It's old news. With the phenomenal construction labor shortage in full
bloom, production homes that used to take five months to build are sometimes
taking up to nine and ten months. So home prices go up, not just because
with the booming economy, builders can get more for homes, but also because
they must charge more for sluggish construction schedules that force them to
"carry" the land longer than they used to.
If you are the type of buyer that frequents the building site once a week, or
stops by on their lunch hour to check out the progress of your new home, you
may very well see your house sit with virtually nothing touched on it for
several days. At the same time, others, even next door to it, may be going
great guns. It's important to note that a production home, no matter how
high-end it is price-wise, is precisely that - like a car on a construction
line, only this time there are "crews" of sub-contractors that have to
perform their tasks in a scheduled sequence, finishing their handiwork on one
house before moving on to the next. And with fewer crews for some important
construction disciplines available these days, hence the delays we speak of.
Many homebuyers' frustration levels run high, wondering if there is some cage
they could rattle or some higher-up they could speak to in order to "speed
up" the process. They fear that the target estimated completion time
originally given to them by the sales consultant may not be a reality after
all, and they may be right.
It may be difficult to believe, but you, as a buyer, can do a few things to
"set the stage" for the timely completion of your home. Sometimes buyers, by
their actions, (or inaction) have a good deal of control over the process
because builders use certain "mileposts" to determine when to they may move
to the next step in the construction process. Each step is vital in to make
the big picture happen, but many buyers don't see themselves as part of the
problem.
Every week, builders customarily hold status meetings, spending hours poring
over their production schedules and sales reports with all the pivotal
personnel involved in the sales, financing and construction of their homes.
Computers spew out reports that tell them, for instance, when your purchase
agreement was accepted by the builder, when you applied for your loan, when
the home site was "chalked" to receive its footings, and the list goes on and
on.
Within these meetings, conversations can run like this:
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Sales Manager: "Lot # 32, Brenda, do we have loan approval for the Hansons yet?"
Lender (Brenda): "No, I have called them twice for loan appointments, and they assure me they will get their loan application to me, but we have yet to meet."
Sales Manager to Sales Consultant: "Jim, do you know why the Hansons are dragging their feet on meeting with the lender? We can't send them to the Design Center until we know the status of their loan."
Sales Consultant: "I'm not sure. I called them yesterday, and they said they haven't had time to get all their paperwork together. They are asking why they haven't seen any progress on their lot, though, and I told them they
need to get their loan approved before we can start."
Sales Manager: "And what did they say?"
Sales Consultant: "They just said that they have both been really busy at work and will try to get all their paperwork to the lender by next week. Not much else I can do."
Sales Manager to Building Superintendent: "Take this house out of the current release and put it into the next one. The Hansons have been on contract for two weeks and we can't wait any longer."
Building Superintendent: "That means this will be a September completion and not an August one."
Sales Consultant (interrupting): "But the Hanson's said their kids needs to start school on September 5, so they need to get into the house by late August."
Sales Manager: "Well then, tell them that if they don't get their loan approval by this time next week, their house will be pushed back on the schedule. There's nothing else we can do."
Sales Manager: "On to Lot #33, the Smiths. Have they been to the Design Center yet?"
Sales Consultant: "They went on vacation for a week and won't be back until next Friday. Design Center says they can't get them in until the following Monday to make their selections."
Sales Manager to Building Superintendent: "Put lot #33 on construction hold."
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Meetings like this can go on for hours, with literally hundreds of homes
being discussed. As business-like and cold as the conversation sounds, it's
easy to see where everyone's interests lie. The sales consultant, even
though they may know each of their buyers' situations, are concerned, but
have their hands tied when buyers aren't prepared to act. Sales managers
care about the sequence of home completions, protecting the builder by
permitting construction to work only on houses that can go forward. Building
Superintendents worry about throwing an entire sequence of homes off and
having to make a patchwork quilt out of their construction schedule. And
buyers tend to look at their own immediate needs at times, wondering in the
end, why other houses seemed to be completed sooner than theirs.
From the builder's standpoint, everyone wants the house to be completed on
schedule. Within that schedule, there are some elements that may not be
under their strict control, such as delays in material deliveries, inclement
weather, sub contractors who do shoddy work and need to be called back, or
untimely city inspections. As you can see by the builder meeting dialogue,
however, there is a limit to amount of control the builder has over the
buyers of their homes as well. They may sometimes be forced to take a "hurry
up and wait" attitude when buyers don't meet arbitrary deadlines for holding
up their end of things.
Here, then, are the things you can do to take the proverbial monkey off your
back for your home to have the best possible chance for an on-time completion:
Fill out your loan application as soon as possible. Have your W-2's, most
recent paycheck stubs, and bank statements together and make copies of them.
If you cannot meet with the lender soon, mail or overnight the package to the
loan officer. Include in your package the small check for the credit report
fee. Sometimes a mere "credit approval" will get your house going.
Make your Design Center appointment as soon as the sales consultant says
it's feasible. If you don't have time for a full appointment, ask to see if
you can at least choose cabinets and a few major items, and use a second
appointment for the details.
Schedule out of town trips for later, whenever possible (at least for
whenever your part of the process is done)
Get your up-front option money to the builder as quickly as possible. The
deposits (except for the occasional special order non-refundable fees for
some items) all go towards your down payments monies, so don't panic that
you're losing anything. The Design Center personnel usually can't even order
your items unless they have received your good faith deposits.
Check on the status of your loan frequently. Lenders won't call you to say
everything is hunky-dory on a weekly basis. To them, no news is good news if
they have given you a preliminary nod that all is well. Your sales
consultant, who attends the weekly meetings, however, will have knowledge of
any red flags coming up.
Don't change jobs if possible, and definitely don't change the line of work
you're in (see "What is Your Loan Approval isn't a 'Slam-Dunk?'") You'll
want the "picture" of your loan approval to stay the same, so that you stay
approved, permitting you to close escrow when the home is completed. And
don't run up credit card bills and put big-ticket items on credit unless
there is plenty of leeway in your loan qualifications.
Don't make special requests of the builder if you want a timely completion.
Builders will try to accommodate as many special requests for custom-type
changes as they can, but it throws them off their schedules, waiting for your
decisions, paperwork, and special deposits to come through.
Buyers are the biggest part of the picture in so many ways. You may not, as
the home buyer, be in the driver's seat at all times, but there is plenty
that you can do to help your builder move forward. Perhaps then you will be
able to anticipate those glorious days of unpacking boxes, hanging pictures,
and ordering take-out food, knowing you did your part to get your new house
completed on time.
Published: June 16, 2000
Use of this article without permission is a violation of federal copyright laws.
A veteran of the real estate and homebuilding industries since 1986, Dena Kouremetis first joined Realty Times as a new homes writer in 1998. Since then, she has authored four books, written consumer columns on new homes issues for websites and newspapers all across the country, contributed to builder trade magazines, appeared as a guest expert on several radio shows and even created a ten-chapter podcast for LendingTree.com’s homebuilder website, iNest.com, now available on iTunes, entitled Uncharted Waters; Navigating the Purchase of a New Production Home.
Kouremetis recently joined her local Folsom, CA Coldwell Banker office as a broker associate while continuing to write for the real estate industry. For the past three years, she has been training real estate agents for both the resale and new homes industries, putting her experience, research expertise and gift of expression to work to help others entering the business.
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