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| Contracting
a Home | |||
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Most first-time self-contractors are eager to start building right away. But this
is where the real legwork begins so the whole building process will go smoothly.
Well, it may not go perfect, but you'll sleep better knowing the legalities and
paperwork are taken care of.
Finding A Site
One
reason is that large blocks of open land are purchased by developers/builders.
They get the lots fairly cheap, and that keeps prices down later when they build.
But it really ties up a chunk of land and can limit your choices when there are
several builders around. Many
"hot" areas with lots for sale are all owned by a building company. Most (if not
all) new homes built there are done by that company. But in some cases, the lots
can be sold. Keep searching the areas you like and hunt down any lots for sale. Or, track down the landowners and make them an offer they can't refuse. Otherwise, keep your eyes open and jump on any leads.
In
our case, a 30' buffer zone around the perimeter of the lot was required, so we
had to adjust the house's location accordingly, while still trying to take advantage
of the lot's features.
But
you should always agree ahead of time exactly who makes the call or later on you
may be ripping out insulation and drywall to show inspectors the plumbing or wiring
that wasn't checked. Timing
can be critical when your crew finishes the forms at 2:30 and you've got concrete
coming at 3:00. So it helps to call the inspectors the day before with an approximate
time so they can be ready when you are. When
it comes to staying on schedule, inspections can often fit right in. On one project,
we had our carpenters finish the framing upstairs and the inspector gave it the
okay the next day. More
framing was needed downstairs, but we had that inspected a few days later at the
same time the plumbing, heating and electrical rough-ins were ready. That allowed us to get the insulation started upstairs while framing continued downstairs, saving us a couple of days. Coordinating subs this way is a juggling act, but it's one way to get back on schedule.
Anything
that isn't fully explained in the plan will raise questions and delays with subcontractors.
Quickly coming up with on-the-spot solutions takes experience that most of us
just don't have. The
whole planning process depends on getting specific and thorough with techniques,
fixtures, millwork, wall & floor coverings, and everything else you're including. That
means taking time to research specific brands and prices -- not just general notions
like vinyl windows or nice shingles. The resulting plan will also help subcontractors
and suppliers give you more realistic bids. Building materials are often related. For instance, certain shingles may require copper flashing instead of metal; otherwise the warranty is voided. Be aware of these sort of requirements and account for them in your plans.
Then
you'll have a pile of bids to go through. Each can look very different, but as
long as they cover the same labor and materials, you'll be able to look for bids
that are consistently lower in price. Often,
a bid is lower due to cheaper materials. Check that all the bids include the same
plan specifications. Then you'll know it's a fair comparison and be confident
going with the lower bid. A
few people automatically accept the lowest bids in each area and build their house
as cheaply as possible. However, as most people realize, the low bid is not always
the best bid. For
one thing, a small minority of subcontractors will "low ball" bids to get the
job, then find a hundred extra things to charge you for. That's
one reason you want the plans to be real specific on what products and materials
you want. To compare bids fairly, you need them to be the same. Several
work items like trim, garage door openers, and appliances overlap between subs.
Siding, for example, is often done by framers or finish carpenters, or even a
siding contractor. You'll need to do some more legwork on bids for the overlapping and leftover jobs. But your subs will usually take on the odd jobs if the price is right since they're already on-site. Yet, double-check that what they'll charge for the job is reasonable.
It's
not the ideal way to get a bid, but there's usually some flexibility in accepting
it. You can start with the bid to get the loan process going and change it later
if it's way off -- as long as the banker agrees. For
remaining items you can't nail down, put in a realistic allowance and replace
it with the exact figure later. But it's important to use that estimate as a bookmark
figure so your whole budget doesn't get thrown off.
As
we've discussed, you should have detailed plans available before you start calling
subs. When you gather bids, the subs should give you references, a license number
(if applicable in your area), and proof of liability and worker's compensation
insurance. Always
call a sub's references. Ask what the sub is like on the job, if they stay on
schedule, and if they do good work. Also check with the Better Business Bureau,
local building officials and the sub's bank to make sure the subs have good histories.
Hiring good people is usually worth the extra money it may cost. You'll be able to trust them and won't need to be on-site to constantly supervise.
Hiring A Construction Consultant
How
much help you can expect beyond looking at the finished plans depends on the terms
you establish. You'll also need to agree on payment like a fixed or hourly fee,
or a percentage of the home's final cost. Budgeting for on-site observation on an hourly basis can save you time, money and trouble down the road. Just don't call them out every day or you'll break the budget pretty quickly. Try to manage their on-site time well and try to set a fee limit.
As the contractor, you should be covered by more than just a homeowner's insurance
policy. Minor mishaps are typical on construction sites, but a major accident
and/or a lawsuit can halt a project. Make
sure you have enough insurance to cover those "worst case" situations. The policies
can get pretty complicated, so consult with an insurance specialist before work
begins. Check into a builder's risk policy, owner-contractor protective liability, general liability, auto liability, and worker's compensation to cover any gaps that your subs' policies may have.
A
good labor contract will basically lay out your expectations on price, schedule
and workmanship; all are issues that can end you up in court when there's no signed
agreement before work begins. Contracts should deal with situations involving completion date and a holdback of funds until the work is done. It also should have some warranty provisions regarding the quality of work and materials.
Changes
usually cost more money, so include a provision that requires written change orders
with prices requiring signatures from both you and the sub. That way, everyone
knows what's involved. It's
a good idea to get a lawyer on board early to write a standard contract for your
subs and to help you with any property transactions. If
you go to a real estate specialist, they'll have standard forms that should get
you through the whole contracting process. They can tailor the contract to your
project for a flat fee. Our lawyer charges $500 to $800. There
are standardized forms available, but they may not cover every transaction. A
lawyer can write the best possible contract for your situation. Many
subs will send you back a signed estimate after getting your plans. If you sign,
it becomes a legal contract. But it's not written to protect you. We recommend sending your contract with each plan that's mailed. You take the initiative and structure the deal your way. If a sub refuses to sign your contract, you can work out a compromise or find another sub that will work on your terms. | |||
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Selecting a site is based upon a few things like availability, personal tastes,
and price. Other self-contractors we talked to say that finding a good lot to
build on is getting more difficult. 
There
are a few key items to think about when buying a lot. For proper drainage, the
house shouldn't be in a low spot or at the bottom of a hill where runoff will
head. Each piece of property has easements that dictate where utility lines can
go. Easements and lot restrictions will also influence the actual location of
the house. 
It's your responsibility as contractor to make sure that the proper permits are
purchased and that inspectors are scheduled. Many subcontractors will help out
by calling for inspections themselves. 
We always emphasize having a detailed plan before starting a project and contracting
a home is no exception. However, in this case, we're not just referring to the
houseplan, but a construction schedule and work details that are as specific as
possible. 
Make about thirty copies of the construction plans right off the bat so you don't
have to shuffle the same sets of plans to subs and suppliers when getting bids.
Send plans out all at once and expect responses in a week or so. 
Sometimes,
the subs you contact are too busy to fill out a detailed estimate. Instead, they'll
give a price over the phone and promise to follow up with details later. 
We've talked about bankers, architects and inspectors, but you'll spend the most
time hiring, scheduling and supervising subcontractors (subs). And finding good
subs is one of the hardest parts of self-contracting. 
We think it's a good idea to periodically meet with an experienced builder to
serve as your consultant. A thousand questions develop throughout the project
and it helps to find someone who'll give you some good answers. 
If
penalties are written in, include provisions allowing for bad weather, holidays,
late deliveries or on-site changes.