Builders, General Contractors, home remodeling, kitchen & bath renovation
Builders, General Contractors, home remodeling, kitchen & bath renovation
The homeowner will typically try to find an architect first. This is the wrong starting point. For example, Pete and Margret were two professional attorneys who wanted to remodel their home, adding a study, a laundry room, and a new master bath. They were recommended to a local architect who charged them over $16,000 for plans. The architect then proceeded to say that all builders had to be approved by them for the project. When we first got involved, Pat and Maggie were lost, not having been able to even select a builder acceptable to the architect. Upon our meeting with the architect, we found them to be a little out of touch with the reality of this project, having designed an exterior staircase under a new master bathroom. During the cold Chicago winters, this was a sure way of freezing pipes. We saw little or no reason for the design. We found the architect to be arrogant in his illogical design and of course wanted to dismiss us. But after we talked to the homeowner and made clear the major flaws in the design, they decided to dismiss the architect. We found an architect who specialized in doing home remodeling projects. He charged $5,500 for his work, and designed a great new bathroom, study, and mud room/laundry. Architects need to be well-directed. Customers have to understand what they’re paying for.
Architects fall into similar categories as builders.
Commercial Architects. These work on commercial and retail buildings with specifications that are quite different than residential building.
The Residential Architect. This is a fully-licensed architect who does home design and structural specifications.
The Architect Designer. Some home design architects are not licensed architects. They are home designers. Don’t dismiss this group. Sometimes the best designers are not architects. Typically, this group will hire a licensed architect to review the final plans for structure and stamp the plans as required for building permit submission.
The Design-Build Architects. These are architects who not only design, but also build structures. Some homeowners consider this an advantage, having to do with less coordination between the builder and architect. The example above is a clear indication of the reasons to try and keep the builder and architect separate. You want the builder and the architect to work together to resolve issues. But you don’t want the builder and the architect to collaborate in such a way that important issues get dismissed. In other words, you don’t want the architect or the builder to be looking out for their own self-interest—you want them to be looking out for your best interest.
The cost of custom home plans varies greatly. But if you open your checkbook up to an architect, he will charge you what he considers to be fair. These are fees that can run anywhere from $30,000 to $300,000, or anywhere from 3% to 7% of the overall construction costs. Knowing that these fee structures can vary greatly, it’s always best to evaluate what you get for your money before you spend it. As an example, Ed and Linda were a couple that wanted to build the house of their dreams. They carefully selected an architect, met with him, and carefully designed a home that they felt was a reflection of their ideas. They paid $60,000 for the plans. When Ed and Linda came to us to review the plans for building, we found many functional flaws. We presented a plan that we had previously built that met 99% of their requirements, plus fit the property almost perfectly. We ended up modifying that plan for them for a total cost of $12,000. Ed and Linda in essence wasted the $60,000 they spent by not first being in contact with a professional builder. Let the buyer beware.
The best thing to do is:
Whether you are going to remodel a bathroom, remodel a kitchen, finish off a basement, build a modest home, or build a 10,000 square foot mansion, you should try to set a realistic budget. It’s important for you to know all the different categories of items for various different projects. So, in Appendix 1, 2, and 3, we have provided the breakdown criteria for a project. Appendix 1 gives you a typical remodeling project (Master Bedroom with new contemporary fireplace, Master bath, Hall Bath Master closet, and staircase remodel). Appendix 2 is the breakdown for a 3,200 square foot home. Appendix 3 gives you a an example of a small kitchen and a large gourmet kitchen breakdown. You’ll get a sense of at least the sub-contractor trades involved in doing these various different kinds of projects.
You of course can manage the project yourself if it is small enough in scope, and sub-contract out these areas yourself. This is much harder than what it may seem on the surface. You have to find the sub-contractors and you have to get them all bid out and you have to get them to perform and you have to monitor their work and you have to make sure they show up and complete their job and follow-up afterward, and warranty their work. This is the reason why you hire a builder. Most North Shore professionals just don’t have the time to do this.
As part of the budget, you have to figure how the builder charges for his services. Basically, there are two ways done in contract form. The first is a Fixed-Cost Contract, where the builder will give you a fixed price for doing an entire project. In this regard, the builder has to evaluate the scope of each of the sub-contractors, get fixed bids from each of the contractors, makes sure that they will not exceed any of their budgets, and he adds in overhead, profit, and a contingency amount for the things that he misses in the budget. Some people would rather pay more and have a fixed budget than have to worry about the cost of the project.
But if you are cost-conscious and want to make sure the budget won’t run over, or that you control the expenses of a project, the builder will use the other type of contract called a Cost-Plus or Variable Cost Contract. This is where the builder adds in only his overhead and profit. This is typically a percentage of the construction costs, anywhere from 8% to 15% for overhead, and 8% to 15% for profit—a higher percentage for the smaller projects, a lower percentage for the larger projects. There is some give-and-take on these numbers, but the builder typically has to cover his supervision costs, his cost of insurance, which in most cases is quite high, and his administration costs for handling the bookkeeping of the project. The Cost-Plus Contract should be used when trying to get the best value for your money. Remember that as you add things into the budget, you increase the amount that you’re paying the builder. On the builder’s side, keep in mind that he has to stand behind all of the workers and warranty the work for at least one year. We’ll be covering warranties in a separate section later on.
People would always like to put a square-footage figure on construction. It’s generally not a good idea to base any realistic budget on square-footage. It’s better to judge from an exact cost standpoint. For example, a kitchen appliance package—knowing what the exact cost is for a refrigerator, range, dishwasher, and microwave, versus taking a generalized figure of a mid-range appliance package is. This is the same kind of comparison as using square-footage as a measurement. Be realistic about estimates and provide for overages as best you can. Have the builder work with you and be conscientious about it.
If you are going to build a new home, this is the most important decision that you will make. Aside from the builder and the architect and the million other decisions that you have to make, if you select the wrong property, you may suffer with it for years to come. The number one criteria is the old real estate adage, “location, location, location.”
If at all possible, work on trying to find the best possible property at the best possible price in the best possible location. Stay away from properties that are on a busy highway or street, in a flood plain, in a wetlands area, in a swamp, or a postage stamp sized lot. These have extreme building limitations, that in the end will cost more to build and will not have great future value. Also, be careful with buying a home with historic designation. You may only be able to improve the interior and the exterior must remain as is. If you want to demolish the house it may take months of meetings and not be successful.
One of our potential customers knowingly bought a property in the flood plain and I still remember after a severely heavy rainstorm, pulling up in my SUV about one block away from the property, taking off my shoes, and walking knee-deep in water to be able to get to the property. When I got there, the house was out of the water, but all of the surrounding area was underwater. The backyard had over three feet of water in it. I called the property owners to ask if they had been out. They luckily had been watching the condition themselves and at least were aware of the severity of the situation. There was no place for the water to go and it wasn’t until the village opened one of the drainage locks to the Lake Michigan, that the area was able to drain. Now this was a beautiful area, full of very expensive homes, but still think about having to deal with this problem in the back of your mind on an ongoing basis. We didn’t get the job, and I always want the job, no matter the challenge, but this one was certain to require more than creative thinking and engineering to solve this problem.
Now why would you want to deal with this kind of problem if you could just be more selective about a property? So, once again, we go back to the basics of looking at the property. Go to the village first. Ask all the right questions.
Next, evaluate the cost of the property, versus the neighborhood, versus the restrictions on the property line, building lines, easements, utility locations, etc., versus comparable products both before construction as well as after the new construction.
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