Building Your Dream Home: Part III - The Build Out



Building Your Dream Home: Part III - The Build Out


We close out this week’s three-part series on building your dream home. Earlier his week we covered land, feasibility, contractors, architects, permits and many other topics. We’re ready to build our home! 


If you’re lucky enough to have cash in hand and you have approved your contractor bid and have permits ready to go, you can begin the process of demolition (if needed) or site preparation. Your contractor and your architect should be on the same page with detailed plans and execute the plan you’ve put together. 

If you need to get pre-approved from a lender for a construction loan or a rehab loan, that process should already be completed before you start writing checks. Each bank/lender is going to have their own construction process. They’re going to need to know who the builder is, and have them conform to the banks process for taking draws as the construction project progresses. Each month, your contractor will be submitting invoices to the bank for reimbursement on things like concrete, lumber, windows, roofing, siding, etc. A representative from the bank will come out to ensure that the work is actually been completed per their draw request. Of course most contractors prefer working with cash clients to avoid this back and forth, but not everyone has $500K + in cash or more to execute on their dream home. 

My recommendation is to line up your financing relationship before you pay for permits and other contractor related items. Their fees, process, costs and interest rates will have a major impact on the project and how you’ll ultimately move forward. Banks take a huge risk during construction and their interest rate usually reflects that risk. 

The loan process usually involves an appraiser coming to appraise the current property, review the builder contract and present a “post-construction” appraisal estimate back to the lender to ensure the loan to value ratio stays within their threshold. If it doesn’t and you’ve designed beyond the scope of your neighborhood, the lender may ask you to bring additional cash to close. 

Once your financing is secured, your contractor and you will begin the build process. You will have countless meetings along the way…adjusting the plan, making change orders where necessary (which increases their cost and yours) to arrive with a finished product that meets your needs. As the client, you must have a clear plan in place. You must know the flooring, cabinet style, paint color, roof style, siding style, and many other choices before the project begins. If your contractor has quoted a composition roof and you change to a metal roof after the project kicks off, it can throw a major wrench into the process. Yes there will be minor changes and additions along the way, but the project should be 90%+ unchanged start to finish to stay within budget. Your lender will ensure you understand that as well. 

Make sure you’re staying on schedule with your contractor. They’re in business for a reason and likely will take on more work while they’re working on your home. Do not let them drag out the process longer than necessary. Especially because your bank is charging you expensive interest-only payments each month. On top of whatever expenses you may be incurring living somewhere else while this project finishes. Since contractors get paid along the way, they can drag out the process longer than it needs to be. Also here in the Pacific Northwest in Seattle and Tacoma, the weather plays a key role in construction timelines. It’s best to get framing and foundation work done when the ground is dry, but it can be done in wetter weather where necessary. 

It’s my goal to educate, inform and share my experiences as a real estate agent in Tacoma. Buying a home is a big deal, but building a home is full of pitfalls and opportunities to learn. I’m always here to help and answer your questions about anything real estate related whether in Gig Harbor, Seattle, Puyallup or Federal Way and nearby. 

You can always reach me by phone at (206) 643-8845 or connect with me online at erikmolzen@bhhsnw.com 

#homebuilding, #dreamhome, #constructionloan, #customhome, #buildingprocess, #realestate, #homeconstruction, #propertydevelopment, #newbuild, #contractor, #homebuilder, #realestateagent, #homeownership, #buildingdreams, #sitepreparation, #constructiontips, #tacomarealestate, #pnwrealestate, #homedesign, #renovationtips


Location: Tacoma, WA, USA

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