Building a house in Idaho (Boise, Sandpoint: sale, real estate, insurance)

[oldafretired]

Any tips from those with experience on what to look for and keep in mind when drawing up a contract with a general contractor/builder? I have zero experience with a big job like this but need to get going on building a house on my lot in Kootenai County (Spirit Lake East).

Here in CA, I've just hired contractors for small jobs like patio covers and made sure they had their liability insurance coverage and worker's comp. I'm sure there will be subcontractors needed by the builder when doing a big project such as building a house but how would I check if they and their employees have worker's comp when I will be absent most of the time?

[Sage of Sagle]

You're going to need to go with a more established/reputable builder, and probably pay accordingly, versus having the flexibility to give another builder "a shot" at your project where you can basically co-project-manage your construction.

When moving here, we needed to first build a shop building at distance, so we did exactly what I advised. I researched until I found a firm that had a reputation for building for distance customers (posting plans and update photos via the web, net meetings, etc). We paid more certainly, but they were SUPER and handled everything, every little detail, and did a fantastic job (Baker Construction in Sandpoint). And years down the road, we're finding that what they built was just a super solid structure.

Once we moved here and I was able to be onsite several times daily, my situation was different, and I could give other contractors an opportunity. I co-project-managed and acted as purchasing manager for our materials which allowed me to bring our materials cost down over 10% from our original bid.

Point is, if you're going to be at distance while building, you'll probably be needing to go with a more established firm, which you've thoroughly checked out, and they're going to have all the proper insurance, etc.

[Ernest T. Bass]

Great info for ALL of us Sage, Thanks

[javatom]

You will need a good set of plans first.

[Clark Fork Fantast]

I've got nothing to add to Sage's great post, and I agree with Javatom, too. You should start moving ahead with plans all by yourself before even meeting with a contractor, putting ideas together, making sketches, printing out Internet images of log homes, and looking through log home magazines (you're going log, right?), and narrowing your choices down to a certain look/design that you can present to the contractor, or have a brainstorm with a designer first. Some contractors are their own designers.

Oh, this is a fun phase! Try not to get trapped in the web of concerns. Savor the moment! See if you can be up there for the groundbreaking; bring your brother (+ family?) over and share a bottle of champagne!

[Lacerta]

The only thing I can think of to add is that I would suggest getting a real estate agent in the area who is familiar with new construction for that area. Someone OTHER THAN the builder, who can watch out for your best interests, make sure things are getting done, and help you negotiate with knowledge of what is normal for that area, and help you meet your deadlines if you are building custom.

I've worked for my parents for over a decade. They are agents/builders/landlords in Boise. When they build houses (they build all custom), we've found that clients who have bad agents make the deal a horrible process for all involved. No agent at all is better than a bad agent. But clients with good new construction agents make for super easy transactions where everyone ends up happy.

A reputable builder will make sure his subcontractors all have insurance (liability as well as workers comp). You can ask for proof from the builder, but I'll tell you in all the years I've worked here, we've never had a client ask. So if you decide to do so, expect surprise from the builder. You can also ask for lien waivers to make sure the builder paid all his subcontractors before you close, but they aren't really worth more than the paper they are printed on when it comes to a lawsuit. So I'd strongly recommend you get title insurance from the title company covering this (extended, expanded, not sure what they call it locally) when you close.

Finally, I'd recommend that your agent insist that the contract be written up on the state form (RE-22 for New Construction). Some builders insist on using their own contract, which protects the builder umpteen ways, but doesn't protect the buyer at all. The state form is more even handed.

[oldafretired]

Thanks everyone for all the great points. I'll keep them all in mind. Thanks again!

[oldafretired]

So I'd strongly recommend you get title insurance from the title company covering this (extended, expanded, not sure what they call it locally) when you close.

This sounds pretty interesting involving a title company. If I already own the land free and clear and no loan would be involved in building the house, where would a title company come in to the picture? Is that to make sure all the bills for supplies have been paid and for setting up an escrow account for the builder to get paid? I'm not very familiar with this process at all.

[banjomike]

Originally Posted by oldafretired

This sounds pretty interesting involving a title company. If I already own the land free and clear and no loan would be involved in building the house, where would a title company come in to the picture? Is that to make sure all the bills for supplies have been paid and for setting up an escrow account for the builder to get paid? I'm not very familiar with this process at all.

The main thing a title company does is make sure the land is free and clear.

There can be all sorts of encumbrances on a property that may have escaped attention in an earlier time (and sale of the property) that are still valid. The seller may have liens or something that he isn't disclosing, but once a sale is done, the lien may still hold. (this is an example)
Other times, there can be property deputes of long standing that can be passed on in a sale of inherited land.

The title company's job is to search through county records for this stuff. Knowing which records to search, how far back to search and other things is what they are paid to do.

This would apply to land owned by a contractor or realtor as well. Take nothing for granted when it comes to buying land; God quit making it a long time ago, and disputes of all kinds are common.

One thing is for sure about building a home: no matter how tightly the plans are estimated and budgeted, I have yet to see a new one that didn't cost about 15-25% more than estimated.

[Clark Fork Fantast]

Another thing you should think about: getting construction insurance. I don't really know whose responsibility it is to secure insurance for your construction site and all materials, you or your contractor, because we went ahead and took care of it ourselves, since we're going the co-project-managing route. But I consider it absolutely essential to have the building materials, the building-in-progress, and the site itself insured against weather damage, theft, fire, etc. Make sure you ask your contractor about it--it may be included in his bid/estimate. An insurance company, if they choose to offer such an insurance, will typically insure the construction site for a year.