The Design-Build Process
The nature of a custom home business is such that the process of designing and building a new home is customized for every buyer. While each project is unique, the process for designing and building a custom home usually follows some of the same steps. Following is a look at how we frequently manage the process:
Often times we create a budget for a prospective buyer even before preliminary plans are available. Similar to a feasibility study, the projected cost and scope may be needed to support a project’s viability. A conceptual estimate should provide enough information to allow an owner to determine whether a proposed project is feasible. The best sources of this information come from historical cost records of completed projects. This step is often necessary prior to committing to design or professional services fees. A good conceptual estimate should provide enough information for the owner to have a clear understanding of how much home they can purchase for their money. We offer this service free of charge to our potential customers.
Proposal of Services
Once we've presented our proposal to the buyer, if the budget is acceptable we can proceed with Design Development and Preliminary Plans. We usually take a $2500 deposit before beginning the design. The design may be created either in-house or by an architect with whom we have a good relationship. Our objective is to create a floor plan and exterior elevation that can be built within the budget we proposed. Full-sized drawings of the floor plan and front of the home will be presented to you for your review. After the Preliminary Plans are completed to your satisfaction, we confirm the budget and inform you of any cost variances that may have developed during the design process. If we've done a good job, there shouldn't be any surprises.
Preliminary Estimate and Specifications
To keep the process moving, we have to be able to provide an accurate preliminary estimate. In order for the best value to be obtained, construction pricing needs to be available during the design process. Seldom does the price of a completed design fall into the expected budget of the buyer, without the help of a builder or professional versed in current costs. Another reason that we prefer to quote from preliminary plans is that we don’t like bidding against other bidders. Although we are not opposed to bidding, many times the buyer obtains apples vs. oranges comparisons. Many of the builders that we compete against in these situations, do not propose the scope or detail that we do. For these reasons, we have developed a very detailed set of specifications. Documentation provides the format for developing a strong relationship with our buyers. We prefer that our buyers are well informed and educated in the home building process.
Our preliminary proposal follows the format of the specifications we will use when we go to contract. Both the proposal and specifications are worded in “user-friendly” language. In the proposal, we make many assumptions based on what you may have indicated wanting. Depending on the level of information available, a price range can be established. Initially, some of the budgets, like the concrete floor slab, will not vary greatly in price. Based on the size of the home, it is not very difficult to determine the cost of the slab. However, other budgets like interior trim and painting can vary widely. As we spend time with you and learn more about your needs, we can begin to “fine tune” the budget until ultimately establishing an accurate price.
Before the next step, we explain that the preliminary price may become the contract price, as long as we stay within the guidelines of the proposal. During this process, we will educate and communicate with you, and strive to stay within the parameters of the proposal. This is very important to the relationship at this time. Surprises and omissions at this early stage can lay a foundation for lack of trust that could continue throughout the entire construction process. Hopefully, by this point, we will have built a good relationship with you and can proceed with an agreement and construction of your new home.
The next step is to start on the working drawings, the actual documents that we use to build the home, and put together the contract and all of the other paperwork that we will use to manage the construction of your home. Prior to beginning the working drawings we usually take another deposit of $7500. Both of these deposits go toward the cost of your home and will be deducted from the first payment draw that we receive from the Lender. While the construction drawings are in process, you will need to be finalizing details of your financing. Typically we first create a "Bank" set of drawings. This set is usually drawn on a CAD computer system and includes the Floor Plans, a Roof Plan and all four Exterior Elevations. You will have an opportunity to review the drawings before the final set is completed. The Lender will use these drawings to perform an Appraisal and we will use the drawings for Roof and Floor Trusses, Energy Calculations, Window Specifications and Architectural Review Approval. There are additional steps at this stage whereby this information is used to put together a "Building Permit Package" and eventually complete all of the construction drawings.
Our typical Buyer usually borrows the money for their new home from a conventional bank although we certainly aren't opposed to cash. We are already approved and familiar with several lenders in our area. Construction / Permanent or Construction-Perm financing is most common. In this arrangement the funds that are borrowed are used for the construction of the home, and when the home is completed the loan is converted into the permanent financing. There are way too many programs to try to discuss them in this format. Normally, the process of obtaining financing approvals run parallel with the development of the construction drawings and permit application.
After the bank has approved your financing and completed an appraisal from the plans and specifications of the new home, a closing will be arranged. Closings frequently take place at Alliance Title Services. With construction-permanent financing, the closing takes place before construction starts. The ownership of the property will be transferred into your name and the balance of the sales price for the home will be disbursed to the builder through draws during construction. Your down payment will be the amount that you have arranged with your lender less the deposits we have received. If everything has run smoothly to this point, we may be almost ready to pick up a permit and start construction.
Starting during the design phase and continuing after construction starts, we will have regular meetings with you to keep the project on track. These orientation meetings are used to, inform and educate; review ideas and make decisions; prepare and debrief, and; generally try to meet or exceed your expectations. There are numerous customer selections and decisions that we need from you during the entire process. We promise to keep the process organized and help you all the way through. Many of our customers might even attest that they had a little fun.
The real beauty of the design-build process is the benefit to the construction process. With involvement that begins with the design phase, there's no excuse for confusion or missing information. We have checklists and procedures designed to streamline the process and enhance productivity of our entire team. We learn something from every project and use the lessons to enhance our processes to the benefit of the next project. Please review our project management information and feel free to ask questions.