Expert: Hans Weber, Licensed Broker Associate - 2/8/2004

Question
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Followup To
Question -
Hello Hans,
I don't really have a specific question, but one of a more general nature. I will be a first time home/land buyer very soon and I am wondering about the land purchase and construction of a home. Are there any things you think I might need to know before going into such a venture as big as this. Because as it stands, I am totally new to this and don't really know what to expect or do for that matter. Any insight you might have would be of great benefit to me. Thank you for your time.
Answer -
Hello Mike,
Thank you for your question.

Are you planning to build by yourself or do you have a builder to build for you?

First, land has to be purchased with cash unless you can get a new construction loan which is paid out to the builder in stages as construction proceeds.

With new construction, usually the final product will be more expensive than initially planned.  Every change costs money and every upgrade does too.  Plus getting the land ready to build is full of unknown costs, will there be rock to blast, how deep will the well be, how much will the septic system cost?

Let me know what your plans are.

Thanks,
Hans

Hans,
This is going to be a premanufactured house(modular) I think and the land is open and slightly sloping. As for the well and septic, friends have gotten that thing done for somewhere in the few thousand dollar range, I think. The land we are going to buy first and with about 50% or more cash down. This should help us get the building loan. The main thing I worry about is like what you said, the groundwork and foundation. That can be so high that we have to cut every corner to be as economical as possible or we won't be able to afford the final product. Same goes for the price of the modular. Some say having a builder build the same floor plan as a modular would be better, are they right? But would it be cheaper? And how can you possibly find people to trust when doing such a costly transaction? I just want to make sure every move I make is calculated and not foolishly waste money that I don't have. Well hope this answers a little more. Thanks for your help.

Answer
Hi Mike,

It sounds like you have to financing planned out.

Having a modular home built and delivered to your foundation is a practical way to build your first home and keep costs as low and certain as possible.  Modular is built indoors and the weather can't interfere or delay the work, so time won't cost you more money.

For the land itself you may wish to seek an engineering firm to inspect the land to help you determine the best site for the foundation.  The local municipal building department may be able to give some insight aboout the area your lot is in and what other home builders have experienced.

Good luck, you are on to an adventure and if you succeed you'll do it again someday.

Hans