Building Process Guide

This checklist can act as your guide to the building or remodeling process

THE CONSTRUCTION SITE

(For new construction only)

Establish the building site location. Three of the most popular choices are:

Raw land purchase. Find a property in a desirable area that is suitable to build on.
Purchase an older "fixer upper" home with the intent of demolishing the existing home and building a new one.
Tear down your existing home and rebuild.
Before you purchase or rebuild, find out about sewer hook-up and any local conditions that dictate maximum size, architectural style, etc.

ARCHITECT OR DESIGNER

Turn your vision into a buildable plan.

We recommend you hire an architect or designer rather than try to design on your own. Ask friends, colleagues and your contractor for references, then interview at least three candidates. Ask yourself the following questions.

Does the architect (or designer) listen to your needs and desires?
Can the architect present visual interpretations of the architectural style you're looking for prior to drawing up plans?
Does the architect understand and (preferable, not paramount) have experience in the locale of your planned building?
Planning Commissions can be very particular and an experienced architect can be a valuable asset when submitting plans for approval. You will not be able to build your dream home unless the planning commission for your locale approves the concept.
How comfortable do you feel with the architect? A good relationship between you and your architect is crucial if the design process is to be successful. Designing and buildingor remodeling a custom home is personal and you must feel comfortable with all the team players.
Do you like the architect's past projects? If you want classic and the architect specializes in ultra modern, this may not be a good match. If the architect designs in a variety of styles, this is a sign the architect is flexible and adaptable to a variety of styles.
Ask to speak with two or three past clients for a reference check.

PRELIMINARY DESIGN

Getting the ideas down.

At this stage you will review the architect's conceptual designs to establish a design direction. It lets you see if the initial meetings between you and the architect or designer are leading to a meeting of the minds.

PRELIMINARY COST

How much will the design cost to build?

Once you and your architect or designer have set out preliminary or conceptual drawings, take them to the contractor for an initial cost analysis. This is by no means a final bid. Rather, it's an opportunity for you to get your arms around the costs associated with the ideas. Most contractors will provide this estimate at little or no cost, as it doesn't require much time. And as this is a ballpark estimate, the contractor is not bound by it. This is a great opportunity for you to interview a would-be contractor if you don't already have one selected.

FINANCING

How will you pay for the project?

Cash
Construction Loan. The construction loan is for people who are building a new home. It's designed to minimize out-of-pocket expenses during the construction process. Typical construction loans allow you to finance 50% to 90% of construction with variable terms depending on your unique situation. Out-of-pocket expenses are generally limited to down payments, points and closing fees, and interest-only payments during the construction process. Many loans are structured so that you pay interest only on the money you draw over time for construction costs.
Home Equity Loan. The most common loan for home improvement and some custom build projects. The lender uses the equity in your existing home to guarantee the loan. The contractor can also provide the cost estimate for lending institution use.

WORKING DRAWINGS

Getting your new home's blueprint.

Now that you know roughly what the project will cost and that you will get financing (or have the cash in hand), you commission the architect for a full set of working drawings, or plans. The architect draws the plans and hires outside consultants such as the structural engineer, soils engineer, surveyor, Title 24 consultant for energy, etc., to provide additional information the architect needs for plans he or she will submit to the building department for approval. The contractor will use the plans – after they have been approved – to build your home.

FINAL BUDGET

Locking in the costs.

After the working drawings are completed, the contractor will provide a final budget for the project. Generally, you will get the contractor costs before the building department's final approval of the plans and before you receive the building permit.

HIRING THE CONTRACTOR AND THE CONTRACT AGREEMENT

- Coming to mutual understanding.

The Contract Agreement with the contractor can be structured several ways and is a little different for each contractor. Here are three of the most common contract types, along with some other hiring considerations.

Fixed Bid. The contractor provides a fixed price for the project based on plans and specifications. The up side: you know the costs of the project up front. The down side: you probably will not have all the specifications decided up front. This makes you vulnerable to inadequate "allowances." The contractor will often add an extra margin in the bid price to cover unforeseen work, errors, and omissions.
Cost Plus Fee. The contractor's fee is based on a percentage margin of all material and labor costs on the project. The up side: you generally pay for subcontractors, labor, and materials at the contractor's actual cost. The down side: although the final construction budget will be a very close approximation (notwithstanding changes and additions), you will not know exact final costs of the project up front.
Time and Materials. All costs on the project, including the contractor's time, are billed on a time and materials basis. In other words, all services (including subcontractor services) are billed by the hour and all materials are billed as they are used. The upside: you can be sure you are paying only for what you are getting in terms of service and materials on the project. The down side: this scenario has the most potential for cost variability from the original budget and is more difficult to use when trying to project a final project cost.

PERMIT

Your permission to build.

Once the plans are approved by the local planning and building department, you will be required to pay some fees. The contractor takes possession of the plans after you have your permit to build. If the new home will be built in place of your existing home that's being demolished, this is the time for you to move into temporary quarters.

START CONSTRUCTION

Your dream comes true.

You and your contractor have established a start date for the project based on a general understanding of when the permit will be available. In most cases, and with proper planning, construction should begin shortly after the permit is issued, unless you and the contractor made some other specific agreement. The contract, budget, and schedule are firmed up, and the construction work begins!