Choosing a builder without knowing how much your new home will cost to build may seem counterintuitive. However, it can be helpful to have a builder’s assistance during the site selection and design phases of building your new home. The solution to this dilemma is to choose a builder on a preliminary basis early in the process with the understanding on both sides that you may later select a different builder for the construction of your home.

The preliminary agreement between you and the builder should afford you the opportunity to cancel the contract for any reason at any time prior to the start of construction. That way, you’ll be in a better position to avoid repeating the preliminary steps with another builder immediately or, if the construction of your home has been postponed, in the future.

A preliminary agreement provides an understanding of the services the builder will render and the fee for those services. Preliminary agreements typically retain the builder to assist the buyer in evaluating and selecting a lot, monitoring the design and specifications process, estimating the cost of building the home, preparing a loan application package and starting the building approval process. Expect the builder’s fee for these services to amount to approximately 1 percent of the total construction cost.

If you later hire the same builder to construct your home, his or her fees for these preliminary services generally will be included in his or her cost estimate. If the builder’s performance under the preliminary agreement is satisfactory and he or she bids a fair price for constructing your home, it’s probably in your best interest to move ahead with the same builder.
The type of contract the builder will ask you to sign for the construction of your home will depend on the type of working relationship you’ve established. The longest and most comprehensive option is a full general contract. The shortest and least complicated option is a construction management contract. The latter arrangement requires more time, commitment and effort on the part of the buyer. Getting some advice and help from your attorney before you sign a contract with a builder is a smart idea.

The contract typically can include the following provisions:

Price and allowances. These items outline what is–and is not–included in the builder’s cost-breakdown.

Plans, specifications and cost-breakdown. These documents can be incorporated by reference into the contract.

Completion date.

Dispute resolution procedure. Negotiation, mediation and arbitration are alternatives to litigation.

Procedures for change orders.

Insurance. Including builder’s risk, worker’s compensation and liability. The contract typically should state the types of insurance and the policy limits and designate whether you or the builder will be purchasing each type of policy.

Warranty. The time frames and performance standards for warranty work typically should be clearly stated.

Special conditions. Any issues related to soils, weather or other miscellaneous factors typically should be explained in the contract.

Contingencies. Examples of contingencies include obtaining financing or selling your current home.

Payment procedures. The contract typically should detail when and how payments will be made to the builder.

Resource
A Colorado Rental Property Resource for both landlords and tenants can be found at http://www.coloradorentalproperty.net . Online land lords can post detailed information regarding their rental property, including 5 color photos. The ad can be self directed by the landlord to their cell phone or property management company. This is a service provided FREE by RealEstateColorado.Net and the ad will remain on line until it is asked to be removed.


REAL ESTATE
541-elk-circle.jpgIf you would like additional information about real estate in Breckenridge Colorado as well as anywhere in Summit County Colorado contact us at 1-800-791-3990 ext 421.

Jeffery McClintock is a real estate broker in Summit County and prides himself on providing clients with professional guidance in all phases of residential new construction, including market research, product development, consulting, marketing and advertising. His personal mission is to bring to you a level of knowledge, experience, commitment, high standards and results to answer your real estate needs. He believes, the most effective way to provide superior service is to build a strong working relationship with you. His system includes regular consultations and feedback, which is the best tool for identifying and clarifying your real estate objectives and help define strategic solutions.

Jeffery has been a licensed Realtor since 1995. During this time he has successfully closed over 135 million dollars of residential real estate, and 40 million dollars in un-improved land amounting to 660 real estate transactions. His professional experience includes the Denver Colorado front range and the Second Home market in Breckenridge, Colorado located in Summit County.