Residential Builders on the TGO?

[Parrothead]

We’ve been shopping for a home for a while now and unable to find the right house in the right place. I would love to talk to a builder/developer to get some info on how to prepare to build. I’ll be happy to provide a beer or two for you time if your local. 
 

if you have built recently, any guidence you might share would be much appreciated. So far, from my research, I have found building is a good way to spend 500k on a 350k home; but it’s the home you want. Still trying to wrap my head around this concept..... 

[Grayfox54]

I hear ya. My younger son and his new bride are looking for a house. Right now its a seller's market with many houses going 15-20K over asking price. Every time they find something they like, they get outbid on it.  

So now they're looking into building. The advantage is you get to pick things like paint, carpet, cabinets to suit yourself. OTOH, you're looking at 6-8 months to move in. Its a PITA any way you look at it. 

[Erik88]

12 hours ago, Parrothead said:

We’ve been shopping for a home for a while now and unable to find the right house in the right place. I would love to talk to a builder/developer to get some info on how to prepare to build. I’ll be happy to provide a beer or two for you time if your local. 
 

if you have built recently, any guidence you might share would be much appreciated. So far, from my research, I have found building is a good way to spend 500k on a 350k home; but it’s the home you want. Still trying to wrap my head around this concept..... 

My wife and I are in the same boat. I was recently quoted $150-$225 sq. foot for building. The big range depends on what exactly we have done to the house. A few years ago $200K would get you a nice home in Knoxville. Now that $200K house needs at least $50K in renovations. 

Also, lots are getting extremely expensive here. That's the other problem with building. 

[nightrunner]

I used to be an electrician working on custom homes. 
 

The main reason it costs more is you will pick out materials that will last 20-50 years where as “builder grade” materials that go into “spec homes” are basically as cheap as you can get and it still look good to sell. Example, 15-25 year shingles instead of 45-50 year ones, cheapest hardwood that’s still hardwood instead of what you really want, off the shelf cabinets for $5-10k vs $40-50k+ for full custom cabinets, cheap carpet that looks 20 years old in 3 years, vinyl flooring instead of tile in laundry room, the most basic ceramic tile in bathrooms. List goes on. 
 

9 ft ceilings instead of 8 ft cost difference is more than you think, even more for 10 ft ceilings plus cathedral ceilings in great room, 12 ft in dining, trey ceiling in master bedroom.

Having everything laid out exactly how you want is worth a lot for quality of life, instead of you conforming to the house you found.

Building a custom home is NOT worth it if you won’t stay there 10-15+ years. If you have a career where there is a likelihood you may have to relocate, don’t do it, you will lose money. 
 

You won’t spend $500k on a $350k house, it will appraise for what you have in it unless you do something crazy. You’ll spend $500k on a house that to the uninformed looks just like the $350k house next door or down the road, but it’s built better with higher quality materials and finishes. And it’s your dream home.

Might sound dumb/crazy, but I got a lot of enjoyment helping people realize/achieve their dream home.

[nightrunner]

I haven’t been in the construction business since 2010. But things haven’t changed only prices gone up. Unfortunately can’t help with the process with a general contractor (GC).

To note, if you build a $250k house on a lot you paid $50k for. The home will appraise for $250k maybe just a touch more if it’s in a good neighborhood, it’s just the way it is. I don’t think it’s right, but  it is how it is.

Also, if you are at all interested in integrated smart home, get a guy out there around the same time you have your security system and electricians out there right after it’s framed, much easier to have everything hidden like it should be that way.

Edited August 18, 2020 by nightrunner

[OLDNEWBIE]

The market is crazy now and I'm hearing about labor and material shortages on new construction. 

Unless I knew the builder personally, I'd be a bit nervous these days trying to get something built.

As a Realtor selling existing homes It's always a race now to get a Buyer to decide quickly and put in a good solid offer before the 5 other people looking at the same home get there first. And this is little old Cookeville!! And Prices? Seems we will be catching up to Nashville or Knoxville in a couple of years if this pace keeps up. Somethings gotta give I'm thinking. Wages vs Housing becoming a problem again. When we start hearing about easy ARM loans becoming the norm again watch out!

[Magiccarpetrides]

When ARM's start getting snapped up i'll be cashing out my stock positions your already seeing all these people advertising $0 down which is insane.  Right now is literally the worst time to build ever....OSB, 2x4's, 2x6's, deck boards...almost everything has doubled or worse.  My builder said his average cost to build a 400,000 house is over $30,000 more then it was last year....when good deck boards are only $3 less than TREX you know things have gotten stupid.  One of my new neighbors that bought land in my subdivision said she can't find a contractor that can quote her 2800sq ft for less than $500,000 and stay in the neighborhood by laws....thats almost $100,000 higher than 2 years ago for my neck of the woods.

[maroonandwhite]

I work for a local community bank and am seeing the same lumber shortages and price increases. A lot of homes are coming back short on the appraisal. Normally a home will get close to the build price (within reason) because they factor in comps along with the fact that someone (you) are willing to pay for the house as long as the builder is quoting a reasonable price per sq foot.  
 

Lately I’ve seen several that have not come close to the build price due to the increase in building material and the fact that the market or comps haven’t absorbed those prices yet. 
 

As others have said, it’s not the best time in the world to build.

Edited August 24, 2020 by maroonandwhite

[eRay]

I built a new 1900 sq ft house two years ago. Builder figured it at $250,000. Ended up costing $310,000. I would have been in way too much but for the fact it was on the lake and the lot has appreciated enough to make up for what I lost on the house. I love the house but if I were doing it over, I would have sold the lot and bought an existing home on the lake. Building is a losing proposition.

[Raoul]

What I'm seeing is that properties are getting snapped up pretty quickly. Some of it is buyers from out of market, but the majority are current residents looking to take advantage of the insane rates. It's a little crazy out there. My take on it is from being an appraiser ..... not a realtor. It's a pretty weird time to be looking to buy imho.....

[E4 No More]

On 8/17/2020 at 9:35 PM, Parrothead said:

We’ve been shopping for a home for a while now and unable to find the right house in the right place. I would love to talk to a builder/developer to get some info on how to prepare to build. I’ll be happy to provide a beer or two for you time if your local. 
 

if you have built recently, any guidence you might share would be much appreciated. So far, from my research, I have found building is a good way to spend 500k on a 350k home; but it’s the home you want. Still trying to wrap my head around this concept..... 

An experienced realtor that's not tied to a builder is your best bet for a recommendation. Mine told me who to consider and who to run away from.

[Raoul]

I need a couple of bags of sweetfeed.

[Erik88]

 

1 hour ago, Raoul said:

My take on it is from being an appraiser ..... not a realtor. It's a pretty weird time to be looking to buy imho.....

You're right. My wife works for a title company here in town and they have had record breaking months every month, since April. It's absolute madness right now. She's currently working on 150+ closings. That's just her and doesn't include the rest of the people in her office. I'm enjoying her bonuses but she's about to pull her hair out.

[Raoul]

2 minutes ago, Erik88 said:

 

You're right. My wife works for a title company here in town and they have had record breaking months every month, since April. It's absolute madness right now. She's currently working on 150+ closings. That's just her and doesn't include the rest of the people in her office. I'm enjoying her bonuses but she's about to pull her hair out.

I feel her pain. And  I still need to get to Southern States for that sweet feed...

[Ronald_55]

On 8/17/2020 at 10:35 PM, Parrothead said:

We’ve been shopping for a home for a while now and unable to find the right house in the right place. I would love to talk to a builder/developer to get some info on how to prepare to build. I’ll be happy to provide a beer or two for you time if your local. 
 

if you have built recently, any guidence you might share would be much appreciated. So far, from my research, I have found building is a good way to spend 500k on a 350k home; but it’s the home you want. Still trying to wrap my head around this concept..... 

One thing I have learned from having stuff done for the house AND having worked for a general contractor is that you need to be ultra specific on all details IN WRITING. Stuff like I said I wanted all screws in the deck we built... but I didn't get it in writing, so I ended up with 1/3 screws and 2/3 nails. Do you want the tile in the entry way the same height as the laminate in the living room? Get it in writing or they will take the cheapest and easiest way out. 

If it is not in writing, some builders will change order (extra fee for changes) you to death on every little thing. 

A buddy just finished a house, but he is a structural engineer with a couple decades experience working with subcontractors. He even drafted the plans. He still had a rough time getting it done how he wanted.

Edited August 25, 2020 by Ronald_55

[Guest OMCHamlin]

Well, I'm glad I stumbled on this post, glad and sad, I guess. The wife and I had a plan of moving to East TN, and have been down in the area looking three times in recent months. We were looking for a nice recent house on a couple of acres where I can shoot a little bit, but we are seeing first hand what you folks are talking about, and it appears to be hopeless. I don't think we can afford stickbuilt, either, and are beginning to look at buying a couple of acres and putting a modular on it.

Has anyone done that, and how did it turn out? We were looking at Clayton in Sevierville, saw a couple of the 2100 sq ft ones that we think would work for us.

Any advice in that direction would be appreciated.

[ReeferMac]

Bad experience building, mostly due to the builder, and his incompetent Son!

Would rather buy pre-constructed and renovate... alas, location, location, location!

Contract should have milestones with penalty for the builder: Foundation poured by XX-NOV, or -$10k

Dunno what the builder will agree to, but you get the idea. Our build took 6 months longer than promised, always blamed it on the weather or some external factor (which I will admit WAS a problem part of time - can't run a dozer if it's soaking wet rain for 3 weeks). That being said, when the crew shows up at 930, smokes until 1030, hangs 2 pieces of siding and breaks for lunch, don't tell me it's the weather's fault. Watched 2 guys working on the siding on separate sides of the house. One would climb up the ladder, take a measure, climb down, cut 1 piece, climb up the ladder and hang it. Rinse, repeat. Other guy was on other side of house doing same thing. Dunno, maybe 1 guy on ladder measuring and hanging, 1 guy on ground cutting and running. Call me crazy, I worked in printing for 20 years.

See/touch/feel all materials. Builder helped us reach a price by getting cheap kitchen cabinets. We knew they were cheap based on the price for the whole kitchen. That being said, had I SEEN how cheap they were, I would have paid 10k more for better stuff. Now it will cost me 30k to retro in 5 years.

Don't over-think the little stuff. You'll repaint and replace flooring, so just get something and get it done. Big fan of the tile we used ( go to Crossville Tile in Crossville and buy from the scratch-n-dent pallets, we saved a TON on material that way).

Lots more advice, but kinda scattered in my head. Was a challenging experience, liked just buying a house better, then making it mine.

 

- K
 

[nightrunner]

4 hours ago, OMCHamlin said:

Well, I'm glad I stumbled on this post, glad and sad, I guess. The wife and I had a plan of moving to East TN, and have been down in the area looking three times in recent months. We were looking for a nice recent house on a couple of acres where I can shoot a little bit, but we are seeing first hand what you folks are talking about, and it appears to be hopeless. I don't think we can afford stickbuilt, either, and are beginning to look at buying a couple of acres and putting a modular on it.

Has anyone done that, and how did it turn out? We were looking at Clayton in Sevierville, saw a couple of the 2100 sq ft ones that we think would work for us.

Any advice in that direction would be appreciated.

Anything but stick built will be VERY difficult to sell later (doesn’t matter if you plan to stay the rest of your life). Even a log home is difficult to sell later and most everyone knows a log home is usually built to higher quality than any stick built ever will be. Why don’t they sell? It’s nearly impossible to get a reasonable appraisal for them. Appraisals are based off of other comparable homes sale prices. Very few log homes or anything else really built, so hard to get an appraisal and a certain percentage of mortgage companies won’t even touch anything that isn’t traditional construction. Mobile homes and modular homes aren’t considered real estate. All that to say, whether it’s a modular home or something else, a non traditional home will require non traditional financing. And many times that isn’t easy to find and when you do, it won’t come with favorable rates.

 

If you are willing and able to go with non traditional construction, another option I would look at has a few names. Pole barn house, shop house, barndominium, etc. The basic shell is a pole barn on a concrete slab. Then it’s finished how you want. Some bachelors will have a 5,000 sq ft shop/garage with a 800 sq ft “apartment” built in the corner. You can do it all in living space as another options. They do usually come with metal siding outside, but you can add custom rock work or nearly anything. You can usually build one cheaper than stick built or build more square footage for the same amount of money. Some of these I’ve seen can be done very basic (just functional) to very lavish and fancy. They are starting to become more common in rural areas.

[E4 No More]

@OMCHamlin Check county codes before going down that road. When we were looking at land in Wilson and Rutherford counties we discovered both had laws disallowing any new modular homes in the county. 

[Guest OMCHamlin]

22 hours ago, E4 No More said:

@OMCHamlin Check county codes before going down that road. When we were looking at land in Wilson and Rutherford counties we discovered both had laws disallowing any new modular homes in the county. 

Holy crap, no modular home allowed in the county???   Do they allow dancing?

[Chucktshoes]

22 hours ago, E4 No More said:

@OMCHamlin Check county codes before going down that road. When we were looking at land in Wilson and Rutherford counties we discovered both had laws disallowing any new modular homes in the county. 

That’s some serious NIMBYist BS right there. That sort of crap really chaps my ass. It reeks of elitist classism. 

Edited August 26, 2020 by Chucktshoes

[peejman]

2 hours ago, Chucktshoes said:

That’s some serious NIMBYist BS right there. That sort of crap really chaps my ass. It reeks of elitist classism. 

Gentrification enforced via ordinance. 

[E4 No More]

1 hour ago, peejman said:

Gentrification enforced via ordinance. 

You get the $100 word usage award of the week! 

[gregintenn]

On 8/25/2020 at 7:04 AM, nightrunner said:

Anything but stick built will be VERY difficult to sell later (doesn’t matter if you plan to stay the rest of your life). Even a log home is difficult to sell later and most everyone knows a log home is usually built to higher quality than any stick built ever will be. Why don’t they sell? It’s nearly impossible to get a reasonable appraisal for them. Appraisals are based off of other comparable homes sale prices. Very few log homes or anything else really built, so hard to get an appraisal and a certain percentage of mortgage companies won’t even touch anything that isn’t traditional construction. Mobile homes and modular homes aren’t considered real estate. All that to say, whether it’s a modular home or something else, a non traditional home will require non traditional financing. And many times that isn’t easy to find and when you do, it won’t come with favorable rates.

 

If you are willing and able to go with non traditional construction, another option I would look at has a few names. Pole barn house, shop house, barndominium, etc. The basic shell is a pole barn on a concrete slab. Then it’s finished how you want. Some bachelors will have a 5,000 sq ft shop/garage with a 800 sq ft “apartment” built in the corner. You can do it all in living space as another options. They do usually come with metal siding outside, but you can add custom rock work or nearly anything. You can usually build one cheaper than stick built or build more square footage for the same amount of money. Some of these I’ve seen can be done very basic (just functional) to very lavish and fancy. They are starting to become more common in rural areas.

Do you think the pole barn houses will retain value in the future like a stick built house, or are they just a fad? They are hot around here right now.

[nightrunner]

1 minute ago, gregintenn said:

Do you think the pole barn houses will retain value in the future like a stick built house, or are they just a fad? They are hot around here right now.

No, I don’t. Unless they get so popular that a significant number of homes on the market are of pole barn construction.

I have heard that out west(especially Texas), that they are becoming quite popular for residential rental properties because they are cheaper to build and cheaper and easier to repair. For properties that aren’t sold on looks or appeal, only cash flow, I do think they will have a certain attractiveness to them. And that may help normalize them to a point where homeowners want them, and if enough people want them, there will be more places willing to finance them. 
 

That’s the main problem right now is financing. VERY few people in this country have the financial means to pay cash for a home, not to mention whether it’s a better financial decision to get a home loan or pay cash (home loan at cost of 4% vs earning 7-10% in the stock market). And currently, aside from a few companies that “do it all”, you have to get a loan to have the pole barn erected, then hire individual sub-contractors to finish it out inside. Or do some of the work yourself. That’s difficult to get bundled together for a lump sum loan. And as I mentioned previously, having comparable properties as a basis for the appraisal which is what the loan value is based on, is what is preventing them from having resale value currently.

A bit long winded, but IF they become more acceptable by the majority of finance companies, they have a chance at holding their value. However, my opinion, they will hold a place in perceived quality above mobile/modular homes and below stick built structures and settle there. I believe they will always be seen as a more budget alternative. You’ll never see subdivisions of McMansions that are pole barn construction.