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The Appraisal Process

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In the residential construction home business, one of the more trickier things to make sure sufficient funds are available for your project is the appraisal. Essentially, once a client orders their home and your custom home plans have been drawn up, we send the contract along with the blue prints to the lender. Of course the lender needs to place a value on the structure and the only way to do that is to get an appraiser to determine its value. This cost is passed along to you the client and it typically runs around $450-600. Depending on how busy things are in the real-estate world, appraisals can take up to 3 weeks.

Appraisers use a software program where values are placed on such things as square footage, sizes of garage space, quality of products, such as granite or Formica. Where you build is perhaps the largest contributing factor because they will pull values from other homes in the area that recently sold or were constructed. View lots, homes on acreage, existing structures, all play a role in determining worth of the project.

After the appraisal is completed, the lender will set in motion what is referred to in the business as “funding the project”. If the value of the project, cost of construction or acquisition cost is more than the appraised value, the client(s) will have to bring “money to the table” to cover the difference. If your appraised value is more than the acquisition cost, depending on how long you have owned the land, a down payment will be determined to fund the loan. Most construction loan programs that banks use take into consideration the length that you have been on title with the land; if over a year, known in the business as “seasoning”, you can obtain 100% financing. You will have to confirm of course if your lender offers this. If, though, you are negotiating on land, then banks offer different programs that will require as little down as 5% up to 20%. For the most part, rates are similar, but “closing cost” can often be different. Closing cost is margin that in essence means the cost of doing the business of getting the loan in place. Say a bank says they have a 3% closing cost. If your loan is $300,000 then it would equate to roughly $9,000 dollars. That money can be for the loan agent, but mostly it’s what the bank is making off the sale of the money it uses to loan to you. A strong word of caution here: when they say 3%, it does not always mean 3%. They still have junk fees. A junk fee might be “courier service”, “Administrative Services”, “Pen Use”… Not to be funny, but when you read some of the fees, you might want to chuckle to keep from crying. We did mention 3% closing cost but others can be 2% and some higher if your credit worthiness and or FICO scores are difficult. You might be able to negotiate some of the junk fees, but I have found it almost impossible to negotiate the closing cost fee unless it is for a large sum of money. At this point it’s time for a review:

Let’s reflect on what we have learned

  • Select a builder to build your home (True Built Home should be your logical choice)
  • Select the home you want
  • Order your home-processing payment from $2500-3500 will be required
  • Get your custom plans completed by our excellent design team-depending on work load and any changes you make it can take up to 2 weeks
  • At this point we can send the blueprints to the lender along with on the other important paper work for appraisal, 1-2 weeks. We also send the plans out to get engineering if needed-1-2 weeks
  • Once appraisal has been completed, the lender normally collects all the bids and estimates for the project and “runs” the numbers
  • Once engineering is done and all the financials look good, client submits for building permit
  • Once the permit is completed-4-6 weeks for most counties/city, you’ll want to call your local True Built Home Branch and request your pre-con meeting
  • You’ll want to bring all county/city paper work, along with your plans stamped from the county/city to the per-con meeting
  • Under normal construction times, we should be able to get a foundation crew to your site within 2 weeks. During especially busy times, it may take longer
  • The pre-con meeting finalizes all selection and any last-minute changes to standard or upgraded items
  • Depending on cost of the project and whether or not you own your land, a down payment maybe require to the lender to fund the project
  • True Built Home is given an escrow number and we verify funds are available. If you are a cash deal, we collect a percentage of the first payment at the pre-con meeting

Granted, all the above things are not “inspired”, it typically flows this way.

One of the fundamental things the owner of True Built Home, Lewis D Mann, wanted when he started the company was to impart as much knowledge about the products he puts in the homes; the process that True Built Home uses to construct their beautiful house and the transparency of the process to you. We hope you find this article informative.

For more information regarding appraisals, you might find this article interesting as well.

If you do happen to come across a dead link, please notify us. Thank you.

 

Oregon home prices hit record in Lane County

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Residential Construction

Residential Construction

Although to be clear, True Built Home does not build within Lane County Oregon, we do like to post articles (Average home price in Lane County sets all-time record, beating pre-recession figures) and good reads about housing within our site. Perhaps some of the more sensible reasons folks choose to build with on your lot builders like ourselves is reflected in this article about record home prices for Lane County. The frightening part about this “record” may mean that those folks purchasing housing in areas such as Lane might find that they purchased at the top of the market. However others feel with tighter governmental control of lending practices and other factors, our surging real-estate market should continue. That brings us to another reason why folks choose an on your lot costume home builder like True Built Home. It makes economical sense to build a home and often have walk-in-equity. Even if the market took a nose dive, often clients that build with us do not suffer the same equity loss as those that purchased on the used side of home sales. Here is a good read for you if you need to understand this a bit more.

 

Reflecting on the 2016 revised Washington State Energy Code

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As of July 1, 2016 all Washington State home builders are subject to new energy codes that have resulted in state-wide price increases. In a nutshell, builder receives credits when they use energy saving methods in the home construction process. In the past, the number of credits required for a medium dwelling unit (1501 – 5000 sf.) were 1.5 and could be met in a variety of methods. A hybrid hot water tank could get you 1.5 credits and it still can, but the state has moved the proverbial bar higher and now all builders have to get 3.5 credits for medium dwelling units. How we obtain those credits can be either good or bad for both builders and those desiring to build. How so? It’s imperative that you understand what you are building into your home and that the credits the builder is offering is economical for you, not just the builder. Adding these energy saving items is obviously good for you and the environment in the end. Will you have to purchase additional things for your home to make it comfortable? Let us explain.

Some builders are offering standard ductless units on all their homes to obtain 1.0 credit, and then obtaining the other 2.5 in a variety of means. Ductless units by-the-way were invented as demand for cheap A/C and heat were needed for older homes. It is minimally invasive because it literally is like a wall A/C unit that hung out of the window. They are in demand for retro-homes or remodels. Granted, for homes 1500 square feet and smaller, these units with one head for both heat and cooling may indeed be sufficient. We ourselves take this approach for all of our homes 1500 sf. and smaller. However, on a two story or a large rambler, if you want to get cooling and heat in all areas of the home, more heads are needed. Imagine while ordering your home from other builders and you are told that if you want sufficient cooling and heat in other areas of your 2,500 sf. home, you have to pay an additional $2-3-4k more!  Why would the builder offer the home in such a way? Because it’s their least expensive means to obtain the credits needed. This will put the client in an awkward position if you want even heating and cooling in the whole house. How so?  Because the builder will offer you an upgrade for extra heads for the ductless unit or offer the option/upgrade that True Built Home does standard-the furnace and heat pump! True Built Home has taken a completely different approach.

Ductless units have their place. However, on larger single-story homes and two-story homes, they make little sense. In this regard, True Built Home offers a high efficient electric furnace and heat pump system standard on all homes 1500 square feet and larger. This gives us 1.0 credit, just like a ductless unit, without the additional expense to the homeowner of adding more heads to sufficiently cool and heat the rest of the home. Let that sink in a bit. Because, when company personnel sit down to discuss these very things, some companies think, “how can we make more money”, while we always take the approach, “how can we add value to our homes”.

In the end, don’t be fooled by some who say that ductless are the “only” way to go. They indeed do have a purpose, but not when you have to pay more for some that could have simply been addressed the right way to begin with.

True Built Home – How we purpose to meet the new Washington Energy Codes

  1. High efficient electric furnace package along with high efficient heat pump system
  2. Low-flow Moen faucets-rated #1 JD Powers
  3. R38 under the floor
  4. LowE .28 windows
  5. Heat pump (hybrid) electric water heater

*Where natural gas can be substituted, an additional up-charge will apply for additional venting and piping.

True Built Home Name Brand Products

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Why name brand standard features are so important.

If you’re in the market for a custom built home, make sure that before you commit to a company you check out their standard features, and see if they give you the brands of the products they offer. Why? Lewis Mann of True Built Home explains at: https://www.youtube.com/watch?v=WPZNE0VkKRo&feature=youtu.be. At True Built Home, the standard features we offer are top quality, name brand products. See for yourself at: http://truebuilthome.com/standard-features/.

How can True Built Home SAVE you thousands of dollars!

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I have 23,000 reason why you should build a True Built Home

When comparing home builders side by side, it can really be tough for you the buyer. Why? Because not all apples are built the same.

As an illustration, consider if you were buying a new car. Sure, it comes with wheels, engine and transmission. However, if it was say an automatic transmission instead of manual, leather seats instead of cloth, nice rims instead of hub caps, it becomes apparently clear that you are buying a nicer vehicle than the plain-jane. However, you should expect or demand that the cheaper car should also be priced cheaper right? If then you bought the cheaper car, but paid the same price as the nicer car then yahoo for the dealer, but shame on the consumer for not doing their homework.

It’s similar with our homes compared to others. For instance, I have shouted this from the roof tops, but it’s so important that I am going to stress it in another way. I am going to compare a top-selling floor plan by one of our major competitors to our top-selling home just to show you how much more money you are wasting by ordering my competitors house and THEN, explaining why we can build for less money with more quality features than builder “X”. After which if you choose to literally “throw your money away”, it’s on you.

Being discreet I will simply say one our largest competitor sells a home that is 2576 sqft, 2 car garage 2 bath in Washington for $158,900 or roughly 61.68 psf. We’ll compare that home to our best seller the Juniper Ridge which is 2527 sqft with two car garage 2.5 bath for $155,900 or 61.69 psf. nearly the same square footage price right? So you would think it should have pretty much the same features, correct? It’s important to compare apples to apples so you the consumer can have a clearer idea of what you are getting in your home or what you may want to add to get a nicer home. I am going to point out only where glaring differences exist. For starters let’s go to the foundation because, you should have noted that you already get an extra bathroom with our TBH house (about $3500);

Foundation – They have a 22’’ foundation, True Built Home (TBH) offers a 24’’ foundation. Why shorter? Obviously to save money. In addition, they do a hung joist floor where we do a rim joist floor. That essentially cost the builder more but the reason being is we need that extra space because we often run all the HVAC plenum under the house, but the real benefit is almost all clients want access to the crawl space for future use. They do not offer the electric furnace package standard, their standard heat source are wall units. So, between the two items mentioned here, you are looking at about a 10k dollar upgrade. Get out your wallet.

Next; their garage space is 22×22, where ours is 22×24 or 44 more sqft. To add 44 more sqft to their garage you’ll likely be charged 1600 dollars. Oh BTW, your TBH home will come with a freezer jack, and 2 outlets in the garage and a plug-in the ceiling because we do a garage door opener standard (we mention later in this article) – put your hands up with our competitor because they are going to charge you another $500-600 dollars for those items.

Fascia board – If you look at their product, they attach the gutters right to the truss tails. However, a True Built Home comes with fascia board. The cost to add to our competitor’s house add $700-800, and the peace of mind that the truss tails won’t rot! As you look up under the overhang of the roof, with their home you will see oriented strain board or better known as OSB. While this is a great product and we use it too on our homes, we don’t use it for the overhang of the roof. There is a debate on whether or not to allow this to be exposed to the constant weather. Builder “X” will tell you that the paint you put on it will be just fine, however, it still is unsightly and will it hold up under Washington mood swings with our rain and sun?? TBH only installs CDX plywood. It’s smooth, can be painted and durable. It looks great and last for years when used properly. If they offer it, you might pay as much as $500-600 extra dollars for this True Built Home standard feature.

Let’s move inside where the costs are really going to go up.

Carpet pad – We do an 8lb pad, they list “carpet pad” as their standard and one would only guess that it’s a 6lb because if it were 8lb, they would mention it. Upgrade cost-around $700 dollars

Our hemlock solid wood trim stained to match your cabinets is by far a step up from what our competitor offers. Their standard trim is an embossed (plastic) coated finger jointed wood trim. Obviously much less expensive and it shows but the real problem is when you damage it. You see, because it’s embossed you can repair it to make it look right again. With a true wood trim, when it gets nicked or damaged it’s an easy fix. Do you desire that TBH standard? It will cost you about $1800.

If you get rid of the cheap trim, you’ll have to upgrade their door package because they are an embossed flat photo finish door to match the plastic coated trim. When will it stop, right? Add roughly $2000 dollars because our interior doors come painted as well! We offer 5 different whites as standard. However, if you have a different color in mind, we charge a bit more outside of our standard white.

All of our cabinets come standard as a 36’’. Add $800 dollars for that change. Are you yelling for mercy yet?

Back to the garage – We include the opener. However, if you are their client you may want to open it on a rainy day, right! Add $400-550 dollars.
We use only Moen faucets throughout all of our branches-Not sure what they use, they don’t list it but if they don’t you could be looking at around $900-1100 dollars to have installed a nationally recognized and award-winning faucet. We offer both the Brantford and the Eva standard in chrome. Satin and ORB are an upgrade. Keep in mind the deep kitchen sink and we hope you’ll be pleasantly surprised by our faucet as well.

We really could mention more like HD Formica counter tops, a better selection of standard vinyl and carpet, door hardware, bathroom hardware; all of which are upgrades by others. So, if you walked into builder “X and wanted the “Standard” True Built Home, how much more would you have to spend? Sit down.
You would spend north of twenty-two thousand dollars, that’s right $22,450 dollars, and we are being conservative!

So, you should be asking yourself why and how. Why do they do that, and how can TBH offer more for less? The big secret is they are franchises. Yep, they have to pay the mother corporation for each home sold and they make the majority of their money on upgrades, and you pay out the nose to make their business model work. True Built Home is owned by only one person; not like a franchise and not like another competitor of ours which is owned by three families. When compared to them as well, you end up funding their checking and saving account, not yours.

So the question we want to ask is when a company offers a product but does not list the items that go into the home… why not? The other is, if a company does not list the price of their homes, why not? When you the buyers are kept in the dark from the start, how might you be treated during the process and at the end of the process?

Our standard home, is our competitors upgraded home.

Obviously it’s your money and you can spend it how you like, but nearly $23K is a LOT of lattes and movies. Or, as we stated at the front of this article, a car with leather seats, nice rims and an automatic transmission!

What is the Co-Construct System?

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True Built HomeHow the Co-Construct system benefits you and your new home

Communication is one of the strongest pillars of the True Built Home building process. Our Co-Construct system allows us to make sure that you, vendors, and subcontractors always know what’s going on at any given moment in the building of your home. Read more about our Co-Construct system and find out how it works at: http://truebuilthome.com/what-is-coconstruct/.

The Top 10 Things to Do in Richland, WA

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Oct-29

In Richland, there’s always something to do!

Beautiful parks, sightseeing tours, and so many wineries – there are endless attractions in Richland, Washington! TripAdvisor has outlined the top 10 things to do in Richland, which you can see here: http://www.tripadvisor.com/Attractions-g58708-Activities-Richland_Tri_Cities_Washington.html. Imagine living in this wonderful community in your new True Built Home! http://truebuilthome.com/

Big Rambler, large covered porch and why wouldn’t you add the covered porch?

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I often wonder why folks don’t upgrade to a large covered porch when ordering a home. Having the space on the lot makes it easy. Adding the covered area in essence increases your living space. Add a fan, TV jack, lights, and you’ll enjoy the space often year round. Here is a house we finished in the Spokane area some time back and a few other covered porch ideas.

 

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Terry S Pemberton-Expert Construction Loan Officer

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True Built Home’s brief interview with one of the Pacific Northwest lending construction loan officer, Terry S. Pemberton of Umpqua Bank

 

Terry first of all, how long have you been in the lender business, and how many years total in the construction lending side of things?

Well Lewis, I’ve been in the mortgage banking industry since 1989 and I have specialized in construction lending for 20 years.

Terry, it’s good to hear that you moved from one nationally recognized bank to a more regional lender with Umpqua Bank. Why the move?

After a lot of analysis, I determined that Umpqua Bank’s construction loan products offered a better overall structure which is more beneficial to the needs of the local borrowers and builders in our area.

If a client were to ask, “which lender does TBH recommend for their construction loan?” why might we tell clients to use you?

Lewis, our construction loan products have low fees and great rates as compared to some of the other products on the market.  But even more important to some borrowers, is the low down payment feature if the borrower does not already own the land. If a borrower is in title on the land at the time of application, they can utilize the equity from the future finished value of the new home and land together, as if the home is already built on their lot. The benefit to the borrower is that the equity can be applied to the down payment. These unique features can be a huge help to some borrowers.

How many construction loans have you done over the course of your professional career and how does this experience help the customer?

I’ve probably closed over 1000 construction loans in the last 20 years. My experience in construction lending helps me guide the borrower through a complex loan with ease because I’ve had the opportunity of working with borrowers through so many different scenarios over the years.

What has been the average loan amount?

My construction loans have ranged from $50,000 to $2,000,000, but, on average they are typically in the $200,000 to $400,000 range.

Are construction loans more expensive than say a refi or purchase?

Yes, construction loans in general are more expensive than most other types of residential mortgages, mainly because the loan needs to include fees for the monthly inspections and drawsOne advantage at Umpqua Bank is that we process and fund all draws internally through our own Custom Construction Draw Department. This means that builders will always work with an Umpqua Associate and never a 3rd party.

What documents are normally needed from the client to close on a construction loan?

Each borrower’s personal financial situation is different, but generally, financial items needed are the same as any other mortgage. As for the construction portion of the loan, I will need to document the project with a contract from the general contractor, plot plan, description of the materials, and a line item budget of all the costs.  The borrower may have portions of the project that will be completed by someone other than their general contractor.  This could be for things like the septic system, a new well or landscaping.  If that’s the case, we’ll need documentation for those items as well.  I will give the customer and the builder a complete list of the items we require early on in the process so that everyone knows what all will be needed.

How long will a construction loan take to close?

The time to complete a construction loan can vary quite a bit depending on each scenario.  From the time I receive a complete credit package and a complete builder and project package we can usually close the loan within 60 days.  Things that can extend that time frame are finding land on which to build, getting septic approval, getting bids for items that won’t be completed by the general contractor or changes to the project after the appraisal has been completed.  When I meet with a customer I explain the details and set expectations based on their situation.

What are some typical “hiccups” to construction loans?

Obtaining the various permits required in association with the building project can create delays. Also, unexpected cost overruns can occur during construction.  If a borrower started with temporary construction financing instead of a one-time close loan, they may have trouble getting approved for their permanent financing if they have had changes to their financial condition during the course of construction. Certainly other “hiccups” can occur also.

What do you think stresses out most clients during the process?

I advise all of my borrowers to try and have patience throughout the process. Many things can stress out the borrower since this may be the first time they have built a home and the long list of decisions they need to make in a short period of time will tend to add to their normal stress load. The main idea to keep in mind is the finished product will be something they can enjoy for many years to come.  They need to talk about setting proper expectations up front, having solid plans and specs, keeping changes to a minimum and keeping in mind that they may run into unanticipated snags.

We know you do business with TBH competitors, but if you were to offer a compliment about True Built Home to our prospective clients, what might that be?

The fact that TBH survived and grew out of the 2008 real estate market is impressive by itself. In addition, I think TBH can include itself in a general group of on-your-lot builders who recognize the need of a middle market, custom home product, and understand how to display and deliver the concept to the marketplace.

Thank you, Terry for your time.

 

Loans subject to credit approval.

Terry S. Pemberton

Home Lending Officer NMLS ID 185396
Direct: 360-280-4208
Fax: 888-977-9408
Email: terrypemberton@umpquabank.com
Web: www.umpquabank.com/tpemberton

Terry can serve all of True Built Home’s locations and branches.

The Beauty and the Beast of hot water tanks

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There is an ever growing trend that appears to be gaining each and every month which is the press towards more energy-efficient items in one’s home. I think every paying customer out there who gets their utility bill, every month or two for some, is ‘WOW… is there anything I can do to minimize the “bite” the government (PUD) takes from your wallet?’ There may be very little to do for folks who elect to live within a city’s limits because the city often charges a fee for trash, storm drainage, sewer, water. However, when it comes to electricity, yeah, there are things that you can do to minimize the “bite”.

With this article, you’ll be getting into some pretty hot water with us. Hot water tanks, and equally the manufactures of them, are getting to where the cost to heat cold to hot is getting more and more palatable. I lived in a South American county for three years, and basically we used what was called a Lucha. (See photo below).

shower-head-latin-america-225x300

Now, if you think we were a little frightened to step into a shower, stand in water with a device likely not connected to a GFI, turn the water on and get hot water out, (think of a toaster as the way it works) and enjoy the experience, then think again. These are probably the most efficient means to heat cold to hot, but if we think most North Americans will adopt this means, well, I think that would take a real effort. Instead, manufactures of hot water tanks, and or devices to accomplish the same thing, have made strides in recent years.

The newer wave tanks are called “on-demand” or instantaneous tanks, and we also have Hybrid which work like heat pumps. All promise to save on your monthly bill, but the question is: what’s the difference you pay and how long will it take to recoup the additional cost of the new generation tank. Another thing to give consideration is the ability to get parts, qualified technicians and the cost of maintenance.

Cost: The obvious theory is, you heat the water when you need it (heat pump hybrids are different in their means to save money) thus saving most families about 30% annually, or on average about $300-360 yearly. Old water tanks cost significantly less from the start; a 50 gallon can cost around $350-500, where your on-demand costs vary as to your needs.  A family of say two could use a smaller on-demand and pay around $300 for a unit where a family of 4 would obviously need more water per minute, so you’d likely have to pay around $1200-1400 for the unit.  The thing to keep in mind is capacity per minute, like the Rinnai RU98EP LPG Tankless Water Heater. True Built Home does not endorse or recommend one or another when it comes to manufactures. Each person should do their own due diligence and make a sound choice based upon you and your family’s needs. With our math in place, it would stand to reason that after say the third year of living with the new water heater, it will have paid for itself. If the unit lasts longer, which is another positive reason to choose to install them, you should start to enjoy some savings every month. You might feel good too because after all, you are not wasting either your money or resources.

Water flow: as we mentioned above, your needs as a family or individual will affect which on-demand tankless hot water unit you install.  The really terrific thing is these units will spit out hot water until the cows come home because they never run out of hot water. Whereas the older technology is, it holds 50 gallons and when it’s gone, it takes another 20-30 minutes to heat up the new water. Probably the big knock against the newer units is the water temperature tends to fluctuate between a little cold to a little hotter. However each year the manufactures are getting closer to perfecting the results, and should not in itself prevent you from considering this option as to the means to heat water for your family.

Size: The old style tanks take up way more room than the on-demand units; another plus for those who have a tight space or just want to free up more room for other things.

Last note: If you are considering an on-demand water heater, good for you, but keep a few things in mind: Think about the size you need. This is the most important thing, in my opinion, when it comes to choosing a unit. Next is to read a good amount of reviews; do your homework. Lastly, and I am only telling you what others in the industry have told me, stay away from electric on-demand units and if at all possible stay with either natural or propane units. I am told by several plumbers (in fact, they won’t install them) is that the electrical units are more temperamental, break down more frequently, and do not provide the consistency of a gas unit. Happy buying.