All across the nation (and Alaska being no exception), buyers are demanding extras, upgrades, and changes to stock housing plans that have been the mainstay of builders profitability for the past twenty years. In the financial uncertainty of homebuilding, repeating a plan provides a modicum of stability in maintaining a builder’s profitability. Lot costs, soil conditions, weather, and the cost of lumber and other materials, remain variables, but in general builders can predict and reach their profit margins by building the same plan over and over again, despite how boring a streetscape it may create.
Most Alaskan builders are not custom builders. Unlike publicly traded home building companies that build thousands of units a year in multi-state locations, Alaska’s largest builders build between just fifty and one hundred homes a year. In fact, in the Municipality of Anchorage, the number one builder in 2015 was the owner-builder. The handful of truly custom home builders generally builds only one to eight homes per year. However, today’s buyers are demanding, thanks to Pinterest and Houzz, a custom home even if it is their first home. They want the railing, the wall color, the canopy hood, the window size and placement, even the towel bars of their choice. And given the growing divide between the cost of new homes versus resale, it is one of the few benefits buyers have in selecting a brand new home rather than the added expense after closing of the remodel of an existing home.
So how can buyers get what they want in a new home without breaking their budget or the builder’s opportunity for profitability? First, get everything in writing, even down to the allowance for the plumbing fixtures or a tear sheet of the door knobs. The final set of plans needs to be initialed, dated and agreed upon between builder and buyer. This plan set should include size of windows and have room dimensions clearly identified. If there are to be cedar shakes or stone on the exterior elevation, the allowance and dimensions need to be identified as well. Buyers should be encouraged to visit a builder’s finished home to check out finishes, although they should be aware that many builders have differing standards for each subdivision. For example, the same house plan in two different locations may have varying allowances for carpet and cabinets. Whether or not landscaping is included also depends on the subdivision and local government requirements. Buyers should also pay special attention to the plot plan which shows the relationship of the foundation and driveway to the lot lines. Be aware that asking for an extra four feet in driveway length adds to the cost of the home.
Builders get very frustrated with changes after construction has started. A change order late in the building process travels from the vendor to the accounting office to the superintendent, to the subcontractor and back. It can also hold up construction which extends the cost of the builder’s daily interest rate. The bottom line for builders and buyers is to make all decisions for amenities and upgrades prior to the start of construction and to write it all down. Buyers need to know what they are buying and builders need to know what they are building. The clearer the plans and specifications the happier everyone will be.
Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or cyoshimura@gci.net.
Connie Yoshimura, Owner/Broker of Berkshire Hathaway HomeServices Alaska Realty.
I liked how you mentioned that you should get everything in writing before having your home built. My wife and I are wanting to build our dream home and we were wondering how we could ensure we get everything we want in the house. I’ll be sure to tell her that we should get what we want in writing before the house is constructed.