Sheri's Blog

Custom Home Construction Contract Differences

Sheri Walls (Sheri Walls, Realtor) — Sun, 04 Jan 2009 15:14:13 -0600

When consumers decide to build a custom home, many things run through their minds. How do I find a Builder I can trust? How much am I going to spend building my dream home? What kind of things do I need to know about building my home? How long will it take to construct my home? Probably the most important question that runs through their mind is: Will my home end up costing more that the price agreed upon? This is the point I would like to address most today.

Most Builders approach a construction contract in two ways: Fixed Cost or Cost Plus contracts. Each of these approaches puts the Builder in control of pricing. Lets first discuss what a Fixed Cost Contract is. A Fixed Cost Contract is basically a way of saying "I believe your home will cost no more than X amount of dollars, but if materials go up, labor goes up or the time it takes to build goes up, then the price of your home will go up and you are responsible for the increase." A Fixed Cost Contract allows the builder to bill the consumer for overages during construction that result from areas not covered under any kind of price cap. Usually these items are laid out in a General Specifications sheet and in their contract. Most builders give allowances on items associated with construction. These allowances can be given on items such as slab construction and framing materials to owner choices in lighting.

A Cost Plus Contract is a contract based on what the Builder "thinks" the home will cost. In a Cost Plus Contract you pay the actual cost for materials and labor and then pay the builder a set percentage of the total cost as a fee for his services. This type of contract allows a builder to skirt sticking to an actual quoted price. It is not uncommon for the cost associated with a Cost Plus Contract to increase quickly. This contract is usually lower than a Fixed Price Contract, but is the riskier of the two.

While each of these contracts truly leaves the consumer holding the bag on cost increases, a Fixed Cost Contract is the way to go if you have no other option.

So you may be asking, what can I do as a consumer who wants to build a home?

One of the best things a consumer can do is go over the General Spec Sheet with his builder line by line. It is also very important for the consumer to make sure the General Spec Sheet covers everything on the architectural plan.
You can also limit you financial exposure by making sure any allowances laid out in the General Spec Sheet are for items chosen by the consumer. These items include items such as, lighting, flooring and plumbing fixtures. Any allowances made on items such as slab or framing materials are increases waiting to happen. So, make sure allowances are given on items of choice. Also make sure those allowance are sufficient to cover the items you want. The last thing you want is to have concluded that the Builder knew you wanted Viking appliances and he only gave you an allowance to cover Maytag appliances. There is a huge price difference between the two.
The best piece of advice I can give is to get to know your builder and his past clients and practices. There is a huge amount of trust placed in a relationship with a Builder. Make sure you have placed that trust in the Right One!

As a Realtor, I too often hear horror stories about building experiences. So, when my husband began his own custom home building company, JMW Homes, with 14 years of residential construction experience, we wanted to change the way people viewed Builders. We set about changing minds and opinions by selecting a very simple company motto, "Making A Difference." With this state of mind, we made a conscious choice to offer our clients a Conclusive Construction Contract. By offering our clients this choice, they receive a guaranteed building price. We took this thought process two steps further by pricing out the items they exactly wanted for their home (i.e. lighting, appliances, flooring and countertops) and by refunding any unused money at the end of construction back to our client. After all, it is their money! We want the building process to be as simple and carefree as possible. We don't want our clients wondering if we will come in on budget or not... It's Guaranteed! We are "Making A Difference!" You can visit JMW Homes at www.JMWHomesInc.com or email me any questions you might have. You can also visit me at www.WallsToWallsRealty.com .

By: Sheri Walls

Realtor, Keller Williams Realty

Each Office is Independently Owned & Operated!

San Antonio's Housing Forcast 2008

Sheri Walls (Sheri Walls, Realtor) — Sun, 20 Jan 2008 18:09:48 -0600

Well, I am sure the housing market is what is on everyone's mind! I realize that so many of us use the national news media to report on what we don't have time to verify or read. I have TWO pieces of advice: 1) Don't trust everything you hear, research independent sources. 2) Remember Real Estate is LOCAL, not National.

With that being said, I would like to address the San Antonio market from a Real Estate perspective. Real Estate is LOCAL! Let me say it again, Real Estate is LOCAL. You cannot put every real estate market in the same box. When you hear the national media reporting about the housing crisis, remember that they are reporting on the national stats and some of the reporters are only reporting on a select few cities. They sale what sells! I wish there were a disclosure on the bottom of a news broadcast that discloses where they get their information. Unfortunately, many of us are too busy to hold them accountable, or we are too trusting about what they are reporting.

With that being said, let me let you know what is going on with the LOCAL San Antonio Market. In the beginning of January, San Antonio held a housing forecast. They hold them every year to let us know where they think we are headed. The esteemed panel members present at the forecast were: Jack Inselmann, Vice President of Central U.S. Division - Metrostudy; Bob Leonard, 2008 Chairman of the Board - San Antonio Board of Realtors (SABOR); Henry Cisneros, Chairman - City-View; Richard Perez, President and Chief Executive Officer - Greater San Antonio Chamber of Commerce; Dr. David Berson, Senior Vice President, Chief National Economist and Strategist - The PMI Group; Michael Moore, 2008 President, Greater San Antonio Builders Association (GSABA).

Metrostudy compiled a study on the San Antonio market. Metrostudy is a leader in providing primary and secondary information to the housing sector and other related industries. Here are some stats about San Antonio:

· Texas ranked 1^st in Annual Job Growth increase of 2 % (Oct '07)

· San Antonio ranked 27^th for Job Growth an increase of 1.8% (Oct '07)

· Mortgage rates are under 6%

· San Antonio Unemployment rate is under 4 %

· San Antonio ranked 29^th among Highest rates of appreciation with 8.4%

· Overall Texas home appreciation of 6.3%

San Antonio is home to a diverse section of industry. We are home to one of the largest Oil and Gas companies, Valero. We have several major Universities, including the University of Texas San Antonio, Our Lady of The Lake University, Trinity University, Texas A&M at San Antonio, St. Mary's University, St. Phillip's College, Texas Luthern University, University of Texas at San Antonio Health Science Center, University of the Incarnate Word and Wayland Baptist University all in our own backyard. San Antonio is home to the World Champion San Antonio Spurs! We have several military bases, including Lackland Air Force Base, Randolph Air Force Base and Fort Sam Houston. We are also home to Sea World and Six Flags Fiesta Texas. San Antonio has a healthy stream of visitors as well. Our city is well rounded. This allows our housing sector to remain level. We don't usually see the double-digit appreciation rates, but we also rarely see the declines. Which is one reason our market is still great.

The outlook on the San Antonio Housing Market is great. Homes are still appreciating and selling. What I have seen in my listings is that the home needs to be priced right and show beautifully! Look back at my blog entitled: Selling your Home in A Buyer's Market. It gives several helpful hints to selling your home. The great news is Buyer's are still buying. The most important advice I can give a seller is to listen to your Realtor. A large majority of the Realtors out there keep in touch with their market and are always willing to give great advice. Find an agent you can trust and who gives you honest information. A great Realtor is worth their weight in GOLD! Develop a relationship!

The mortgage industry is leveling and people with good credit can still buy a home. Most mortgage companies are requesting 5 %-20% down. Although I did have a client just qualify for 100% financing. It is still available, but scarce! Buyer's, do your homework and come prepared. Even in this market great properties sell fast. "What you looked at today, someone else saw yesterday!" An experienced agent will give you great information about what to offer and so forth.

If you would like a copy of the Metrostudy report or slide show, click the contact us tab and reference the Metrostudy slide or report and I will send it to you. You can visit me at www.wallstowallsrealty.com for more real estate related articles and information. If you feel like chatting, click the chat button on my home page and I would be more than happy to answer any questions you may have.

By: Sheri Walls

www.sheriwallsrealtor.com

Selling Your Home In A Buyer's Market

Sheri Walls (Sheri Walls, Realtor) — Wed, 04 Apr 2007 18:21:03 -0500

Okay, so things have changed! We are moving into a buyer's market. NO NEED TO WORRY, just be prepared. You need to stand out from the competition and Pricing Right is THE MOST IMPORTANT! Buyer's always want deals and with the recent aggressive escalation in sales prices, they are becoming very choosy. So, let's talk about the things you can do to make them look your direction!

Hire A REALTOR- They advertise to everyone and you only pay them when they sell your home. What could be better?
PRICING- The Most Important!
Staging- Make your home look and feel like a Model Home.
Offer Incentives to the Buyer- Changing carpet or paid closing costs.
Get A Pre-Sale Home Inspection- This allows you to make the appropriate changes to your home that may slow down the sale.
Be Flexible- Allow Agents to Show your home and work with all offer's. That LOW offer you received maybe a starting point for an agreeable sales price. Work With It.
Have your agents preferred Mortgage Company do a Second Review of a Buyer's Mortgage Status. It won't cost you or them a thing, but you might weed out those who will have financing issues prior to closing.

Okay, now you have the keys to Selling Your Home in A Buyer's Market! Good Luck