Moving Up is Hard to Do

So you’ve decided to take advantage of today’s historic low interest rates and move-up to your dream home—only you can’t find it. You’ve looked at over 20 pre-owned homes with your realtor and nothing fulfills the dream you have in your mind about how you’d like to live in the future.

You’ve decided that the only choice you have left is to find a lot, a floor plan and a builder—all of which requires choices you’ve never made before. So here are some simple rules to follow when embarking on having your dream home built to your specifications.

Your lot selection should come first. Not all lots are created equal and there is significant cost to the development of a lot beyond its purchase price. Your lot selection will dictate whether or not your new home will be able to accommodate a basement, either daylight or walk-out, how many steps you will have from the garage to the main living level and how many steps you have leading up to your front door. Uphill lots generally require a full flight of stairs up to the main living area. Downhill lots will provide lower level/rec/media room square footage at a lower lost per square foot than main floor living. But, and this is an important but, a downhill sloping lot may also require a significant amount of fill in order to bring the home and the driveway up to an acceptable grade. Good luck finding a level lot to build on for a traditional two-story home, especially if you’re looking for a view, because they are few and far between.

Once you’ve found the area of town you’d like to live in and selected what you think is the lot of your choice make sure you walk the lot with a potential builder. Most builders will walk the lot with you without any commitment from you to have them build your home. Builders have a lot more experience in lot selection than you do and they can better visualize the placement of a home on the lot than a novice eye.

Select a builder who is familiar with the subdivision where your lot is located. For example, an Eagle River builder is probably not a wise choice for a southeast Anchorage custom build. Anchorage has its own MOA inspectors and Eagle River has private inspectors. If the builder is not already building in the subdivision, his subcontractors and foreman will have to make special trips just to visit your site and so his mark-up and administrative overhead will be greater than a builder who is already building in the subdivision.

If at all possible, you should select a floor plan that the builder has already built. By doing so, he is more certain of his costs and you will receive a better price—without the fudge factor. Almost all builders will allow you to stretch and shrink their floor plans, add a window here and there, rearrange the kitchen to your specific needs, as long as the basic layout (where the structural elements, stairway, garage are located) remain the same. After all, part of the fun of building your dream home, is to make it the way you like it.

Starting from scratch with a new floor plan, designed by an architect or a residential building designer, will add costs in two ways. First, you will have to pay for the plan design itself. This can add anywhere from $5,000 to $30,000 depending upon the size of the home. These professionals charge by the square footage of the home and, in the case of architects, may also charge a percentage of the overall construction costs. The majority of new home builders in Anchorage don’t like to build one-of-a-kind custom homes. It’s a specialty that your semi-custom and production builders shy away from because it takes more time and they are unsure of how much the home will cost. Therefore, most custom homes are done on a cost plus basis. If you have an unlimited budget, this is a process you may elect to do. However, it is not a process I recommend unless your new home will have a value close to one million dollars in today’s market.

Depending upon the time of year, the site and the builder’s schedule, new home construction can take up to eight months, so you need to plan ahead. Putting in a foundation in the middle of winter will add costs to your home that are not recoverable in an appraisal or market value of the home.

And one final word of caution. Regardless of your price point, every new home will have a compromise. The floor plan, combined with the topography of the lot, will dictate many elements of the final style and structural design. But the rewards of living in a home on a site that you selected, in a floor plan of your choice, with the smell of fresh lumber and the smooth feel of new granite, are immeasurable.