When you meet with a builder (or an architect or designer)
and that person is going to draw house plans for you
we recommend that you discuss the following:
1. Cost of the drawings
2. What is included in the cost - what level of service (the plans
must be code compliant)
3. What drawings are you going to get. In order to obtain a
building permit you will typically need the following:
a. Foundation Plan
b. Main Floor Plan
c. 2nd Floor Plan
d. Exterior Elevations (views) - all four sides of house
e. Section View - this is essentially a view of house as if
you could look right through the walls and see what was inside the house.
This view will list many of the features of the home.
4. You should discuss who OWNS the plan. What I mean by this is who has the rights to use the plan. Why is this important?
a. If the plans are drawn and you decide not to use the builder that drew them do you have the right to give them to another builder. You want the answer to be yes. If you are paying for the blueprints you should have this right.
b. Also if you work with the builder/architect/designer to design the home you should find out if the builder/architect/designer reserves the right to re-use the plan with another customer. This might not matter to you, but some folks care. They want their house to be one of a kind.
5. Can the person drawing the plans provide you with a 3D view of your home? This is tremendously helpful. It should cost little more.
6. This should all be in writing. Do it with a contract. The person drawing the plan should have a contract. Be certain that it states your desires.
That is all I can think of for now.
If you came to our blog from a source other than our website and you would like to visit us please do so at www.heartlandbuilders.com.
Have a good day.
Saturday, January 31, 2009
Saturday, September 13, 2008
Energy Efficient Mortgages
In today's world "Green Building" is mainstream.
Unfortunately, though there has been a missing
link in the chain and it pertains to financing.
Traditionally, lenders (and appraisal firms)
have not given customers proper credit for the
"green" features they have selected for their homes.
They say it is because the "market" does not recognize
the value of green and therefore the cost of green exceeds the value.
From our experience and the experience of other builders and realtors that I know it is clear that customers will pay more for features that they value. They value "green"! It is the lenders and appraisers that do not have the ability to quantify it. They are not in step with the consumer even though everything you read talks about "green" and sustainability. EVERY prospective customer we speak to desires energy efficient features for their home. That is why they come to us.
I can best demonstrate what I mean by using an example. A customer builds a home and decides to choose geothermal heating/cooling vs. a traditional gas furnace. The geothermal system costs more. In some cases, $8,000 to $15,000 to $20,000 more.
If it costs more why would anyone choose it? Because when you do, you eliminate your gas bill (for heating). The fact that you can heat and cool your home without sending $150 to $200 a month to the gas company is a cost many people are willing to pay. The savings in the monthly gas bill is greater than the monthly cost to have geothermal.
Unfortunately though there are banks that don't give the customers any credit for the extra cost when they value the home nor do they give credit to the customer for the fact that the customers cost of homeownership (mortgage plus monthly utility expenses) are going to be lower (no gas bill).
There is a bright light out there though. I have found a bank that is offering "Energy Efficient Mortgages." It is Northpointe Bank (www.npbank.com) based in Grand Rapids, MI. Contact: Jeff Brom [jeffb@northpointelending.com]
They get it!
You should call Northpointe Bank. I have no relationship to them, I simply want to support the companies that support the desires of my customers.
For a home to qualify for this mortgage it has to be "rated". What this means is that when they evaluate your house plan and the features it includes they will consider the energy efficient features of the home and provide you with credit for them. Credit for the cost and credit for the savings they will generate for the homeowner.
My hope is that more banks will see the benefit of working with customers that (1) value something enough to pay for it vs. purchasing the cheapest product available, (2) want to do the right thing for their health (and the environment) and (3) are educated. The demographics of "green" is the exact customer that lenders want.
Build with Confidence! Build with Heartland Builders.
If you came to our blog from a source other than our website please visit us at www.heartlandbuilders.com. We will be glad you did.
Unfortunately, though there has been a missing
link in the chain and it pertains to financing.
Traditionally, lenders (and appraisal firms)
have not given customers proper credit for the
"green" features they have selected for their homes.
They say it is because the "market" does not recognize
the value of green and therefore the cost of green exceeds the value.
From our experience and the experience of other builders and realtors that I know it is clear that customers will pay more for features that they value. They value "green"! It is the lenders and appraisers that do not have the ability to quantify it. They are not in step with the consumer even though everything you read talks about "green" and sustainability. EVERY prospective customer we speak to desires energy efficient features for their home. That is why they come to us.
I can best demonstrate what I mean by using an example. A customer builds a home and decides to choose geothermal heating/cooling vs. a traditional gas furnace. The geothermal system costs more. In some cases, $8,000 to $15,000 to $20,000 more.
If it costs more why would anyone choose it? Because when you do, you eliminate your gas bill (for heating). The fact that you can heat and cool your home without sending $150 to $200 a month to the gas company is a cost many people are willing to pay. The savings in the monthly gas bill is greater than the monthly cost to have geothermal.
Unfortunately though there are banks that don't give the customers any credit for the extra cost when they value the home nor do they give credit to the customer for the fact that the customers cost of homeownership (mortgage plus monthly utility expenses) are going to be lower (no gas bill).
There is a bright light out there though. I have found a bank that is offering "Energy Efficient Mortgages." It is Northpointe Bank (www.npbank.com) based in Grand Rapids, MI. Contact: Jeff Brom [jeffb@northpointelending.com]
They get it!
You should call Northpointe Bank. I have no relationship to them, I simply want to support the companies that support the desires of my customers.
For a home to qualify for this mortgage it has to be "rated". What this means is that when they evaluate your house plan and the features it includes they will consider the energy efficient features of the home and provide you with credit for them. Credit for the cost and credit for the savings they will generate for the homeowner.
My hope is that more banks will see the benefit of working with customers that (1) value something enough to pay for it vs. purchasing the cheapest product available, (2) want to do the right thing for their health (and the environment) and (3) are educated. The demographics of "green" is the exact customer that lenders want.
Build with Confidence! Build with Heartland Builders.
If you came to our blog from a source other than our website please visit us at www.heartlandbuilders.com. We will be glad you did.
Monday, June 30, 2008
Great Lakes Green 2008
Great Lakes Green 2008 inaugural conference and
exhibition will teach over 5,000 homeowners, builders
and remodelers about the hottest trend in residential
construction and remodeling - going green. The
three-day conference, August 21-23 at DeVos Place in
Grand Rapids, will feature over 100 exhibitors.
30 experts will showcase the latest innovations in healthy, affordable green products and home design. You will learn about green building and remodeling techniques, the benefits of building green, and what criteria to use in selecting products and services that are both people and earth friendly.
To learn more go to www.greatlakesgreen2008.com
exhibition will teach over 5,000 homeowners, builders
and remodelers about the hottest trend in residential
construction and remodeling - going green. The
three-day conference, August 21-23 at DeVos Place in
Grand Rapids, will feature over 100 exhibitors.
30 experts will showcase the latest innovations in healthy, affordable green products and home design. You will learn about green building and remodeling techniques, the benefits of building green, and what criteria to use in selecting products and services that are both people and earth friendly.
To learn more go to www.greatlakesgreen2008.com
Friday, June 20, 2008
Change Orders: punishment or profit
Are change orders intended to punish the
customer (or the builder) or is the goal to profit
from them? In reality, the honest answer is NEITHER.
Many people believe that builders love change orders.
We cannot tell you how many people have said to us
"That's where a builder makes all their money." WRONG!
If you were to look at national statistics going back many years the
majority of builders actually lose money on change orders. It's true.
How can that be? Change orders require a great deal of effort. They are often made under time constraints. The timing may not always allow you to properly consider all aspects of the change. When a price is given for the change it very likely is not adequate to cover the real cost of the change.
To restate the point of this post - - The administrative fee associated with a change order is not intended to punish the customer (or the builder) and it is not intended to be a profit center in and of itself.
Just what does the fee for a change order cover?
1. The additional labor required to assess the cost of the change. A builder deserves to be compensated for the effort involved in implementing the change. There are 12 steps involved with a change order. Each must be taken with careful consideration.
2. As your builder we are required to warranty the labor and materials involved in building your home. Similar to an insurance company, we require compensation for the risk we assume. If the cost of a product increases, the risk (cost) associated with replacing the product increases. The cost of insurance for a Corvette is greater than the cost to insure a Chevette.
3. Make no mistake a builder is a business person. They are required to carry business insurance. The premium for a builder's insurance policy is based on the total value of all homes built. If the cost of a home is increased, the insurance premium paid increases. If a builder does not charge a fee for the increased cost of a home the builder actually loses money.
4. Taxes - The state and federal government tax builders based on sales. If a customer increases the cost of a home the builder has to pay more in taxes. If a fee is not assessed to a change order the builder loses money.
5. Creditors require a business "make" money in order to provide credit. If the financial statements of a business are not sufficient to warrant credit the ability of the business to conduct its affairs is severely limited. A builder requires credit in order to build your home.
Please know that we are not writing this post to justify charging our customers more money. Most builders would love a "change order free" world. We are writing this post to bring clarity to an often misunderstood part of the building process.
The best defense against change orders is to MAKE YOUR DECISIONS IN ADVANCE OF CONSTRUCTION. If you do that, changes during the course of construction are typically limited and often minor in cost. This is the best position for both the customer and the builder. Promise!
If you came to our blog from a source other than our website, please visit us at www.heartlandbuilders.com. We will be glad you did.
Build on! Build with Confidence. Build for fun. June is "Buy your Builder a Popsicle Month." It's hot out there.
customer (or the builder) or is the goal to profit
from them? In reality, the honest answer is NEITHER.
Many people believe that builders love change orders.
We cannot tell you how many people have said to us
"That's where a builder makes all their money." WRONG!
If you were to look at national statistics going back many years the
majority of builders actually lose money on change orders. It's true.
How can that be? Change orders require a great deal of effort. They are often made under time constraints. The timing may not always allow you to properly consider all aspects of the change. When a price is given for the change it very likely is not adequate to cover the real cost of the change.
To restate the point of this post - - The administrative fee associated with a change order is not intended to punish the customer (or the builder) and it is not intended to be a profit center in and of itself.
Just what does the fee for a change order cover?
1. The additional labor required to assess the cost of the change. A builder deserves to be compensated for the effort involved in implementing the change. There are 12 steps involved with a change order. Each must be taken with careful consideration.
2. As your builder we are required to warranty the labor and materials involved in building your home. Similar to an insurance company, we require compensation for the risk we assume. If the cost of a product increases, the risk (cost) associated with replacing the product increases. The cost of insurance for a Corvette is greater than the cost to insure a Chevette.
3. Make no mistake a builder is a business person. They are required to carry business insurance. The premium for a builder's insurance policy is based on the total value of all homes built. If the cost of a home is increased, the insurance premium paid increases. If a builder does not charge a fee for the increased cost of a home the builder actually loses money.
4. Taxes - The state and federal government tax builders based on sales. If a customer increases the cost of a home the builder has to pay more in taxes. If a fee is not assessed to a change order the builder loses money.
5. Creditors require a business "make" money in order to provide credit. If the financial statements of a business are not sufficient to warrant credit the ability of the business to conduct its affairs is severely limited. A builder requires credit in order to build your home.
Please know that we are not writing this post to justify charging our customers more money. Most builders would love a "change order free" world. We are writing this post to bring clarity to an often misunderstood part of the building process.
The best defense against change orders is to MAKE YOUR DECISIONS IN ADVANCE OF CONSTRUCTION. If you do that, changes during the course of construction are typically limited and often minor in cost. This is the best position for both the customer and the builder. Promise!
If you came to our blog from a source other than our website, please visit us at www.heartlandbuilders.com. We will be glad you did.
Build on! Build with Confidence. Build for fun. June is "Buy your Builder a Popsicle Month." It's hot out there.
Sunday, June 8, 2008
Contracts: Types of Building Contracts
There are two primary types of building contracts in
residential construction. A "Fixed Cost" contract
and a "Cost-Plus" contract.
Heartland Builders prefers a Fixed Cost contract. This
contract protects the customer from runaway costs and it
protects Heartland Builders by predetermining the work
that is desired.
This is a contract where the price of the home is pre-set based on the construction drawings and the material and labor required to build the home. The builders fee is included within the price of the home.
Is the price really fixed? Yes, but there are some variables which may change the price. What are those?
1. Excavating costs due to soil conditions. It is not always possible to predict what type of soils you will find below the ground. You may have to haul a type of soil in (black dirt, sand or gravel) or haul soil out (clay for example).
2. If your site requires a well (not municipal water) then we cannot guarantee the depth of the well.
3. If your site requires a septic system (not municipal sanitary sewer) then we cannot guarantee the cost of installing the septic system until we are able to determine the soil conditions below the ground.
Other than those three variables, we can accurately predict the cost of building a home. For those three variable items we make every attempt to accurately predict their costs (in advance of construction) by communicating with the local health department, talking to others in the neighborhood that have built or some other method.
As you can see from this method, we guarantee the majority of the cost of the home. Probably 95% to 98% of the costs. We guarantee the amount of lumber, wood, siding, paint, etc..... Under this contract the customer does not have to worry about the variability of pricing or the amount of materials used or unused.
What else can affect the cost of construction when using a Fixed Cost contract? Change orders and customer selections. Both items are under the customers control.
Again, we believe that this type of contract provides the customer with the greatest amount of protection. We like it also because it helps us properly budget and it sets the scope of work in advance of construction. We like that!
A Cost-Plus contract is open ended with no final dollar amount predetermined, either because the project is fast-tracked or the scope of work has not been determined. In addition to the costs of the home, the builder's fee is added to the total costs as a % of the cost.
Please know that the "Costs" under a Cost-Plus contract includes EVERYTHING that goes into building the home. Not just lumber and such, but the builders cost of driving to and from the jobsite, the labor cost of the builder to supervise the job, and all other "soft" costs of construction. On top of these "soft" costs and the "hard" costs (materials) a customer will pay the builders percentage to manage the job.
This type of contract is commonly used in high end residential construction when the work is highly customized. It is used becuase highly customized work can be impossible to estimate from a cost standpoint. Drawing it is one thing, building it is another.
The other time it is used is when a customer does not make their decisions in advance of construction. Without a predefined scope of work it is difficult to determine what needs to be done.
Again, we prefer the Fixed Cost contract. We require our customers to make their decisions in advance of construction. We want our customers to "Build with Confidence." To do that, we feel you have to know how much your home is going to cost before you break ground.
Thank you for taking the time to visit our blog. If you came to our blog from a source other than our website, please visit us at www.heartlandbuilders.com. We will be glad you did.
Build On! Build well! Love your builder!
residential construction. A "Fixed Cost" contract
and a "Cost-Plus" contract.
Heartland Builders prefers a Fixed Cost contract. This
contract protects the customer from runaway costs and it
protects Heartland Builders by predetermining the work
that is desired.
This is a contract where the price of the home is pre-set based on the construction drawings and the material and labor required to build the home. The builders fee is included within the price of the home.
Is the price really fixed? Yes, but there are some variables which may change the price. What are those?
1. Excavating costs due to soil conditions. It is not always possible to predict what type of soils you will find below the ground. You may have to haul a type of soil in (black dirt, sand or gravel) or haul soil out (clay for example).
2. If your site requires a well (not municipal water) then we cannot guarantee the depth of the well.
3. If your site requires a septic system (not municipal sanitary sewer) then we cannot guarantee the cost of installing the septic system until we are able to determine the soil conditions below the ground.
Other than those three variables, we can accurately predict the cost of building a home. For those three variable items we make every attempt to accurately predict their costs (in advance of construction) by communicating with the local health department, talking to others in the neighborhood that have built or some other method.
As you can see from this method, we guarantee the majority of the cost of the home. Probably 95% to 98% of the costs. We guarantee the amount of lumber, wood, siding, paint, etc..... Under this contract the customer does not have to worry about the variability of pricing or the amount of materials used or unused.
What else can affect the cost of construction when using a Fixed Cost contract? Change orders and customer selections. Both items are under the customers control.
Again, we believe that this type of contract provides the customer with the greatest amount of protection. We like it also because it helps us properly budget and it sets the scope of work in advance of construction. We like that!
A Cost-Plus contract is open ended with no final dollar amount predetermined, either because the project is fast-tracked or the scope of work has not been determined. In addition to the costs of the home, the builder's fee is added to the total costs as a % of the cost.
Please know that the "Costs" under a Cost-Plus contract includes EVERYTHING that goes into building the home. Not just lumber and such, but the builders cost of driving to and from the jobsite, the labor cost of the builder to supervise the job, and all other "soft" costs of construction. On top of these "soft" costs and the "hard" costs (materials) a customer will pay the builders percentage to manage the job.
This type of contract is commonly used in high end residential construction when the work is highly customized. It is used becuase highly customized work can be impossible to estimate from a cost standpoint. Drawing it is one thing, building it is another.
The other time it is used is when a customer does not make their decisions in advance of construction. Without a predefined scope of work it is difficult to determine what needs to be done.
Again, we prefer the Fixed Cost contract. We require our customers to make their decisions in advance of construction. We want our customers to "Build with Confidence." To do that, we feel you have to know how much your home is going to cost before you break ground.
Thank you for taking the time to visit our blog. If you came to our blog from a source other than our website, please visit us at www.heartlandbuilders.com. We will be glad you did.
Build On! Build well! Love your builder!
Thursday, April 24, 2008
Schedule of Construction
Your builder should give you a schedule of construction!
What does that mean? It means you should have a
written list of dates from your builder that tells
you what is going to happen and when it is going to happen.
Here is what we do - - Once the framing starts on a home we
publish a detailed breakdown of dates indicating what trade contractor (plumbing, heating, flooring, painting, etc...) will be on-site. A start date and an end date - by trade.
Why is that important:
1. We want want our customers to know what is happening with their home and when it is going to happen. It is an important step in our belief that you should "Build with Confidence." When you know something is supposed to happen and then it happens that gives you confidence that your home is on schedule and moving forward as planned.
2. Our suppliers and subcontractors get the same schedule as our customers. Because of this the flooring contractor, for example, knows that he is supposed to install flooring 3 or 4 months in advance. A schedule of constructions helps control delays.
3. Our schedule is detailed to the point where we can give our customers their occupancy date as soon as we start framing the home. It helps our customers plan the move into their new home.
Most builders don't provide such a schedule. I can't figure out why not. My only guess is that they don't want to commit. Our feeling is that our customers have committed to us, we need to ensure our commitment to them.
We are glad that you have visited us. If you came to our blog from a source other than our website, please visit us at www.heartlandbuilders.com. If you are planning to build a new home (or dreaming about it), please know that we would love to talk to you.
Build for fun. Build till you can't build no more. Build with confidence.
Remember: May is "Love your Builder" month
What does that mean? It means you should have a
written list of dates from your builder that tells
you what is going to happen and when it is going to happen.
Here is what we do - - Once the framing starts on a home we
publish a detailed breakdown of dates indicating what trade contractor (plumbing, heating, flooring, painting, etc...) will be on-site. A start date and an end date - by trade.
Why is that important:
1. We want want our customers to know what is happening with their home and when it is going to happen. It is an important step in our belief that you should "Build with Confidence." When you know something is supposed to happen and then it happens that gives you confidence that your home is on schedule and moving forward as planned.
2. Our suppliers and subcontractors get the same schedule as our customers. Because of this the flooring contractor, for example, knows that he is supposed to install flooring 3 or 4 months in advance. A schedule of constructions helps control delays.
3. Our schedule is detailed to the point where we can give our customers their occupancy date as soon as we start framing the home. It helps our customers plan the move into their new home.
Most builders don't provide such a schedule. I can't figure out why not. My only guess is that they don't want to commit. Our feeling is that our customers have committed to us, we need to ensure our commitment to them.
We are glad that you have visited us. If you came to our blog from a source other than our website, please visit us at www.heartlandbuilders.com. If you are planning to build a new home (or dreaming about it), please know that we would love to talk to you.
Build for fun. Build till you can't build no more. Build with confidence.
Remember: May is "Love your Builder" month
Sunday, March 30, 2008
Recipe for Success
At Heartland Builders we want people to have a
great experience - - whether or not they build with us.
Here are a few thoughts that we think are important
to help ensure that "great experience" we so boldly claim.
1. Make your selections before you break ground - that way
you know with a high degree of certainty the ultimate
cost of your home. You can adjust your selections in advance
of construction.
2. Live within your means. It is only a house. No matter your budget, we can assist you in building a beautiful home. Don't outspend yourself.
3. The ability to make a decision is important. We can help you with the decision making process through the use of our interior designer, by directing you to preferred suppliers and so forth. But, make no mistake, you will have decisions to make.
In prior posts I have stated these same words, but they bear repeating (so you might even see them again in the future.)
Thank you for visiting our blog. If you came to us from a source other than our website, please visit us at www.heartlandbuilders.com. If you like the words we speak and are looking for a builder, please contact us.
great experience - - whether or not they build with us.
Here are a few thoughts that we think are important
to help ensure that "great experience" we so boldly claim.
1. Make your selections before you break ground - that way
you know with a high degree of certainty the ultimate
cost of your home. You can adjust your selections in advance
of construction.
2. Live within your means. It is only a house. No matter your budget, we can assist you in building a beautiful home. Don't outspend yourself.
3. The ability to make a decision is important. We can help you with the decision making process through the use of our interior designer, by directing you to preferred suppliers and so forth. But, make no mistake, you will have decisions to make.
In prior posts I have stated these same words, but they bear repeating (so you might even see them again in the future.)
Thank you for visiting our blog. If you came to us from a source other than our website, please visit us at www.heartlandbuilders.com. If you like the words we speak and are looking for a builder, please contact us.
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