The Complete Home Building Guidebook

By Howard A. Zuckerman

The Complete Home Building Guidebook, written by Howard Zuckerman is based on the last 35 years of experience in building homes in the Atlanta, GA marketplace. Written in easy to understand language, this book will take the reader through each phase of the home building process. This guidebook includes numerous bullet points, charts, illustrations, photographs, checklists, forms and documents. Each of the chapters presents information that can potentially save or earn the reader thousands of dollars.

• Language: English
• Publisher: BookBaby
• Release date: Aug 16, 2018
• ISBN: 9781543942095

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All rights reserved. This eBook or parts thereof may not be reproduced in any form in any retrieval system or transmitted in any form by any mean – electronic, mechanical, photocopy, recording, or otherwise – without prior written permission of the publisher, except as provided by United State of America copyright law. For permission requests, write to the publisher, at "ATTENTION: PERMISSIONS COORDINATOR," at the email below.

Publisher: IREDI Press, LLC (contact at: [e-mail])

© 2018 by Howard A. Zuckerman

2407 Wistful Way

Marietta, GA 30066

All rights reserved. The text of this publication or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher.

Printed in the United States of America

Library of Congress

Print ISBN 978-1-54394-208-8

eBook ISBN 978-1-54394-209-5

Table of Contents

ABOUT THE AUTHOR

ACKNOWLEDGEMENTS

DEDICATION

FOREWARD

CHAPTER 1: INTRODUCTION TO HOME BUILDING

THE COMPLETE HOME BUILDING GUIDEBOOK

TRAITS OF A HOME BUILDER

GENDER

WHAT THIS BOOK WILL DISCUSS

THE 4 P’S OF MARKETING

THE DAY TO DAY LIFE OF A SMALL BUILDER

WHAT THIS BOOK IS NOT?

REAL ESTATE DEVELOPMENT

PLEASE NOTE

CHAPTER 2: TYPES OF HOME BUILDERS AND MARKET SEGMENTATION

CUSTOM/SEMI-CUSTOM BUILDERS

SPECULATIVE (SPEC) SMALL BUILDERS

DESIGN/BUILDERS

PRODUCTION BUILDERS

RENOVATORS

HOUSING MARKET SEGMENTS

CHAPTER 3: LAND: LOCATING, CONTRACTING AND DUE DILIGENCE

HOW TO FIND A SUITABLE LAND PARCEL OR LOT

LAND/LOT CONTRACTING

METHODS OF PURCHASING THE LAND/LOT

LETTER OF INTENT (LOI)

PURCHASE AND SALE AGREEMENT

LAND DUE DILIGENCE

PROPERTY ISSUES

LEGAL ISSUES

MARKETING ISSUES

LOT PROS AND CONS

TEAR-DOWNS

CHAPTER 4: ASSEMBLING THE HOME BUILDING TEAM

THE TEAM PLAYERS

CHAPTER 5: DESIGNING THE HOUSE PLANS

FINDING THE RIGHT PLAN TO FIT THE MARKET, LIFESTYLE AND LOT

REVIEWING THE DEMOGRAPHICS

WHAT GOES INTO A GREAT HOUSE PLAN

WHERE TO FIND THE INFORMATION NEEDED FOR A GREAT HOUSE PLAN

FINDING THE RIGHT RESIDENTIAL ARCHITECT OR HOME PLAN DESIGNER

CONTRACTING FOR THE HOME DESIGN

TYPE OF HOME STYLES

SITING THE HOME ON THE LOT

SQUARE FOOTAGE

EFFICIENT FLOOR PLAN

DESIGN FEATURES

FEATURES TO ADD TO THE NEW HOME DESIGN

UNIVERSAL DESIGN/EASY LIVING HOME DESIGN

SMART HOMES

GREEN HOMES

CHAPTER 6: WORKING DRAWINGS

HOW TO FIND THE RIGHT ARCHITECT/HOME DESIGNER

QUESTIONS TO ASK THE ARCHITECT/HOME DESIGNER

READING THE WORKING DRAWINGS

A SET OF WORKING DRAWINGS

WHAT YOU SHOULD KNOW ABOUT HOUSE PLANS AND DESIGN COPYRIGHTS

WORKING DRAWINGS - ITEMS TO REVIEW

GRADING & TOPOGRAPHICAL PLANS

LANDSCAPE DESIGN

CHAPTER : SELECTING THE VARIOUS MATERIALS

REVIEWING THE FEATURES OF COMPARABLE HOMES

SPECIFICATIONS

GENERAL CONDITIONS

THE SPECIFICATION LIST OF ITEMS TO REVIEW

CHAPTER 8: ESTIMATING, BIDDING & DOCUMENTATION

ESTIMATING THE WORKING DRAWINGS

THREE METHODS TO ESTIMATE

THE HOME BUILDING COMPONENTS TO OBTAIN ESTIMATES

ESTIMATING THE VARIOUS COMPONENTS FOR:SLAB, CRAWL SPACE AND A BASEMENT

VALUE ENGINEERING

ESTIMATING MISTAKES

FINDING SUITABLE SUBCONTRACTORS & VENDORS

GETTING THE BID/QUOTES

CONTRACTING

CHAPTER 9: CRUNCHING THE NUMBERS: PREPARING THE BUDGETS & PROFORMAS

PRICE PER SQUARE FOOT

SOFT OR INDIRECT COSTS

HARD COSTS

PROFIT MARGINS – SPECULATIVE HOME BUILDERS

PROFIT MARGINS VS. MARK-UP– CUSTOM HOME BUILDERS

HOW TO DETERMINE WHAT YOU CAN PAY FOR THE DIRT

THE RISKS ASSOCIATED WITH BUILDING

THE GO OR NO GO DECISION

CHAPTER 10: FINANCING THE PROJECT: DEBT & EQUITY

LOT LOANS

ACQUISTION AND DEVELOPMENT (A & D) LOANS

CONSTRUCTION LOANS

EQUITY

CONSTRUCTION & PERMANENT (C & P) LOANS

PERMANENT LOANS

CHAPTER 11: THE CONSTRUCTION PROCESS

PRE-CONSTRUCTION

PRE-CONSTRUCTION ITEMS TO COMPLETE

SCHEDULING

CONSTRUCTION STARTS

HOME BUILDING – GANTT CHART

CALENDAR VIEW

REVIEWING THE SUBCONTRACTOR’S WORK

QUALITY ASSURANCE

PERFORMANCE TESTING

POTENTIAL CONSTUCTION ISSUES

SAFETY IN THE WORKPLACE

CHAPTER 12: DEALING WITH SUBCONTRACTORS, VENDORS AND INSPECTORS

HOW TO FIND THE BEST TRADE PARTNERS

SUBCONTRACTORS

VENDORS

INSPECTORS

PRIVATE INSPECTORS

CHAPTER 13: THE SALES PROCESS

HOW WILL THE HOME BUILDER MARKET THE HOUSE?

MODELS VS. STAGING

TAKING PROFESSIONAL PHOTOGRAPHS

CURB APPEAL

MARKETING COLLATERAL

MARKETING DISTRIBUTION

HOME BUILDER BRANDING

HOW TO PRICE THE HOME

THE MONTHLY COSTS FOR THE HOME BUYER

REAL ESTATE COMMISSIONS

SELLER CLOSING COSTS

WHEN TO LIST THE HOME ON THE MARKET

PRICE NEGOTIATIONS

NEGOTIATING STRATEGIES

EARNEST MONEY

ALLOWANCES

STANDARD UPGRADES

CHANGE ORDERS

DEALING WITH THE PURCHASER’S APPRAISAL

SALES OFFICE

TRAFFIC REPORTS

COMPARABLE STUDIES

SALES TECHNIQUES

CHAPTER 14: WORKING WITH THE HOME BUYER

TYPES OF HOME BUYERS

PROS AND CONS OF CUSTOM HOME BUILDING VS SPECULATIVE BUILDING

PRE-SALE BUYERS

TYPES OF CONTRACTS

BUYER EXPECTATIONS

SELECTION OF MATERIALS

WALK THROUGH OF THE HOUSE

CONSTRUCTION DRAWS

DEALING WITH THE HOME BUYER’S INSPECTOR

WARRANTY

DEALING WITH DIFFICULT HOME BUYERS

DEALING WITH DIFFICULT REAL ESTATE AGENTS

CHAPTER 15: PRE-CLOSING, AT THE CLOSING & POST CLOSING

PRE-CLOSING

PRE-CLOSING ITEMS

AT THE CLOSING

POST CLOSING

CHAPTER 16: THE BUSINESS END OF HOME BUILDING

SETTING UP THE NEW OWNERSHIP ENTITY

LICENSES REQUIRED

BUSINESS PLAN & MISSION STATEMENT

SETTING UP YOUR OFFICE

EMPLOYEE MANUAL

BOOKKEEPING/ACCOUNTING

INSURANCE AND BONDS

ACCOUNTING REPORTS

SOFTWARE

FILING SYSTEM

ORGANIZATIONAL CHART

MEETINGS

MEMBERSHIP

SUBSCRIPTIONS

TIME MANAGEMENT

SUCCESSFUL BUSINESS PRACTICES TO FOLLOW

CHAPTER 17: LOT DEVELOPMENT

LOT DEVELOPMENT

FEASIBILITY STUDIES

SCALING UP THE HOME BUILDER’S EXPERTISE

CHAPTER 18: ADDITIONS & RENOVATIONS

ITEMS TO INCLUDE WHEN PRICING THE JOB

KITCHEN – RENOVATIONS

BATHROOM - RENOVATIONS

BASEMENT - ADDITIONS

EXPANDING THE FOOTPRINT

ADDING A SECOND STORY

OTHER AREAS TO RENOVATE

18 RENOVATION MISTAKES

APPENDIX

CONSTRUCTION GLOSSARY

TYPES OF CONSTRUCTION EQUIPMENT

RESOURCE LINKS

PHOTOGRAPHY OF THE HOME BUILDING PROCESS

Figures

1.1 The Home Building Process (Speculative)

1.2 The Home Building Process (Pre-Sale)

1.3 The Traits Of The Home Builder

16.1 P & L Statement

16.2 Balance Sheet

16.3 Budget vs. Actual

16.4 Organizational Chart

Illustrations

3.1 Aerial

3.2 Tax Map

3.3 Demographic Profile (2 pages)

5.1 House Styles (5 pages)

5.2 Plat with– Survey & Topo

5.3 Roof Styles

5.4 Wall Section

5.5 Types of Kitchen Layouts

5.6 Kitchen Designs (2 pages)

5.8 Window Parts

5.9 Window SDL Bars

5.10 Types of Garage Layout Designs

5.11 Types of Stairways

5.12 Furniture Layout

6.1 Scale

6.2 Architectural Symbols

6.3 Electrical Symbols

6.4 Cross Sectionals

6.5 Elevations/Details

6.6 Elevations/Roof Plan

6.7 Basement Foundations & Electrical Plan

6.8 First Floor & Electrical Plan

6.9 Second Floor & Electrical Plan

6.10 Sections – Kitchen & Bath Elevations

6.11 Details

6.12 Basement/First Floor – Framing Plan

6.13 Second Floor – Framing Plan

6.14 Ceiling Joist – Framing Plan

6.15 Roof – Framing Plan

6.16 Grading & Topographical Plan

6.17 Landscape Drawing

7.1 Roof & Cornice Parts

7.2 Types of Countertop Edges

7.3 Framing Parts

7.4 Truss Types

7.5 Truss Parts

7.6 Door Parts

7.7 Trim Parts

7.8 Brick Patterns

7.9 Stair Parts

11.1 Sample of a Building Permit Application

11.2 Sample of a Building Permit

11.3 Sample of a Builder’s Risk Insurance Certificate

11.4 Sample of a Certificate of Occupancy

11.5 Sample of an Energy Code Compliance Certificate

13.1 Feature Sheet

13.2 Broker Flyer

Documents

3.1 Letter of Intent

3.2 Purchase and Sale Agreement

8.1 Construction Contract – Site/Building

14.1 Single-Family Home Building Contract on Owner’s Lot

14.2 Buyer Expectations

Forms

3.1 Land Checklist Form (4 pages)

7.1 Feature Comps (2 pages)

7.2 Home Building - Items to Pick Out (3 pages)

8.1 Estimating Worksheet

9.1 Sources & Applications of Funds

10.1 A & D Construction Draw Sheet

10.2 Construction Loan Draw Sheet

11.1 Home Building - Critical Path (5 pages)

11.2 Home Building - Timeline

11.3 Home Building - Calendar View

11.4 Subcontractor’s Completion of Work Checklist

13.1 Upgrade Form (4 pages)

15.1 Pre-Closing Walk-Through Form

15.2 Owner Manuals & Documents

15.3 Punch List

15.4 Buyer’s and Seller’s Combined Closing Statement (2 Pages)

16.1 Purchase Order

16.2 Change Order

17.1 Subdivision – Lot Development Checklist (4 pages)

Photographs

2.1 Single Family Home

2.2 Condominium

2.3 Townhome

5.1 Ceiling Types (2 pages)

7.1 Appliances

7.2 Types of Joists

7.3 Pre-Fabricated Stairs

7.4 Electrical Fixtures (2 pages)

7.5 Types of Stone Patterns

7.6 Plumbing Fixtures (3 pages)

13.1 Staging Photographs

13.2 Rendering

ABOUT THE AUTHOR

I have over 35 years of experience in the Home Building and development business having built or converted more than 1,000 homes, condominiums and townhomes in the southeast USA.

I have an undergraduate degree in Marketing from Ohio State University and a Master’s Degree in Real Estate from the University of Wisconsin.

I have written the following books over the last 25 years:

Real Estate Investment & Acquisition Workbook – Prentice Hall

Real Estate Development Workbook & Manual – Prentice Hall

Real Estate Wealthbuilding – Dearborn Publishing

Real Estate Exchange – Probus Publishing

Real Estate Workout Deskbook – Probus Publishing

Problem Real Estate – Probus Publishing

Real Estate Development – A Guidebook to Profitability – IREDI Press

I have been the editor for the following three national newsletters for 8-1/2 years

Real Estate Workouts & Asset Management Newsletter – Warren, Gorham & Lamont

Real Estate Development & Asset Management Newsletter – Warren, Gorham & Lamont

Capital Sources for Real Estate Newsletter – Warren, Gorham & Lamont

I have also taught the Real Estate Development course at the graduate level at Georgia State University (Atlanta, GA).

ACKNOWLEDGEMENTS

I would like to thank the following individuals for their time and effort in assisting me in the completion of this book:

FRANK BETZ & ASSOCIATES

Since 1976 Frank Betz Associates, Inc. has specialized in custom and stock home plans. FBA has developed an unsurpassed reputation as a leading provider of house plans. With more than 100 years combined experience, the FBA team of experts, design trend setting award winning house plans for home builders, developers and consumers alike. At FBA it is their goal to create house plans that set the highest standards in residential design and support those products with unparalleled customer service. www.frankbetzhouseplans.com

POLLOCK & ASSOCIATES

Since its inception in 1982, Pollack & Associates, Inc. has provided quality, professional Atlanta Landscape Design Service to a wide array of clientele throughout North Georgia and the Southeastern United States. For over thirty-five years, Pollack & Associates, Inc. has exhibited a dedication to providing its clients with landscape designs that are above and beyond their client’s expectations. www.pollackandassociates.com

HASK CUSTOM HOMES

Al Kelecki, President of Hask Custom Homes which was founded in 1975. Al holds a master’s Degree in Civil Engineering from the University of Southern California and began building homes in Atlanta’s northern suburbs during the city’s bustling growth era of the 70’s and 80’s. Al’s engineering background proved to be a major influence on his style of innovative designs, precise craftsmanship and using fine building materials. www.haskconstruction.com

JANIS KIRTZ - ANSLEY DEVELOPER SERVICES

Janis Kirtz brings 30 years of sales and marketing experience to Ansley Developer Services. A highly respected industry veteran, she was the former President of Morris and Raper Realtors where she developed and implemented sales and marketing strategies for condominium and high-density townhomes, as well as single family, detached and master planned communities. She is a driving force in Ansley Developer Services. In addition to playing a key role on the senior management team, Kirtz also contributes her legal skills as an expert on contracts, mediation, negotiation and more. www.ansleyatlanta.com

GREG LYLES

Greg began his real estate career in the early 1980’s as a developer. For the next 18 years, he built single and multi-family residential communities and shopping centers throughout the Southeastern United States. As an extension of his development business, he founded Geometrix Corporation and served as it’s CEO until the business was sold in 1999. He then founded Conrad Lyles Realtors, a boutique real estate company that became one of the top producing independent offices in Atlanta selling high end properties in the Buckhead, Sandy Springs markets. In addition, he has developed numerous training programs for the real estate industry that have helped thousands of agents; plan, promote and grow successful businesses.

JOE SEIFER

Joe Seifer is Sr. VP Construction for Camelot/Signature Homes, LLC since 2000. Joe has over 40 years of home building experience and has built over 1,000 homes in the Atlanta marketplace. His experience includes tract housing, modular housing and custom homes.

DEDICATION

I would like to dedicate this book to my wife (Amy), 3 children (Lindsey, Carley and Adam), 3 grandchildren (Gemma, Frankie and Margot), mother, father and sister and our faithful companions (Alfie, Murphy and Satchel, Spotless, Stella and Seamus).

I would also like dedicate this book to Professor James A. Graaskamp (University of Wisconsin).

FOREWARD

The 10,000 parts that become a Corvette are assembled in an 8-hour shift in an air-conditioned plant by 100% GM employees who speak one language. By contrast, a new home has in excess of 250,000 parts to be assembled over several months in all types of outdoor working conditions. Nevertheless, home buyers expect the home builder to produce a new home with the same expectations of quality of construction as a new automobile.

To meet home buyer’s expectations and to make a profit doing so, home builders must develop procedures and policies that allow the home builder to control the manufacturing process so that the home can be delivered in a reasonable time, within a budget that allows a profit and with a quality that will satisfy the demands of the customer. The key to success is the complete understanding of the flow of the building cycle and the ability to manage a huge amount of information about the parts and pieces of a home, control construction costs and manage the business process.

Howard Zuckerman has written a book that takes the reader through the building process from the great idea to the final warranty checklist signoff. He uses a bullet point delivery system so that the information is quick to understand and easy to use. His checklists give the reader the prototype documents that are the core of any successful home builder. While individual documents such as contract forms tend to be local to each market, the format and business needs of the forms show the reader what is needed in detail for a successful form.

This book will be a touchstone for home buyers preparing to build a new home, home builders wanting to up their game, remodelers seeking to open new markets for their business and real estate agents wanting to understand the home building process and better serve their clients.

Dennis McConnell

Healthy House of Georgia

2015 Atlanta Home Builder of the Year

CHAPTER 1

INTRODUCTION TO HOME BUILDING

THE COMPLETE HOME BUILDING GUIDEBOOK

The Complete Home Builder Guidebook is written for:

A small home builder looking to bring organization into his business

A production builder who wants a manual to teach his employees

An entrepreneur who is looking to enter the home building business

A home builder who wants a reference book

A house renovator who wants to enter the home building business

A commercial contractor who wants to learn the differences in the residential home building business

An individual who is looking to building his own home

An individual who is having a home builder build his home and wants to understand the home building process

Real estate agents interested in learning the home building process to better assist their builder or home buyer clients

This book will walk the reader through the complete home building process for both a speculative house, (a house built by a builder without a home buyer) and a pre-sale house (a house built with a buyer contract in hand prior to the start of construction).

This book is a nuts and bolts book on how the home building process works. It is written in easy to understand language to assist in understanding the home building process.

1.1 The Home Building Process (Speculative)

1.2 The Home Building Process (Pre-Sale)

The book includes easy to understand:

Text with bullet points

Graphics

Forms

Checklists

Documents

Glossary of home building terms.

TRAITS OF A HOME BUILDER

In order to become a successful home builder, the individual must possess some or all of the following traits:

Business person

Entrepreneurial

Multi tasker

Disciplined

Persistent

Focused with eye for detail

Sales oriented

Creative

Risk taker

FIGURE 1.3

THE TRAITS OF THE HOME BUILDER

1.3 The Traits Of The Home Builder

GENDER

In writing this book, the term home builder will be used frequentl. For conformity, the pronoun his is used throughout when referencing the home builder. Today, many women are involved in the home building process. These jobs include: builder, superintendent, subcontractor, vendor, architect/designer, sales agent, banker or any other team players mentioned in Chapter 4.

WHAT THIS BOOK WILL DISCUSS

The types of home builders

How to find and secure the right land parcel, contract for it and conduct the due diligence process

How to assemble the home building team

How to design the house plans to fit the market

How to prepare the working drawings

How to select the various materials used in the house

How to estimate and bid the house plans

How to crunch the numbers and prepare the budget and proforma

How to prepare a loan package for a construction lender

The construction scheduling process – from A to Z

How to deal with the subcontractors, vendors and inspectors

How to handle the marketing and sales of the house

How to work with the home buyer

What goes on during the closing and post-closing period

How to set up a home building company

Understanding the lot development process

Additions & renovations

THE 4 P’S OF MARKETING

This book will discuss the 4 P’s of marketing and how the home builder should properly position the new home for a successful sale. These 4 P’s include:

Place - placing the property where the target market is located (Chapter 3)

Product – designing the floor plans and elevations to meet the expectations of the home buyer (Chapter 5)

Promotion – marketing the home to the target market (Chapter13)

Price – pricing the home to meet the market comparables (Chapter 13)

THE DAY TO DAY LIFE OF A SMALL BUILDER

When first starting in the home building business, the home builder will be a Jack-of-all trades. Since he most likely will not have the funds to start hiring additional employees, they will be working the job 24/7. This commitment to the business means long hours of:

Finding the perfect lot to build on

Deciding on the best plan to build

Working with the bankers

Supervising the job

Dealing with the subcontractors and vendors

Dealing with various inspectors

Working with potential home buyers and their real estate agents

Getting the home closed

Dealing with the potential warranty issues

As the number of homes built per year increases, the home builder will start staffing up to build a home building company. This guidebook will assist the young home builder in learning this business and should assist in growing the business. It will also assist the various team players (Chapter 4) in understanding their role in the home building process.

WHAT THIS BOOK IS NOT?

This book is not:

A get rich quick or motivational book

A book that will show you how to do any of the physical work on building a house – for various links to see how to do some of the physical work, see our website at:

www.learnhomebuilding.com.

REAL ESTATE DEVELOPMENT

For those individuals who want to take the next step after learning the home building process, they can view www.realestatedevelopment.biz also authored by Howard Zuckerman.

PLEASE NOTE

Please note that different parts of the country will use:

Different building terms

Different inspection procedures – please check with your local building department

Different building codes – please check with your local building department.

In addition, please consult with your accountant and law firms regarding any tax questions or legal issues.

For any questions you might have or comments regarding this book, please contact me at:

[e-mail]

CHAPTER 2

TYPES OF HOME BUILDERS AND MARKET SEGMENTATION

When deciding to enter the home building business, you must first decide on whether you want to be a custom or production builder and if you want to build only when you have a home buyer contract in hand or build speculative homes to sell to a homebuyer upon completion of the home.

CUSTOM/SEMI-CUSTOM BUILDERS

Custom building is when the home builder is building for a particular home buyer. The home is contracted before construction commences. The home buyers will get their own financing to build the home. The home buyer will pick out a home plan that the home builder has with some modifications or will have a new set of plans prepared from scratch. The home buyer will then pick out all of the home’s materials and colors. Typically, custom home builders are smaller and can offer more attention to a home buyer than a production builder. Custom home builders will either build a fully customize home for a home buyer or build a semi-customized home for a home buyer once the home was started as a speculative home.

If the home buyers want to have an architect design the home, they should first meet with a home builder to assist them in making sure that the home design fits within a pre-determined budget. The home builder should then carefully review the plans prior to the completion to finalize the budget.

SPECULATIVE (SPEC) SMALL BUILDERS

Many smaller builders will either find:

One or multiple vacant lots to build homes

Find a lot with an older home that they will tear down to build a new home

Purchase few lots from a residential lot