Building Costs for a New Addition? (Early: refinancing, lender, how much)

[BATexan]

I'm looking at adding another 1000 sq. ft. I've been thinking about $150/sq. ft., but given the building slowdown, I'm hoping I can get closer to $120/sq. ft. I was thinking a 20% discount is realistic.

We're living south of LBJ (north of the Park Cities) and expect pricing to be higher, but think the current economic situation may work in our favor for building.

What do you think? Also, does anyone have any recos for a builder?

[loves2read]

you would be amazed to discover that some building materials have not seen a reduction in price similar to what the rest of the economy has experienced---so your materials may not be any cheaper than building a year or more ago--
regarding other discounts--this is the way it works for builders/contractors when times are bad and jobs are few...
some of them have to charge MORE because they have less work--
I know it sounds stupid but if a guy is looking at working 3 jobs in 6 mo vs 10 jobs--he may not be able to reduce his profit margin

if you are basing your cost expectation on the price of homes on MLS in your area, that is probably not the best way to judge remodeling costs either...

I would do some research--make a spec sheet for materials that would be pretty specific and not just generic--like a specific type of light fixture vs generic light fixture...
and get bids
contractors HATE to do specific bids--it takes up time and does not make them any money...

good luck

you might also consider checking out site called Gardenweb.com--home forums where there are lots of boards for areas like remodeling/lighting/plumbing/electric/pools/bathrooms/kitchens....
posters include builders/contractors/home remodelers/people w/experience and people who are newbies...

[momof2dfw]

We are adding a new addition. A garage. I have not seen bids go down at all in the last few years from the time we first contemplated the thought of building one to when we actually signed the contract back the first part of March. A lot of supplies have stayed pretty steady in price and the workers that are WORTH having are not hard up for work either. Our addition is about 950 square feet, all garage w/ some plumbing (sink) and electrical and WE will add the wiring for the security system, sound, cable, etc. We are also doing the landscaping seperate than the build as well as the changes in the sprinkler system. All of that easily adds around $2-4K depending on how much landscaping one does and the sprinkler system work (already have one just have to have them come out and cut the lines that won't be needed, tie off and then come back once all construction is done and rework it). We are looking at about $90K for the build alone and then the extras. This is no "fluff" on the inside like bathrooms, finish out (carpet/tile, cabinetry, woodwork, etc). This is a garage. A BIG garage though.

[BATexan]

I've spoken to a builder and they are saying some things are coming down, but others have stayed flat or gone up. At the same time, an architect I spoke to has said labor costs should be down significantly. I'm a bit conflicted about who to believe.

Momof2DFW, how many bids did you get before you selected your builder? Were they all in the same ballpark?

loves2read, I would expect the cost to build would be significantly lower than the MLS cost/sq. ft for homes that were listed/recently sold. The MLS cost/sq. ft. not only includes the home value but also land value. It's a build vs. buy decision that seems like there should be a larger price discrepancy, no?

Thanks for gardenweb, I'll check it out. I've looked at servicemagic as another source.

[loves2read]

I know that about the MLS cost per sq ft--I just wondered if that was what YOU were using as YOUR rule of thumb---
and I agree that quality workers are busy--and have not had to cut their price--in a bad economy more people would go to the redo/redecorate vs selling/moving because the market is not as strong so they stay put--that means that remodeling is MORE busy than in busy selling time like 4-5 years ago when people would move up vs redo...
at least that is my take

servicemagic is like Angie's list but more aggressive--Service magic sends your request to contractors or whatever you are looking for--
Angie's List lets you check what other people have posted--there are no recommendations with service magic--they just give your info to 3 or 4 service people who pay to be on their list...

[momof2dfw]

Originally Posted by BATexan

I've spoken to a builder and they are saying some things are coming down, but others have stayed flat or gone up. At the same time, an architect I spoke to has said labor costs should be down significantly. I'm a bit conflicted about who to believe.

Momof2DFW, how many bids did you get before you selected your builder? Were they all in the same ballpark?
.

We got a lot of recommendations from friends and then went with the 3 that sounded like they did the best job and we saw their work. There were at least about 6-7 we talked to about the job and got a feel for them. Of those we had 3 we went more off of who we felt more compatible with working on a project moreso than the price. We did pick the guy that was reasonable. I always say throw out the highest and lowest and pick somewhere in the middle. Several reasons: I don't want the guy that is sky high just to start off with. What if we have changes along the way is he going to charge an arm and a leg for each of those. We knew there would be some changes along the way and there already has been so this was important to us. I also don't want the lowest bid guy. What has he left out? If we do change something is he going to try and make up the difference on that and really stick it to us? Is he paying his subs on time? Why is he so much cheaper. The top bid and the bottom bid were a HUGE stretch apart from each other. I mean HUGE!!! I'm glad we got more than 3 bids for sure.

Oh, and on subs. In your contract w/ the builder make sure that when they submit their request for their draft (payment) that you get a release of lien from EACH SUBCONTRACTOR!!!!! This is to keep the subs from being able to come back later on and say they got stiffed from the contractor and they CAN put a lien on your property. I know of one person that the company that POURED the concrete tried to come back to them for payment. You want to avoid that at all costs. If the general contractor or builder won't go for this then find another. We are using Kingsman Custom Homes. So far we have been VERY PLEASED!!!! Sure there have been some minor hiccups but he has been able to get them resolved asap (cut gas line, fried electric meter box - that was fun when I started laughing when the second one happened he was like, "I'm glad you can laugh" ). We have also made a few changes already and he has been okay with it. He has even mentioned things to us and then we have agreed and changed it to what he recommended. Just been easy to work with so far. One contractor seemed a wee bit too arrogant for me. Another was too "fly by night" and REALLY REALLY cheap.

[loves2read]

if you are paying cash vs refinancing
you might even see if the contractor will take a % as overseer and YOU pay the subs directly...some people would not want to do that and could not because of the cash outlay--but it might save you money--of course the contractor might not trust you to have the funds in hand when needed either...

but as Momof2 said--very important to get the release of lien--and frankly I would get the name and address and phone of subs that worked on your job just for followup

[BATexan]

Thanks Momof2DFW and loves2read; very helpful feeback. When do you ask builders for the release of lien for each subcontractor? Is that a question asked during the bidding process or after you've selected the builder?

loves2read, can you clarify "if you're paying cash vs. refinancing"? I thought most GCs end up asking for %s of the est. total, then I pay that %, and then the GC pays down the subs. I wasn't thinking the GCs would float anything for me.

momof2dfw, sounds like you've seen some smooth sailing so far (knock on wood)!

I'll keep you posted on how things go!

[momof2dfw]

You get the release of lien from the GC each time he submits his request for a draw. We have I believe 3 draws total that are set to be paid at a certain stage of the construction. The subs that did the work during that phase will give the GC a release of lien and the GC will give them to us and the lender gets a copy. So you only do this during the actual building phase.

Each contractor/builder does things differently. Some will do a 10% over costs, others factor other things in to reach their total price. On the ones that do a 10% over will give you a copy of the bill from the sub or supplier and then you pay that plus 10%. Not many do this and if you have a GC that doesn't pay attention to market prices it can backfire on you. A couple of years ago we did a build that was this type. The GC did not pay attention to the price of sheetrock skyrocketing and ordered it right when he needed it. Of course the price was then about DOUBLE of what he originally quoted during the bid. He COULD have ordered it earlier and paid a lot less. Also, some GC's won't give over the copy of the bills from subs and suppliers. I would not concentrate on this as much as I would the price they are coming in at and how well you seem to "mesh" with the person you chose.

So far, so good. Yesterday the plumber stopped by and asked a few questions before he started work today so he would know EXACTLY where we wanted some things and even told us a few options for them. We could have changed things right then and there and it would have been okay. I LIKE THAT!

[loves2read]

yes--getting a plumber to show up at the agreed time/place is so much of an issue on construction projects that one who comes EARLY is like having an extra payday in the month...