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Show me the equity!

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In reading this article I found in it some sobering facts, especially the one about homes that are in the $200k range. If having equity in your home is important you’ll enjoy this piece. If you would like to read the article from the original site, here is the link.

Staff TBH

 

WASHINGTON — If you’re like most homeowners, it’s your biggest asset. You can’t track it online or check monthly statements sent to you by a bank, but it’s crucially important for your personal financial well-being and your retirement planning.

It’s your home equity — the difference between the market value of your house and whatever debt you’ve got on it. Equity for most of us is a big deal, and based on data released recently by the Federal Reserve, Americans’ home-equity holdings are booming.

Related story: New online calculator makes fees in mortgage offers transparent

That’s great news for most owners — though not all — and for the economy as a whole. The more equity we have, the more likely we are to spend money on goods and services that create more jobs — the so-called wealth effect.

Now consider these brain-bending big numbers: Thanks to rising prices and substantial continuing pay-downs of mortgage debt, owners’ combined equity holdings increased by $795 billion during the three months ended March 31. Homeowners’ equity holdings at the end of the first quarter totaled $10.8 trillion, the highest amount since late 2007 — but still well below the bubble-era record of $13.4 trillion reached in early 2006.

 

REAL ESTATE

Condos are becoming FHA no-lending zones

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The ongoing boom is also pulling thousands of owners across the country out of real estate purgatory — they’ve been stuck in negative equity positions but are now transitioning to positive. According to new estimates from mortgage and housing analytics firm CoreLogic, the owners of 312,000 houses moved out of negative territory during the first three months of 2014. If prices rise just 5% in the year ahead, say researchers, an additional 1.2 million owners could do the sale.

Now for the sobering side of the home-equity story: Despite the boom in housing wealth underway, many owners are still unable to join the party. About 6.3 million of them remain underwater on their loans. The average amount of negative equity they’re carrying is often significant — they owe an average 33% more than their house could command in a sale today. That gives you an idea of the widespread pain still being felt in the wake of the bust and recession.

The impact is especially severe for owners who bought with little or nothing down and then loaded on additional debt with second mortgages. The average negative equity balance for owners with two mortgages is about $75,000, according to CoreLogic. For households with one mortgage, the average negative equity is around $52,000.

Also on the sobering side, millions of owners continue to have less equity than they’ll need if they want to sell or even refinance. At the end of March, 10 million owners had less than 20% equity in their properties, and 1.6 million of them had less than 5%. Given real estate transaction costs, most people with less than 5% equity would have to bring money to the table to pay off the debt on their house when they sell.

Equity holdings are closely linked to market segments — higher-cost houses are less likely to be in negative equity positions than lower-cost homes — and geography. According to CoreLogic, only about 3% of homes costing more than $500,000 have negative equity. By contrast, 17% of homes costing less than $200,000 are in negative positions.

Not surprisingly, areas of the country that performed worst during the bust — where easy-money financing was most common during the boom — continue to have high rates of negative equity, even well into the housing rebound. But there’s one dazzling exception: California. In some inland counties during the recession, toxic financing contributed to home value losses of 50% and higher. Yet today, thanks to the most vigorous marketplace rebound of any state, just above 11% of California homes are in negative equity. Compare that with 29% in Nevada, 27% in Florida, 20% in Arizona.

Where are average equity levels highest? Texas, where home prices remained modest and affordable during the boom, is at the top. Just 3.3% of Texas homes have debt exceeding their resale values. Rounding out the top five, Montana, Alaska, North Dakota and Hawaii all have less than 5% negative equity on average. The District of Columbia, a high-cost market that has seen significant home-price appreciation in the last several years, ranks sixth best in the country with a 5.1% negative equity rate.

 

Equity in your home, or the lack there of

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I read this article; although a few months old, I found in it some sobering facts, especially the one about homes that are in the $200k range and the owners equity, or lack there of, position. I have highlighted it below.

Staff TBH

 

WASHINGTON — If you’re like most homeowners, it’s your biggest asset. You can’t track it online or check monthly statements sent to you by a bank, but it’s crucially important for your personal financial well-being and your retirement planning.

It’s your home equity — the difference between the market value of your house and whatever debt you’ve got on it. Equity for most of us is a big deal, and based on data released recently by the Federal Reserve, Americans’ home-equity holdings are booming.

Related story: New online calculator makes fees in mortgage offers transparent

That’s great news for most owners — though not all — and for the economy as a whole. The more equity we have, the more likely we are to spend money on goods and services that create more jobs — the so-called wealth effect.

Now consider these brain-bending big numbers: Thanks to rising prices and substantial continuing pay-downs of mortgage debt, owners’ combined equity holdings increased by $795 billion during the three months ended March 31. Homeowners’ equity holdings at the end of the first quarter totaled $10.8 trillion, the highest amount since late 2007 — but still well below the bubble-era record of $13.4 trillion reached in early 2006.

lRelated

REAL ESTATE

Condos are becoming FHA no-lending zones

SEE ALL RELATED

8

The ongoing boom is also pulling thousands of owners across the country out of real estate purgatory — they’ve been stuck in negative equity positions but are now transitioning to positive. According to new estimates from mortgage and housing analytics firm CoreLogic, the owners of 312,000 houses moved out of negative territory during the first three months of 2014. If prices rise just 5% in the year ahead, say researchers, an additional 1.2 million owners could do the same.

cComments

  • @grandmesa Just how did you come up with that idea? What, now that we have equity homes will all of a sudden qualify for equity loans?

D1GAME

AT 8:09 AM JUNE 16, 2014

ADD A COMMENTSEE ALL COMMENTS

3

Now for the sobering side of the home-equity story: Despite the boom in housing wealth underway, many owners are still unable to join the party. About 6.3 million of them remain underwater on their loans. The average amount of negative equity they’re carrying is often significant — they owe an average 33% more than their house could command in a sale today. That gives you an idea of the widespread pain still being felt in the wake of the bust and recession.

The impact is especially severe for owners who bought with little or nothing down and then loaded on additional debt with second mortgages. The average negative equity balance for owners with two mortgages is about $75,000, according to CoreLogic. For households with one mortgage, the average negative equity is around $52,000.

Also on the sobering side, millions of owners continue to have less equity than they’ll need if they want to sell or even refinance. At the end of March, 10 million owners had less than 20% equity in their properties, and 1.6 million of them had less than 5%. Given real estate transaction costs, most people with less than 5% equity would have to bring money to the table to pay off the debt on their house when they sell.

Equity holdings are closely linked to market segments — higher-cost houses are less likely to be in negative equity positions than lower-cost homes — and geography. According to CoreLogic, only about 3% of homes costing more than $500,000 have negative equity. By contrast, 17% of homes costing less than $200,000 are in negative positions.

Not surprisingly, areas of the country that performed worst during the bust — where easy-money financing was most common during the boom — continue to have high rates of negative equity, even well into the housing rebound. But there’s one dazzling exception: California. In some inland counties during the recession, toxic financing contributed to home value losses of 50% and higher. Yet today, thanks to the most vigorous marketplace rebound of any state, just above 11% of California homes are in negative equity. Compare that with 29% in Nevada, 27% in Florida, 20% in Arizona.

Where are average equity levels highest? Texas, where home prices remained modest and affordable during the boom, is at the top. Just 3.3% of Texas homes have debt exceeding their resale values. Rounding out the top five, Montana, Alaska, North Dakota and Hawaii all have less than 5% negative equity on average. The District of Columbia, a high-cost market that has seen significant home-price appreciation in the last several years, ranks sixth best in the country with a 5.1% negative equity rate.

 

Raised Heel Truss

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In one of the more common areas to save on your heating cost, the raised heel truss with additional insulation is one that is in reach for most of our clients. Essentially, at the ends of the hip part of the roof, the angle of roof to exterior wall becomes very small. As a result, almost the entire perimeter of the home, where your roof hips, you are loosing heat or better know as money. In the picture below, you will see what a standard home comes like, and what a “raised heel truss” looks like;

Raised-Heel-truss

 

By raising the truss up off the top plate and increasing the area between truss and sheet rock to roof under sheathing, you effectively gain enough area to provide a higher insulation value for those areas. If say we were building both types of homes and they are each roughly 1000 sq-ft homes, the house on the left, or a standard truss package, would get only 900 sq-ft of R49 whereas the rest of the areas would be roughly R20. That is a significant amount of insulation loss. When raising the heel, effectively you have increased all the areas to get the maximum amount of insulation as possible. Add R60 in the roof and you really have a home that will save you money.

 

Why not ask one of our helpful home consultants how much these upgrade cost. Contact True Built Home now!

 

True Built Home-we are adding a few new plans

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We have been busy and are inviting you to take a look at three new plans.
The Jasmine-big, open rambler sure to delight those needing floor space.
on your lot, custom home, custom home builder

The Jasmine

The North Wood-Perfect 2 story ready to fit on smaller city lots.
1917-North-wood--720x480
The Chadwick-the one we are really excited about!
Chadwick_2044_1920x1080
The Ripple Cove-we have re-designed the floor plan with easier access to the kitchen
ripple-cove-rambler-home-plan
The Chadwick and the Jasmine come standard with the hip style roof.
Our standards are other companies upgrades. If you are going to get a long term loan, you should at least get a long term home. With True Built Home, why not settle for more!

Drywall Level Finish

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Every once in a while we run into a difference of opinion with a client over the finish standard of our garages when they want to have the garage fully sheet-rocked. Some have come under the impression that the finish should be the same as the house, which can be done, but is rarely done if ever. After all, it’s a garage. So to help folks out, we put together some photos and descriptions for you to let you know what we offer for the upgrade to have your garage fully sheet-rocked. If you desire a higher finish, let us know and we can do it for a moderate upgrade cost.
Level 0 is used in temporary construction or if final decoration is undetermined. No taping or finishing is required.

 

A Level 1 finish is recommended in areas that would generally be concealed from view or in areas that are not open to public traffic. Joint tape need not be covered with joint compound to fulfill the requirements of Level 1. In Level 1, the surface is left free of excess joint compound. Ridges and tool marks are acceptable for a Level 1 finish. This level is often specified in the plenum area above ceilings, in attics, or in service corridors. In some geographic areas this level is referred to as “fire-taping”.

Level0

 

Level 2-this is the finish that True Built Home offers and what is completed at the upgrade price.

In garages, warehouse storage areas and other similar areas where the final surface appearance is not of concern, a Level 2 finish is the recommendation. Level 2 may be specified where moisture resistant gypsum board is used as a tile substrate. Level 2 reads, “All joints and interior angles shall have tape embedded in joint compound and wiped with a joint knife leaving a thin coating of joint compound over all joints and interior angles”. This differentiates Level 2 from Level 1. Joint compound is applied over all fastener heads and beads. The surface is left free of excess joint compound. Ridges and tool marks are acceptable for a Level 2 finish.

Additionally, Level 2 includes the following sentence: “Joint compound applied over the body of the tape at the time of tape embedment shall be considered a separate coat of joint compound and shall satisfy the conditions of this level.” In the past there has been some confusion as to whether tape pressed into joint compound and covered with joint compound in a single operation fulfilled the requirements of Level 1 or Level 2

Level1

 

Level 3
In areas to be decorated with a medium or heavy hand and spray applied textures or where heavy-grade wall coverings will become the final decoration, a Level 3 finish is recommended. Level 3 states, “All joints and interior angles shall have tape embedded in joint compound and shall be immediately wiped with a joint knife leaving a thin coating of joint compound over all joints and interior angles. One additional coat of joint compound shall be applied over all joints and interior angles. Fastener heads and accessories shall be covered with two separate coats of joint compound. All joint compound shall be smooth and free of tool marks and ridges. Before final decoration it is recommended that the prepared surface be coated with a drywall primer prior to the application of final finishes. Level 3 is not recommended where smooth painted surfaces, light textures, or light- to medium-weight wall coverings become the final decoration.

Level2

Level 4

If the final decoration is to be a flat paint, light texture or lightweight wall covering, a Level 4 finish is recommended. As stated in Level 4, “All joints and interior angles shall have tape embedded in joint compound and shall be immediately wiped with a joint knife leaving a thin coating of joint compound over all joints and interior angles. Two separate coats of joint compound shall be applied over all flat joints and one separate coat of joint compound shall be applied over interior angles. Fastener heads and accessories shall be covered with three separate coats of joint compound. All joint compound shall be smooth and free of tool marks and ridges.” It is recommended that the prepared surface be coated with a drywall primer prior to the application of final finishes.

In severe lighting areas, flat paints applied over light textures tend to reduce joint photographing. Paints with sheen levels other than flat as well as enamel paints are not recommended over this level of finish. Special attention should be paid to long corridors, large areas of wall, and large/multiple windows when specifying Level 4, because these areas are potential areas of concern in achieving acceptable wall finishes, and may need to be specified appropriately.

Level3

Level 5
Level 5 finish is recommended for areas where severe lighting conditions exist and areas that are to receive gloss, semi-gloss, enamel or non-textured flat paints. Level 5 requires all the operations in Level 4. Additionally, a thin skim coat of joint compound, or material manufactured especially for this purpose, is applied to the entire surface. A thorough explanation of “skim coat” is given in the comments section of GA-214.

A skim coat of joint compound is intended to conceal small imperfections in joints and on the surface of the gypsum board to help conceal joints and create the appearance of flatness. A skim coat will also smooth the texture of the paper, minimize differences in surface porosity, and create a more uniform surface to which the final decoration can be applied.

Level4

3 Billion plastic bottles and some really smart people

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What do you get when a company wants to make their carpet exclusively with plastic bottles? Much cleaner landfills, and oh, carpets that are the best in the world!
True Built Home and Mohawk, the award-winning flooring people, have teamed up to bring the most durable, stain and wear resistant carpets in the industry.
To learn more about EverStrand click here.
EverStrand is True Built Home’s standard line of carpets. It is a polyester carpet, or better know as PET. In fact up to 99% of all carpets in the US are synthetic in nature. If you are currently having a home built by True Built Home and have yet to order the carpet, you may want to visit with your office to see what the possibility is of having EverStrand installed instead of our previous standard carpet. Why?
EverStrand is made exclusively from 100% recycled water bottles. These bottles, before being discarded, were approved for human needs from the FDA. Low to zero VOC.
EverStrand comes with the best warranty in the carpet business. (Some highlights are below)
Lifetime stain resistance 10-year abrasive wear 10-year texture retention 10-year soil resistance 10-year manufacturing defects.

Step It Up A Notch!

For a little extra money, you can upgrade to the SmartStrand, a nylon carpet which has the ONLY built-in stain and soil protection that NEVER wears off. Other carpets lose as much as 50% of their protection after three steam cleanings. So, in about 54 months, you lose 50% of the stain protection but with SmartStrand, you still retain 100% protection! You can download their Brochure if you’d like. Need a little proof, what about Red Wine?
Flooring Protection to the Max
Finally, our laminates or engineered hardwoods from Mohawk with Armormax. What is Armormax?

Introducing the industry’s most durable coating system for hardwoods, Mohawk’s ArmorMax™ Finish Technology offers maximum protection for your floor. Combined with Scotchgard™ Advanced Repel Technology, ArmorMax serves as the ultimatebarrier against staining and abrasions that come with everyday life.

  • Tested and proven protection that is five times more resistant to wear than other similar extended wear finishes.
  • Built-in surface shield repels stains and everyday messes for long-lasting performance in your home.
  • Easy maintenance, as ArmorMax Finish eliminates the need for frequent hardwood cleaning and floors look newer for longer.
  • Backed by a 50-year finish warranty.
Basically, Mohawk took on 6 other competitors according to the principles of ASTM D 4060 They sit a sander if you will, with essentially is 320 grit sand paper and a little over a pound and half weight on it. Every time the sander makes one revolution, it is counted as such until in does it 500 times, or better know as a cycle. Mohawk products with Armormax lasted up to 3000 revolutions, or 5 times tougher than their closest competitor!
So, if you are thinking of building a home with a “cheaper kind of builder”, remember, the old saying, “the cheapest person always pays the most”. True Built Home has your back! We don’t settle for the cheapest product to put in your house. That’s what others do. We look for the best value, but more importantly, when it comes to flooring, those that will stand the test of time!
Please call or email us to discuss True Built Home’s incredible line of products, benefits, and features. You can reach us by email at contact@truebuilthome.com  For a brief video about Mohawks products, you can click here. Or on our YouTube.
Learn all you want about carpets here.

Hybrid Hot Water Tanks-Why Wise, and How They Work

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Having hot water is essential to the modern family. Thanks to some genius in the past, we no longer have to cut word and boil it over a fire! After all, after cutting all that wood, who needs a hot bath or shower.

The old ways of heating the water in a conventional water tank, well are about to “tank” as new methods, along with cheaper methods, come along. Today you have several choices to heat your water to save money. 1. Chop wood and boil (as discussed, not the best way). 2. Electric tank with what essential is a wire coil that heats the water (what most homes have). 3. On demand (stay far away from electrical ones, gas ones are great) 4. Solar (more money, but will eventually come down in price) 5. Hybrid (the most popular choice). Today we are looking at the hybrid means.

Hybrid hot water tanks work a lot like a heat pumps that cool and heat your home in a much more efficient means than an electric furnace package and an air conditioner. The Heat Pump Water Heater is an integrated system that utilizes heat pump technology to provide a more efficient way to heat water with electricity. Similar to your home air conditioner in reverse, the Heat Pump Water Heater extracts heat from the surrounding air and transfers the heat to the water in the tank. This is a very efficient means of heating water, and yields a by-product of cooler, dehumidified air. More storage capacity allows the water heater to operate in the most efficient mode and generate greater savings compared to smaller capacity heat pump models. Greater storage capacity provides more hot showers every morning. Essential, the hybrid hot water tank can save you on average about $300 per year. With local and state rebates, you might be able to re-coop the cost of the hybrid hot water tank in about 3 years or less. The great thing is you should see immediate savings each month. In addition, the hybrid hot water tank has a monitor control area that you can adjust on a moments notice. It will have a vacation mode and by simply touching the button, wham, it converts to vacation mode.

You can check out more information here.

Combine the hybrid with a high efficacy heat pump, some heal trusses, triple pane windows, and you are on your way ever month at savings hundreds and thousands of dollars over the course of these modern products lives.

The Pros and the cons;

Pros

  • Saves money every month
  • Quick adjustment to heat settings
  • Pretty cool looking
  • Will make you feel good going green

Cons

  • The cost will take about 3 years to re-coop
  • They have to be in the garage or must be vented if installed within the home
  • Makes noise
  • Slightly bigger than a standard hot water tank

 

A little reflection and history of True Built Home and other “on your lot builders”

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Are you among the many that are looking to build a new home on your land? Maybe you’re considering a volume builder that deals with a set of stock plans that you can alter, or a home builder that doesn’t allow any changes to their stock plans. There are a few large, on your lot, volume builders in the area, such as Reality Homes Inc. (out of Fife, Washington with branches in Burlington, WA, Centralia, WA, Woodland, WA, and Woodburn OR), HiLine Homes (out of Puyallup with offices in Woodland, Centralia, Yakima, Grays Harbor County, and Jefferson County in Washington), Lexar Homes (with offices scattered about), and Adair Homes (out Oregon with offices in Aura, OR, Medford, OR, Bend, OR, Creswell, OR, Olympia, WA, Caldwell, ID, and Woodland, WA). In your search for a volume builder, you may have come across prices that sound too good to be true and asked yourself, “How can these contractors make a profit?”, “What ensures that I’ll get a quality home?”, “What type of products are they using?”, “Will I have resale value?”, “What are my final costs likely to be?” (that’s a big one), and of course, “What are the hidden costs?”

First, let me introduce myself. My name is Lewis D. Mann. I’m the owner of True Built Home (www.truebuilthome.com), and I previously worked with HiLine Homes (www.hilinehomes.com) for more than three years as an independent contractor, selling their homes and learning the business (1996-2000). I later went on to co-found Reality Homes (www.realityhomesinc.com) out of Fife, which lasted three years as well for me. I used to say that I have assisted hundreds, but I have later revised that to say thousands of families, builders, and contractors to understand clearly what is involved with an on your lot volume home builder, and what pitfalls might occur in the building process. I have seen builders of this nature up close. I have observed the entire scope of the process, first-hand. I have absolutely seen the great, the good, the bad, and the downright ugly side of this business. Since I originally wrote this article around 2007/2008 and it’s now getting closer to 2020, you can see that I have seen it all.

First, the client finds an advertisement in the paper, real estate magazine, radio, TV, or perhaps on the internet. Maybe you have searched using words like, “custom home builder”, “on your home builder”, “on your lot builder”, “volume builder”, etc. and came across their website. Next, you might make a phone call, or pay the local office a visit. You’ll hear the pitch – they’ll describe the process, and if they have a model home, you might just get lost daydreaming of owning your own home in your visit. You might have a million and one questions that you are going to ask. However, will that salesperson have your best interests in mind? When you visit any showroom or model home, you have screaming above your head, “I saw your ad,” or, “I saw a home built in my area, and I wanted to come and see more for myself”. In this scenario, you are at a complete disadvantage. You’ve traveled to them, and you are on their turf (so to speak), and they will be answering questions that they have heard hundreds of times before and they will have the perfect responses for you. Sometimes with a bit of humor to break the ice. What you need is clear direction and foresight. It’s almost like looking at a shiny new car. Oh, how pretty it looks! Did you stop to ask, “what’s it got under the hood, and what kind of tires are those?” I really believe most folks get lost in the visit and when questioned about the warranty of something like the siding package, they are clueless.

I have included these volume builders in this informative blog because I think that you deserve the opportunity to investigate them all in hope that after doing so, you will have easily discovered that True Built Home (owned by only one man), has the absolutely most beautiful homes, with hands-down the best standard features when compared to the others.

First a bit of history. Adair Homes, as we mentioned before, was essentially the inventor of the on-your-lot building program in the Pacific NW. Sometime around 1990, the Sundby family were farmers that moved out to Puyallup, Washington. Eventually, they began framing homes for Adair. About 1994/95 they decided to do the exact same thing as Adair and solicited a draftsman to draw up some plans that were very similar. The funny thing is, while they were selling their new homes to clients, they were still framing homes for Adair to fund the company. One day an Adair project manager saw a home being built by “Creative Builders.” After they did some research, they found out that the framers, were the Sundbys. They were let go and Creative Builder’s story began. They later started doing business as HiLine Homes. The family sold homes out of their basement in Puyallup, WA, but when they were confident enough, they opened their first model home in September of 1998. A few years later, they accumulated two partners to add to the father and son team, and eventually, they broke the company up. The son sold his stake, but the father kept his, and Lexar Homes was created with two additional owners: James Moen and Bob Hollis. Most, if not all of their branches, are franchises or licensees and that is a critical piece of information that you will need to remember, but back to my story.

I remember when I started with HiLine Homes, they were concerned that it would be six months before I would have a paycheck. That first month I sold five homes, and for three years I enjoyed seeing the company prosper and the homes being successfully built. HiLine Homes was on the map and has continued to beat Adair Homes for sales volume for many years now. They were a real thorn-in-the-side of Adair, but in many ways, the roles have reversed. Things were changing, and it all came to a head in October of 2000. I don’t want to go through all the sordid details, but suffice it to say, I left. I joined a company with three other “partners” as a 10% stakeholder in the very early days of their beginnings. My partners thought that they could do the same thing as HiLine Homes. However, they needed someone that understood all aspects of the business from banking, advertisements, sub-contractors, etc. They had a large pool of investment dollars to spend and were making progress with their branch, but they did not have a grasp on the concept. They “claimed” to have contracting experience on their website, but they were sealant and caulk company, a barricade and fence company (so if that is being a contractor, well perhaps they do, but that hardly made them home builders). Now, they too wanted to become an on your lot volume builder. When I caught wind of it in December of 2000, I made a phone call to one of the owners. I revealed my desire to come aboard as a principle owner and shareholder. The talks were on. I had left HiLine Homes in January of 2001 and started my new life as a 10% owner of Reality Homes Inc.

At Reality Homes, the first-year projection was 28 homes; I set that goal. The project manager said 56, we sold 128 homes that first year. WE WERE BLOWN AWAY. But storm winds were blowing. Let me explain.

One of the biggest things I learned from on your lot builder HiLine Homes was not to oversell. Building the homes is by far the most rewarding part of the volume building business. Daily, I was getting concerned with the timelines of construction at Reality Homes and voiced it over and over again. My concerns seemed to come across to some as one who did not want the company to succeed. That was the furthest from the truth! I wanted the company to be the most dominate on your lot volume builder in our industry. I continued to clash with one of the partners. What made matters worse, six months later when the shares were awarded to me, the partners suddenly could not remember the part about me being a principle. Was I shocked? That’s an understatement. The writing was on the wall. I saw it coming a mile away, and this had a detrimental effect on my morale and sales. What was happening to me was insignificant compared to what was happening to many of the customers that purchased a Reality Home. Let me explain.

Early on, the partners of Reality Homes and the project manager wanted to allow the clients to make changes to the stock plan homes we sold. Not only did I disagree with it, but it also made me sick to my stomach thinking of the repercussions that would come up six months or longer down the line. It sounded like a great idea, giving the client what they want. As a sales rep for HiLine Homes, this was one of the big things early on with the company that was a point of contention. Over the course of time with HiLine Homes, I began to see the wisdom of their business model, and I can say after three years with HiLine Homes, I could clearly see that sticking to non-changeable floor plans was not only healthy for the company, but was the best thing for the client. Granted, we all seem to make changes now, but it has finally evolved, with software and intelligent designers, so we can make changes possible. Back to the story.

At Reality Homes, a client would want to move a wall. Sounds easy right? But moving walls around required that we needed someone to run the CAD software to make the change. Reality Homes allowed one of the sales staff members do this. It failed miserably after two months, and the project manager had little time to do it with all the other things they were making him do. On top of that, he had limited ideas on how to do computer drafting work. Now remember, these changes to homes would not reveal their errors until the construction actually began. To me, it appeared like an iceberg on the horizon, and we were the mighty Titanic. Let me just give you one scenario.

A client wants 42” cabinets in the master bath (standard are 36”). Salesperson orders them, adds it to the home change order. Salesperson (not trained CAD operator), adds 42” cabinets on blueprints. Cabinet company sends out the cabinets, but no one informed the electrician. The 110 outlets were too low (the ones you plug your hair dryer or electric toothbrush into). Trim carpenters show up and starts to set the cabinets. Has to end his day when he discovers that the outlets are too low. A delay occurs, and it might be several days before electrician can make it back out. Imagine if your house is being built 2 hours way from their nearest branch. Delays occur; client is paying interest on loan. Electrician makes the change. Trim carpenters fit it back into his schedule which may take several days because he has several homes he is doing. Because the electrician has made a change, the electrical inspector may require a re-inspection. All of these mistakes cost additional money. Not much, but it adds up. Sometimes it is passed along to the electrician, homeowner or Reality Homes would pick up the “tab”. Next the mirror and wire shelving people show up. Nobody informed them of the taller cabs and guess what? The mirror that was custom cut in the shop is too big and won’t work in the master bath. Wire shelving contractor can’t finish his job and has to stop work, order new mirror, wait a few days and then get back out to the home which may take a few more days. All the while the interest on the home is ticking. One change in a home that may have had several. Reality Homes had hundreds of these homes. Some under construction, others waiting to start.
In a lot of respects Reality Homes may have wanted to give the client more. I strongly disagreed with them and knew it was going to get messy. If you have just a few homes to build, that’s manageable, but if you have several hundred homes going at once, you can almost see how chaotic it would become, and it did!

Two years with Reality Homes and over 200 homes sold. Customer complaints were mounting. I aired my concerns with one of the “upper management” person at the end of 2.5 years with Reality Homes, and I told him that If Reality Homes did not fix their construction problems, “it would become a newsworthy item and may even end up in a class action lawsuit.” Then a year and a half later King 5 Investigating called (a bit of the background story, I had left 6 months prior to this taking a buyout). They said that they were doing a story of the multiple complaints that customers were having with Reality Homes and the attorney general’s office of Washington State. I told them that I had hired many the sales staff there and that many of them were good people, but at this time, “I have no comment,” because I had left the company six months earlier. I took a buyout because I really felt I had no control of anything within the enterprise. Jesse Jones thanked me and I left it at that. It was what I had warned. I was happy for their failure; I was sick to my stomach. Had they only listened.

As my usefulness was coming to an end, I made it known that I would not have a problem exiting the company as I mentioned earlier. I also wanted to put distance between Reality Homes and me and their reputation. I was never made a principle as was agreed; they did not take my advice on the core business ideas and fundamentals, and they threw caution to the wind. Ultimately, the clients and the contactors were/are the ones paying for this serious flaw.

Our approach to building homes

Realistically, we want to build the best home for the money, compared to what our competitors construct. On this note, I emphasize that if you look at all the builders I mention in this article, and consider their “standard” features, you will witness that not all inform you of what the brand names or model numbers of the products are that they build within their homes.

My goal with this blog, or article is not to bash my competitors. In fact, we all know each other, and for the most part, I believe each company tries hard to do what they do best. However, you need to know something. It is way more complicated to build a home with quality ingredients than it is to have the best square foot cost. As an example, if you called your local automotive parts store, and said, “I need some new spark plugs for my car,” they may inform you that they have “several brands to choose from ranging in price.” If you said, “just give me the cheapest ones,” that would make the process so much easier than if you wanted the best value, and higher quality. There may in fact be several to choose from that are “middle of the road”. In a lot of ways, some of these companies employ this method to build their homes no joke. They say to the plumber, “hey just give us the cheapest ones you install”, or door hardware, “just ship us the most inexpensive ones.” I know for a certainty, one company employed a purchasing agent whose entire job was to find the cheapest items, methods, to increase profits. Ideal for the owners of the company, bad for you. However, if you just look at the square foot price, you are going to thank, WOW WHAT A DEAL! If you are serious about building a home, then ask them “what are the products you put in your homes?” If they hem and haw, well then buyer beware.

The Nuts and Bolts

True Built Home was designed first with the purchaser in mind, then construct staff and contractors. After all, the greatest asset to any company is the clientele. We expect that putting the consumer first will ultimately translate into less frustration for all parties from bankers, realtors, sub-contractors’ counties, cities officials, inspectors and you. Don’t think for a moment that I am selling you “pie in the sky” idea. Building a home, especially in certain counties, is frustrating, discouraging and time-consuming and aggravating. I remember a client in Clark County. He has 217,600 square feet in land. He is building a 1720 sq feet, with about 9,000 sqft of impervious soil. County says he has to have an onsite storm drain! Don’t get me started. However, for what it’s worth, it is the only means I know to jump-start a savings plan, or sell an item (home in this case) and make a splendid profit. Especially in a fast moving market.

We are hoping for two key things to differentiate us from others. First, we want to empower you with more information the home you might be looking at. That is why we have put lots of time and money on our website. It is, as they say, “chalked full” of content. One of the most asked question from clients is, “can I see the home” Now you can go through True Built Home site and most of our homes have 3D rendering that enables you to spend time with a bird’s eye view looking at the layout of a home. Although not perfect, it allows most people to visualize the home and the client to get a “feel” for the layout. The second way is our method of construction. Through my experience of thousands of former customers of both Reality Homes Inc. of Fife Washington and HiLine Homes of Puyallup Washington, there seems to be one inherent trend. A lack of clear communication and the real education about the process of building. Now, don’t get me wrong. We are constantly working to improve this, after all, we are contractors! We attempt to solved this issue with our “real time” website that clients can monitor their home daily and have up-to-date access and information. We call it the Co-Construct system. In this area, True Built Home has set the standard. In fact, till this day, 8/2/2016 I do not believe any of the companies mentioned in this article allow the client to have access to a calendar of events such as we do. We have created a step by step guide to ordering your home, what to expect after your purchase and what you will see during construction. Our website is stuffed full of informative articles and information to arm you with to put your mind at ease for the construction of a new home.

Planning ahead

Are you considering building a new home? If so, there are certain facts that you need to consider.
First and foremost what we want our clients to understand is that construction is like having a baby. It can be joyous from the day one. Being overjoyed with the progress that you will see happening to your home to wanting to get it done and all the emotions in between and then jubilation as the home is completed and you are moving in. Just as with starting a family, we encourage you to think serious about the ordering of a home. Planning is essential to success. Here are a few of the things to consider.

• What can I ultimately afford? This is best discussed with one of our approved lenders as they will ascertain from your earning and debt ratios. Note: did you know that if your appraised value is high enough (and you have owned the land for over a year) and your construction cost is low enough, you may be able to “wrap” some of your existing debt into the permanent take our loan. Eliminating a large payment of a visa or car payment may give you a more significant amount of monthly payment you can use towards the purchase of a home.

• Is location more important than the size of a home? Often clients are happier buying a parcel of land that is in a better location and then purchase a smaller home to stay within their budget. Which type are you?

• What are your time frames? Four months, six months, one year?

• How developed is the land in question? Will it take a time to develop it for construction? Does it have power, sewer or septic installed or do you have a septic design already? Is there water on the site or will you have to drill a well or have local water brought to your property? Click here for assistance.

• Which options will you order? Some options increase the value of your home while others are “lifestyle choices”. Remember that banks do a pre-construction appraisal before construction begins to determine the value of the proposed project. If the buyer puts too many “lifestyle choice” options in the home, this may have a detrimental effect on the appraisal of the home and may require that you put money into the project or change either your home or options. This can cause frustration on the part of all parties. Our knowledgeable sells staff can assist you to determine if the options you want will help or hinder your appraisal. We have broken them into “Helps with value” or “Lifestyle Choices”.

• Is your lot level or sloped? Sloped lots cost more in construction for concrete, pony walls, glue lams and or beam and post construction. Sometimes up to $50,000. I encourage people to solicit a knowledgeable realtor for land purchasing. Not all realtors understand property. It is best to call the agency, talk with the broker and ask him or her who is the best suited to handle your land purchase. This is an area that family contact or a friend in the business must be set aside if the person is not qualified.

• Do you have unreal expectations? If you expect to have a home done in 2 or 3 months, I can say with some certainty that this is a unrealistic expectation. Framers, plumbers’ roofers’ electricians, and others typically have several homes that they are servicing at any one time. As a result, your home will be put on a schedule that we hope will be constructed from the day the footings are placed until you’re handed the keys, to be about 150 days. Although, be aware that “owner items” or things that you are going to be responsible for, must also be accomplished within specified timeframes. However, if you get you items done sooner than we allow, say we give you 15 days to do your exterior painting, but you finish in 2 days, may not mean that we can always shorten our schedule. Your home is scheduled from the day we pour the foundation base upon certain criteria that we feel the average homeowner can accomplish in a given time. If we can get to it sooner, we will. Be aware that others are having their home constructed also and all must wait their turn. Remember also. Bigger homes with lots of upgrades take longer than 150 days, It is really better to plan around 9 months.

• Will you be out of town or out of state during construction? If so, we would encourage you actively putting off the ordering of your home until you will be in the general area of the project. Why? The purchaser must perform certain items or someone hired or assigned to do them. Some companies don’t mind telling you not to worry about it and order the home. However, it is our experience that this attitude puts the company ahead of the client and will ultimately harm you in the future.

If you have any other question, please contact your local branch and consult with a knowledgeable sales member. I hope that this helps you to appreciate what may be involved with the planning stages.

Are you Spontaneous?

Do you need you’re a home NOW!?
If you have done your due diligence, have studied the floor plans, know your options, then please feel free to call one of our branches that serve your area. The process will likely take less than an hour. One word of caution, though; please have a lender chosen before you order.

Why does True Built Home have selected lenders?

That question is perhaps one of the other most asked question from potential purchasers. Here is the reason:

Lenders have a process of approving of a builder. It is a lengthy one. Here are but a few of the things they may have us do. Someone has to take the time to fill it out all the forms, produce profit and loss statements, bios of owner or owners and quarterly statements. They often will pull credit of it owners and or corporation. All of this is an inefficient means to operate a volume building company. What we have done is to narrow down the banks or mortgage companies we feel are best suited for our clients and program and have already been pre-approved. Some have felt that banks are giving “kick banks” to the builder. Just wrong and is illegal. Sometimes the banker or mortgage company my pay for some co-op advertisement with the expectation of referring clients but that is all. There has been so much illegal activity with some in the lending business, that it is simply a case of maintaining a standard of integrity that we hope protects you the borrower and us the builder.

My experience, and I have assisted thousands of purchasers through the lending process, is that if our approved lenders cannot do the project, it is highly unlikely that anybody else can. They are just as motivated as any other lender with one enormous difference. They answer to True Built Home if clients are not treated fairly and timely. We can just take them off our list. Here is what I have seen happen time and time again. Some builders will charge you a fee to use your lender. This, in essence, is paying for the aforementioned items that will have to be accomplished by the builder. Borrower gets the ok to purchase or order the home. Client puts $2500-5000 down to lock in the price. Another $1,500-2,000 for the lender fee, bringing the total to several thousands of dollars. I have seen time and time again that the lender ultimately could not do the project and now the client is out all that money because it is non-refundable. Our aim is you first. When a builder will allow you to use another lender and charges you a fee, are you really first? How much money are some on your lot builders making off of a “lender fee”?

Finally, a word about prices. Most HiLine Homes offices are a franchise. They pay money for each home sold to the mother corporation. Reality Homes is owned by three people. Lexar Home is also another franchise. That leaves True Built Home. Owned by one man. What that means is, when you compare square foot prices and you say, wow, they are all pretty close, they must all be the same. Wrong! Because I owe the company alone, you will get a better home. Hands down, if you are buying a home from my competitors, you are throwing money in the pockets of the owners.  I consider this to be the most disheartening thing about this whole thing. From the front door, to our true hardwood stained trim, heat pumps, 8 lb. carpet pad, garage door opener, just to mention a few. Compare, compare, compare what we offer and what they offer. You’ll be shocked at the difference.

I wish you the best and if you want to contact me directly, feel free. I’ll answer any of your questions to the best of my ability.

Warm regards,

Lewis D. Mann

Owner

True Built Home

Ldm@TrueBuiltHome.com
True Built Home
“A Great Way, To a Great Home
We have four branches. Please contact the nearest one to you!

A word about slab-on-grade floors

By | Construction, Learning Center, Resources, Site Preparation | No Comments

Several times throughout the year, we are often asked about doing a home with a slab-on-grade as the main surface for the home.  Which is better? a crawl space, as we do, or a slab-on-grade?

Some will argue that a crawl space gives you more flexibility with the home, and its construction. For as many benefits there might be to a slab-on-grade home, the truth of the matter is, often the slab was not “placed” correctly to the approval of designer, builder and client. A lot can go wrong. Here is but a brief sample:
1. Cracking – structural
2. Cracking – shrinkage
3. Curling- Top of slab shrinks more than bottom and slab edge lifts.
4. Scaling – Hardened concrete breaking away from slab top in sheets 1/8” to ¼” thick.
5. Dusting – Appearance of powdery material at slab surface.
6. Crazing – Many fine hairline cracks in a new slab which resemble a road map.
7. Spalling – disintegration of concrete at joint edges.
To avoid one, if not all of the aforementioned items, the concrete must be placed appropriately. What this involves are a lot of variables. One of which is the appropriate mix of concrete.
Portland Cement Association recommends that a commercial or industrial concrete floor should have a three-day compression strength of 1800 psi. This is to avoid any damage before it thoroughly sets or hardens which takes 28 or so days. Some would say bad concrete will never result in a good finish. Therefore, a PSI of 4000, instead of what’s common 3000 psi, should be the starting point for a properly mixed concrete.
Not to go into a lot of detail here about concrete, but what are the benefits of have a slab-on-grade? Basically some would say the “ugly, dirty, moldy” crawl space won’t haunt you with a slab-on-grade floor. This may perhaps be true, but if you live in an area of high moisture, high water tables, lots of rain, then most, if not all, residential contractors in that particular area will not do a slab-on-grade home. The risk/reward are too great to take on such liability. That, and again, when pipes, conduit, and the 7 items mention above happen, things can quickly begin to spiral. It all starts at the foundation. Every framer will tell you “when the foundation is good, the framing goes good”. That and everything else that requires walls to line up, drywall to come together and siding to be installed without hiccups. Here at True Built Home, we are not opposed to perhaps doing one, under the right conditions, and in the right locations, particularly east of the mountains in our drier areas. If you are living in one of these areas, you might want to talk to one of our sales staff about doing one of our plans with a slab-on-grade. Please keep in mind, that if your thoughts are of saving money with a slab-on-grade floor, this is not the case. Typically, they cost a bit more that our standard crawl space homes.

Crawl space Better?
The flexibility you get with a crawl space are obvious. You don’t have to hack into the floor if something were to go wrong with the plumbing, or drainage. Being able to service the area of the home, via a crawl space, makes many people aware that having a crawl space is the easy choice. In addition, many think about the hardness of having a concrete floor, all day, every day, in the home. Thinking of standing, or laying down, or dropping things, just makes many cringe about the prospect of having a slab-on-grade home.
In the end, location, weather, land, and your particular taste will likely be the driving force of whether or not you have a standard crawl space home, or elect to have a higher end, and often more expensive alternative, slab-on-grade home.

How to buy a home

By | Construction, Financing, How It Works, Learning Center, Resources | No Comments

Before we get into the nuts and bolts of “how to buy a home”, we should first consider “should I settle for a used home?” It’s cliché but often repeated, buying a home will be the largest investment you will make in your life, unless of course you have 4 girls and they all need braces! So, if it’s true that it will be the largest investment, why do so many people make some rather common mistakes about their first home? Often, many feel they can’t afford something that doesn’t come with “problems” or repairs. Does that have to be the case? Not really. Here’s why: when considering the purchase of a home, many think that building a new home is a pipe dream because, either it cost too much, or the stories they have heard about building a home are shocking. Granted, there are some very skilled general custom home building contractors that charge what they are worth. Often the quality of products they use, or the skill level of the subs they use, all might be high-end items and personnel. As a result, you could easily spend $125 per square foot on a new home. Stories of building are also true. Building a new home can be stressful for many reasons. Here are a few in my experience that shed light on why some individuals struggle with building a new home.

  1. Stretched to the max.
    • I have observed couples who qualify for a loan, and take the loan to the max of the limit, and then during construction other costs creep in and the pressure of having to “find” additional funds puts immense pressure on both the client and the builder. Avoid this by putting a contingent amount of money into the loan for surprises during construction. A 5-7% contingent fund (of the entire purchase) in your loan will go a long way to alleviate some of the potential moments of stress related to building.
  2. Unprepared.
    • Focus on what you want. Quality, functionality, economics of the purchase, or location. Each of these, and perhaps a few others, if meditated upon and agreed upon, if you are a couple, will help you to make wise choices regarding your home. Focusing on one, or no more than two, because budget often predicates your choice, will help keep your project from derailing.
  3. Unrealistic expectations.
    • If you are paying $125+ per square foot for a new home, I would say that you have every right to have high expectations. If though choosing one of the many on-your-lot builders here in the Pacific Northwest and getting what many describe as a “ridiculous” priced home, you may need to temper your expectations. Not to say we don’t strive for excellence, the reality of the build is, you’re paying half the price in some cases, which may mean that having every imperfection addressed is simply not a realistic expectation. If you feel you are the type to demand more than what you pay for, you may want to opt for a smaller home at a $125 per square foot. If though, you see the forest, not just the trees, than you are a perfect candidate for a home at a “ridiculous” price.

So, let’s address “how to buy a home”. I think it well to understand that as many people you ask that question, you will get a plethora of answers and advice. So, please indulge me with what I advise. It’s all about the money. Banks like to use what’s called the “debt to earnings ratios” to determine how much you can afford a month on a new home. Easy to figure, and then the real fun starts with all the paper work. Here is a calculator that you can use to see how much money a lender might allow you to borrow when purchasing a home. Now, just a bit of clarity. You don’t have to put in the amount of gas you use or the amount of your food or entertainment budgets. They want to know credit card payments, car payments, and other long-term debt that you might have. Alimony or child support would be considered such. Subtract what I call “hard” debt from your monthly income, and you can get a picture of what most do when they do that. Where’s all my money going?! Basically, lattes and wine! But seriously, the amount left over is your income minus your debt, and of the left over you can use up to 36% of your total income for a house payment. Granted, I just made that look so simple, but the truth of the matter is, there are several things that go into getting qualified for a loan. To learn more, click here for some different “views” of how to go about getting qualified. NOTE: doing advance research is great, but you want to know what’s even better? A great loan officer or mortgage lender. If you are in the Tacoma area and need one, than I have one that I highly recommend; knows the business like nobody else and is focused on giving you the only advice you need to know either to qualify, or getting you qualified. His name is Justin Glass. You can reach him at 253-208-7879 or email at justinglassknowsloans@comcast.net . I have to let you know that he does not do construction lending. This article is not intended to “push” building a new home, but rather to answer the question, “how to buy a home”. If though you are convinced about building, as opposed to buying a used home, then I would recommend our list of approved lenders.

Once the lender has “pre-qualified” you and your significant other (if you have one), then you can start the real process of finding the perfect floor plan, location, amenities, etc. Will you buy used or go through with the very rewarding process of building a new home? Here is an article that may assist you to determine which path you will take. There are two ways to go about buying a home. Whether or not you buy or build the process is similar. You have to find what you want, negotiate a price, agree on the price and go through what many call “the purchase and sale” arrangement. Having a pre-approved letter from your lender goes a long way to assure the person selling what you want that you qualify to purchase the property. If you elect to have a real estate agent involved, (always a good option) then they can help with negotiations, working with appraisers, lenders other agents, the seller and a whole host of paperwork. If you are buying, then the real estate agent in essence is working for free for you. That’s because most who are selling their home or property have made arrangement to pay both real estate agents. Yes, you could argue that you might be paying for the agent because the seller raised their price to accommodate the cost of having to pay the agent, but that is not always the case. Once mutual acceptance of the land or the home has been made then inspections, typically required by your lender, which you have to pay, will need to be made. When the inspection is finished, depending on what is on the report, you and the seller through your agents, negotiate which if, not all have to be addressed, fixed or repaired, and which ones are not required by the lender to be addressed. Cosmetic items like paint, wood work etc., will likely not be an issue with the bank or lender. However, mechanical or structural issues will be. Sometimes with the sale of a used home, the cost to repair is significant and the seller just does not have the money to have the work done. However, they may agree to allow some of the profit from the sale of the home, if any, to cover the repairs. Items like a busted furnace, or poor roof or bad siding, will more than likely stall the process unless either the borrow or seller agree to have them fixed to the bank’s approval to move the process forward. In addition, like that of a newly constructed home, an appraisal of the property and the future home to be built, or the used home that you might be looking at, needs to be performed, again paid by the person buying the home. A typical appraisal is about $400-500. Some lenders my offer this for free, but you need to confirm.

I think if I were to make a plug at any time on whether to build or to buy new, this is the time. The reason being is that often the appraisal of the new home, say if you are purchasing a True Built Home, will often, if not always, be a pleasant surprise due to the amount of value you will have upon completion of your home. This is no joke. We see in many cases the value determined by an appraisal upon completion of one of our homes is often north of $100k above the cost of construction. Click here for just one example. To be fair, a used home may have some equity, but think about this: if you were selling your home and paid to have a professional appraisal and the value was, say $350k, and you owed $250k, why would you sell the house at $250k? You wouldn’t. You would try to get the most profit you could. So, if you were to buy the house at $325k and it’s value is $350k you would have some equity. However, when building a new home, you should realize an improved equity position than you would with a used home. This is a very basic approach to “how to buy a home”. Here are some review points:

  • It’s all about the money! Find a lender; get pre-approved; find out what you can afford.
  • Start shopping. Either for a used home, or a parcel of land to put a new True Built Home on!
  • If you find what you like you could obtain the service of a real estate agent.
  • Make an offer.
  • Go through negotiations.
  • Mutual acceptance.
  • Get inspections.
  • Negotiate fixes, repairs and cosmetics.
  • Get an appraisal.
  • If the numbers work and you have enough cash to put down on the home, close the deal.
  • Have a double gin martini, or whatever it takes to celebrate or de-stress.