guest article by Tom Landis, OwnerBuilder.com
4. Useful Links
5. Thought for the Day
6. Subscription Information
Please forward this newsletter to anyone whom you think may be interested!
1. Money Back Credit Cards
If you take our advice and build your house without being the GC, a money back credit card can easily save you several hundred dollars. If you choose to be the general contractor you will be responsible for buying many of the materials that will be used in your new home. These purchases will add up to tens of thousands of dollars. In this case, a simple cash back credit card will save you thousands. One piece of advice though, pay the balance at the end of each month. If you don’t your savings will evaporate and the card will cost you, not save you money. If you are undertaking a building project, you will have a source of financing lined up. Use your cash back card(s) to buy the materials and then use your credit line to pay off your card balances.
There are several good credit card sites mentioned on the customer resource page of the House-N-Home web site. If you have purchased the Guide, you have the access to this page, and we would encourage you to take a look at it. Most cash back cards pay in the neighborhood of 1% to at most 2%. Many of these offers are paid on a sliding scale, viz. 0.5% for the first $2500 charged, then 1% on everything over this amount. Many of these cards also cap the total amount you can earn at $500.
Recently I came across a new offer that pays up to 5%. To earn the full 5% you have to carry a balance. Since you don’t want to do this, the most you can earn is 3%. However the 3% is at about twice what you will find elsewhere, so it is definitely worth applying for this credit card. The card is anAmerican Express Cash Rebate Card. It has no annual fee, an introductory 0% APR, and a balance transfer option.
If you follow the advice in theHouse-N-Home Building Guide you will not only save 3% on the purchase of fixtures, appliances, cabinets, countertops, windows and many more items, you will also learn how to avoid the expense of the builders mark up. By doing so you will save an additional 10-20% that the builder would have put in his pocket.
2. The 10 Most Common Mistakes in Building Your New Home
This is the third in a series from Mr. Chris McMinn. His firm, McMinn & Associates are professional cost analysts and consultants. They review and analyze a large range of residential and commercial construction projects, applying the same methods and techniques of cost engineering to residential construction projects as they do for their commercial customers.
If you are looking for a professional cost consultant, we encourage you tocontact Chris. If you are looking for written Guide to many of the same issues Chris points out, we encourage you to take a look at the House-N-Home Building Guide.
Copyright © 2002 C. S. McMinn
The Third pitfall: integrating and matching bids with specifications.
If you've ever bought a new car, you may have been enticed by those "bumper to bumper" extended warranties. Usually about thirty-seven months after purchase (one month after your factory warranty expires), you discover a problem: nothing major, just your car's battery goes flat every couple of days. You drive down to your dealer, congratulating yourself on that extended warranty. After a day or two of tests and the expense of a rental car, they call you. "It's the solid state **&##$@!??^%$!! Attached to your rectifier..."
"My what?" You hear a chuckle on the other end. "It's part of your charging circuitry."
"Well, how long before it's replaced?" You ask. "A couple of days. It's special order."
"Okay" you say, "Just call me when it's done?"
"We will," comes the reply... "By the way, our estimate for that part is $176– plus labor."
"WHAT?" You yell. "I've got a BUMPER to BUMPER extended warranty!!"
"Yes, ma'am, we know. But that **&##@!??^%$!! Is specifically excluded..."
(YOUR REPLY DELETED)
This may be your first encounter with a basic rule of all selling:
"The Big Print Giveth and the Fine Print Taketh Away."
This principle applies even more so to all construction projects– especially yours. Unless you happen to be a dealer, an expert, or a former contractor, these little time bombs will be embedded in your contract documents. Your contractor knows exactly what he did– and didn't– include. You don't. But you can be sure that by the time your project is done, you will have a whole new appreciation for fine print.
What can you do now? This is a crucial and potentially costly area of misunderstanding. Space does not allow an in depth treatment, but you need to learn how to read and understand bids, contracts and material specifications. If you don't have the time, or find it too boring, your contractor will quietly remove thousands of extra dollars from your bank account– carried away by those new born change orders.
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3. House Building Contract=====================================================.
After working with the home building community for 30+ years in the residential design/build process, what I've witnessed as being a major concern for owners,
I'd like to present my thoughts on the necessity for a complete set of these documents as a way to avoid glitches on your project.
For those of you who may feel inept because you keep tweaking your schemas, let me assure you the creative process occurs in successive phases from your original idea to project completion.
There's nothing wrong when you're doing revisions when planning and organizing the job.
What I tell folks doing a project is that the design/build endeavor for home building or remodeling occurs through a process of "progressive approximation."
What this means is that, at first, we're not certain of the product/service mix necessary to complete a project; but, after a series of revisions and collaboration
with the building community, we finally arrive at a point where we understand what resources are necessary to get the job done.
Best results are achieved when these drawings, specifications and conditions are in place before the first shovel of dirt is turned, not afterwards.
READ JIM MONTGOMERY'S "10 TIPS FOR A SUCCESSFUL CONSTRUCTION CONTRACT" http://www.jamesmontgomerylaw.com/Article_TenTips.html
After the initial epiphany regarding 'why' a building or remodeling project should occur, the process of progressive approximation launches itself, eventually leading folks to a point where they understand the product/service mix that'll suit them best.
We need to be comfortable with this creative process. It's very rewarding, both in terms of project management and personal achievement.
Ultimately, what's required is a complete set drawings, specifications and conditions describing scope of work. These documents just don't fall into one's lap because the design/build process enjoys the presence of a variety of professionals with whom the owner must collaborate.
There's no single best way; and, there's more than one way to get the job done correctly.
There's an ensemble of players on the home building stage, all of whom are reading from their own scripts, depending on their occupational orientation: realtors, lenders, designers, engineers, contractors, manufacturers, suppliers, inspectors...and on and on.
READ ROB COOK'S ARTICLE "THE CONTRACT DOCUMENTS"
To keep all the players on center stage, and reading from the same script, requires a dialog to occur leading toward a common set of documents so all participants come to agree on how best to accomplish the project.
Sometimes this can be a struggle, other times the process just seems to fall into place. Either way, we need a complete set of documents so we can properly direct the cast of players.
There are legal, technical and managerial reasons why the drawings, specifications and conditions need to be in place. Putting them into place will be part of determining
who and what will become part of the means needed to accomplish the end
This occurs by progressive approximation as we meander through the marketplace
finding the right product/service mix to fit a situation.
It takes time to accomplish results, but we need to take this time so our jobs go smoothly.
What we end up doing is planning and organizing around the schedule, budget,
resources and people necessary to achieve our goal based on these three
Once decisions are made, and the right product/service mix is configured,
the drawings, specifications and conditions are then useful to implement and control our projects.
This is how we remain in schedule, on budget, making best use of products
and remaining on good terms with the people doing the work.
FURTHER READING: R.S.MEANS "BUILDING PROFESSIONALS GUIDE TO CONTRACT DOCUMENTS" http://www.rsmeans.com/about/pr-67261A.html
The following are useful links relating to the housing industry that may be of interest.
Home Wiring Guide – This free guide contains information about installing low voltage wiring for audio, video, home automation, phone, and data communications in your home. http://www.wildtracks.cihost.com/homewire/
Contractor Guide is a free service to help you find contractors, suppliers and manufacturers on the Internet. Their database contains more than 1,175,000
5. Thought For The Day
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