NEWSLETTER #269 February 2009 House-Building Home Page

The 10 Most Common Problems When
Building a New Home

  1. Updates
  2. Ten Most Frequent Issues
  3. Subscription and Removal Information
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1. Updates

Home construction rates are at historic lows.  One of the banks I work with is offering a 12 month construction loan of 3.75%.  I am also seeing an up-tick in the number of inquires for home loans. It certainly appears the bottom has been reached.

I also wanted to let you know that we recently acquired another website called Wise Home Building.The site offers the Wise Home Building Guide, a step-by-step guide for first time consumers that are building a new home.  It also sells consulting services to consumers for their home building projects.  We can provide a review and critique of your contract, specifications, house plans, change orders, and final walk through inspection. You can find the site here:   The site is still undergoing revisions, and not everything is yet working, but we hope to have it completely functional within the next month.  We will provide more details in the future.

Lastly on our Home Building Pitfalls site we are trying something entirely new.  We are offering the E-book for to you for FREE.  I am a little hesitant about doing this, but I thought it was worth a try—so we are doing it on a trial basis.  After a couple of months we’ll look at the results and see if this makes sense for us to continue to do or not.  The program is really simple and works as follows.  To get Pitfalls free, you are required to complete a no-obligation offer from any of several dozen MAJOR retailers.. companies like Ebay, Discover Card, Staples, Gap, etc.   By completing an offer with one of these companies – again a no obligation offer taking about 5 minutes of your time - - they pay us – and that enable us to give you the Pitfalls book absolutely FREE. 

Best Regards,

James Todd
House Building Guide
Home Building Pitfalls
Wise Home Building

2. Ten Most Frequent Issues

The “Ten Most Common Issues” presented below are provided courtesy of the new website we purchased, Wise Home Building.  This list was compiled by a builder with 35 years of experience in the industry.  This list is a good starting point if you are considering a home building project. Get up to speed and educate yourself so you are in a position to AVOID these problems on your own project.

  1. Buyers, lacking the necessary knowledge of the building process, forego control of their investment and look to their builder as their sole source for guidance. This reliance upon the builder to fulfill their responsibilities often ends in disappointment.

    When you hire a builder, you are hiring someone in business to make a profit. That means that he will look after his own self interests first, and yours second. Hiring a reputable, ethical builder is certainly important, but it doesn't change the above fact. There is no one that will protect your interests in the building project, except for you-or someone that you might hire on your behalf such as inspector. Building a new home is probably one of the largest financial commitments you will make, protect your investment by become knowledgeable about the process.

  2. Builders fails to visit the construction site with the owner before construction begins to analyze the surroundings, conditions, potential obstacles and specific site circumstances that often require special attention.

    This is another common mistake, and it's one that can be easily avoided and one you don't want to make. Why, well the best reason to give you is that the financial repercussions of NOT having this meeting will be borne by you. In other words, if something is overlooked, or needs to be changed when the construction begins, because the builder did not visit the site prior to initiation, the builder will look to you to pay these extra costs. And if you balk or refuse, he'll just stop work.

  3. Builders fails to make progress construction inspections. Builders rely on their subcontractors to establish the norm for quality and completeness of their work.

    This problem is quite common. It's like asking the fox to guard the chicken coop. If a subcontractor makes a mistake, especially one that will cost him money to remedy, he is likely to try to hide it rather than fix it. If YOUR builder who hired this subcontractor, does not inspect or review this work and catch it, then YOU will bear this cost, either directly in dollars to remedy it at some point in the future when it is discovered or indirectly thru a lower quality product and/or reduced aesthetic appeal.

  4. Builders' contracts are builder favored making them self-serving. They use open-ended language pertaining to various condition costs, they have unaddressed quality standards, and weak performance commitments, etc.

    Boy, this is true, big time. If you don't plug these holes you will find it difficult to resolve disagreements or differences, because the contract favors the builder. While a legal review is a good place to start, lawyers are not builders, and you need someone with a building or construction background to vet the document as well. Here is just one example…

    Cold weather may require temporary heat in the home or excessive rain may damage or require water to be pumped from the basement of foundation hole. If these were NOT addressed in the contract, guess who will be responsible for these additional costs?? A clue, it won't be your builder.
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  6. Excessive and/or needless "allowance Items" are used for the builder's convenience. These allowances are poorly estimated amounts that favor the builder.

    This is a common problem because it is human nature to take the course of least resistance. Rather than make some calls to track down pricing on something a builder is uncertain of, they'll simply throw in more than enough dollars to cover the unknown. This works to your disadvantage it several ways, and can end up costing you more money.

  7. Excessive charges for Change Orders made during construction.

    One can never emphasize this enough. Keep your change orders to a minimum, and the best minimum would be NONE. Why, because a change order occurs once you have hired a builder and started construction. That means that if you ask for a change, the builder can charge you whatever they want within reason (and sometimes outside of what is reasonable), because there is no way to competitively bid this - AND if your home building contract did NOT stipulate the acceptable or allowable markup on change orders- they you are stuck! Morever, if you have an agreed upon timetable for completion in your contract, you have now given your builder some wiggle room to miss the deadline because you changed something.

  8. Incomplete and/or poorly described Building Specifications.

    It takes some work to come up with a complete set of specifications for your home- but it is worth the effort. It helps you retain control of your project, it protects you from the use or substitution of lower quality items, it results in a more accurate overall budget, and it can save you money because if you discover something you don't' like that was not specified in your Building Specs, and ask the builder to change it… ching, ching, ching… I can hear a change order coming.

  9. Unrealistic projected completion dates.

    If you have a timeline for moving into your new home, a prospective builder may use this as a sales tool to get the job, when in reality it is impossible or at least very unlikely that the projected date is attainable. You should be knowledgeable about the process to the degree that you can spot or at least suspect if a timeframe is unreasonable. Secondly, you need to tie this issue down in the contract -with specific dates, allowance for "Acts of God" beyond the builder's control (i.e weather) and with specific penalties that are not unreasonable, but yet sufficient to cover your out-of-pocket expenses should the agreed upon date not be met.

  10. The use of intimidation to project and/or persuade personal opinions.

    Unfortunately this is all too common. It may start small but if you let it slide a few times, you will likely see it repeat itself and progress to larger items. For example if there is a small defect that you point out to your builder, he might say: "Well that is really not a defect, it is within the range of what is considered normal… and if you worked in the building industry and built as many homes as I have you would know that." If he uses this once and gets away with it, the next time something comes up, he will not be hesitant in trying it again.

  11. The unwillingness of owner to confront builder with justified complaints.

    This issue can be related to the above issue in #9. A home owner may really have a justified complaint, but is afraid that if he approaches the builder, the builder may stop or slow down work on the project thereby delaying completion and occupancy.

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