FAQ
When you begin a new project several questions arise. Ontarget Systems offers introductory answers to frequently asked questions about self-built projects, construction contracts, contractors, draw request and many other topics that are brought to our attention during construction. If you are unable to find the answer to your questions, we encourage you to contact us with your question(s) and we will answer them or help you in contacting the proper authority who will best answer your question.
Will I save money by building my own home?
In my opinion, 82% of self-built projects are unsuccessful in completing on time and within budget. Self-built projects begin with great intentions! Calling upon favors from friends and family to help with building the project appear to be the most common approaches to self-built homes. This scenario will likely result in family feud, contract disputes, running over budget and/or not being completed on time. The self-built project will likely face continued re-work to repair or address code violations and/or structural concerns by local code compliance officers. With the likeliness of scheduling delays, subtrades and suppliers (material suppliers, foundation, electrical, plumbing etc) will likely charge a premium to a self-built project regardless of what discounts appear to be offered. Subtrades may require large deposits to secure the work. However, they may cater to their regular clients before servicing a self-built project. Payment terms are usually not as flexible as that of the more frequent customer (the builder), resulting in stricter budget restraints.
What should be in my contract with my builder?
Most states have minimum requirements on what needs to be written in a commercial or residential construction contract. The Attorney General’s website for each state will usually have this information. Your builder will provide you with an estimate, contract or proposal. Have your legal counsel review it before you sign it!
How do I find a reputable contractor?
Interview several contractors! Recently, a local general contractor, who for years produced some of the highest quality homes in this area, abandoned several construction projects! Therefore, get references! Speak with their suppliers! Conduct a financial inquiry on your builder! Ask the builder if they can qualify for a construction bond? If the results are not favorable, ask yourself; if a contractor cannot manage their own money, then how do I expect them to manage mine?
How long does it take to receive money from my draw request?
Providing the borrower and builder have fully executed a proper draw request with appropriate codes, supporting invoice(s) and appropriate waiver of lien records from the previous draw request, the site review and disbursement report will be completed and submitted to the lender within three business days.
What is a change order?
A change order is an amendment to the original contract. Typically, it is a one or two page document describing what is being changed on the project and the cost or savings associated with the change. Note: a change order must be pre-approved by the lender. Why? If it is an increase in cost, the lender wants to know how it will be paid. If it is a cost savings, what will it do to the appraised value and will the change prevent the project from qualifying for a conventional mortgage?
My contractor requires a deposit, how do I draw this money?
There are a few things to consider when paying deposits. Is the amount of the deposit reasonable and does it meet state mandates and/or lender approval? Is the deposit a good faith deposit or is the deposit for cash flow? A good faith deposit usually is 5% of the total project not to exceed $10,000 in value. When asked this question I also reply, what are you prepared to lose in the event your builder experiences a hardship? For example, what if your contractor is going through a divorce, bankruptcy, medical setback or death? Most states have maximum amounts that are allowable. Check with your Attorney General’s Office to get this information.
What is the difference between a building designer and architect?
In many cases, building designers offer a similar range of services to architects. Architects are licensed or registered with state based authorities and designers are not. The designer will usually require a waiver of liability and an architect should absorb liability in the event of a design flaw or structural defect. Last but not least, a good set of building plans by a designer will usually run approximately $1,500 to $2,500 and increase with complexity of the project. A licensed architect will start around $10,000 and go up also depending on the complexity of the project.