What to Expect When Building a House

So you want to build a house instead of buying one that’s already constructed. This can be a great idea for many reasons! By building a house, you guarantee that your spending is controlled one hundred percent by you, as well as ensure that the house has everything that your family requires to go about their daily lives – whether that applies to wants (such as extra rooms, specialty rooms, extra outside space, or certain fixtures), or needs (such as handicap equipment or a certain bedroom count for a larger family). It can be extremely difficult to find a pre-existing home that checks all of your boxes and is exactly how you want it.

You take out a loan to build a house just like you would take out a loan to get a mortgage. However, the money is spent a little differently. The average cost to build a house from the ground up is a little over $290,000 but that can vary greatly. The lowest you will be able to build for is around $147,000 and the highest you can likely get approved for is around $436,000. These numbers depend on a lot of things – the home’s location, it’s size, how many rooms it has, the quality and newness of it’s appliances, and more. Thankfully, when you build a house, you are completely in control of all of these factors. Theoretically, there should be no surprises!

Here are the general steps towards building a house from scratch.

Figure Out What You Want

Before you even talk with a lender, you need to know what you want in your house. After all, the lender has no idea how much they need to lend you if they don’t know whether you want a one bedroom house or a five bedroom house. Consider things like build type, location, and size of your home. These are the three general “building block” concepts that will help your lender form an idea of what you’ll want loaned to you.

Another thing to consider is whether or not you want to buy into a housing development or not. In this case, the builders of your future home will have you choose from a limited number of floor plans, typically with a list of add-ons or upgrades to choose from. Going this route is more like building a house from a catalog than starting from scratch. If you don’t want to make every single decision for every square inch of your house, this is the way you will want to go. It does limit your options, but it is also quite cheap compared to building from scratch. You can save up to 15% on home building costs by going through a housing development!

Even cheaper than building your house through a housing development is go build what is called a “pre-fab” house. These homes are manufactured off site and then the pieces are assembled on location, which means that it’s also much speedier than building from scratch. These homes can be just as roomy and beautiful as homes that are built on site, but make sure you are getting better than builder grade product. “Builder Grade” means that the product (flooring, walls, windows, doors, and more) are just good enough to pass inspection or rules. Think particle board furniture – it does the job, but won’t last as long. Do your research on pre-fab companies to make sure you won’t get stuck with builder grade products!

Once you know what kind, size, and type of house you want, where you want it, and how you want to go about building it, you should…

Create Your Budget

Once you’ve outlined your needs and wants and how you’re going to get them, you should compare the estimated costs with what you’re willing to spend and make changes as needed. You will definitely need to do a lot of research and get estimates from a lot of building professionals. You don’t want to start something you can’t afford to finish here, so make sure you go above and beyond doing your due diligence to make sure you truly can afford to pay back a loan for the amount that you need. Talk to your loan professional to see how much you can get pre-approved for – this will help you cement numbers in your mind. Make sure no stone goes unturned when it comes to creating your budget.

Next, you’ll…

Buy the Land

You’re building a house, so of course you need somewhere to PUT the house. It’s not uncommon for people to state that they were so focused on building the house that they didn’t think about the fact that they have to buy the land the house is going to sit on. When you’re scouting out the perfect location for your future home, make sure the location you choose makes sense for you and your family. Is it close enough to town? Are the neighbors far enough away for you to have as much privacy as you want? Do the other houses have good curb appeal? Is the lot big enough for your house with room left over for a yard? Are home values in the area similar to your projected home value? These are all extremely important questions to ask before you talk to your lender and get a loan to buy the land you’re going to build your house on. You want it to be perfect – no regrets!

Once you have bought the land your house will sit on, things have really started moving along. This is the point when you will…

Hire Professionals

If you chose to build a completely custom home where you make every structural and style decision from the ground up, you’re going to want to hire a general contractor to manage all of the subcontractors (the guys that do the foundation, the guys that do the frame of the house, the guys that lay the carpet, the painters, the door and window installation men, etc). The general contractor will also likely be willing to handle the legal aspects needed to complete the job properly. It’s likely that in this case you’ll also want to hire an architect, or at least have a consultation with one to look over your blueprints. Make sure that any professional you hire (down to the guy who installs your internet) is properly licensed and has great reviews or references. You don’t want to find out too late that the company who poured the foundation for your house did a horrible job, and now you have to backtrack to start completely over from day one.

At this point, you have your land, a group of hired professionals, and ideas. It’s time to really get started. Now, you can begin…

Developing Plans
Did you decide to go the way of a pre-fab home or a housing development home? If so, this will be a little easier. If you plan to build a custom home, however, you definitely need to hire an architect to ensure that your vision is structurally sound. Will the water pipes run in such a way that you can position your bathrooms and kitchens throughout the house like you want? Where are “support” walls needed and how will it affect your vision? Is your second story properly supported?

Once these questions are all answered and any issues are resolved, you can…

Get Your Paperwork Ready

Did you hire a general contractor? If so, you’ll be glad you did right around now. To get your house built, you’re going to need a ton of permits at your city, state, county, and federal level. There are a lot of rules when it comes to building a structure of any kind so this is normal. Your general contractor is trained to take care of all of this on your behalf, as well as any inspections that have to be performed so that the permits can be made out for you.

After this, you will want to…

Purchase Insurance

Your general contractor and your subcontractors (should) have insurance of their own, but you should purchase your own insurance to protect yourself financially, as well. You never know when something will go wrong. You can speak with your general contractor about this – they will be able to advise you where to look for good insurance.

And finally…  After so long:

Begin Construction!

Your vacant plot of land is ready to be turned into a home with a yard. This part of the process could take three months or longer than six months – it depends on the finer details of your house as well as the weather. When it’s done, an inspector will take one last look at the finished home to ensure that it was built according to the plan you made at the beginning of the process – and that the home is structurally suitable for someone to live in. Congratulations – you built a house!

Things You Might Not Think to Look For When Touring a House

What are the most important things you must do before buying a house? Being informed when you make a huge financial decision (such as buying a house) is greatly important. Take the time to educate yourself about what you are getting into before you commit to buying a property. Doing these things before you buy your new home will lead to a smooth transaction and a great first-time home ownership experience.

The most important thing is knowing what to look for when you’re touring a home. There’s a lot to see, and it can be easy to get distracted by little cosmetic things and totally miss a safety issue or a habitability issue, like mold or leaky pipes. You must have a strategy that helps you properly determine whether a home is a good fit for you. If you’re already touring a property, it’s safe to assume that you like the location, price, and bedroom / bathroom count – so what should (or shouldn’t) you look for and take into account when you tour a potential new home for the very first time?

You should look at…

The Exterior

Don’t forget to walk around the entire property on the outside. Pay attention to the condition of the roof and siding. Ask when the roof was last updated. Does the landscaping look like it will cost a lot of money and time to upkeep? If you don’t want to hire a gardener or do it yourself, how expensive would it be to remove the landscaping? Is there adequate parking space on the property? Do the doors and windows look secure? These are all important questions to ask.

Odors

Sometimes, it’s best to rely on our senses when touring a home. Your nose can often help just as much as your eyes when touring. Can you smell gas, mold, or mildew? The smell of mold is that of wet socks, while mildew tends to give off a musty odor. Gas will smell like rotten eggs. What about cigarette or pet smells? These may seem trivial, but these odors can cling to the walls and ceiling of a home, meaning that even if no one else in your house smokes, your guests might think you do! Fragrances used to mask these odors will be heavily perfumed, like candles or air fresheners, so if you smell an overwhelming scent of freesia or cinnamon, the current home owners may be trying to cover something up.

Wall and Floor Conditions

Look for warped wood floors, cracks in the ceilings, water marks, and dips in the floor. These can all be things that are indicative of bigger issues. Typically, hairline cracks that are bigger than 1/8 of an inch are okay, especially if they are running vertically. Cracks of any size that are running horizontally are not good, ever. These typically occur when a home’s foundation settles and are most often found around windows and doors. A warped floor can mean a myriad of issues from rotting wood to termites. Water damage can also wreak havoc on a home. Look for stains or bubbling on walls or ceilings, baseboards buckling, or pungent smells.

Integrated Fixtures and Systems

Sure, you can change the showerheads or the sink faucets if you don’t like them, but you’re stuck with your HVAC. Issues with integrated features can be big trouble. Look for issues in the electrical wiring, cooling systems, and heating systems. Check for exposed or eroded wires, HVAC systems with leaky ventilation, or leaking water heaters. Warm or vibrating outlets or flickering lights can be indications of issues with electrical wiring. If you turn on a faucet and see orange or brown water, the pipes are rusty. An AC unit that squeals needs replaced, and a faint gas smell in a room other than the kitchen can indicate a water heater with a compromised gas valve.

Unpermitted Additions

So you get to the house you intend to tour and find out that there’s one more bathroom than you originally thought. Cool, right? Not so fast. Before you celebrate, make sure that extra room is permitted. In addition to being a safety concern if not constructed properly, it can also be a financial concern. If you buy a house with unpermitted additions, you will be the one who gets hit with fines from the city (as well as the costs associated with getting the work permitted or removed). Look for converted garages, rooms with lower roof lines, or freestanding guest houses. A permit is required to remodel if the remodel includes adding or removing walls, making changes to plumbing or electrical, or adding a window.

Lawn Condition

Sure, everyone wants a lush, green yard, and a few yellow spots are okay – but when do they become a problem? Sometimes these spots are caused by fungal diseases in your grass. While not necessarily hazardous, the longer it goes untreated, the harder it will be to fix. Neglecting a fungal issue in a lawn can also bring about various pest infestations. Also check for inexplicably wet, soggy spots in the yard, especially if they’re accompanied by a foul odor. This could indicate a damaged or broken sewer line.

There are also some things you don’t need to worry about as much when you’re touring a home. If you can change it quickly and relatively cheaply by yourself, and it’s not a safety hazard, you can look over it for now and deal with it later.

Examples of things you don’t need to consider during a home tour are…

Furniture and Décor

Typically this will be the first thing you see when you enter a home. Sometimes it will vary greatly from your own personal style, but this is okay. Almost all of the time, when the current owner leaves, so to will their furniture. Don’t focus too much on these elements. They are not permanent. Try to envision the home with your furniture and décor inside, and use that to determine whether or not this is the home for you and your family.

Wall and Floor Treatments

So you hate the back door’s blinds – that’s okay! You can replace them later. You can paint over the garish lime green color in the living room, and you can also re-carpet the basement. These are some of the cheapest and easiest upgrades you can make to a home. Removing or replacing these things may cost a little money and professional assistance, but they’re all still fairly simple and low cost. Changing these small details is what will really make the home your own, and if you’re lucky, you’ll find some great hardwood floors under that carpeting in the dining room.

Small Fixtures

Cabinet doors, ceiling fans, microwaves, or chandeliers… What do all of these things have in common? They can very easily be replaced! These elements are simply cosmetic. They do not impact the safety or habitability of the home. Sellers are typically aware that these features are outdated, too, and will often take that into account when pricing their homes. Don’t worry about the little things – make the house your own later!

Bathroom or Kitchen Design

Is the bathroom off of the master bedroom smaller than you had hoped? Is the kitchen too large? If the amenities of your new home leave something to be desired, don’t worry. Take a minute to consider it. If you like everything else about the home but one room, are you willing to pass on the entire house instead of just updating the room to your liking? You can also increase your home’s resale value by updating these rooms. Just include the cost of remodeling the rooms into your listing price when you decide to sell the home in the future.

No Fence in the Yard

This one is easy. If there isn’t one, and you want one, build one! If there is one, and you don’t want one, get rid of it. If you have pets or small children, this may be pretty high on your list of “must haves”, but if the rest of the house is perfect except for the absence of the fence, buy the house and add the fence yourself! It’s a relatively inexpensive upgrade to your landscaping and in many areas you don’t even need a permit to put one up. However, you should still check with your HOA or your city regarding permit requirements, just in case, as well as height and setback restrictions.

Unless you are designing the home yourself and building it from the ground up, the chances of finding one that fit your wants and needs exactly are very slim. You must maintain a healthy amount of perspective during a home tour, and weigh your wants and needs properly. This can go a long way towards making sound decisions about this important financial investment.

What Does a Home Appraiser Look For In a House?

Lenders, such as your bank, require an appraiser to evaluate a home before they will fund your mortgage. This professional evaluation ensures that the buyer’s desired home exists, that the area supports the loan amount and that the home has the features listed in the listing agreement. A home appraiser’s job is to confirm that the contract price is fair for all parties involved in a home sale – the buyer, the seller, and the bank, who is lending the money.

Neighborhood Characteristics

You could call this “curb appeal”, but that’s not the only thing the appraiser will be looking for in this instance. They’ll also check out the general landscaping of the home – of course they want to see grass and trees, as well as other lovely landscaping concepts, but if your new home has a lot of difficult-to-care-for plants and dead trees, this can negatively affect you home’s appraisal value. Look for a home with an easy to care for and clean landscape design to increase this appraisal value.

Location

Different neighborhoods will increase or decrease the value of your home. The neighborhood’s value will be determined based on a number of factors – the crime rate, the distance from the home to schools, the distance from the home to the nearest hospital, the neighborhood’s school district’s rating, how close the home is to community amenities (parks, pools, gyms), how well maintained the public services are (roads, street lamps), and how busy or safe the immediate closest roads are.

Where your home is positioned within your neighborhood holds some weight. If your house is closer to the main road where you will hear traffic passing all night long, your house might not be appraised for as much as if your house was quietly tucked into the back of your neighborhood, where the ambient volume levels are much lower.

Age of the Home

A newer home won’t always be appraised at a higher number than an older home. New homes that were built in the last one or two decades usually have less major issues, but old homes that are located in historic districts or have been well maintained will also have a high appraisal value. However, if your home is 35 years old and looks like it’s 60, it will likely be appraised much lower than a 35 year old house that “looks it’s age”. It all comes down to how well the house has been maintained in all it’s years, and unfortunately, if you’re having a home appraised so you can buy it, how it’s past owners treated it is out of your control.

Design Style of the Home

There are certain design styles of a home that will likely never go out of style. For example, the choice to position the dining room near the kitchen is one that will likely continue in all new houses, forever. However, some home design trends just aren’t “in style” anymore, and believe it or not, even these cosmetic fixtures have an effect on your home appraiser’s valuation of your new house. If the cabinets are stained an out-of-date color, the permanent light fixtures are no longer in style, and the appliances are from the 90’s, you’ll likely get a lower valuation number than you thought!

Lot Size

Lot size can make a big difference when it comes to a home’s valuation. If there is a large yard, the home will be valued higher than a one without a yard at all, or one with a very small yard.

Evidence of Public Utilities (Heat, AC, Water, Gas, Electricity)

Not only is a house without access to public utilities not considered “usable and livable”, but it will be valued at much lower than a house with access to public utilities. The other thing that must be considered here is that not only does there have to be access to the utilities, they have to work well, too. Does water simply drip from the kitchen sink instead of running in a stream? Does the heat work, but not above 65 degrees? These things will also lower appraiser valuation.

Other things that the home appraiser will consider are how your heat is fueled, the age of the existing systems (regardless of how well they work), ease of use, and whether your AC is central or requires multiple individual room or window units.

Evidence of Driveway or Car Storage

There is nothing wrong with parking your vehicle on the side of the road in front of your house, but your house will simply be worth more if there is a driveway, and even more if there is an enclosed garage. The number of vehicles a garage can hold will also be taken into account, as well as the extra storage space in the garage. If the garage is detached, this will also affect the valuation of the home, and if it is separate from the home, it’s structural integrity and building materials will come into consideration as well.

Measurements (Room Size, Total Square Footage)

Total square footage is one of the first things a home appraiser will compare to the selling price of the home. They won’t let someone get away with trying to sell a tiny, cramped house for half of a million dollars. The selling price of the home and the space available in the home must make sense based on average home sales in the last year or two.

A home that has a tiny kitchen but huge bathrooms is going to be appraised lower than a home with room sizes that make sense. It’s not just about space in the home, but how it’s distributed. You want room sizes to be comfortable and good uses of the home’s total space without the ratio getting too wide. The appraiser will also look at how much of your square footage is actually livable and usable space. For example, if the basement is counted in the home’s square footage, but is not refinished, there is a lower percentage of the home that is considered “livable and usable”, which means the home’s appraisal value will be lower, too.

Number of Bathrooms and Bedrooms

What’s the first thing most people look for when viewing house listings? The number of bedrooms and bathrooms available! The more bedrooms and bathrooms, the higher the appraisal value will be. A one bedroom, one bathroom home will be valued at much lower cost than a home with five bedrooms and five bathrooms. In fact, one bedroom one bathroom homes sell for far cheaper than even a two bedroom, two bathroom home, because most families aren’t interested in them as they want a guest room, a home office, or a child’s room in that second bedroom.

Evidence of Any Past Remodeling

It’s very likely that the home you are having appraised has been appraised before, when it’s last owners bought it or built it, so your home appraiser almost certainly has files and paperwork on the house already. If they note that there has been remodeling, additions, or upgrades to the home, this will raise their valuation of the home.

Some of the most valuable home renovations are new garage doors, new and more secure front doors, a grand entrance room, new siding, and hardwood floors installed to replace carpet, but any type of remodel or upgrade will be accounted for.

Materials Used in Building

If the house was built in the last five or ten years, it will have better materials used in it’s skeleton than a home that was built 40 or 50 years ago. If the age of the house is older than the appraiser would like, they can typically be swayed by old materials being phased out with updates, such as a new roof, siding, windows, or wiring systems. If the home is structurally unsound, the appraiser will likely advise your bank not to fund your mortgage loan – this is for safety reasons.

The highest value structural updates that an appraiser will look for are updated electrical (especially when corrective), removal or non-existence of asbestos or other dated materials, a deeper basement creating potential living space (if not already refinished), new roofing, new siding, new windows, solar panels (where conditions permit), additional insulation, and high-quality entry and exit doors.

Condition of the Home (Interior and Exterior)

The general condition of the house will also be taken into account by the home appraiser. Does the house look dingy and old, or does it look well taken care of and pleasant? Is the outside of the house dirty and falling apart, or is it cleaned and kept up after? If carpet is peeling at the corners and the paint is chipping off the siding, the house will be valued lower.

Evidence of Amenities (Pool, Energy Efficient Appliances, Privacy Fencing)

Does the home have a lot of storage space? Is the basement refinished? Is the garage sized for two cars instead of one? These little things add up to a higher appraisal valuation. Much like when a home has recently been upgraded, the addition of amenities can boost a home’s valuation by a lot, but not quite as much as necessary upgrades such as those done for safety reasons.