Archive for the ‘Building a Home’ Category

Build Your Custom Home Now at Low Interest Rates

Author: Chuck Marunde

8 Aug

Since this is a buyer’s market, it’s not a great time to be selling your home, but if you own a lot, and you are planning to have your home built in the near future, this is a good time to start the process of selecting a builder and planning your home.

Most people plan to finance the construction and long term mortgage of their home, and this is why it is a good time to get started. Interest rates are at historical lows, and most experts are saying that interest rates are headed upward in the months ahead.

At an interest rate just 1.0% above the current rate of 6.52% on a 30 year fixed, your mortgage payment on a $300,000 loan would increase by $200 per month. You would pay $72,000 more in total interest on your loan than you would at today’s interest rate. At an interest rate 2.0% above the current rate, your mortgage payment on a $300,000 loan would increase by $400 per month, and you would pay $168,000 more in total interest on your loan than you would at today’s interest rate.

It’s a good to build your home. It’s a good time to get a loan to build your home. Procrastinate, you and it may cost you in the long term.

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Sequim and Port Angeles Home Builders - Does Size Matter?

Author: Chuck Marunde

7 Aug

Building a home in Sequim or Port Angeles? Finding a home builder for your next home is one of the most important decisions you will make as you start this next phase of your life in retirement. This is part two of a two part series that asks the question, “Does Size Matter?” when it comes to hiring a home builder.

[This photo was taken by me at the St. Louis National Strongman Contest a number of years ago. My son, Jesse Marunde, is the entertainer in the center. Jesse died of a heart attack last year in his Sequim gym. He was big at 6'5" and 320 pounds.]

In part one, we looked at common misconceptions when hiring a builder, and we looked at the pros and cons of hiring a small builder. Today, we look at hiring a larger home builder.

A large builder in Pierce or King County would build hundreds of houses each year, but in small towns like ours, a large builder would be someone building perhaps 8 to 30 houses per year.

I would categorize large builders based on criteria like their business model, their customer service, the quality of materials used, the quality of workmanship (i.e. the quality of their subs), the process by which they quote estimates and final bid prices, their contracts, their warranties, and their integrity.

Volumes could be written just on these criteria, but this is a blog post, which means it gets down and dirty quick. The question, the answer. Let’s get to it.

Business Model. Large home builders around the country have learned to create a business model that is a money machine. Now this is America, home of the free and the brave, and we boast about our free enterprise system. That’s all good. And there’s nothing wrong, and everything right, about having a corporate goal of making money. But many builders have taken this to levels unheard of 30 years ago. Slick advertisements that often border on fraudulent advertising, bait and switch, and lopsided contracts are very common among many large builders. From the beginning of the first meeting to the walk-through, there are a thousand ways to maximize every dollar of profit to the detriment of the unwary homeowner.

(more…)

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The Biggest Mistake New Builders Make

Author: Chuck Marunde

28 Apr

The biggest single mistake made by the homebuilder who builds his first home is this: to build a spec home in the highest price range, which is the smallest segment of the buyers’ market.

Since January 1, 2005 through December 31, 2007 this chart shows total home sales in Sequim and Port Angeles, Washington in all price ranges at 2,310. The majority of homes sold were priced below $300,000. Homes priced above $300,000 represent 40% of the entire home buyers’ market.

Here’s where the mistake is often made. Building a spec home and listing that home at a price above $500,000 means the market for that home is only 9.0% of the entire buyers’ market. The challenge is selling to that 9%, because that 9% is 100% of the market for that home.

I showed a home recently that was a spec home built by a first time builder and priced at $699,000. Let’s round that off to $700,000. That home only has 3% of the buyers’ market. Wow! That’s a very very small segment of the buyers’ market.

If you were building a custom home to put on the market as a spec home, would you target 3% of the buyers’ market, or would you first want to know where 60% to 80% of the buyers’ market is?

There is another challenge in finding the one buyer at this high price range. Buyers at this high price range will want a floor plan that is ideal for them, but the spec home only gives them one choice, a choice they may or may not like. Building a spec home for 3% or 5% of the entire market is a very risky proposition for a builder.

For the one buyer who falls in love with such a home (assuming one is found within a reasonable period of time, and in this price range a home like this could sit on the market for over a year), their negotiating power is far greater than they might realize, since they may be one in a hundred who find the home suitable in every way. Unfortunately, the builder has poured his heart and money into building a beautiful spec home, so his cost is going to be $175 to $220 per square foot, which brings us back to the buyer. At that price per square foot, a buyer may just choose to purchase a lot and have their perfect dream home built.

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Filed under: Builders and Contractors, Building a Home

Building Your Sequim or Port Angeles Home

Author: Chuck Marunde

22 Sep

Building Your Retirement Home
(or having a contractor build your home)
Sequim Real Estate, Port Angeles Real Estate

You’re moving to Sequim or Port Angeles, and you’re planning on having a contractor build your retirement home. You’ve been planning this for 5 to 7 years, and finally you’ve reached that magic retirement date. You’ve purchased a piece of vacant land in either Sequim or Port Angeles, gone through many checklist items when making the offer so you don’t get caught by a Trap for the Unw ary (wet lands, land doesn’t perc or other septic issues, well water contamination, site approval issues, easements and set backs effecting site building permits, environmental contamination (from prior uses or from neighboring properties), access, encroachments, boundary lines, etc.), and your next step is hiring a contractor to build your home. After 20 years of law practice and many years as a Realtor, I have put together a checklist from real life experience, and you can read the full article at: