Homeowners usually have to deal with obtaining a mortgage when buying a home, but they seldom need to convince a bank to loan them the same amount on a piece of dirt, with promises to make a home worth a mortgage. As the Homeowner/General Contractor, I not only had to qualify for the loan, I had to qualify to be our General Contractor. It took an essay about my prior experience building commercial offsite structures and a little bit of residential construction experience plus a supportive loan officer to gain their trust. Now, all I have to do is follow through, with no experience using local contractors, in a wildly inflated market, using very expensive money. Piece of cake…. gulp!
With the bank willing to “consider” funding a construction loan, my next step was to pull together plans and a price. I still wanted to use the original builder, but with them only drying in the home I needed more trades. The first step is having a set of plans. My wife and I took elements of several plans and features that we both liked and worked with the builder to develop a floor plan and elevations. We then picked fixtures and appliances, including kitchen, heating, cooling, and water heater options. Adding specifications for construction materials, finishes, and features rounded out our package. With this “package” we could provide enough information to subcontractors to get estimates.
I did online searches, my wife asked friends at work, and I leveraged the few contractors I already knew from building my shop for their help. Getting three bids is an industry standard, but in this market, it’s hard to get three subs from the same trade to even return a call, let alone quote. We found at least two subs for each trade who would submit a price. PDF plans and specs in hand, I started emailing each sub and waiting for their bids. After a couple of weeks, it was clear that they were very busy and I needed to be proactive if I wanted to build this home in 2023. Add another month and the prices are in. Even sending out identical packages, bids were all over the place. Going back and forth for another week or two got everyone on the same page, including me. I learned a lot from that process as each sub was an expert in their trade and was willing to help me not make big mistakes.
Finally, I had enough prices to put together a massive spreadsheet workbook with a sheet for each trade and a sheet to bring all of the totals together. That helped me to not only pull together prices but also to consider what-if’s and see how plugging in different contractors might affect the total. I could see where items were missing and where we had duplicate work bid by different trades, overlapping and driving up the price. Finally, armed with the spreadsheet, plans, and expected price, I met with the banker.
It didn’t take long for the bank to get onboard with the project with one caveat, the dreaded pre-construction appraisal. For two weeks, I sweated bullets waiting for what I was sure would be a low number, proving my ineptitude in thinking I could do this and driving up the upfront costs. In the end, the number came in over the estimated price. Well, that is another level of self-doubt, but onward! We signed a contract with the builder and now we expect to break ground in mid to late May. Now, I just need to clear a few more trees before we begin.
Next Month:
Site work and utilities