What To Look For In A Builder?
what should someone look for in a builder when they have a peice of land say 5 buildable lots they want to develope. do they generally discount the price per home if you need 5. what other problems do you have to look out for in builders.
If you want to hire a builder, I'd suggest getting a copy of the construction contract the builder uses and have your RE attorney review it very carefully and make appropriate changes to it (including but limited to waiver of mechanic's liens) Also get plans and specs when a builder submits his bid. Interview several bldrs, look at what they've built, check with the local governments where they've built--in short, check their credentials.
thanks nancy, i have a couple more questions i hope you can ansrew. now you mentioned having a number of them bid. how do i decide on what i want them to bid on. would i consult an agent about what type of house would sell the best in that area, or consult the builders about house types and costs. also would it include utilities and sewer improvments, and road if needed.
my second question is that essentially these builders are general contractors and are sub contracting out every thing. so would there be a fixed price they bid and is that generally fixed. im wondering this because i always here of subs upping there bids to allow room for overages, how can i protect myself from cost overuns by careless general contractors/builders.
You've mentioned 2 different scenarios--one where the lots are approved & front on an existing road, and the other where there is no road.
Second scenario: if the parcel hasn't been subdivided, that will have to be done first. As part of the approval, the town will require certain improvements be installed, such as road, curb, sidewalks. They will require cost information to determine how much to escrow for improvements.
First scenario: your RE attorney should make sure the construction contract protects you concerning overruns and other issues. The builder's job is to prepare the lot (grading, clearing, connection to existing utility lines, etc) and build the house. As for the type of house, research the area--see who is building what where--and also when you interview builders, ask them to recommend a product.
If you are building 5 homes next to each other there should be alittle bit of a break. Keep in mind how much money the builder is saving by the homes being together and not spread out all over town. If you are paying cash I would expect another discount. Many builders have lenders they like to work with which they may offer free upgrades or credit towards closing to use. It really depends on your market on how much you can get out of these builders. When interviewing bulders ask for a contract up front. Some builders have a clause in there where they can raise the price 10-20% I would stick to a builder who would back up their price.
Interesting, thank Nancy. so if the lots havent already been sub divided and do need roads the town will require that money before you can build correct? and will that money come from your lender as part of the land acquisition costs? thanks again.
In my area, when municipalities give final approval, there are conditions attached to it, including the signing of a developer escrow agreement and posting security. They and the applicant/developer work out the $$$ amount for installation of the site improvements. They will want this security (like a bond) posted before they will allow the plan to be recorded and building permits issued. The developer's lender funds this as part of the financing.
So if your parcel isn't subdivided and a new road and other public improvements would be required, you might want to sell the property to a builder contingent on the builder getting the approvals and his taking it from there.