110 PDF

The Owner-Builder Book:
How You Can Save More Than $100,000 in the Construction of Your Custom Home
Fourth Edition
Copyright 2007 The Consensus Group, Inc.
Printed and bound in the U.S.A. All rights reserved. No patent liability is assumed with respect to the
information contained herein. Although every precaution has been taken in preparation of this book, the
publishers and authors assume no responsibility for errors or omissions. Neither is any liability assumed
for damages resulting from the use of the information contained herein. For information address The
Consensus Group, 3776 North 300 West, Provo, UT 84604-4907
This book is distributed to the book trade through Ingram, Baker & Taylor, and Partners Publishers
Group.
ISBN: 978-1-932272-04-8
UPC: 6-96326-27204-9
Library of Congress Control Number: 2006910317
Fourth Edition 10 9 8 7 6 5 4 3 2 1
The Consensus Group, Inc.

Toll Free: 1.888.333.2845
OwnerBuilderBook.com
Reader Comments
Reader Comments
I took your book out of the library because my friend said it was a good one. Before I finished reading it,
I had found the confidence to go out and build. We read the Special Reports to each other on the way back
from Montana. We read all the ones that go to the budget and we broke it down to our parts where each of
us get bids.
Melanie & Jeremy T.
Riverton, UT
I read it, my husband is in the process, and we are sold on the idea. My husband was up til 3:30 this morning reading this, it was so enthralling to him. He says it is very helpful and he is looking forward to using
the software templates. I enjoyed the website, especially the moms that are on there.
Lyn & Phil S.
Kansas City, MO
I was in the library yesterday and found your book. What a godsend!! I have been reading it and decided to
check out the website. We have already been doing a lot of what is recommended by the book; getting estimates on jobs, pricing materials, calling banks, etc. I have found two banks willing to loan us the money
with us being our own G.C. I know I am rambling on, which is out of character for me! I guess my reasons
for writing are to ask if there is any advice you can give to me and to just thank you for the book. It has
encouraged me that Jim and I CAN do this ourselves and have a nice home without an enormous debt.
Jodenia & Jim M.
Blacksburg, SC
I liked it. I like the fact that its very easy to read. I like the way its laid out.
Mike W.
Molalla, OR
It makes sense that you make your money in planning.
Kevin T.
Lawton, OK
Youve got some good stuff in here. The savings emphasis and the encouragement helped me. It agrees
with the things my buddies in contracting tell me. It breaks it all down so you can understand it.
Eric R.
DeSoto, TX
Im so glad to find your book. I feel like we can get started now. I felt so alone, but now all of a sudden after
reading your book, I see that its not just me.
Judy & Chris P.
Bothell, WA
I enjoyed reading the book. We gathered about thirty different books, and yours had things like Realtor
input that no one else had. Many lists of things that we liked.
Tom W.
Logan, UT
Ive been enjoying your book. Ive done some projects as a project manager. Thats my forte, so house
building seemed like a natural. I had a contractor last time, and that convinced me never to do that again.
Everything you say in your book is true.
Suanne D.
Rio Rancho, NM
I bought your book, The Owner-Builder Book, and found your personal signature in it, we think it is cool.
I am now halfway thru book and really like how you organize the contents. I was going to plan to owner-
The Owner-Builder Book
ii Reader Comments
build my house in only one month but after reading your book, I extended it to one year. So I am going to
continue renting the house we live in now and plan aheaaaaad.
Eric Emmons (via email)
Its a good book. Im in construction, and Ive been reading books on this for 20 years and I really enjoyed
it. It was more practical, and the numbers seemed more real than other books Ive read over the years. I see
50% and 60% off all the time, not just 10%. Subs will charge what they can get away with. The best part
was how you talked about the planning. For me, planning is about 90% of it. It all should be done in your
mind first.
Jim & Mary F.
Northboro, MA
I thought it was very great. We are doing a major remodeling, start to finish, and its very helpful, very
good info and things you learn. The numbers that hit you when you get your plans are so high, you know
you have to be able to do it cheaper than that. You need to hear it over and over. Very, very good book. I was
shopping around. This is very easy to follow. Easy to read and highlight. It had everything in it. Like one
stop shopping. Eye-opening, but very good. Weve been doing a lot of shopping around.
Bonny P.
Andover, NJ
Weve owner-built once before 24 years ago without any kind of help like this. We didnt do any of the
trades. We just cleaned up and bought everything. This time well downsize. We have wonderful plans, and
wonderful people because weve been here in this small town for a lot of years. I wish Id had some literature
like this the first time I did it. I just knew that I could shop better than a contractor could. We saved a lot
of money the first time, and well do a lot better this time.
Gene P.
High Springs, FL
I read your book in two days! I really appreciated it. Im looking forward to downloading software from
your website.
Gina L.
Fountain Inn, SC
I was very inspired by your book. Were getting ready to build a house. Its going to be fun.
John O.
San Rafael, CA
I build apartments by trade, Ive built about 10,000 units. I stumbled onto your book a couple of weeks
ago, and I think its the finest publication Ive ever read on the subject.
Chris V.
Federal Way, WA
My husband and I are getting ready to build a home in town and we are so much more excited about what
we can accomplish because of what we have read in your book. Thanks so much for the information and
tips and encouragement. We are picking up our final design plans tomorrow to submit to the city and then
the real fun begins.
Shawn & Amy H.
Provo, UT
Dont change a thing. Its easy reading. Thats a big plus. Ive used this as a Bible, throughout the whole
project. Its hard to put down.
John J.
Higganum, CT
It was very refreshing to see the comments you make about referrals and subcontractor certification and
the other games that go on in our industry.
Mike M.
Bonham, TX
Reader Comments iii
Its a good book. I write in it and fold the pages. I like the letter to the reader that says you can do it. Ive
got my wife thinking we can do this. My friend is having a contractor build his house, and he says I think
I can do it. All you have to worry about is having the subs show up. And you cover that in chapter 13.
Greg T.
Harrison, OH
I started by reading The Complete Guide to Contracting Your Home which was full of valuable information.
Then I got your book and liked it even better. Your book covers a different side of owner-building. What a
perfect complement the two books are!
John & Pat W.
Crystal Lake, IL
I just finished building my wife and I a house. Where I ran into problems was in the planning stage. When
you say go, you are running down a hill thats too steep, and you keep up or fall. I was thinking of going
to a psychiatrist because this first project caused such emotional stress, but bought your book instead and
now I know that I have control of those factors, not the construction workers.
Tom M.
New York, NY
Very interesting. Its a good read that at the very least will prevent you from getting ripped off. One of the
most fascinating books Ive ever read.
Ivey S.
New Strawn, KS
I love your book. Its great. We were trying to decide whether to act as general contractor. After reading
the book we got so excited about it we are doing it now.
Becky & Steve G.
Waterloo, IA
Been in the Corps of Engineers, and have extensive homebuilding experience. Ive looked at a lot of books,
and yours was by far the most comprehensive, especially in getting your construction loan. Theres a lot of
owner-building here. If you want a decent house, you have to do it.
Clinton B.
Anchorage, AK
The book is simply great. My wife and I are in the planning stages of building our own straw bale house in
Tucson. I especially liked the concept in your book that a dollar saved is equivalent to 10 dollars in wages
that does not need to be earned (or at the very least not spent needlessly). This is why Im interested in the
budget templates. Your ideas are very similar to the thinking in the book Your Money or Your Life. Following the basic principles in that book have culminated in being able to do whats in yours.
Robert G.
Tucson, AZ
I was telling a friend of mine, my lender, that this book was probably the best investment Ive made in the
last twelve months. You emphasized many things the average person doesnt think about. I can save a lot of
money with this book, there is no doubt in my mind.
Julio L.
Austin, TX
Im a management consultant, have done a 6,000 square foot house, a 5,000 s.f. house, and now a 4,000 s.f.
and concur with all that you said in the book. Obviously you had to be a good management consultant to
create the level of detail thats in the book. I owned the book for six months, and finally took it on vacation
where I read it. I want to commend you. Its written very well, and very very practical.
Jim V.
Reno, NV
iv Reader Comments
I do property management, and I know that preparation is everything.
Rob B.
Mesquite, TX
We really enjoyed your book. We noticed that it was the only one in the group that acknowledged and
referenced the other books on the subject. Its nice to know that when you wrote the book you had already
assimilated everyone elses philosophies. And youre the only one with internet support where you can
share ideas with others.
Steve & Kathryn H.
Spanish Fork, UT
Its a great book. I finished it in three days, I was so engrossed. It was extremely good.
Emmanuel G.
Oak Brook, IL
Your book was the most interesting in the bookstore. There was nothing in any other book that was so
practical.
Chris F.
Plainfield, VT
My friend had your book checked out of the library so much that the librarian bought him his own
copy.
Dale B.
Tucson, AZ
I enjoyed your first edition very much. I was very glad to find this third edition at the bookstore. Because
I remodel houses, I watch for all the books on this subject. Ive probably read them all. There are so few
books out there that you can use. The majority of the construction books are just written to sell. Yours is
written to inform. Some of the books I just get maybe a paragraph out of thats new. Yours I can use.
Cliff S.
York, SC
We are working on a huge apartment project, and this is coming in really handy. The book gave us the
inspiration to get started in the first place.
Edmund & Emily M.
Coppers Cove, TX
This book fell into my hands last year. It was like an answer to prayer. I just devoured the book immediately. I have 20-30 sticky tabs sticking out of it all over.
Dorethy H.
Topeka, KS
Excellent book. A lot of useful information a lot of people dont have. Very informative. As a contractor, I
sat down with the book. At first I was wanting to toss it out the window. Either this guy is clueless, or hes
been there before. I finally realized that the realities of running your own project are right on target. You
can run your own project and become your own construction manager. Often the client doesnt have a clue
and they are running fifteen subs and dont want to cut loose control and it turns into a nightmare. They
are never there, but they hold the power of the purse. When the subs know that youre not cutting the check,
they dont paying attention to you.
It was very informative and very on target. And this is the wave of where construction will go. A great
book to pass on to clients. Ive got a client now where they cant get a hold of a contractor. Theyve done a
lot of footwork, but dont have enough information to take the reins and do it. Its very hard to get contractors right now and this is a great resource for people who could do this on their own. This will give them
enough to know what they are getting into at the very least. It gets crazy with people who dont know what
they are doing.
Reader Comments
A contractors perspective. We hear how to sell. And we find contractors that just slam-dunk people,
and we are trying to build a reputation for doing whats fair. Ive laid my books open to people. Everyone
talks about leveling the playing field, but thats difficult when theres no one to reinforce the certification of
contractors. We find scabs out here who undercut the price but dont carry the insurance, the Workmens
Comp., and theyre not above board. We often have to go out and clean up a bad mess. If people really want
to level the playing field they have to reinforce the certification of contractors.
Instead, lets give everyone the information to be a true owner-builder. Were trying to run a square
game. We try to make enough profits to stay in business for another day. We get slammed with high liability
insurance, workers comp., and all the overhead. Im all for people being fully informed. If someone had this
information and had their project as well-planned as it should be, it would be a joy to work for them. There
would be very few problems. That does everybody a service.
Larry T.
Driggs, ID
I love your book. You talk about a software project in the beginning of the book. Ive used that as an illustration for the need for planning at my own work.
Scott A.
Walnut Creek, CA
It was very well-written. I liked the summary level detail.
Gerry R.
Austin, TX
Its inspiring. The testimonials in there are amazing. Its very tempting to do this.
Kathy N.
Truckee, CA
I appreciate your book. I thought it was a very good source. I also appreciate the postings on the website.
Dave M.
Sunnyvale, CA
This book is done very practically. I like the way its put together. Its not theoretical, its my type of book.
Thank you for doing this. You did a great job putting this together.
Anthony L.
San Jose, CA
The book reinforced our thinking that this is all do-able.
Ken & Linda L.
Silver City, NM
This is the best thing I have gotten my hands on. I checked it out at the library and decided I needed my
own copy to make notes in.
Mark F.
Lynnwood, WA
I found the book very useful. I found the information you gave on making a contract very helpful.
Richard R.
Huntingtown, MD
This book has been just tremendous. I read it once and marked it, and now Im going through again. Its
Notes in the color and
been so helpful, I would highly recommend it. Im thrilled with it. More than
font
of the one at left are
50 pages of
Bill H.
Sacramento, CA
reader com- clickable in our electronic
Its very helpful, especially for someone new to this sort of thing. ments are version. (Page 262) You
viewable on can click through to join
Jason A.
Lake Station, IN
our website. any conversation shown
in our sidebars.
vi Letter To The Reader
Letter to the Reader

I had no idea I could build a house.

I didnt know the first thing about carpentry, or cement work, or any of the trades; I had no tools;
and I certainly didnt have enough money to build the kind of place I knew I wanted.

Yet here I sit in the nicest office Ive ever had in the nicest home weve ever owned enjoying every
comfort and a breathtaking view of the mighty Wasatch Mountains.

Elaine and I built this place. We truly love it. Its a gorgeous house that has everything we want in
it and works very well. Its a great comfort because we can manage the mortgage payment, and because we
go to sleep knowing that we have more equity in it than we owe.

I never thought we could do this, because people assume you cant. And the thought that you
could do it far less expensively than a general contractor really causes resistance. People told us no all the
time.

We decided to write a book that would tell you yes.

Enjoy this book. Its loaded with every tool, technique, and tip that we used, most of which we
couldnt find in any other book.

One more thing. We sometimes felt very alone building our house. Because we dont want that to
happen to you, we have provided a website where you can interact with other owner-builders. Elaine and I
are accessible via toll-free number and email as well.

Dont let anybody tell you you cant do this.
Table of Contents vii
Table of Contents
Chapter 1: You Can Save $100,000...................................................... 1

Amazing Cost Savings..........................................................................................................................................1
Best Tax-free Way to Make Money......................................................................................................................2
Cold Sweat Equity.............................................................................................................................................3
Lowering the Threshold.......................................................................................................................................4
Other Benefits.......................................................................................................................................................4
Myths and Propaganda........................................................................................................................................5
Owner-Builder Misconceptions..........................................................................................................................9
Qualifications of an Owner-Builder.................................................................................................................. 11
Chapter 2: Learn the Wealth-Building Secret..................................... 13

People in Construction Know the Secret..........................................................................................................13
Free and Clear Step-up Strategy........................................................................................................................ 14
Owner-Builder Exclusive................................................................................................................................... 16
Retirement Plan.................................................................................................................................................. 17
Open Up Your Veins....................................................................................................................................... 17
D.S.D.E................................................................................................................................................................ 18
Rock Star Wages..................................................................................................................................................19
Guerilla Economics............................................................................................................................................20
Chapter 3: General Contractors Arent What You Think They Are... 21

Contractor Games.............................................................................................................................................. 21
Youll Shop Better...............................................................................................................................................24
Youll Be More Organized..................................................................................................................................25
Youll Give It More Attention.............................................................................................................................26
Youll Keep Your Savings....................................................................................................................................26
How Much Can You Save?.................................................................................................................................27
When is 10% Not 10%?......................................................................................................................................28
Contractors Mark Up Their Costs to You.........................................................................................................29
Get Bids from Three Generals...........................................................................................................................30
Chapter 4: You Can Manage Better Than a Contractor.................... 31

Management Concept One: People Often Ingest M&Ms............................................................................ 31
Management Concept Two: Plan Hard, Work Easy.....................................................................................32
Why Plan.............................................................................................................................................................33
I Want a Thousand Hours!................................................................................................................................34
Act Like Youre a Business..................................................................................................................................36
Planning Steps.....................................................................................................................................................38
viii Table of Contents
Chapter 5: You Will Profit By Building a True Custom Home............ 51

Starter, Step-up, Custom, Dream House........................................................................................................... 51
Four Ways to Make Money................................................................................................................................ 52
Your Dream Home Notebook............................................................................................................................53
You or the Market?.............................................................................................................................................54
Real Estate Survey...............................................................................................................................................58
Sub and Supplier Input.......................................................................................................................................60
Features of a Custom Home............................................................................................................................... 61
A House that Works............................................................................................................................................62
Quality Considerations......................................................................................................................................63
Comfort and Convenience Considerations......................................................................................................64
Energy Saving Features......................................................................................................................................66
Chapter 6: Conquer Details Room By Room and Save 20%............. 69

Change Orders Are Costly.................................................................................................................................69
How Specs Save You Money and Get You a Better House...............................................................................71
How to Develop Room by Room Specifications...............................................................................................72
Architect vs. Designer.........................................................................................................................................77
You Are Ready to See Your Designer.................................................................................................................79
Good Design Saves Money in Four Ways..........................................................................................................80
Chapter 7: How to Get the Subs on Your Side.................................... 85

How to Find Good Subs.....................................................................................................................................85
How to Interview Subs.......................................................................................................................................88
Detailed, Accurate Bidding................................................................................................................................88
Get Three Bids from Subs on Each Item........................................................................................................... 91
How to Get Bids..................................................................................................................................................92
Follow Up Your Bids...........................................................................................................................................93
Chapter 8: How to Build a Budget That Is a Powerful Miracle Tool 95

Start with Your Bids from General Contractors...............................................................................................95
Spreadsheet Budgeting.......................................................................................................................................96
Riverbottoms House Budget..............................................................................................................................99
Budget Worksheet............................................................................................................................................. 105
Shop Your Budget for a While......................................................................................................................106
Table of Contents ix
Chapter 9: Commando Shopping Techniques.................................. 119

The Price of Marshmallows............................................................................................................................. 119
Bargains............................................................................................................................................................. 121
Identify Your Suppliers.....................................................................................................................................123
When You Pay for Materials Separately You Save..........................................................................................125
How to Use a Computer to Save......................................................................................................................126
Excerpts from The Owner-Builder Book: Construction Bargain Strategies.................................................... 131
Chapter 10: How to Schedule the Work at a Savings.............. 151

Another Miracle Tool....................................................................................................................................... 151
Picking the Right People is Half the Battle..................................................................................................... 152
Computer Scheduling.......................................................................................................................................154
Live in Your Schedule for a While...................................................................................................................154
Sample Construction Work Schedule.............................................................................................................156
Schedule Worksheet..........................................................................................................................................158
Back-up Plans to Keep the Work Going.......................................................................................................... 162
Schedule Reinforcement Program................................................................................................................... 163
Chapter 11: How to Make Your Lender Swoon................................ 165

Your Next Thousand Hour Payoff................................................................................................................... 165
What the Lenders Want.................................................................................................................................... 166
Your Loan Proposal Book................................................................................................................................ 167
Lenders Want to Put a Copy of the License in the File.................................................................................. 169
Dont Budget Self-Work.................................................................................................................................... 170
Your Loan Presentation.................................................................................................................................... 171
Shop for the Right Terms................................................................................................................................. 172
Chapter 12: Paperwork Before You Begin........................................ 175

Anatomy of a Lawsuit....................................................................................................................................... 175
Get Good Protection........................................................................................................................................ 177
Lien Waiver....................................................................................................................................................... 178
Write Good Contracts...................................................................................................................................... 180
City Permits...................................................................................................................................................... 181
Contracting Agreement.................................................................................................................................... 182
Table of Contents
Chapter 13: Six Months to Victory.................................................... 185

Integrate......................................................................................................................................................... 185
Step One............................................................................................................................................................ 186
How to Get Subs to Show Up........................................................................................................................... 186
Rules of Work.................................................................................................................................................... 187
Running the Job................................................................................................................................................ 188
Cost Accounting............................................................................................................................................... 189
Daily Record......................................................................................................................................................190
Your Video Camera and Other Unlikely Tools...............................................................................................190
Emotional Roller Coaster................................................................................................................................. 191
Chapter 14: Smooth Execution Saves Money & Improves Quality....197

Other Daily Duties........................................................................................................................................... 197
Why You Need to Be On site............................................................................................................................200
Consensus Breeds Creativity............................................................................................................................202
Clean Job Saves Five Percent............................................................................................................................203
The Inspector Is Your Friend...........................................................................................................................204
You Can Get Independent Inspections...........................................................................................................205
Inspections Checklist.......................................................................................................................................206
Staying on Schedule..........................................................................................................................................208
If You Do Self-Work Control It...................................................................................................................208
Rules of Self-Work............................................................................................................................................ 211
Sub Recognition................................................................................................................................................ 213
Chapter 15: Mistakes You Can Avoid & Successes You Can Achieve..... 215
Mistakes............................................................................................................................................................ 215
Disasters............................................................................................................................................................ 217
Successes............................................................................................................................................................ 217
How to Score Yourself...................................................................................................................................... 219
If You are Married............................................................................................................................................220
The Ten Commandments of Owner-Builders................................................................................................ 221
Chapter 16: If You Decide to Use a Contractor................................227

There are a Lot of Reasons to Use a General...................................................................................................227
How to Hire a General.....................................................................................................................................228
Whos Got the Risk?..........................................................................................................................................229
You Know What You are Getting Into............................................................................................................ 231
Afterword: Once Youre In.................................................................237

Table of Contents xi
Minimize Punch List........................................................................................................................................ 237

Punch List.........................................................................................................................................................238
Lower Your Property Taxes..............................................................................................................................242
Better than Wall Street.....................................................................................................................................242
Help Someone Else...........................................................................................................................................243
Index.....................................................................................................245
Appendix: The movie they made in the Riverbottoms house...... 251
Resource Guide....................................................................................257
The Owner-Builder Book: Special Reports........................................................................................................257
Books.................................................................................................................................................................262
Book Combinations..........................................................................................................................................266
DVDs.................................................................................................................................................................268
OwnerBuilderBook.com....................................................................................................................................272
Free Download Gallery.................................................................................................................................... 273
Paperless Coupons............................................................................................................................................ 274
Chapter 1: You Can Save $100,000

Amazing Cost Savings
ou are driving down a beautiful street and you see houses that you would like
to own. These are spacious custom homes with many upgrades and custom
features. They cost around $450,000. You want to build a house like that, but
not at that price. You sigh and drive on. But wait a minute. What if you could save
35% on construction and build that $450,000 house for $328,000?

Adjusting for land value, the average owner-builder (O-B) I studied saved
that much on the same type of property. How does $293,000 strike you? Thats what
it would cost if my own owner-builder savings were applied to that $450,000 house.
How about $268,000? One of the O-Bs I studied saved that much building a similar
house.

In these examples, I have assumed that the $450,000 house was built on land
with a value of $100,000 and construction costs were $350,000. And I have applied
savings of 35%, 45%, and 52% actual achievements of people like you.
Forums
We just signed the

last papers on our
construction loan.
The loan amount,
which includes
all our costs, less
about $45,000
of our own was
$305,000. The
appraisal which
was done off only
our plans and our
property came in
at $470,000 for
a 2,538 sq. ft.
house. Of course
were not done
building yet, but
that is an exciting
start for a first time
o-b adventure. I
hope others can
see these kind of
results.
Wayne in Fresno,
CA
Forums
I live in Minneapolis greater metro

area and just completed my second
home. I built my
first 7 years ago.
This house was
started in April
and finished in
August. I estimate
we saved more
than $100,000
by doing the
contracting ourself.
We ran into many
more problems
with this house,
but I will do it
again in the near
future. I love the
building process.
Laurie in Elk River,
MN
Sources Say
Most people
think that to build
a home you have
to know a lot
about architecture,
bricklaying, carpentry, electricity,
and plumbing.
Not so. Most
professional builders are essentially
managers. They
leave the actual
hammering, nailing, and wiring to
specialists.
From Everything
You Need To
Know About Building the Custom
Home
(See page 263)
Sources Say
Habitat for
Humanity: How to
Build a House outlines the investigative work you can
do to find a good
building lot.
The Complete
Idiots Guide to
Building Your
Own Home has
chapters on choosing land and
buying a lot
(See page 263)
Savings Comparison
Price of House
Cost of Land
Construction
Cost
O-B
Savings
O-B Cost of
Construction
Total Cost
with Land
$ 450,000
$ 100,000
$ 350,000
35%
$ 227,500
$ 327,500
$ 450,000
$ 100,000
$ 350,000
45%
$ 192,500
$ 292,500
$ 450,000
$ 100,000
$ 350,000
52%
$ 168,000
$ 268,000

The 35% savings example comes from my interviews with owner-builders
from across the U.S. and Canada. Their average savings on construction costs were
35%. These savings are calculated either against actual builder estimates of construction cost, or against appraised values after completion.

The 45% savings example is our own. Elaine and I built our home for $63
per finished square foot (in current U.S. dollars) after it was estimated by a general
contractor at $113 per foot, exactly as specified, with the addition of many upgrades.
We saved about $180,000, or 45% of the estimated cost.

The 52% savings example is that of Vince Miner, a college tennis coach I
interviewed. He saved 52% on the cost of his custom home by owner-building.
Best Tax-free Way to Make Money

You can make more tax-free money building houses for yourself than any
other way.

Rod Allred, general contractor.

Owner-building is the best-kept wealth secret around. I first understood this
when we struggled our way into our first house in Denver, 30 years ago. We tried
painstakingly for a year to save up the $3,000 down payment from my IBM paycheck,
and wound up putting part of it on a credit card. I just barely squeaked in before the
house got over my borrowing limit. The house cost $55,000.

A year and a half later, when we moved out of town, I sold the house for
$74,000, paid commissions of $4,000 and had $18,000 left over. Since I purchased
another home right away, I owed no taxes. The $18,000 was mine! I put $10,000 down
on the new house and had $8,000 in cash. With the cash, I paid off two automobiles.
I didnt even have $500 in savings from the years at IBM. But I had $18,000 in cash
from my house. And I found out an amazing thing about that house profit. It spends
just like any other money!

Living expenses and taxes had eaten up my generous IBM salary, but the
money we made from our house was intact. We made that money from appreciation,
one of the ways that home ownership pays off. Colorado was in the midst of a real
estate boom, and we made a then-phenomenal 15% gain per year on our home. I was

ecstatic. It wasnt until years later that I discovered an even better way to make money
on a home.

Building booms come and go, and house appreciation fluctuates. It is rarely
more than ten percent per year, the recent boom notwithstanding; and it can be
flat, or worse. As we go to press with this edition of The Owner-Builder Book, the
year-over-year median price for new homes in the U.S. actually dropped a little, a
rare occurrence after a 10-year run-up in most of the country. A surer, faster way
to make money is through owner-building your home, because you can accomplish
your gain in a very short time, usually less than six months. We saved 45% on our
home in the first year by owner-building, and we continue to add five percent or so to
its value each year through appreciation. The average appreciation amounts to more
than $2,000 a month, but during the time we built our home we made about $25,000
a month through construction savings.

This sizeable income is protected from taxes in two ways. First, money
saved building your house is not taxed at all when you save it. You dont pay federal,
state, social security, sales tax or property taxes on what you save. It goes direct and
untouched into your home equity and your net worth. Second, when you sell it, the
U.S. Taxpayer Relief Act allows you to keep your profit tax-free.

If you are married and file a joint return, you can keep up to $500,000 in
house profits without paying a dime in taxes. You must live in the house for two years
to enjoy this tax-free bonanza. But you can do it again and again, as long as Congress
maintains the current law. You no longer even need to build or buy a new home with
the proceeds.

Some people think that winning the lottery is the best way to make money,
but its hardly tax-free. You can make a million dollars on the lottery, yet with the
$50,000 checks you would get once a year (they usually pay the money over a 20-year
period), the various taxes youd pay (more than 50%), and the things youd spend it
on, very little if any would go to your net worth. In fact, I added more to my wealth
each month I was building my house than a million-dollar lottery winner does in a
whole year. All the savings in building a house for yourself go to net worth. Its pure
wealth!
Cold Sweat Equity

To achieve this wealth, you dont need to swing a hammer or do much selfwork on your home. On the contrary, I advocate limiting self-work and emphasizing
your role as manager of construction.

The big savings in home costs that build value are often called sweat equity
you provide labor to reduce costs on a new home or to improve an existing one.
The value of the property and your equity in it rise. This book will teach you cold
sweat equity the savings and value you get through your worry, planning and
management. Most of the savings described in the chapters that follow are in planning, organizing, and controlling construction costs.
O-B Connections
I bought The
Owner-Builder
Book and
downloaded the
software and
found them very
useful in being an
Owner-Builder.
We basically tore
our house down
and lived in a 24
C class RV in front
of the house with
3 kids under 10
years old. We survived and saved
over $100,000.
Sherry in Rossmoor, CA
Sources Say
As the developer
and general
contractor of your
own house, you
perform the most
important (and
best paid) roles in
home building.
From Build Your
Dream Home for
Less
(See page 263)
Forums
Help! I have 2
kids (5 mo. and
21 mo.) and am
feeling a bit discouraged about
going into such
a big project.
Has anyone else
out there accomplished such a
daunting task with
kids in tow?
Birgit in Joliet, IL
Hi Birgit. My
husband & I are
midway through
our home construction and have four
kids (18 mos.-10
yrs.). We are all
living on site in a
35-ft travel trailer
throughout this process. While its not
ideal, we wouldnt
have been able to
build the home we

wanted without
generalling it
ourselves. The
cost difference
(our savings) will
be approximately
$175,000.
My husband is a
stay at home dad,
so hes on site to
manage things
and handle day
to day problems,
but weve really
been partners in
this process. So,
the short answer
to your question
is YES. The long
answer is yes,
but be prepared
and have your
homework done
before you begin.
Since your time
will be split
between children
and your project
your time to investigate things during
the construction
period will be
more limited. I
cant stress enough
to be prepared.
Good Luck!
Kirsten in Atascadero, CA
Hi all, ANYTHING is possible
if you want it bad
enough. In the
past 10 years I
became a nurse,
during which I had
four kids, and built
one home. Last
week got another
college degree
and in three
weeks we are all
moving from NJ
to New Mexico
where we bought
three acres, while
we are renting
there we will be
building our next
house, but this
time being the
O-B!! WHILE WE
ARE EXTREMELY
NERVOUS, we
Lowering The Threshold

For many, home ownership is an unattainable dream, beyond the financial
reach of the average person. The owner-builder process can change that.

If the median new home cost is $270,000 and the mortgage payments are
$1,800 per month, only people with household incomes of $5,400 per month, or
$65,000 per year can qualify (rule of thumb: income should exceed three times payment). This amount of monthly income ranks at about the 60th percentile of U.S.
households. At a savings of 35% of construction cost, that same average home could
be erected for $200,000, requiring a monthly payment of $1,200 and a household
income of $4,200 or $50,000 a year, hitting the 55th percentile of incomes in the
U.S.

For those who are just trying to enter the market in the smallest possible
way, you may be looking at a project in the $100,000s. Kyle and Rachel Simons purchased a starter home for $125,000 and in two years were thrilled to know its value
had climbed to $150,000. Look at those numbers. The $125,000 mortgage requires
a monthly payment of $950 for a household income of $2,850 a month or $32,000 a
year. This comes in at the 35th percentile in the U.S. Saving 35% on the construction
portion would put that project at about $91,000 for a monthly payment of $700. The
qualifying household income would be $2,100 a month or $25,000 a year, about the
25th percentile of U.S. households.

Saving 35% or more on construction costs can make home ownership available to an additional ten percent of U.S. households or about twelve million more
families. Ownership of nicer homes is also available to a wider group. I live in an
exclusive neighborhood that includes the ranch of former football star Steve Young,
and the home of TV personality Donny Osmond. This is a neighborhood far above
our means. Typically, the mortgage on a home like we live in would require a monthly
income of $10,000. Because we saved $180,000 on the home, we were able to save
$1,000 on the monthly mortgage. Multiplying times three, we were able to get into
the house at an income of about $3,000 a month less than otherwise indicated.
Other Benefits

We saved 45% building our home, but the benefits didnt stop there. Our
satisfaction has been enormous real daily pleasure in our new home and a sense of
pride that we accomplished what we set out to do.

In doing this, we didnt cut any corners. In fact, we always chose the upgrade
while trying for the best deals we could get on the improved version. We upgraded the
carpet, cabinets and appliances from the original specifications. We bulked up the
framing, the insulation, the wiring and the concrete work. We upgraded the fixtures
and added flexibility for future upgrades to the house as each opportunity presented
itself. In many cases, we found an upgrade available at the same or lower cost than
the going price for standard levels of finish. For instance, we actually saved money
shifting from Corian to granite slab countertops when a bargain arose.

As your own contractor, you get to buy cafeteria-style. You may have things
you want to do that vary from the norm, and which save labor dollars. You dont
have to argue the merits with a contractor, like using pre-built roof trusses instead of
stick-built roofs. Or using structural insulated panels or insulated concrete forms
instead of conventional stick-built exterior walls. You can realize increased savings
on labor because you negotiate with each trade directly.
also are looking

at it as a great
new adventure...
one which I am
eagerly waiting to
start. Have faith!!!
Stephanie in Las
Cruces, NM

You get the extras you want without the surcharges occasioned by fixed-price
bidding. One of the pleasures of our new home is ceiling fans. They can move the heat
out of a bedroom quickly on a summer evening and provide a very pleasant breeze
through a summer night. Builders will add ceiling fans as upgrades to custom homes
at upwards of $350 apiece. We put in each high-end fan ourselves for about $90 and
each economy fan in childrens rooms for about $45. At that price we installed as
many as we wanted, and controlled the quality closely.
We have four
children 6 to 12
years old. We
just started our
foundation, and
it seems like a lot
of the pressure
has let up. I think
the hardest part
so far has been
all the stuff before
construction, but
we have only just
begun so that
could change.
I think if youre
pretty organized
you can do it.
Good Luck.
Denise in Elk
Grove, CA

We saw just the right vinyl siding at a home & garden show, and met an
award-winning craftsman to install it. We removed the original siding subcontractor
from our plans and engaged the new craftsman without a hitch. We found a solid
vinyl deck material we wanted to use. We negotiated for a contractor price, and got it
installed at far below market value. In the course of construction, other ideas
and improvements occurred to us. We implemented them without having to negotiate with a contractor. We found many bargains, and exploited them on the spot.

There are unexpected benefits when you build your own house. You have
control over quality and features. You get inexpensive extras. You ensure low maintenance and ease of repair. You control energy-efficiency and comfort. You derive a
continuing sense of accomplishment, make new friends, experience family and personal growth and gain prestige.

In the course of interviewing architects for The Owner-Builder Book, I talked
with an architect from Louisiana who was curious about our owner-built home. I
described the specifications and asked him what a house like ours is worth. He said
that in his market, our home would appraise for at least $190 per square foot. After
being told so often that one cannot achieve a success like ours, this brought me a deep
sense of satisfaction.
Myths and Propaganda

One of the biggest satisfactions in owner-building our home has been that
we beat the system. The system tends to be a closed one, reserving the privilege
of owner-building to construction industry insiders. Many myths about ownerbuilding have been spread about as propaganda by general contractors. Even some
construction lenders have voiced the stereotypes you see here.

Since contractors have their own industry groups and associations with their
own publicity machines, they can perpetuate attitudes about something like ownerbuilding that they consider to be a threat. Very little exists to counteract the flow of
misinformation. Owner-builders have no organized voice, no association, no official
Sources Say
Here are the
major ways to
save money: Real
estate commission, 7%; Builder
markup, 20%;
Savings on material purchases,
4%; Cost-saving
construction, 2%;
Doing work yourself, 9%; Total: up
to 42%.
From The Complete Guide to
Contracting Your
Home
(See page 263)
Journal
Just got the call

from the bank
They have our
appraisal in hand
and plan to close
on the construction
loan tomorrow!!
We had to fire
the first appraiser
because she just

didnt seem to
want to pursue
comps. She
dragged her feet
for almost two
weeks and made
no progress.
We also found
a new bank
because the last
one was limiting
the appraiser to
a 10-mile radius.
Anyway, the
appraisal came in
at $315,200. By
our calculations, if
we stay on budget
(yeah right!) well
be looking at
almost $100,000
in equity upon
completion!! Now
THATs motivation
enough for me
to pour as much
sweat as possible
into this project!
Im re-reading The
O-B Book for the
third time...
Danny in Sparta,
IL
Sources Say
You will get more
of what you want
in your house, with
fewer hassles,
when you act as
your own general
contractor. Most
contractors are
very staid. They
like to do things
the same old way.
This often causes
problems for the
buyer who wants
something done
a little differently.
With you as the
general contractor, you get things
done as differently
as you like.
From Be Your Own
House Contractor
(See page 263)
magazines, no propagandist. As a result, many of the following attitudes have come

to be accepted as fact.
You Cant Save Any Money

This is a widely circulated idea that has no basis in fact. Every owner-builder
that I surveyed saved something over the cost of a general contractor-built house. I
know of several instances of civilian O-Bs (non-construction people) completing
their new homes with 50% equity or more. Among construction tradesmen who
owner-build, instances exist of savings of 60% and more in terms of cash expended.
(Part of their savings is due to trading labor with other tradesmen.)

This is not to say that O-Bs dont exceed their construction budgets. Budget
overruns are common in all branches of construction. Mistakes, surprises, and
upgrades caused my own budget to go over by $25,000. But I still saved 45% against
contractor estimate.
The Professional Builder Passes Inspections With Flying Colors

Building inspectors tell me they catch instances of contractors cheating
frequently, although less so on custom homes. A veteran general contractor whom
we hired to do air conditioning and furnace work caused me one of my few failed
inspections. He had framed up the furnace closet three inches too shallow to pass
code. He had been general contracting and doing furnace work for 40 years. He had
to re-frame the closet, and since I was dumb enough to pay him by the hour, I got to
pay for his indiscretion.

Owner-builders on the other hand are regarded as a good bet by inspectors. They are building for themselves, not to protect a contractors bottom line. As a
result, they are seen as interested in quality, durability, and safety.
Contractors Get Better Prices Than the Public

I had trouble getting a good price on the lumber for my house. My initial
quote came in at $26,000. A general contractor I used as an advisor sent me to his
lumberyard to get his prices. He had built many homes with his lumber dealer over
the years. The dealer priced the package at $24,000. I was pleased, but decided to give
it another try. Then a prestige builder friend of mine who buys $300,000 a year in
lumber had his lumberyard estimate it. This time the price came in at $18,000. The
materials were identical, and I was able to beat the price of my construction advisor
by $6,000, and the initial quote by $8,000. The advisor was amazed. He had never
questioned his prices at the lumberyard.

A retired cement contractor told me that he had a deal with the cement plant
to buy concrete at $30 a cubic yard, years ago. At the time, contractor prices for
concrete were $48 a yard. He kept his prices a secret by signing a non-disclosure
agreement with the plant. His conclusion: There are contractor prices, and then
there are contractor prices. This contractor got wealthy by sourcing the material at

secret prices, and passing it on to his customers at street prices. Note well that any
contractor who gets a special price may have no motivation for sharing his savings
with you.

There is always a better price to be had, usually through research and effort.
Chapter 9 provides you a guide to construction buying at a savings.
Contractors Take the Risk and Relieve the Owner of That Burden

Author Ronald Horne says that increasingly, contractors work without risk:
There is no risk for the builder any more. This is particularly true if a home is built
on a fixed-bid contract, as 90% are. If a contractor agrees to a fixed price with you,
he knows that he can meet it because he has control over materials and workmanship, and can cut corners to protect his profit. For the owner, the risk is the viability
of the single greatest investment he will ever make. For a review of relative risks, see
Chapter 16.
Contractors Can Get Better Quality Materials Than You Can

One contractor told me that owners were liable to get crooked lumber
because they dont know any better. That wasnt a problem for us. Before we signed
our lumberyard credit agreement, our framer advised us to cross out the paragraph
that said we had to pay a restocking charge for any returns. He then inspected all the
stock that was delivered, and refused to accept anything that was hard to work with.
I hired the framer; the framer checked the lumber.
The Contractor is There to Protect Your Interests

The interests of a contractor and his customer are frequently at odds. The
customer wants every upgrade and attention to detail possible. The contractor wants
every bit of his planned profit, and that means economizing on costs. Most of these
trade-offs are decided by the contractor during the course of construction. Who do
you think he decides for?
Owner-Builders Build Shoddy, Cheap Houses

This makes no sense. The owner wants the best for his comfort and his
investment. Unless he is doing the work himself (not recommended) he is contracting for the best quality he can get. In reality, owner-builders are known for upgrades
and extras, not for shortcuts and cheating.
Owner-Building Isnt Legal

Unless you buy land in a developer-restricted subdivision, there is no law
against owner-building in the United States. You must own the land, obtain necessary permits, and make timely requests for municipal inspections. You are expected
to occupy the house. You may be required to carry certain forms of insurance.
Readers Say
Mark, sorry for
not keeping you
posted (smile).
This has got to be
one of the easiest
things I have ever
done. This is the
first home that
I have built by
myself. My father
built the home he
lives in (1989).
The exterior is
complete (3 sides
brick, HardiPlank
in the rear). Finish
grading will
start next week.
Cabinets have
been installed.
Hardwood
flooring installed.
Interior trim to start
tomorrow.
2,700 heated sq.
ft ranch on a full
daylight basement. 4 br, 3 ba,
split configuration.
Formal (whatever that means)
livingroom, formal
diningroom,
great room. 3-car
garage (675 sq
ft.).
The hardest part
of this project
was planning.
The home was
designed on a
slab, I made
changes to
accommodate
a staircase. I
planned on using
an engineered
floor system, but
decided to build
using dimensional
lumber (that was
fun).
At this time, I
am building the
home at approx.
$77/sq. ft. We
(my wife) decided
to put in a few
updated features
(granite countertops, stainless steel

appliances, etc.).
Land was purchased for $54K
(2 acres). Subject
to appraisal, value
$365K.
We will do
this again for
ourselves in 2
years. I have been
approached with
building for others.
As a side note, I
am dealing with
the reality that not
everyone will do
what I am doing.
Not that they
cant, but that they
wont.
There was a
little fear when I
started, but the
fear left me after
beginning and
turned into the
desire to finish.
I get frustrated
trying to convince
others to do the
same.
You Have to Have a License

Not to build your own house. We know of one state where you pay a small fee
to get a G.C. license, but there are no examinations and no special qualifications. In
a few areas there are restrictions against doing some of the mechanical trades yourself, (electrical, plumbing, heating and air conditioning). But even those restrictions
are rare.
Banks Wont Lend to You Unless You Have a Contractor

In nationwide telephone interviews of bankers, I found that 15% of banks
refused to make construction loans to owner-builders. 40% made the loans with
some restrictions. 45% made the loans with no special restrictions. Chapter 11 shows
you how to overcome any restrictions.
You Cant Possibly Get It Done on Schedule

My survey of owner-builders indicates that the average planned schedule of
completion for a custom home was about nine months. Average actual time was nine
months. About half of my respondents finished in under seven months. Vince Miner,
owner-builder extraordinaire, finished his 4,000 square foot house in four months.
Gary Ziser built and occupied a similar home in three and a half months.
You Will Save Enough In Interest Alone To Pay a Contractor
I did not do this

alone. I had great
subs. I have seen
the work of all the
subs that worked
on this home prior
to hiring them.

My carrying charges on a seven-month $190,000 construction loan were an
average of $780 a month. The National Association of Home Builders says average
completion time on average contractor-built houses is six months. As it took me
seven months to build, completing the house in six months would have saved me
only $780 in interest.
I feel honored to
be part of this
project. I am 39,
married with one
child. Let me know
if you need more
info.
Phillip C. Wallace

But many contractor customers complain about how slow contractors are
to finish a job. Particularly on custom homes, the contractor time to complete can
be much longer. My neighbor built a 9,000 square foot dream home with a contractor. The original schedule was 14 months, and they got the job done in a mere 30
months.
Sources Say
Unless special
licensing is
required in your
area, you are just
as much a builder
as the next guy.
Contracting Your
Home
(See page 263)
You Can Make More at Your Job Than What a Contractor Costs

The average American saves less than ten percent of his salary. However, all
of the savings you realize building your home go directly to your net worth. If you
build a $350,000 house for $250,000 you enrich yourself by $100,000 in equity. If you
make $100,000 at work, you enrich yourself by less than $10,000 on average, a savings rate of less than $1,000 a month. The average owner-builder I studied completed
their house in seven months. Which is better, $100,000 saved or $7,000?

Few people have to quit their jobs to act as their own general contractor.
However, you will have to make some choices during the construction period.
The Subs Wont Show Up for You

A good portion of this book is devoted to the problem of managing subs
effectively, starting from subcontractor interviews and references, to the bidding
process, to on-site management. Some of the O-Bs I interviewed had no problem
with subs showing up. Much more to come on this subject.
You Cant Do It Because You Lack Know-How

You may indeed lack construction skill. However, contracting a home is not
a construction skill; it is a management skill.

One contractor told me that no one should expect to come in and do what
a contractor does any more than expect to do what a doctor does. He said, What if
my wife needed surgery do you think I could cut her open with a knife and start
messing with her organs?

I have to laugh at the gruesome illustration. I can just see a couple hearing
this harangue and the wife squirming at the vivid analogy. And then placing themselves wisely in the hands of this surgeon of brick and mortar.

But the analogy is a scare tactic and hardly apt. This builder went on to say
that he had seen windows framed into owner-builder walls without headers, and
later on, the walls would sag, he said. Well, O-Bs rarely do their own framing. This
is the province of the framer. It is inspected by the inspector. You choose the framer
you trust.

A better analogy is that of a homemaker. A builder is more like a homemaker
than a surgeon. He shops or should shop for good values; he coordinates the efforts
of different members of the group, and manages a budget. The task is a management
task, not a medical one.
Owner-Builder Misconceptions

For their part, prospective owner-builders labor under some misconceptions,
too. Lenders tell me that O-B applicants for construction loans are almost never prepared. They tend to underestimate the size of the task, and overestimate their own
ability to contribute. Many dont understand the risks involved and how to manage
them.
I Could Do This With My Free Evenings and Weekends

The general contracting task will actually take owner-builders about one
person-year of effort, though you could spread the planning part over several years
O-B Connections
John, I am currently in the process of building
an addition to my
home in Pleasantville, I would be
glad to share info
with you. I was
going to move but
in Westchester
County everything
is so expensive,
im sure in your
area prices have
increased a lot
also. O-B is a
great way to
save, contractor
by me are insane
with their prices,
I would highly
recommend you
look for individual
people to do the
phases of construction. you will
have to do some
work and juggle
multiple tasks
but the saving is
large and in NY
even better than
what the people
on this forum say.
Although some
of the prices
these people are
reporting seem
unattainable. Id
be glad to share
any contacts with
you. Since we
O-Bs here in New
York are few the
only way to show
these contractors we can do
it without them
is to do it on our
own. Good Luck.
P.S. Youll freak
when you get the
prices back from
the GCs I could
have built a new
house for the price
they were quoting
on my addition.
Steve from Pleasantville
10 Chapter 1: You Can Save $100,000

Sources Say
Many would-be home builders are
discouraged from attempting to build
their own homes because of fear due
to the mystique of modern construction
practices.
From The Complete Guide to Contracting
Your Home
(See page 263)
of time. Most of that can be done on evenings and weekends. The

construction phase requires about four hours per working day
of the O-Bs time. At least half of that during normal working
hours.
Sources Say
We (contractors) arent tradespeople
or very handy do it-yourselfers. We are
professional managers of people, time
and money. Those are the required
skills for managing your own renovation
project.
From Be Your Own Home Renovation
Contractor
(See page 263)

This could be true for someone who has done dozens of
houses and had systems and routines in place to manage the process. The construction phase of building a house has been called
Mr. Toads Wild Ride for good reason. Many things will go
wrong if not managed, and many opportunities for improvement
of house comfort, longevity and value will be missed.
Sources Say
You and the Law
Dennis Beaver, Attorney at Law For the
Times-Standard
PATIENCE BIG MISTAKE WITH NEW
HOME BUILDER
Dietz-Crane builds homes all across
America. They are part of the D.R.
Horton family of construction firms, and
describe themselves with these words:
Pride, Care and Craftsmanship go
into every home we build. Come meet
the builder other builders talk about.
Business is good for Dietz-Crane, and
for D.R. Horton, very good. Unfortunately, what is good for them -- a home
construction universe on steroids -- may
not be especially good for some of their
customers.
Two years ago in June, Andy Tang
and his wife moved into a very attractive Dietz-Crane home in the Rancho
El Mirage subdivision, near Phoenix,
Arizona. Our house came with a
new Whirlpool fridge which had been
installed sometime before we moved
in, Andy Tang stated in an e-mail. The
freezer could not make ice, and the
rest of the fridge was lukewarm. After
going through all the troubleshooting
steps in the manual, I called Dietz-Crane
customer service, and instead of immediately just exchanging this obviously
defective refrigerator, I was told to deal
with Whirlpool, Andy wrote. Remember, this is June, Phoenix, and we were
looking at daily temperatures well over
100. I also had a fridge full of food that
would go bad, he added.
Once I Get the Ball Rolling, the Project Will Manage Itself
Subs Will Show Up as Promised and Do What They Promised

Almost never.
There Is Only One Way To Do It

Some O-Bs will not take counsel from the subs they hire
for possible improvements in design or approach.
My Construction Drawings Provide an Infallible Guide for

the Subs

One key to saving time and money is to be decisive. Many
questions as to the owners desires and intent arise every day on a
custom home project, in spite of detailed drawings.
The Subs Know What They Are Doing and Take Care of
Everything

One O-B went on vacation and returned to find that the
roof had been placed on his house, but that the second story had
been omitted.
The Subs Will Do Everything They Can To Save Me Money

Most savings come through persistence and planning.
Help from any quarter is welcome, but it rarely comes spontaneously.
Chapter 1: You Can Save $100,000 11
Qualifications of an Owner-Builder
1. You come to the job each day prepared to fire
people if needed.

This consists of being clear about what you expect and
holding subs accountable for it. You are writing the check, you
are in power. You stage your payments so that you can pay for
performance to date and release the sub if necessary. You can
put your foot down if needed.
2. You are somewhat familiar with construction.

You have interest in the subject of building and some
aptitude, and are willing to learn. You talk the talk of the business. This can be learned from building shows on television,
from builder magazines to which you can subscribe, from
interviewing subs, and from observing building projects,
among other places. Even though you may not perform a given
trade, you can talk about it knowledgeably.

However, overemphasis on the minutiae of building
knowledge can interfere with the exercise of good planning
and management, your principal tools.
3. You communicate well.

You make clear your expectations, and make certain
they are understood. You can talk to all kinds of people. You
can win loyalty and build relationships with the team. You are
capable of making endless phone calls to check on things.
4. You pay patient attention to detail.

Winston Churchill, who liked to lay brick on his English
country estate and was a competent oil painter, said, Genius
is the capacity for taking infinite pains. The tiny details done
right add up to a distinctly superior house. The O-B must be
prepared to take the time to see that things are done right.
5. You have job flexibility.

Either you or your spouse need to spend four hours a
day or so on site during construction. Many construction lenders interview their applicants about the circumstances of their
employment to ensure this flexibility.
Construction crews were still in Andys neighborhood, working on other houses, so it

would be logical and most customers would
expect that, once notified of the problem,
the nice folks at Diet-Crane would simply
swap refrigerators. That, of course, would
immediately solve the problem, but Andy
didnt know that common sense and problem solving just seemed too complicated a
notion for Americas Home Builder.
I pleaded with the customer service people
to please just exchange this broken fridge!
It was unbelievable, they were building
other houses down the block, installing
appliances, and someone could easily have
just brought me a new refrigerator, but they
refused! While they were generally polite,
I had a tough time understanding how
any responsible home builder could sell a
customer a new home and not immediately
swap out a new but defective refrigerator for
one that worked I mean, lets get serious
here, I as the customer had just paid them
a small fortune for a new house that should
have had a functioning refrigerator, not a
broken one. I did not know it at that time,
but was in for more surprises with DietzCrane and Whirlpool, Andy told me during
one of our many phone conversations.
2 Years and 5 Repair Attempts Later...
Over the next two years from June 2003
to June of 2005 Andy Tang lost two
refrigerators full of food and put up with 5
repair attempts by Whirlpool service technicians. It gave new meaning to the words
incompetent service, he told me. Even after
being told by both Whirlpool and DietzCrane employees that his fridge should
have been replaced, it seemed that was not
to be. One technician told him there was
a slow Freon leak and the fridge needed
to be replaced, but neither Whirlpool nor
Diet-Crane did what common sense called
for. Not until Andy was put in touch with this
column on June 13th.
Nice Doesnt Mean Action
I immediately contacted both Dietz-Crane
and D.R. Horton management in Arizona
and Texas, asking these questions of
everyone I spoke with: What is your policy
concerning immediate replacement of a
customers defective refrigerator? Why was
Andy put through two years of nonsense?
Everyone I spoke with was polite, friendly,
assured me that I would be called back
immediately, but that seldom happened.
In fact, they were sooooo nice, and I
concluded that is their way of dealing with
complaints; be nice, but thats about all, if
Andys situation was typical case.
12 Chapter 1: You Can Save $100,000

One of their Customer Service Coordinators
-- Bill Miller, who works the same development where Andy lives, stated, I cant
believe this! I will call you back in 24 hours.
He should have had a new refrigerator.
I never did hear from him again, despite
being repeatedly told, We will radio him at
once and he will call you right back.
Want To Buy A Home You Cant Sue Us!
One of the more disturbing things I learned
from Andy was a form that Diet-Crane
salespeople made him sign. It said I
am waiving my right to sue for breach of
contract or other defects with the house,
he told me. It was sign that form or we will
sell your house to someone else, leaving
no choice as we wanted the house. While
I do not think it is legal, and have heard of
other builders sued even with the same kind
of language in their contracts, it seems to be
high pressure and not very ethical, Andy
Tang concluded.
Is Dietz-Crane any worse than other home
builders? Its difficult to say, but if they have
behaved this way where its only a refrigerator, I have to wonder what it would be
like with much more severe construction
problems. In fact, Andy did have another
problem a water shut-off value that was
stuck in the open position, making it impossible to turn off the main water source to his
house. We will get right back to you on
this, he was told. It never was to be, and
Andy repaired it himself.
The last time I heard from him was on
Wednesday, June 29th. Thanks for your
help, because they just delivered and
installed my new refrigerator!
It is no doubt true, just like their advertising,
D.R. Horton is the builder that other builders talk about. I just wonder what they are
saying...
Times-Standard Eureka,CA
6. You have determination and problem-solving

ability.

You dont lie down at the appearance of the first knotty
problem. There are several every week during construction.
You will stick with them until they are solved.
7. You are financially motivated.

Parkinsons Law is that work expands to fill the time
allotted to it. A corollary is that a construction budget expands
to the borrowing limit of the owner. If your limit is low, you
will be more ingenious in finding ways to meet it.
8. You are organized.

If not in general, at least for this project, you are organized to a fault. You will tend to the agreements, paperwork,
schedule and budget tirelessly.
9. You are a good shopper.

You can tell differences in quality, can find bargains,
and wont overspend on anything.
10. You are a good student.

You watch well and learn quickly. You can get answers
to your questions.

I possessed, or Elaine did, nine out of ten of these
qualifications, though we had to work at number two. It cost
us dearly that I was utterly incapable of number one. If you
lack one or more of these, perhaps you can hire someone to
compensate. In my case, an independent inspector would have
been a great help. See Chapter 14.
Chapter 2: Learn The Wealth-Building Secret

People in Construction Know the Secret
eve all heard of inside information and insider trading. In building homes, industry people have the inside track on a wealth-building
secret, the building of houses for themselves. Probably half of all ownerbuilders are construction people. For them, owner-building is something of a side
benefit to their profession. But you shouldnt be excluded from the privilege if you
arent a construction person.

The average Americans net worth is equal to about four times their annual
compensation. Thus, if you make $75,000 a year, you would hope to have a net worth
of $300,000. And many people toil their entire lifetimes to develop it. But people in
construction often have homes that contribute that much by themselves to their net
worth.

One of the general contractors I interviewed was an executive in a large construction company. He owner-built his $800,000 house with help from company
tradesmen for $550,000. It was finished in four months. He added $250,000 to his
wealth practically overnight. This approximates the net worth that many of us work
for over our entire lifetimes. For him it was an employment perk.
Readers Say
I was a plumber
for 21 years. Im
going to build
a house for
$250,000 and
the one I saw built
to the same plans
on a lake sold for
$1.2 million.
David D.
Lilburn, GA
Sources Say
The Well-Built
House has a
good section on
choosing a lot.
(See page 263)
Sources Say
Your New House
lists 20 questions
to ask before
buying a piece of
land such as, Are
there any impact
fees?
(See page 263)
14 Chapter 2: Learn The Wealth-Building Secret

Sources Say
Better Houses,
Better Living has
a good chapter
on lots.
(See page 263)
Readers Say
Mark, I enjoy the
website and learn
a lot from reading it. The book
inspired me to
do my first house
two years ago.
Success on the
first house inspired
a step-up plan that
is still evolving.
I purchased
another lot in just
as we finished the
first house. Since
then, I have split
the lot and built on
both halves. We
just moved into
one of the houses
and I sold the
other house to my
friend and helped
him owner-build.
The strategy was
effective and I
hope to repeat it
again on the twoyear cycle.
Here is how it
worked: LOT 1:
$96K + Construction Cost $294K
= $390K. House
1: Sold FSBO at
$700K two years
later.
Then bought new
2.5-acre lot at
$225K OwnerFinanced
Next year split off
1.25 acres and
sold for $125K
This year built on
remaining 1.25
acres ($100K cost
basis) + $335
construction cost =
$435K

One of the subs on my house built his own 4,500 square foot house for $110,000
plus land, making a total cost of about $150,000. It took less than six months. Yet that
house has a valuation over $315,000. In six months, he added more than $165,000 to
his net worth!
Free and Clear Step-Up Strategy

As an owner-builder, you may not feel very rich when you take on the
increased mortgage payment that comes with your larger home. In fact, you may not
see the financial effects until you step up to a house with a reduced mortgage payment or no payment at all, what I call the Free and Clear Step-up Strategy.
Custom Home Step-Up Strategy: Shrinking Payment

House
Cumulative
O-B Equity
G.C.s
Estimate
with Land
G.C.-Based
Monthly
Payment
Borrowed
Net Cost to
Owner-Build
O-B
Monthly
Payment
Two-Year
Sale Price
Current
Value of 1st
House
First
$100,000
$445,000
$2,109
$224,250
$1,371
$489,500
$489,500
Second
$265,250
$592,295
$2,710
$42,743
$299
$651,525
$538,450
Third
$608,781
$788,345
$4,362
$0
$0
$867,179
$592,295
Equity
after 6 yrs.:
$867,179
$186,718
Assumptions: 5% annual appreciation, 5% inflation in constr. costs; 7% APR interest-only mortgage, 35% ownerbuilder construction savings, 10% increase in successive house scale, self-sold.
First house example is a 3,000 square foot home at $115 per foot with paid-for land valued at $100,000.

The table above dramatically illustrates the financial divergence between the
O-B and the typical custom home buyer. By the end of the sixth year in this example,
the owner-builder has more than quadrupled the home equity of the GC customer.

I had heard it said that you can own your home free and clear if you build
seven of them, over 14 years. South Carolina owner-builder Alex Acree says that you
can do it in three builds. My calculations say that the average owner-builder can do
it in three builds over six years under the assumptions shown above. The analysis
assumes that the owner-builder starts with the land paid for or perhaps proceeds
from a previous home $100,000 in initial equity. It assumes that the initial ownerbuilt home is a 3,000 square foot custom home with a market value of $115 per square
foot. In this example, the O-B takes advantage of increasing equity by making a
smaller monthly payment on the second house.

The owner-builder in the next scenario could own a home free and clear
after two builds in four years through the simple expedient of keeping the monthly
mortgage payment level. This means that even though the required mortgage payment shrinks on the second house, the owner-builder intentionally makes the same
monthly payment. The non-required portion of the level payment goes to reduce
loan principal each month. This builds equity faster, and in the example below, the
second home is owned free and clear after two years of payments on the small residual balance of $37,943:
Chapter 2: Learn The Wealth-Building Secret 15
Custom Home Step-Up Strategy: Level Payment

House
Cumulative
O-B Equity
G.C.s
Estimate
with Land
G.C.-Based
Monthly
Payment
Borrowed
Net Cost to
Owner-Build
O-B
Monthly
Payment
Two-Year
Sale Price
Current
Value of 1st
House
First
$100,000
$445,000
$2,109
$224,250
$1,626
$489,500
$489,500
Second
$270,050
$592,295
$2,673
$37,943
$1,626
$651,525
$538,450
Third
$646,221
$788,345
$3,766
$0
$0
$867,179
$592,295
Equity
after 6 yrs.:
$906,203
$195,118
Assumptions: 5% appreciation, 5% inflation in constr. costs, 7% APR conventional mortgage, 35% O-B construction savings, 10% increase in house scale, self-sold.
First house example is a 3,000 square foot home at $115 per foot with paid-for land valued at $100,000.

Here the owner-builder approaches five times the house equity of the GC
customer after six years, through continuing to bank the level payment amount after
owning free and clear.

In my case, I will achieve a free and clear home in two builds because house
and land prices went up dramatically fast at the right time for me, because I had
a low mortgage rate, because I saved 45% on construction of the first house, and
because I have waited longer than two years between builds. Its not just me over
the past five to ten years in the U.S., conditions have been very favorable against these
assumptions, and the average O-B in our survey anticipates being free and clear in a
stunning 2.25 builds.

Author Marian Robinson says: Owning your own home free and clear
thats the key to all the rest. Once you have your snug harbor, your safe base, all else
comes easy. You can tell the rest of the world to go to hell if you want, once you own
the roof over your head.

More than half of the owner-builders I studied have built or plan to build
more than once. As one wit put it, some believe that You have to build two houses
to get one right. Some O-Bs are motivated by the hands-on satisfaction of trying
new trades or by the pleasure of negotiating better deals. I found many ideas building my first one that I am anxious to include in our next house. My net worth rose
dramatically during this project, and that becomes a major motivation to repeat.

One owner-builder who is a commercial freight pilot contributed this case
study example of the financial effects of stepping up:
Case History
Two pilots, one with a commercial airline, one with freight. A makes $200,000
a year. B makes $100,000. Four years ago both bought houses. Both paid
$190,000. A started paying his mortgage down, owes $150,000 and his house
is worth $200,000. His equity is $50,000. B sold the $190,000 house for
$300,000 in a stronger market. He then built a $300,000 house for a mortgage
of $205,000. That house is now worth $375,000. His equity is $170,000 more
Moved into house

#2 appraised at
$750K
Net Gain so far
$615K.
This is not too
bad for working
a part-time job
for two years.
Rapid real estate
appreciation
was also a factor
over the last two
years, of course.
This is a factor
that cannot be
counted on again,
though. Given
these results, I am
shopping for land
again and looking
for the next O-B
project.
The timetable
for each house
has been pretty
similar. Finding the
land, defining the
project, doing as
much engineering
and designing
as possible and
closing escrow
has taken about
90 days per
project. Permitting has taken 12
to 14 months!!!
Construction to
the C of O stage
has taken six to
seven months,
primarily working
on the weekends
with 10 to 12
person crews
made up primarily
of moonlighting
subcontractor staff.
Then landscaping
and swimming
pool construction
add another three
to four months
of less intense
work, bringing the
beginning to end
timeline to nearly
two years.
Again thanks for
the excellent book

which helped me
to overcome my
reservations in getting started on the
journey.
Michael Wendtland, P.E.
O-B Connections
We are moving
along quite nicely
these days. We
have drywall in
and have the
installation of flooring and cabinets
scheduled. The
interior doors just
came in as well
and are being prehung right now. I
think I see the end
in sight, although
it is still a couple
of months down
the road. Despite
all the trials and
tribulations, we
enjoyed doing
this so much that
we have already
purchased another
property that we
will demolish and
rebuild as soon
as we are finished
with our current
O-B.
Readers Say
When we bought
our house, it was
in the framing
stage, so my
wife and I did
all the picking of
wallpaper, carpet,
lighting and
paint. I see just
from that little bit
how much work
we did for the
builder, while we
paid him dearly
for the privilege.
I have worked
construction while
growing up, but I
didnt realize how
much opportunity
there was to save
on the price of a
home.
Kevin T.
Lawton, OK
than three times what A has. He lives in a nicer neighborhood now with half the
salary that A earns. And he has something for retirement.

Owning your home free and clear knocks out more than a third of your
family budget, while potentially improving your level of home comfort and utility.
The free and clear strategy reduces your need for salary. For instance, if you have
a gross salary of $100,000, your income after taxes is $60,000. Your discretionary
income after taxes and housing is $27,000:
Percent of Gross Income
Gross Salary:
$100,000
100%
Net Income:
$60,000
60%
Housing Costs:
$33,000
33%
Discretionary Income:
$27,000
27%

Turning this on its head, you would obviate the need for $30,000 if you eliminated mortgage costs from your budget. (You still have to pay property taxes and
insurance.) Your discretionary income is still $27,000, but you can live on a much
lower salary:
Percent of Gross Income
Housing Costs:
$3,000
7%
Discretionary Income:
$27,000
63%
Needed Income:
$30,000
70%
Needed Salary:
$43,000
100%

This means that if you eliminated $30,000 in annual housing costs, you
could eliminate $57,000 in needed salary.
Owner-Builder Exclusive

Due to the U. S. Taxpayer Relief Act, U.S. owner-builders are in a unique
position to profit from their homes. The law allows you to sell a home every two years
with no tax consequences (unless your profits exceed $500,000 for a married couple).
In actual practice, only owner-builders can sell a home profitably every two years. An
ordinary homeowner who buys a custom home usually does not get enough appreciation in two years to profit from selling the house (at 5% appreciation per year,
the 25-year historical U.S. average.) The in-and-out costs of Realtor commissions,
mortgage origination fees and closing costs consume the profit of two years of house
appreciation for typical homeowners.

This leaves the owner-builder in a unique position to profit from the provisions of the Tax Law. Because O-B equity stems from building at a reduced cost,
owner-builders have a handsome profit to reap, tax-free, as often as every two years.
If you build a $450,000 house at a savings of $125,000 every two years, you can enjoy
a tax-free bonanza of $65,000 each year until the law changes. Since the $65,000 is
tax-free, it amounts to the equivalent of $110,000 of ordinary taxable income.
Retirement Plan

This tax benefit builds your net worth along the way at a dramatic pace. In an
economy where less than a quarter of retirees are financially independent, you have
three very pleasant options during retirement.
Option One:

According to the banking industry, Social Security and your company pension or 401K will typically provide less than two-thirds of the income youll need
for retirement. Since people spend about a third of their income on housing, if you
have your home paid off via your step-up plan, you only need two-thirds as much for
living expenses. You can retire without worries on Social Security and your pension
or savings. You stay in the dream home you built for yourself.
Option Two:

After you own a home free and clear, you can continue to build and sell
residences as often as every two years and bank the tax-free profits. After about four
step-up builds over the course of a lifetime, with the value of the home you live in,
and with normal inflation, you will have amassed a net worth over one million dollars from the process. You are free to move into smaller retirement quarters or into a
facility providing residential care and live off your wealth.
Option Three:

Through a financial vehicle known as a reverse mortgage you could stay in
the house you own free and clear and tap the value of your dream home to lavishly
finance your twilight years. You draw payments monthly against the equity in your
home until the end of your life.
Open Up Your Veins

Money saved on the construction of your house is different and financially
more powerful than money you save buying groceries or insurance, or even paying
taxes. Your house is an appreciating asset, much like a savings account, but even
better. A bank wont credit you with $450 if you only deposit $350 into your account.
But you can build a $450,000 house for $350,000 and have the market count it as
$450,000. You can sell it for that much and keep the difference.

Money you save on building your house goes directly to your net worth. It
reminds me of the buffet at a recent Chamber of Commerce reception I attended.
I chided the caterer on the high cholesterol in the hors doeuvres including baconwrapped chicken livers skewered with toothpicks. She answered, Yup, you might as
well open up your veins and mainline the stuff. In a different way, you get to mainline money right to your net worth when you build a house. Everything you save goes
direct to net worth. No processing, no withholding, no deductions.
Readers Say
The work youre
doing is absolutely incredible. I
found your info on
lumber discounts.
If we had people
who had time to
shop around for
their materials
theyd save more
money than my
discounts can
produce even as
a contractor. The
techniques you
mention I never
get because I
dont have time to
go dig for them.
Everyone who
does spec building like me would
like to know the
techniques of
saving money in
building.
Larry T.
Driggs, ID
Readers Say
I built a fence, a
historic design,
for $12,000 and
a lady copied it,
with a contractor,
and it cost her
$50,000. Hysterical! I get great
satisfaction from
saving money.
Anyone can
spend money, but
its a lot tougher to
save it.
Karen C.
Kennewick, WA
Forums
I see that you are

using Countrywide
for your mortgage...do they
do owner-builder
loans? If so, what
do they require?
Thanks.
Brenda in Eustis,
FL
They do require a
GC or at least a
GC to oversee the
project. I have a

GC that is doing
my foundation
and excavation
and a few other
little things, and
so I just set up a
contract with him
to help me out
on the project on
hourly basis. He
was willing to sign
off on my plans
and budget; I
did get my own
builders risk and
liability insurance,
though.
Viler in Westminster, CO
A GC should be
responsible for the
whole project, not
just your foundation. Watch out
for this...when you
have an individual
subcontractor sign
off as a GC for
your project, you
can end up in
trouble. Michigan
has similar laws. If
you run into problems with your
project this could
come back to
haunt you. I tried
to get someone to
sign off as my GC
prior to doing my
own project and
my lawyer strongly
advised against it.
Something about
bank fraud and
problems with
building permits/
inspections.
Brad in MI
Many banks allow
General Contractors to act as site
supervisors for
owner-builders.
IndyMac, Wells
Fargo, Capital
City, Countrywide
and Mid-Country
to name a few.
There is no bank
fraud involved.

If the accepted market value for a custom home at your level of finish is $150
per square foot, and you build it for $100 a foot or for $90 a foot, you get to keep the
difference. Every bargain you find, every price concession, every savings adds directly
to your wealth.
D.S.D.E.

Benjamin Franklin made famous the expression, A penny saved is a penny
earned. He said this about 150 years before we had income taxes in our country. I
say now that a dime saved is a dollar earned. That is, you typically have to earn a
dollar to set aside ten cents. The savings rate in our country is well below ten percent,
thus when an American earns a dollar, he will save a dime, or less, of it. The rest goes
to payroll deductions, taxes, and consumption.

When I built my house, I discovered that my humble efforts at contracting
were far more valuable than my professional salary as a planning consultant. If I
earned $100,000 in salary, $10,000 or less, maybe much less, would make its way into
savings. But when I saved $180,000 on my house, it all went into savings, into my net
worth.

To have saved that much otherwise, I would have had to earn ten times that
amount, or $1,800,000 in salary, which would have taken many years. I call this principle D.S.D.E. or a Dime Saved is a Dollar Earned. Every dime I save building my
house would be the savings equivalent of ten times that much in salary.

Suppose you are making a mortgage payment of $1,500. How much goes to
equity? On the mortgage that I held after building, our monthly payment for principal and interest was $1,500, and only $80 went to equity, about five percent. But
the dollars you save building your house go straight to equity 100%. Say you are
building a $300,000 house, and the lumber is $60,000. If you find a way to get it for
$45,000, your savings of $15,000 goes straight to equity. It should cost $60,000;
but it costs $45,000. The savings reduce your cost but dont change the value of your
house.

This book will present this special style of economic thinking and how it creates a new view of money for you. DSDE thinking (pronounced dazdee) changes
the way you see both construction savings and costs on your home. If you can save
the $15,000 on lumber, you value that savings as much as you value $150,000 of
salary. If you made $150,000 a year it would take you a full year of work to save or set
aside $15,000. If you can save $15,000 on lumber through a few hours of research and
effort, you have perhaps saved the equivalent of twelve months of striving on a good
salary.

When you are into DSDE thinking, you multiply any savings times ten to see
the equivalent in units of salaried work. If you save $100 on a ceiling fan, was it worth
the hassle? If you consider it to be the equivalent of $1,000 in salary ten times the

100 dollars and it only took you an hour or two to find the savings, it was well
worth it. It may take you two days or a week to earn $1,000 at your employment.

When you are into DSDE thinking, you multiply any cost times ten when
you consider it. What if trash hauling service adds $1,000 to my construction cost?
That would reduce the equity on my house by $1,000. It would take ten times the
$1,000 or the equivalent of $10,000 of salaried employment to set aside that amount.
$10,000 in salary could be weeks or months of work. And I can haul away the trash
in a day or two. It would be well worth it to save that expense.

At 45% of the contractor-estimated cost of my house, general contracting
would have cost me $180,000 (contractor profit and overhead). The $180,000 cost
would have done nothing to change the value of my house. The house was worth
$450,000 in our market without a contractor, and it would have been worth $450,000
with a contractor. The $180,000 I saved on contractor costs went straight to equity. I
realized that I would have had to earn the DSDE equivalent of $1,800,000 to replace
that equity otherwise. That made me think twice about using a contractor. Especially
when in less than a years time I eliminated that cost. And you can, too.

Turn the DSDE principle around for a moment. Suppose you pay $150,000
for contractor costs on your house. Say it increases the cost of construction from
$350,000 to $500,000. Youve used up your cash for the down payment, so naturally,
you mortgage the amount to cover it. Your mortgage payments on the additional
amount add $1,000 to your monthly payment on the house. Since bankers multiply monthly payments by three or more to determine qualifying salary, you have to
make an extra $3,000 a month to qualify an extra $36,000 per year. Over a 30-year
mortgage you must make an extra $1,000,000 to cover an extra $150,000 borrowed.
Rock Star Wages

It is worth being conscientious in the management of your construction. You
are being paid handsomely to do it DSDE thinking means that savings of $150,000
equate to earnings of a million and a half dollars rock star wages.

For the time I was building my house, I made rock star wages. Over a tenmonth period, Elaine and I put in 3,000 hours of effort. A year and a halfs work for
one person. We saved more than $180,000 or about $60 for every hour we spent,
whether planning, shopping, or sweeping the concrete. The DSDE equivalent is $600
per hour in salary. In a normal work year, someone making $600 an hour will gross
$1,200,000 about what Donny Osmonds salary was in his pop music days. Ironically, Donny and another musical performing star (less famous) live in the neighborhood we now enjoy.

Why can I afford a house like these megastars? For a brief shining moment,
I made the equivalent of rock star wages, in savings on my own house. And you can,
too.
In most states an
O-B is allowed
to act as their
own contractor.
Sometimes a bank
may require a
GC to look over
things. Depending
on the contract the
GC is not responsible for anything,
other than what
he does. All the
GC is doing is
making sure the
O-B is handling
things properly
and giving advice
if needed. This
happens every
day in Florida and
other states. Many
homes are built
this way.
Phil in Gainesville,
FL
Readers Say
We are going to
meet two ownerbuilders this week
who saved over
$100,000 each
on their houses,
and we are
bringing a tape
recorder for each
session.
Kayla & Troy L.
Provo, UT
Readers Say
We built a 7,000
sq. foot home,
full brick, beautiful detailing, had
excellent people,
always on time,
very helpful. Our
plumber is going
to build and wants
to imitate us.
Columns, arches
throughout, a fabulous home with
60 windows and
glass doors. All
for $83 a square
foot.
Joan L.
West Mountain,
UT

Readers Say
We went up to look at our chosen lot last
Saturday, and found a car parked nearby.
We asked him what he was doing, and
he said he was in line for the lot sale. I told
him that the lots were going on sale next
Saturday. He said he knew, but he was in
line for it. We parked our car behind him
and will be in line for a week. Soon there
were six cars and several RVs. Sometimes it
takes that kind of thing to get your lot when
land is scarce.
Jim & Larene D.
Salt Lake City, UT
Sources Say
The tools you need to be your own contractor are in this book...The payoff is two-fold.
First you save moneyyou can save many
thousands of dollars by being your own contractor. Second, you earn bragging rights.
You can say, I built this home. And even if
you had help, youll be right!
from The Complete Idiots Guide to Building
Your Own Home
(See page 263)
Guerilla Economics

Take a moment to consider the widely disseminated
myths and propaganda about owner-building described in
Chapter 1. This is what you are up against. No one will simply
provide you with savings, although many will deprive you of
savings on your project in the blink of an eye. The constant
struggle over those savings is something like a war. And as in
war, the first casualty is the truth.

Your truth is that you can save an amazing amount
of money on the construction of your custom home and that
those savings go straight to your net worth. (The average O-B
in our survey saved about $180,000 on their house.) You must
hold on to this knowledge in the face of many naysayers and
much resistance. If you do you will prevail.

Your attitude may seem like a guerilla or rebel insurgent one to the opposition. Because it is. You need to stretch a
dollar to accomplish your goal, and you can. You may also need
to temporarily forego some income, and its worth it.

A lot of people are what independent inspector Joe
Stark calls checkbook rich, and savings account poor. They
cant owner-build because they dont have the patience and discipline to come up with the land cost. But your reward for your
guerilla savings efforts and attitude are a superior home and a
galloping net worth.
Chapter 3: General Contractors Arent

What You Think They Are
Contractor Games
Perpetuating Myths
ou call a general contractor for a bid on your project and he shows up in a

nice pickup truck wearing jeans and a work shirt and work boots. Perhaps hes
carrying a clipboard or a laptop. The impression is that of a tradesman, and of
technical expertise. The contractor will reinforce some or all of the Myths described
in Chapter 1. Most non-construction people would hesitate to question the word of
this expert.

The big myth is that you cant do without this technical expertise. Its a
specialized field, and you need an experienced specialist. But the work of a contractor is to contract, that is to hire and manage independent craftsmen, known as
subcontractors. His work is management work, much like the work of any of us who
have ever run a household with its myriad expenditures and activities.
Readers Say
Generals here
arent real anxious
to work on a fixed
fee basis. I got
disgusted with
what you had to
pay, and with the
lack of control.
Their propaganda
is: Youll mess it
up and itll cost
you more to fix
later.
Dan Q.
Overland Park, KS
Readers Say
We built a home
for $185,000
four years ago,
recently appraised
for $365,000.
Joe & Connie W.
Olathe, KS
22 Chapter 3: General Contractors Aren't What You Think They Are

Forums
I am just starting
my first project, so
I am working with
my prime, who
has a line item on
his bid reading
Builder OH and
P; does anyone
know what that is?
Paul in Marina,
CA
Overhead and
Profit?
Kenneth in Lees
Summit, MO
Overhead and
profit. These can
add up to 20 percent or more. But
at least this guy
is being honest
about it.
Jeff in Provo, UT
It is in fact
overhead and
profit, and that is
normally 15-20%.
It includes the cost
of your builders
insurances, liability, taxes, cost of
having a license,
guaranteeing the
work performed
(generally 2 years
on workmanship), and then
profit margin for
running a business after all if
he isnt making
money, what is he
working for? It is a
great advantage
to see it up front,
then you know if
he is jerking you
around on the
other items or not.
Good luck
Rene in Tucson,
AZ

Almost any independent construction inspector, (usually a retired contractor) has equivalent knowledge of the process and the details as does the contractor
before you. They are paid as consultants, and can advise in detail on custom home
construction for fees of less than $1,200.
Scare Tactics

Relying on the impression of exclusive expertise, a general contractor may
play on the fears of prospective homeowners. An illustration comes from the recent
text for general contractors, Building Contractor by R. Dodge Woodson:
The Fear Factor Can Sell Jobs
If you prepare yourself with stories to tell, you can increase your in-home sales.
People are often nervous about the dependability, ability, and performance of
contractors. This nervousness stems from fear created by the media. When people
read a news story about how a homeowner was cheated out of money by an
unscrupulous contractor, they become concerned. This type of news can hurt business for contractors, but it can also be your ace in the hole.
Once you have developed a portfolio of contracting-related horror stories, you
can use the fear factor to sell more jobs. People generally assume you wouldnt be
educating them in the risks that are present with contractors if you were one of the
bad guys. Automatically, when you begin warning the consumer, you are building
the image of one of the good guys.
After telling your stories, tell the customer how you operate to put their mind at
ease. By showing the consumer what could happen, and why it wont if they work
with you, youre on your way to signing a new deal.
What does that tell you?
Pursuing Self-Interest

The danger is that you believe that the contractor is there to protect your
interests. In reality, the contractor is set up to make sure that his own interests are
met over the course of your project.

In the same book, Building Contractor, out of 20 chapters, only one deals with
schedule and budget. In fact, almost nothing in the book deals with your concerns.
If you count the Customer Relations chapter, only two of the chapters, or ten percent of the book pertain to you. Lots of them deal with taxes, insurance and retirement plans, image, sales, marketing, and pricing. Theres lots to learn about handling
money, employees, vehicles, and your office location, but you dont care about that.
You care about subs, schedule, and budget.
Chapter 3: General Contractors Aren't What You Think They Are 23
Offering Self-Serving Agreements

The typical bid-price construction contract is an example of the orientation
general contractors have to their self-interests. The contract sets a price for your construction. You agree to pay so much for the house no matter what. It gives total control to the contractor. He can procure materials and labor at a savings, and keep the
savings. He can substitute cheaper materials or cut corners on craftsmanship and is
paid to do so by keeping the difference. If you want something better, you generally
have to pay extra.

Most residential construction contracts are fixed-bid agreements. The general contractors I interviewed used them 90% of the time in preference to the little
used Cost-plus agreements, which are less profitable to them. But cost-plus agreements are self-serving too. These are agreements that require you to pay the cost
of construction and give the general a fee or commission of, say, ten percent on the
whole amount. Its self-serving, because the contractor controls what the costs are,
and the higher they are, the more fee you pay.

With cost-plus, it is hard to pin down cost. In many cases where the contractor uses an outside source for material or labor, he receives the invoice, tacks something on for his overhead and sends you a separate billing. When the contractors
own forces do work, he always adds in for overhead before sending you the invoice.
It is common, for instance, to multiply wages paid to workers by 2.75 before listing
labor costs on your invoice. At the end, the contractor is allowed to apply his profit
to the whole amount, including the extra overhead added to each item. You are not
permitted to scrutinize the detailed charges, nor can you control what he calls overhead.
Enforcing Package Buying

As an owner-builder, you get to buy cafeteria-style, selecting your materials
and labor from the best source in each case. Contractors deprive you of this privilege.
For instance, they will use their own cement crew or framing crew. You have no idea
if the prices charged are competitive. Nor is there an assurance of quality. You take
the service because it is part of the package. You have some comparison in the beginning by getting bids from multiple general contractors. But once the deal is signed,
you are captive, and any extras are at the price the contractor quotes.
Lowball and Change Order

Some contractors take advantage of this situation by quoting a low price initially and claiming later that certain things were not included. For example, you may
think youve paid for oak trim, and you visit the site to discover that the carpenters
are putting up paint-grade economy trim. You object and a price is quoted to you for
the upgrade. Time is short, the carpenters are waiting, and you agree without any
chance to check out price and availability. Such contractors are free to follow the old
rule of crooked auto mechanics: Double the usual price, and if the customer doesnt
flinch, go with it.
Readers Say
I got one house
package estimate,
(lumber, doors,
windows, and
trim) and was
going to go with
it, then went to
Menards, and
had them price
the same takeoff
for a savings of
$30,000. The
original contractor
and lumberyard
were surly about
it.
Yvonne B.
Caroline, WI
Readers Say
I have a contractor who actually
had it in the
contract to finish
by 18 Dec. of
last year and he
is not 1/4 done
yet. Talk about
putting eggs in
baskets, he openly
admitted that he
spent my money
on another project
and doesnt have
the money to
buy supplies for
my project now,
I gave him a
second chance
and he blew
that. Hes actually
putting my eggs
from my chickens
in someone elses
basket, probably
his.
Ray P.
Aurora, CO
Readers Say
Really all you
need to know
is how to make
phone calls. Ask:
Will you give me
contractor prices?
They say, Sure.
Lynn H.
Tremonton, UT
Exploit Your Ignorance
Journal
Met with interior

designer to get
opinions on
layout, traffic
flow, furniture
placement, etc.
Expected to spend
about two hours
with her, but
barely made it an
hour. Didnt really
have too much to
offer beyond what
we had already
thought of and
she didnt have
any great solutions
to somewhat
problem areas.
From what I gather
it really comes
down to personal
preference and
what issues one
can or cannot live
with. Originally I
was looking forward to working
with a designer,
and I guess I just
expected a lot
more. Not worth
it! All in all Im
glad I met with
her, it just reassured us that we
are on the right
track trying to
really think things
through in this
planning stage.
Jamie & I need
to come together
and tweak a few
things on the plans
and back to the
architect we go!
In the meantime,
Im collecting
lots of pictures
of ideas on all
sorts of things
and organizing in
a notebook. Im
trying to be much
more organized.
Continuing to
learn a lot from
this forum, and
branching off
to do our own
research as well.

At an early point in my construction project, I got cold feet because I couldnt
answer some of the questions posed by the subs. I began belatedly to look for some
on-site supervision. My designer told me that the going rate in our market was $3,000
$4,000 for assistance from a general contractor, including use of the generals license
and some of his subs, answering questions, and providing some on-site supervision.
I put the word out for help, and a wily general contractor called me and offered the
assistance for nearly $1,200 a week. That would have been over $30,000 for a sixmonth project, 15% of my budget. I felt desperate, but I wasnt ignorant. I found the
needed answers elsewhere for no charge.
Cuts Corners

Inspectors have told me many stories about corners that contractors have cut
to improve their profit. Some examples: plumbing running uphill, roofs without base
felts, gutters without flashing, reduced beam sizes, bowed walls, foundation walls
two inches thick in spots, or poured five inches thick throughout instead of six, short
roof shingles extended to provide minimal coverage, inadequate roof bracing, collar
ties missing on every other rafter or omitted completely.

Are these shortcuts the fault of the general or the sub? Some work is done by
the generals own forces, and he controls it directly. Other work is done by subs, but
the general dictates what he will pay them, and he is responsible for their supervision.
Youll Shop Better

Contractors are poor shoppers. Witness my construction advisor, a general
contractor who has built hundreds of homes. He offered me the lumber price mentioned in Chapter 1. With a little checking, I was able to beat his price by $6,000 in a
weeks time. He couldnt believe that his prices at the lumberyard were high. He had
built over 200 homes with that lumberyard, and had never shopped their prices
against other lumberyards.

The contractors I interviewed had few or no ideas on saving money, other
than to speed up the project, which they all mentioned. That doesnt save you much
money some on interest. It makes them money because they earn their fee over a
shorter time, and can go earn another fee from the next customer sooner.

The contractor looks at his fee based on time to complete:
Example: Overall Fee of $100,000

Months to Complete:
Twelve
Fee Earned Per Month: $8,333
Nine
Six
Five
Four
$11,111
$16,666
$20,000 $25,000

You will shop better because you are not in a hurry. You will shop better
because you will start long before you break ground. You will shop better because its
your money.
Youll Be Better Organized

A recent NAHB survey revealed that only 56% of builders used a computer
for estimating project costs. This is an indication of how disorganized, how seat of
the pants general contractors are. Spreadsheet budgeting is a very valuable technique that we will teach you in Chapter 8. It is easy and fun to do. We estimate that it
will save you five percent on your overall project, when used as a tracking device.

If you have kept your own ideas about your custom home in your head, or in
a dream home notebook, you are prepared to track details you expect. Since many
bills will be paid out of your own checking or credit card account, you already have
in place a very personal and controlled system for financial management.

If you can keep a file of bids for your job, along with product literature, you
are already far ahead of what a general contractor will do. The list below contains
some suggestions from other owner-builders to get organized. We will explore most
of these ideas in more detail in later chapters:
Owner-Builder Ideas to Get Organized

develop written flow chart schedule of construction
maintain loose-leaf binders for bids from subs
fill a box with hanging files for product literature
keep a binder for insurance work
use a box for samples of wall and floor coverings, swatches and finishes
use a spreadsheet budget, make sure is complete
get all prices before starting
keep a business card reference file of subs and contacts
keep a binder of subs you hear about, both good and bad
know your running tally of expenses at all times
know what week of your schedule you are on
interview contractors and take notes
keep a phone list of contacts
file all invoices and attach copy of check and lien waiver
list all items you must purchase, record price comparisons
make up a file box for clippings from magazines or brochures
separate bank account or Quicken account for EVERY penny you spend
keep a large calendar to track appointments and trades, etc.
We need to
decide on the
home structure
itself. So far, I
really like the ALL
WALL system but
need to gather
more info. Hope
to decide soon!
Kristy in St. Lucie,
FL
Journal
Heres the
Monday morning
scoop:
The pad is done
and invoice is in
hand, and I think
the well is about
done too. Theres
no need to write a
bunch of commentary, the below list
sums up our goals
for the week.
To do (in order):
Find lien release
(C)
Mail IndyMac
interest payment
(C)
Pay fill invoice (C)
Pay well invoice
(C)
Get compaction
test (J)
Schedule surveyors (J)
As soon as permit
comes through
(please, O-B
gods, please):
Call foundation
people (J)
Call electrician (J)
Cara & Jason in
Orlando, FL
Readers Say
Im building
4,700 sq. feet on
a golf course, and
I have a full-time
secretary who
helps me to do
the bidding and
sourcing.
Jim K.
Elk Grove Village,
IL

Readers Say
The Owner-Builder
Book was right
about setting up
the proper files,
knowing where to
go for things, and
staying organized.
Checking references. I became
the form queen.
We are building
now. We didnt
track a lot of it on
computer, but I
carry a notebook
with me. I write
down the tasks
and cross them
off, and go back
through periodically to see that
things are done. I
keep my conversation notes there
and can find
things later that
way.
Kathi D.
Tucson, AZ
Readers Say
The general contractor is simply a
middleman.
Jerry B.
Tucson, AZ
Readers Say
Weve thoroughly
enjoyed ownerbuilding. Weve
saved about
$70,000 on a
$220,000 house
at contractor
price.
Brenda & David
R.
Caneyville, KY
Forums
We are set to
break ground on
our new home in
Draper, Utah as
owner-builders
and I read The
Owner-Builder
Book to get
new ideas and
strategies. I work
for one of Utahs
largest homebuild-
Youll Give it More Attention

Building inspector Jim Wright told me Contractors usually call subs, and
get started, and then are somewhere else right away. In my opinion they probably
spend one to two hours a week on site.

I asked generals how much time they spend on each job and found they were
a little evasive about this. Most tell you about how they are on site all the time. One
general contractor building custom homes admitted that his superintendents handle
a dozen jobs each at a time. In a 40-hour week, this means they could be at any given
job no more than four hours a week. Allowing for travel time, office meetings, and
paperwork, I would guess the actual on-site time is two hours a week per project.

Even at that low level, inspector Joe Stark complained to me that the superintendents in the industry today tend to be kids. They may know how to order, or
schedule, but they dont know quality. This is not comforting when its your house.

It is indisputable that you will spend more time on your job than a contractor
would. But the less costly the house the more true it is. You might get a general who
builds three a year to be on site an hour a day, or about 100 hours overall. But the
builder who handles 50 a year will probably be there an hour or two a week, maybe
35 hours altogether. As an owner-builder, I was at my job site nearly 2,000 hours, and
Elaine was there about 500. This is about 25 times as much attention as a general can
give.

The time they are there doing their own trade work doesnt count. How can
they supervise themselves? If providing more care would cost them money, they have
a conflict of interest deciding whether to provide that additional care. Something
about being watched all day long makes people provide more care. You do the watching and get a better house.

You will also give more attention to quality. The builders I interviewed had a
difficult time describing quality. Mostly they said it was finishing quickly. Good and
quickly seldom meet, and quickly usually helps their bottom line, not your quality.
Youll Keep Your Savings

The contractor isnt motivated to save your money, only to complete the job
faster. He will let you pay for any overhead expense he thinks is justified. In my initial
budget to build the house, I allocated $625 for cell phone service. When my budget
began to get tight, I decided to sacrifice the service to save money. I carried a roll of
quarters in my car for use at the pay phone at the nearest gas station. I spent less than
$25 for phone calls over the remainder of the project. Would a builder deny himself the use of his cell phone to save you money? Most likely not, and every general
charges this expense and many others to his customers in the form of overhead.

The contractor isnt paid to bargain-hunt, find less expensive but equal quality components, or find superior products at special prices for you. The contractor

is more loyal to himself and his subs than to the owner. He actually has a conflict of
interest in trying to save you money.

Contractors routinely get promotional rewards or Spiffs from lumberyards
and other suppliers for spending their customers money there. These are prizes or
incentives which may include clothing, tools, cash, or trips to Hawaii. Have you ever
heard of a contractor passing on the benefit to his customers even though the customers paid for it?
How Much Can You Save?

One way to look at potential savings when you eliminate the general contractor is to look at how much contractors make.

I got a simplified look into contractor economics from a decking subcontractor who ran a crew but didnt do any of the work himself. He estimated my deck at
$2,420 (current dollars) for labor only, as I was purchasing the materials separately. I
called him back and asked him to break down his bid.

Reluctantly, he told me that it was $1,125 for labor, $1,000 for overhead, and
$295 for profit. The labor was 60 work hours at $19. He paid them $10 an hour and
charged them out at $19 per hour to cover payroll costs. What was the overhead?
Well be on your job for parts of two weeks, and we only have two other jobs going
on. My expenses and salary are $1,500 a week, so divided by three jobs, thats $500 a
week. Somebody has to pay that. The profit we earn for managing your job.

This deck subcontractor resembled a general contractor in that he contracted
with others to do the work and he handled multiple jobs. On the face of it, it appears
that his margin (overhead plus profit) was $1,295 or 53%. But it might be even more
than that.

I hired two carpenters at $19 per hour to build the deck and I provided
unskilled help. They finished the project in 20 work hours at a cost of $375. It is hard
for me to imagine that an experienced crew that builds decks for a living would be
slower than two general purpose carpenters. True work hours would be 20 or less, not
60. If you take my actual labor costs of $375 and compare them to the estimated costs
of $2,420 the margin for the contractor in this instance would be $2,045 or 84%!

But it gets worse. A few years after finishing the Riverbottoms house, Elaine
and I went to the JLC Live contractor show in Las Vegas and attended a seminar
called Spreadsheet Estimating, Your Simple Solution. The case study for the session
was a standard redwood deck. With materials and labor, they managed to crank up
the cost for a 12x12 deck to $10,546. An 80% markup was used on materials and hard
costs were overestimated on everything, just to be conservative. The total included
$725 for tear off and disposal of the old deck, if any. I find it ironic that tearing out
an old deck would be nearly twice the labor that I paid for building a new deck.
ers part-time as a
CPA and between
what Ive learned
on the job and
from this book,
weve decided to
go for it and build
our dream home.
We started planning last June, and
now are chomping at the bit to
break ground. I
want to start a
diary of this build,
either here or
somewhere on-line
to share the stress
and the joy with
others doing the
same thing.
A mini-background
on our home-tobe: 6,800 s.f.
custom luxury
two-story w/walkout basement and
all the bells and
whistles, including
a pool! We are
cheating a bit at
the owner-builder
thing since I am
using some subs
that my employer
uses and they
are giving me
a helluva deal
because of the
volume that my
employer does
with them, but
since this is a
custom home (my
employer builds
starter homes)
that has different
requirements,
I have had to
branch out and
choose some subs
and suppliers
totally on my own,
which has been
fun.
In bidding, I had
a LOT of flakes.
I lost about 6
sets of plans to
jerks who just
werent on top of
their game with
returning bids,

plans, etc. timely.
But I did find some
gems in the rough
subs that were
just willing to bend
over backwards
to get this job and
use it as advertising. I am not a
mean person
either, which my
husband worried
would get me
walked over in
this process. But
Ive been good at
bargaining, and
my friendliness
hopefully will be
evened out by the
fact that they all
know who I work
for and that I will
give them a bad
name in the business on a HUGE
scale if they screw
me over as an
O-B.
I am looking
forward to sharing
this process with
other O-Bs and
especially any
Utah O-Bs with
who want to chat
local numbers on
bids. Our permit
is ready to be
pulled, the city
called yesterday.
We have lined
up our surveyor
for March 7th,
and our excavator
for March 8th. I
am meeting with
him tonight to
discuss where I
want all my utilities
trenched in, what
he recommends,
etc. Now to pray
for a WARM DRY
SPRING here in
Utah :)

Labor was charged out at $35 an hour, and the hours were way overestimated
on each item. Then they still added in administration for the carpenter at one hour
for every eight labor hours, and still marked up the whole thing at the end. There
were two differences between their $10,546 deck and mine. Theirs was smaller by
about 100 square feet and it was out of redwood. Ours was a solid vinyl deck. Apples
to apples comparison, my deck would be $1,625 labor and materials or $7.22 a foot vs.
$68.20 a foot, factoring out tear off and disposal. In this case, compared to an actual
measured project, the builders estimate amounted to an 89% margin.
Laura (and Mike,

my husband who
will really only
sign checks, I am
the true general
on this house!)
Laura in Sandy,
UT

If you make a healthy margin and want to pay less in tax, you spend more
money on your company. You may put in place a retirement plan for your full-time
employees, life insurance for your key people, medical coverage, higher salaries for
the partners, and any manner of personnel expense. But it doesnt stop there. You
may buy the biggest and best earth moving equipment, new expensive vehicles, build
Two memorable quotes from the builders seminar:

You dont need to tell the client about set-up. They dont want to know theyre
paying you to travel and bring all the tools to the job, even though they expect you
to do it.
God forbid the lead carpenter leaves his estimating printout on site and the
homeowner gets to see it.
When is Ten Percent Not Ten Percent?

Usually general contractors claim to make only ten percent profit on
custom home construction. Yet, owner-builders report an average 35% savings. So
what gives? The builder makes something on everything else. He makes it on overhead on all labor, he makes it on material markups, trade markups, overcharging for
work not bid out, and on general overhead.

One contractor I interviewed told me he added overhead to materials and
labor and then imposed profit on the entire amount. For example, on one job, lumber
was $25,000 but they billed it at $37,500. Framing labor was $19,000, but they billed it
at $31,250 for a total for framing of $68,750. Then they tacked on a ten percent profit
of $6,875. However, direct costs were only $44,000. The contractor charged $75,625,
which is a difference of $31,625 or a 42% margin. But technically, his profit was only
ten percent.

A contractor from Indiana told me he makes 60% margin (overhead plus
profit) on a custom home. Like other contractors, he probably tries to show no more
than ten percent profit each year so he doesnt have to pay excess taxes. He may make
profits of 30% on a given job; but with the slow seasons of the year, and any expenses
he chooses, he only shows overall company profits of ten percent or less for the year.

The great variable is overhead. This is what a contractor spends.

a bigger, better building, buy office computers, furnishings; almost anything under the sun could count as overhead.

I had one general contractor executive tell me
insistently that his company only made ten percent on
their work. Then I asked him if the company had built a
home for him. He admitted they had, at a cost of $120 a
foot. And what would your company have charged for
that? His answer, $170 a foot. Even though the company claimed to make only ten percent profit, they managed to save 30% on the executives house.

The average for all the general contractors I surveyed was an overhead of 29% on residential projects and
profit of 14%. They may only admit publicly to profits of
ten percent, but thats the tip of the iceberg. The overhead
is something every customer must also pay, and that is
more than two times greater than profit, on average.
Contractors Mark Up Their Costs to

You

Part of the contractors standard formula is to
add something to every cost in a job. Hourly employee
wages, for example, are marked up considerably to pay
for various indirect personnel costs. A common formula
is to multiply hourly wages by 2.75. Thus a $14 an hour
worker could be billed out at $38 per hour.

The book Building Contractor teaches budding
general contractors how to price their services. The first
key point is a hidden freebie: markups on materials. The
author confines his discussion to a range of from 10% to
35%. How would you like to pay a markup of ten percent
on a $40,000 lumber package? The lumber supplier delivers and offers credit. What does the contractor need to do
to procure that lumber that you couldnt handle yourself
for a savings of $4,000?

In the 1980s, I consulted for several contracting
firms in Ohio, and spent two years as a vice president for
one of them, responsible for marketing and sales. I never
swung a hammer, so to speak, but I reviewed many
construction budgets. In one instance, the principals of
the firm had bought farm land for $4,000 per acre and
after building infrastructure, bundled some of the land
Congratulations on starting your new project. Mine

is almost finished, finally. Started the whole process
over a year ago. We have only had one weekend
off since then. We were working on all holidays
including Christmas. I can say we are all tired and
glad its done, with the exception of landscaping.
Have fun and dont make any vacation plans! :-)
You will learn a lot about yourself & family and the
building process. I am looking for another lot this
spring and will do a complete owner-build and
self-finance. A purely sale for profit box-type house!
Good luck and have fun with your project. I am
going to put together a picture book like others
on-line here from start to finish once we move in
and get back for a long well-deserved vacation to
Hawaii!!!! Aloha.
Dennis in AK
Update: I pulled the final permit. It is laminated and
at the front of my building binder. We dont have to
post permits here, we just have to keep them with
our stamped prints and have them available for
inspections. The lot was cleared and the footprint
of the house was staked on Friday morning. They
did it in pink sticks, I laughed at how fitting that was
for this Barbie-doll-style contractor. I had to make
a sign for the lot number so theyd know which lot
to dump the portapotty on, etc., as all begins next
week, so I wandered over to another lot and asked
the framers if I could take a piece of scrap plywood
to spraypaint my lot number on. They were laughing and saying, Have your builder do that, youll
break a nail and I said I am the builder! and then
they commented on my pink Lands End construction
boots/mudslogs so they teased me calling me the
Barbie-doll-builder and helped me get some wood.
So then when the surveyor staked it in pink, I knew
theyd have a laugh with that. Im sure theyll have
some fun watching me boss all these rough men
around over the next few weeks.
Our final appraisal came back early in the week,
and we are elated. The home was appraised for
$900,000 and per our budget, it is costing us
$661,000 to build. I kept that in mind this morning when the long-term weather forecast showed
it freezing this week at night again, so I had to
go and get concrete blankets from the subdivision
where the builder I work for is building. Those things
are HUGE, and DIRTY, and AWKWARD. I got so
filthy dragging them onto the utility trailer, I wanted
to cry so this is how it is going to be but then I
remembered what I am getting in return for such
hard work. We ran one trailer load up to our lot
and dumped them in the corner so they are there for
the footings and foundation later this week, but we
will still probably have to do one more load tomorrow morning. ACK! And so ends week one of my
diary of this home. And here is the final picture of
our lot before anything was done to it.
Laura in Sandy, UT

for around $250,000 per acre into an office building project. Allowing $25,000 per acre for infrastructure,
that land was marked up about 900% to the customer.

In my survey of general contractors, I found that they marked up materials by an average of 24%.
But the number could be even higher. An architect in Nevada told me that he set up a purchasing company
to help his clients save money on materials. He said his firm openly marked up the materials by 35%. Yet,
they almost always beat the material prices offered to clients by contractors.

One possible explanation is that some contractors may start with a list price, far above actual cost,
and mark that up. Or they may be practicing the double whammy of marking up an item, and then adding
a standard profit to the marked-up number. Or they may not buy scientifically and simply pay too much
for material. Either way, these contractor markups increase your cost and decrease your equity.
Get Bids from Three Generals

While a contractor can hurt you, they can also help you. Even if you dont intend to use a general
contractor you need to take advantage of a free service they offer and get three general contractor bids on
your plans and specs once they are detailed. If you provide all three general contractors the same detailed
specifications (Chapter 6 will show you how) you will get an apples to apples comparison. This sets the bar
height for what you can save.

One expert tells me that bids may vary 15% on the same house at different times based on market
conditions. You may get a real bargain and decide to skip the effort of owner-building. More likely, you
will get an education in specifics that will help you save far more money. Insist on line-item estimates on
each thing with an indication whether it is to be done by own forces or who will likely do it. And have
them prepare a written schedule showing sequence and indicating how they will finish in six months, the
deadline you must meet.
Sources Say
A general contractor usually takes the cost of labor and materials and adds a 50% markup.
By assuming the duties and responsibilities of a general contractor, you will save a dollar amount equal to what a general contractor would have made in the form of profit and overhead.
From Be Your Own Home Renovation Contractor
The Complete Guide to Contracting Your Home
Recommends spending 6 months planning and 6 months building.
Incredibly, in some areas of the country, there is no systematic check to determine whether contractors are licensed or
not. Therefore, unlicensed contractors can pull a permit to build a house and dupe consumers into thinking theyre legitimate.
Even more amazing, loopholes in laws also let contractors build houses without permits. A few states allow unlicensed
contractors to build houses without a permit if the house is for their personal use. Some builders use this loophole to claim
theyre building a house for themselves, only to quickly turn around and sell it.
From Your New House
As a manager, the builder should know good and not-so-good materials and workmanship. Scheduling and coordinating material deliveries and subcontractor work are critical, and oversight during construction is crucial. Inept and dontcare builders turn things over to the subcontractors and accept whatever happens while good builders stay right on top
of the work, with frequent visits to the site to insure coordination and to get boo-boos fixed before they get locked into the
fabric of the house.
From Better Houses, Better Living
(See page 263)
Chapter 4: You Can Manage Better Than

a Contractor
Timeline: One year before groundbreaking
Management Concept One: People Often Ingest

M&Ms
ven though I was a management consultant for more than 15 years, I am going
to restrain myself and only include two management concepts in this book.
However, these concepts will really help you to get a handle on your project
and save money.

The first is the duties of a manager. They apply to any general manager.
These are the tasks that a contractor should perform when building a house, and
they describe your duties in doing the same:
Plan
Organize
Measure
Motivate
Integrate
Readers Say
We started buying
a year ahead of
time, boxes, and
outlets, 30 rolls
of wire. We overwired it. You build
better than anyone
else would.
Bryan & Debbie
G.
Ottawa, IL
Readers Say
Im building my
own home and
Im sure I can do
it better than a
general contractor.
I will pay more
attention to detail
then any general
ever will.
John N.
Lehi, UT
Readers Say
Mark, I have been
a reader of your
site for a long time
but an infrequent
participant. As
32 Chapter 4: You Can Manage Better Than a Contractor

someone who was
been a general
contractor for
20 years I have
always thought
that many of the
people we did
work for were
more then capable
of managing their
own project. Since
suggesting this
to them would
soon render me
out of business,
it remained just a
thought.
Thank you for
building a very
informative website.
Ray Clark
Readers Say
We are trying
to add curb
appeal through
a major remodel
of our home:
first; upgrade on
doors, baseboard,
and trim, new
closet doors,
carpet, paint, and
electric, second; a
kitchen redo, and
third; a master
bedroom bath
and closet expansion. Remodel
rates out here are
$300-$500 a
foot. A carpenter
here told me
he worked real
cheap, $150 an
hour. Ive used
tradesmen for floor
refinish, and painting. Well demo
(demolish) the
kitchen ourselves,
and are doing
much of our own
work. Adding
walk-in closet,
fireplace, Jacuzzi.
The local prices
for that would be
$400,000. We
hope to bring it in
under $175,000.
Dave M.
Sunnyvale, CA

These five words form the acronym POIMM. The device I use to remember
them is the phrase, People Often Ingest M&Ms.
Plan

Later in this chapter we will suggest high-value planning items that will
change the outcome of your project. Planning will be about half your work in building a home.
Organize

Organizing (making an organization) is bringing together your team. Contracting means organizing because it describes making arrangements for various
specialists to work with you.
Integrate

Integrate is a good management word. In my seminars, I have found people
who thought the I in POIMM was implement. But a general manager doesnt
actually implement. He or she integrates or coordinates the functions of the team
so they complement one another.
Measure

Measure refers to management control, as in the job of a corporate controller. To measure is to see that all the measures of the project are met. In particular
this means budget and schedule.
Motivate

Motivating your team includes clear communication, payment for services
and special recognition.

Thats it. These five functions are the work of a general manager. They are
the work of a contractor. My experience is that contractors usually neglect more than
one of these functions, and sometimes every one of them. As an owner-builder, you
will be trying to perform for the first time the functions that a general contractor has
performed many times. If you think of them as POIMM you may find you do some
or all of them better than the best contractors.
Management Concept Two: Plan Hard, Work Easy

Your first task is Planning. Years ago I discovered an amazing thing about
planning. It saves time and money. This idea was made clear by Crawford Greenewalt,
president of DuPont in the 1940s. DuPont had done manufacturing studies to see if
planning was worthwhile. I call the conclusion the Greenewalt Principle:
Chapter 4: You Can Manage Better Than a Contractor 33

Top-notch workers first plan and then follow a relaxed rather than a frantic
pace. Planning their time makes this ease possible, for every moment spent planning saves three or four in execution.

DuPont discovered that a twelve-month project could be shortened to nine
months by first spending one month in planning. Then, an average of eight months
more was required to complete the project.

One of my friends tested this on programmers in a computer testing division
of a major software company. Two programmers of the same average productivity
were given the same program to write. Much like general contractors, both programmers indicated they would like to jump right in and begin work. One was permitted
to start programming without any preliminaries. The other was instructed to plan
and diagram the work in detail before programming.

The first programmer jumped right into the task, and with changes and
rework, he had the finished program ready in eight and a half months. The second
programmer merely planned. He planned for a month, then two months, and finally
was ready to program after two and a half months. He was finished three weeks later.
Both programs were considered equal in quality.
Why Plan?

We all know the old tailors maxim, Measure twice, cut once. It only takes
a few seconds to make a cut with a power saw. Measuring takes just as much time.
But construction tradesmen know it saves effort, time and money. I have heard carpenters exclaim with mock irritation, I keep cutting this piece, and its still not long
enough!

My then college-age son, Ben, supervised a crew of American high school
students a few years ago in the construction of a low-income house in an impoverished area of Mexico. He instructed the sophomore girls on the first day to cut the
lumber lengths for the frame of the small structure. In the space of a half hour they
cut all the lumber to the wrong length. There was no more lumber available, and the
crew had to work around the problem for the rest of the project.

When you plan a construction project, you are measuring twice. It costs
nothing to plan. It causes no one a delay. You are off the interest clock that starts
when you break ground. Later, when you follow a good plan, you can work at a
relaxed pace and get done much sooner. You naturally save money on interest but
also on all your other expenditures. Planning time uncovers bargains, opportunities,
and superior options that you dont turn up in haste.

General contractors and some owner-builders seem in a rush to break
ground. I felt the impatience to do so. Even though I did much with planning, I
glossed over the planning for the unfamiliar task of doing the electric wiring for the
house. Confucius said, Nothing done in haste is thorough. This proved painfully
true for me.
Readers Say
We do a better
job than experts
because we care.
They tend to just
get through it and
they slop around.
Wilma B.
Tampa, FL
Readers Say
I read some of
The Owner-Builder
Book but I ended
up getting a
contractor. Things
are slow with
the contractor. It
would have been
faster if I had built
it myself.
John F.
Asheville, AL
Readers Say
Banks think that
owners are total
dummies. They are
used to working
with developers
who have a nice
little pat package.
When you walk in
with something to
present, they dont
know how to deal
with you.
Jean & Bill H.
Lansdale, PA
Readers Say
We were way
over budget and
it took a lot longer
than we thought.
You almost get
into a panic state.
We had to do
a lot of building
during the winter,
couldnt find a
roofer, went into
a panic and
grabbed whoever... If we had
gotten the city to
move a little faster
on our permits,
that would have
helped.
Jim and Carol T.
American Fork, UT

Readers Say
Your book was
very informative
on this. I feel
bad for anybody who lacks
understanding on
the management
side. With the
information, I think
it would behoove
everyone. I dont
think there is
anything in print
like this. Lets start
by introducing
the plans to some
subs that might
do the work. Its
really, really busy
here now, even
my own subs
are abandoning
me. Two or three
bids isnt going to
work. I look at a
minimum of five to
six subs bidding
on a project if
you want to have
a choice. Theres
such a demand
here that the
crews are selling
themselves out to
anybody for more
pay. There are a
lot of slam-dunk
homes with vinyl
siding in Idaho.
Very few new
people coming
into the trades.
Its a common
problem to try and
find labor. We
get people who
tell us they are a
12-year carpenter,
and then they do
$3,000 worth of
damage in two
days. If people
have the information you give in
your book, its a
win-win for everybody. They will
enjoy the process,
they will get what
they want.
Larry T.
General Contractor
Driggs, ID

I spent an hour or two planning the electric work, thinking that my construction advisor would show me what to do. He never showed up to help me, and it took
Elaine and me 800 hours and lots of anxiety to do the job. We saved money, about
$6,500, but the task was excruciating. Real electricians can finish a house like ours in
about 80 work hours. Its amazing but true that we beginners took ten times as long as
the pros do.

Having been through it, I now estimate that if wed spent a month, or 160
legitimate hours planning the task in detail, we could have saved three times that
much in implementation, (480 hours), as the Greenewalt principle indicates. That
means we would complete the electric work in 320 hours total, about four times what
an experienced team would take.

Electric work is interesting, as are the other trades in a house, but only a small
portion of our savings came from doing self-work. We saved about $25,000 on the
four trades we did ourselves: electric, ceramic tile, painting, and landscaping. The big
swinger is the management of the job at a savings. The rest of this chapter gives you a
look into the possibilities that planning affords.
I Want a Thousand Hours!

You remember the wartime expression Uncle Sam Wants You!. My version
is I want a thousand hours!. I want you to spend 1,000 hours planning the construction of your house. There are 2,000 hours in a work year (40 hours times 50 weeks). I
want about a half year of planning, even though you and your spouse may share the
duties and possibly spread them over several years of time.

Once our job started, I found that I was too short on time to do a number of
crucial things properly. Inevitably, the things you rush cost you more money than they
should. As owner-builder Debbie Crosby told me, You find you are under the gun to
figure out windows, for example, in two days. I regretted that I had not done more
planning. The most common regret of O-Bs I interviewed was the same.

When I first interviewed owner-builder couples ten years ago, they reported
521 hours of planning, on average. Its gratifying to see in our most recent survey,
that O-Bs (two-thirds of whom had read The Owner-Builder Book) now averaged 688
hours. Elaine and I spent about 700, and it was relatively easy to do. Some of the tasks,
like shopping for fixtures and attending the Parade of Homes, are actually recreational. I have been keeping track of the work hours I spend for about 20 years. It has
become a habit for me, and has provided me many insights. On our house project I
also tracked Elaines hours. This is how we spent the combined total:
Planning:
Electric work:
Other trades:
On-site supervision:
Total:
700 hours
800 hours
1,000 hours
1,200 hours
3,700 hours

We saved $180,000 on the house, which works out to $60 an hour saved. But
we only saved $25,000 on the trade work, or about $14 per hour expended. The other
$155,000 is attributable to planning and on-site supervision. Site time is valuable,
particularly in preventing mistakes and rework, but not as valuable as planning. I
would say planning is three to four times as valuable as site time. Therefore, I would
attribute $150 per hour in savings to the planning and $42 per hour in savings to the
site time.
Task
Time
Value
Total
Planning:
700 hours
$150/hr.
$105,000
Electric work:
800 hours
$8/hr.
$6,500
Other trades:
300 hours
$19/hr.
$18,500
1,200 hours
$42/hr
$50,000
3,700 hours*
$60/hr.
$180,000
On-site supervision:
Total:
(*Dont be alarmed by the huge total. The average O-B couple in our survey spent less
than 500 management hours on site during construction.)

It takes a thousand hours to plan because there are so many requisite, highyield tasks to perform. A thousand hours is a lot, but people in our country watch
an average of more than 25 hours of TV a week, so just by eliminating TV-watching,
a married couple can open up 1,000 hours in 20 weeks. Thats only five months. If
you consider that each hour may be worth $150, whats a few missed reruns of Seinfeld?

Is 1,000 hours too much? Its only half a year of work for one person. You
have to figure that you are trying to do the work of a contractor better than he does it.
That contractor may have learned his trade over many years, even decades, he or she
might have gone to school for additional training, and you are going to replace him.
This naturally takes some effort.

By comparison, remember that saving $100,000 on a custom home could cut
ten years off the necessary working life of a person making $100,000 a year not a
bad exchange for a few months of planning.

But the good news is that the effort is enjoyable.

What do you do with your 1,000 hours? At the end of this chapter are the combined recommendations of ourselves and the owner-builders we interviewed along
with the suggestions of lenders, house designers, and inspectors. Most of the ideas are
explained further in this book. Others are self-explanatory. Use it as a checklist to
see that you have worked the suggested areas. Take them in the order that works out
for you. Keep track of your time. If you address each area and spend 1,000 hours, you
will have an easy project and a quality house. You will beat the system and save more
than $100,000 on your custom home.
Readers Say
Built our house
and were in it. It
went great, very
few problems.
People tell you
cant do it, but you
really can. You
run into a lot of
obstacles, but if
you are prepared
for it, it goes well.
Chuck & Laura L.
Providence, UT
Readers Say
We built 2,071
square feet finished, and 2,071
in the basement.
I cherrypicked
the marble for
the bathroom,
insulation, rain
gutters, sheetrock
taping, the leverage worked well.
I show the vendors
actual figures.
Vern & Catherine
P.
Willard, UT
Readers Say
I know some
people who are
owner-building
right now and they
are having a hell
of a time. They
didnt read your
book, and didnt
plan properly,
even though hes
an electrician.
Marion J.
Hooksett, NH
Forums
I submitted my
plans to Planning
and Development
in February. I have
submitted a final
revision (fingers
crossed) of my
drainage plan,
and a revision of
the building plan
with the engineering, and the wind
analysis, following the revision
guidelines. If all

is good and well, how
much longer will I have
to wait to obtain a building permit? The CS told
me 3 weeks. Is this fairly
accurate?
Claudia in Glendale,
AZ

When I wrote my first marketing plan for a client 20 years ago, it took
me 1,000 hours to complete. After some years, my tenth plan took about 200
hours. Any general contractor would laugh at the expenditure of 1,000 hours to
plan your first owner-built home. It wouldnt be considered efficient. But youre
not concerned with efficiency, only that you succeed. On your tenth house, you
will be able to knock out the prep work in, say, 200 hours.
Three weeks is probably realistic for a

review cycle based on
my experience. If you
havent heard anything
in three weeks begin
calling and/or going to
the counter. If they find
something they dont like
about your plans you
are in for another review
cycle figure two months
to get the changes
made, the submittal
back in and review
time.

There are 85 items on our list of planning suggestions. If you or your
spouse spent an average of a day and a half on each of them, it would add up
to 1,000 hours well-spent, and well-rewarded. Of course, some of the activities
will take many days, some a few hours. Henry Kissinger, former U.S. Secretary
of State, said of his time in office that ...all you can do is spend the intellectual
capital you have accumulated in advance. If you are tempted to short yourself
on planning, consider that each hour you forego may cost you $150. Once you
start construction, you will have no more chances to prepare.
They normally send

faxes when they want
plan revisions and call
you when a permit is
ready.
Michael in Cave Creek,
AZ
You guys in Maricopa
County are spoiled.
We are used to three
weeks which means
thats the day Pima
County sends it off to
third-party for review
and they have no control over the schedule.
Had one project take
3 weeks just to get
Outdoor Lighting Code
revisions approved.
Usually have to bug
them just to find the
plans, because their
computer updates may
be four days behind.
But we have a new
director and he supposedly is on the ball about
all this scheduling and
turn-around stuff.
Hush, this is a secret,
there are some employees downtown I have
yet to see work in five
years.
Dale in Tucson, AZ
How to Use the Planning Steps Worksheet

Use the Planning Steps Worksheet as your notes of planning activities
and chart your progress. There is a progress bar provided with each step that
you can color with a pencil to see at a glance your level of completion. On the
right of each step is a tally of hours to allow you to track the extent of your
effort.
Act Like Youre a Business

If you plan, organize, integrate, measure, and motivate, you are performing the intended functions of a contractor or developer in building your
house. For the duration of the project, you are performing business functions.
You are a business and should be recognized as such.

To reinforce your role, make the effort to resemble the existing businesses in the industry. Name your business, (you dont have to incorporate) and
get business cards. You can be a contractor or a consultant or a developer
for the duration of your project. Register with your state or province to buy at
wholesale and pay sales taxes when you use your purchases on your own project. This is called a sales tax or resale number. There is no charge for this privilege in my state. Get a business license, sometimes called a DBA license, from
the city or county where you live. Print the license numbers on your business
card along with your email address and your phone and fax numbers.

If you dont have a fax machine, you can use the fax number of your
local quick printing establishment. Treat it as if it were your own number. If
you receive faxes, they will call you and you can pick up the fax when you pay
the charge. You can even put a toll-free number on your card. It is not expensive
to set up this service with your long distance carrier.

Readers Say
We are a year away from having blueprints, and I have 300 hours of prep in already.
Letha M. San Anselmo, CA
Readers Say
At first, I thought that 1,000 hours of planning was crazy, but now I think 1,400 hours sounds good. Everything we did in
the planning phase saved us time and money later.
Kathi D. Tucson, AZ
Journal
I must be getting ahead of myself. Every time I think were getting close to starting the actual groundbreaking were really
still many months away. Why did I think this would be easy?
The realization has set in that while I really want to start building my house tomorrow, I am still only in the planning &
research phase and have many decisions left to be made. While there are many knowledgeable people on this website
who are more than happy to offer me advice, the decisions still rest on my shoulders. And with so many options out there
which one is right for me?
I thought I had this all planned out a year ago. How naive. There are so many things to consider when building and I am
lost in a sea of information trying to fish out what appeals to me and sounds like something that is affordable, practical
and beneficial for my family. Just when I think Ive set my hook and Im reeling one in, I see a bigger fish out there ... So I
guess this could go on for a while, but Im OK with that. I would rather take my time and learn everything there is to learn
about every product out there. Then I will make informed decisions that we can live with. Until then I will stare longingly at
my house plans.
It seems as though everywhere I go I try to make contacts. Do you know a good electrician, plumber, HVAC, GC (to
use for consulting only) ... I have so many names and recommendations that I dont know how I could possibly talk to all
of these people. But here and there I get some good advice and by talking to some people of the trades they are able
to offer me ideas that I havent thought of and have given me a general idea on what costs might be or directed me to
change something in my plan because it really wouldnt work the way we had it.
One step at a time ... were forging ahead and learning as we go. Its a great and stressful experience that I wouldnt
want to pass up. Im proud to say that Im owner-building my house. Most people pass this opportunity up because of
lack of time and experience, but its worth what you have to learn and all the extra time you have to put into it. I think the
end result will be an amazingly beautiful home and it will feel awesome to know that I designed and built it myself.
Angela in Lake Helen, FL
Forums
Just a little something I came across... vistaprint.com prints 250 free business cards. All we did was pay for the shipping, which was nominal. They gave us an estimated turnaround time of 14-21 days for the slowest shipping, received
it in less than a week. The cards look really nice ours have a colored background and it looks professional. I wanted
something that didnt give the fuzzy edges of perforated cards. Only thing is theres a small line on the back in tiny print
saying their website name, but around here, that wont raise an eyebrow. Ive seen other professionals use these cards.
Thats actually how I found out about them. Just wanted to share that if someone was looking for an inexpensive way to
print professional-looking cards.
Joanne
Sources Say
The Complete Guide to Contracting Your Home recommends spending 6 months planning and 6 months building, and
suggests: Form a separate corporation if you want to set your enterprise off from your personal affairs. This may give you
a better standing among members of the building trades if they feel that theyre dealing with a company instead of an
individual.
Bob Vila? Bob, Norm, and Steve from This Old House? Sorry, folks, this type of skilled building is seen only on television.
Real life means building crews who are more like Larry, Curly, and Moe bumbling idiots who couldnt tell their butts from
a two-by-four. The only thing these guys ruminate on endlessly is which bar theyll hit at quitting time.
From Your New House
One of lifes greatest satisfactions can come from starting from scratch and ending up with a home thats the result of your
ideas and decisions. You can even be your own general contractor! This may seem ridiculous to you right now, but its not
that difficult with the help of companies formed specifically to help you make decisions that general contractors make and
to help you save part of the money that a contractor needs for overhead and profit.
(See page 263)
Planning Steps
Task
Notes
Create or add to a dream home notebook.

25%
50%
75%
100%
Start and add to a written list of your questions.

25%
50%
75%
100%
List the resources you bring to the project.

25%
50%
75%
100%
As a couple, resolve differences and work on your relationship.

25%
50%
75%
100%
Clarify your household budget in writing so you know how much you can contribute while building.
25%
50%
75%
100%
Generate personal financial statements and supporting documentation.

25%
50%
75%
100%
Obtain a copy of your credit report and clear up any errors.

25%
50%
75%
100%
Develop a file of house pictures you like.

25%
50%
75%
100%
Make seasonal observations at your property.

25%
50%
75%
100%
Go out to projects and watch homes go up, talk to foremen.

25%
50%
75%
100%
Scan the classified ads for construction-related offerings regularly.

25%
50%
75%
100%
Read books about self-contracting.

25%
50%
75%
100%
Network with other Owner-Builders through our on-line Forums or O-B Connections.
25%
50%
75%
100%
Tour the Parade of Homes in your area and take notes.

25%
50%
75%
100%
Notes
Tally of Hours
Task
Notes
List and refine your house ideas.

25%
50%
75%
100%
Measure rooms you like in other houses.

25%
50%
75%
100%
Do extra research on kitchens and baths.

25%
50%
75%
100%
Develop lists of features room by room.

25%
50%
75%
100%
Write up specs for each trade.

25%
50%
75%
100%
Interview subcontractors. Try for five in each category.

25%
50%
75%
100%
Background visits with lenders.

25%
50%
75%
100%
Develop preliminary construction budget.

25%
50%
75%
100%
Interview general contractors.

25%
50%
75%
100%
Get estimates from general contractors.

25%
50%
75%
100%
Develop preliminary drawings with architect or designer.

25%
50%
75%
100%
Develop materials lists.

25%
50%
75%
100%
Meet with suppliers to get recommendations and prices.

25%
50%
75%
100%
Visit construction supply outlets regularly. Track prices on items you will need and take advantage of specials.
25%
50%
75%
100%
Open builder accounts at lumberyards and distributors.

25%
50%
75%
100%
Notes
Tally of Hours
Task
Notes
Confer with each utility. (Includes gas, water, electric, sewer, phone, cable TV, internet, and trash removal.)
25%
50%
75%
100%
Identify and talk with other team members.

25%
50%
75%
100%
Get lumber package estimates.

25%
50%
75%
100%
Shop for plumbing and electrical fixtures.

25%
50%
75%
100%
Shop for bargains on all other materials.

25%
50%
75%
100%
Read about trades you will supply.

25%
50%
75%
100%
Go to do-it-yourself classes for trades you will supply.

25%
50%
75%
100%
Develop a written plan for your self-work.

25%
50%
75%
100%
List your tools; clean, sharpen and lubricate.

25%
50%
75%
100%
Select and purchase any tools or cleaning materials youll need.

25%
50%
75%
100%
Buy a generous supply of common fasteners to keep on hand.

25%
50%
75%
100%
Shop for trim materials.

25%
50%
75%
100%
Inspect the work of subcontractors you may use.

25%
50%
75%
100%
Attend home and garden shows or a professional construction convention.

25%
50%
75%
100%
Meet and talk with your municipal inspector.

25%
50%
75%
100%
Notes
Tally of Hours
Task
Notes
Interview and select an independent inspector.

25%
50%
75%
100%
Select ceramic tile.

25%
50%
75%
100%
Select hardwood flooring and find source.

25%
50%
75%
100%
Find carpet source.

25%
50%
75%
100%
Study and select cabinets.

25%
50%
75%
100%
Select bathroom and kitchen fixtures.

25%
50%
75%
100%
Shop for towel bars and door hardware.

25%
50%
75%
100%
Shop and compare window sources and windows.

25%
50%
75%
100%
Make revisions to drawings with architect or designer.

25%
50%
75%
100%
Share and discuss drawings with selected subcontractors for input and estimates.
25%
50%
75%
100%
Get three bids from selected subcontractors in each category.

25%
50%
75%
100%
Get more bids in categories where you feel uncomfortable.

25%
50%
75%
100%
Get three bids from selected suppliers needed.

25%
50%
75%
100%
Build a file of sub and supplier estimates.

25%
50%
75%
100%
Review the bids down to the line items. Enter on a spreadsheet.

25%
50%
75%
100%
Notes
Tally of Hours
Task
Notes
Refine your budget.

25%
50%
75%
100%
Talk with past customers of selected subs.

25%
50%
75%
100%
Write letters (faxes, emails) to selected subs to indicate their selection.

25%
50%
75%
100%
Watch construction videos, planning DVDs, and TV shows.

25%
50%
75%
100%
Read builder magazines.

25%
50%
75%
100%
75%
100%
Dream.
25%
50%
Check with your state or province about insurance coverages required.

25%
50%
75%
100%
Shop for coverage.

25%
50%
75%
100%
Learn how to use a computer spreadsheet.

25%
50%
75%
100%
Build your budget on computer.

25%
50%
75%
100%
Review your budget with several people.

25%
50%
75%
100%
Build your calendar on computer.

25%
50%
75%
100%
Review your calendar with several people.

25%
50%
75%
100%
Make revisions to budget and calendar.

25%
50%
75%
100%
Develop loan proposal and presentation for lender.

25%
50%
75%
100%
Notes
Tally of Hours
Task
Notes
Apply for loan.

25%
50%
75%
100%
Develop final drawings with architect or designer.

25%
50%
75%
100%
Study your plans thoroughly, review them with other people.

25%
50%
75%
100%
Take out builders risk insurance policy.

25%
50%
75%
100%
Set up clear property boundary markers.

25%
50%
75%
100%
Get your permits; laminate a copy for on-site use.

25%
50%
75%
100%
Go to Zoning if you need to pursue any variances.

25%
50%
75%
100%
Set up economical cell phone plan, program team member phone numbers into phone.
25%
50%
75%
100%
Preliminary clearing and rough staking.

25%
50%
75%
100%
Call your local underground utility locator service for underground utility flagging.
25%
50%
75%
100%
Make construction sign with street address and laminated permit copy.
25%
50%
75%
100%
75%
100%
Other:
25%
50%
Other:
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
Notes
Tally of Hours
Each of the
planning steps
is explained
and illustrated
in our DVD
series, The Ten
Commandments
of OwnerBuilders
(See page 268)
These planning
steps are also
available on
a spreadsheet
template at our
Free Download
Gallery
Project Notes
Chapter 5: You Will Profit By Building a True

Custom Home
Time line: Nine months before groundbreaking
Starter, Step-up, Custom, Dream house
ccording to a recent survey of custom builders in Custom Builder Magazine,

the average U.S. custom home was 4,000 finished square feet in size. The
average total value of a new custom home was $950,000 including land. Factoring out land at 25% of total cost, custom home construction prices were then $180
per finished foot, on average. The average contractor-built custom home construction budget in this survey was $713,250.

By contrast, the median house built in the U.S. this year was 2,400 square feet
in size and had a value with land of $270,000 according to the U.S. Census Bureau.
Factoring out land at 20%, the median construction cost of a new house in this country is $216,000 or $90 per finished foot this year.

Traditionally, single-family homes are classed roughly into three groups, by
size and cost: starter, step-up and custom or luxury homes. To these groups, I
Sources Say
Getting a custom
home is well
within just about
everyones ability.
But there is work
involved. Youll
have to figure
out just what you
want, not as a
nebulous dream,
but as something
that can be put
onto paper and
then built.
From Better
Houses, Better
Living
(See page 263)
Forums
Cara, if you have

what you want,
pay what you
have to pay and
move forward.
It was our experience in the end
we didnt really
save any money.
We could have
52 Chapter 5: You Will Profit By Building a True Custom Home

bought a house
for $100 a sq
ft. We got a
house for $100
a sq ft that a
builder would
have charged
$300 a sq ft to
build. There was
a house about
6 blocks from us
that was built the
way we wanted
with upgraded
materials. It was in
the Sunday paper
that the builder
charges $300 per
sq ft.
You are going to
end up with the
house you want
at a tract home
price.
Lyn
Lyn you could
not have said it
better. I finally
JUST about a
month ago realized the difference
between building
budget and
building the way
you described.
You have to look
at the end value
of the house
compared to what
you spent. If you
come out on top
(and you likely
will), great! But in
all honesty, even
if you just broke
even and that
really depends on
what you consider
breaking even
and ended up in
your dream home,
I think Id still call
it a successful
project :)
Cara in Orlando,
FL
Sources Say
Your New House
gives ten clues to
a quality home.
(See page 263)
would add a high-end classification of Dream Home. The starter homes are at the
bottom of the market in scope, the step-up homes are in the middle, and the custom
homes occupy the high position. A dream home is a highly customized custom home
that the owner personalizes to his tastes without major concerns over its appeal to a
subsequent buyer.

With custom (and dream) homes averaging over $900,000 and the median
new house price at $270,000, there is a great distance separating the categories of construction. Factoring out dream homes which can run into the millions of dollars, the
custom home category would likely start in the $500,000 bracket currently. Step-up
homes would generally start in the $300,000 to $400,000 bracket and starter homes
approaching the $200s.

The issue for you when you set out to build a custom home is that it will be
recognized by the market in the custom category, and priced accordingly at resale.
The starter and step-up categories hold much slimmer profit potential at resale than
does a custom home in total dollars. At the same time, a custom home can bring a
disappointing return if it tips over into the dream home category and is too customized to attract a solid price.

For example, if you build a high-end custom home of 10,000 square feet
with large rooms, but only two bedrooms, as one owner did, you may find very few
prospective buyers at resale and attract a very small profit on your costly original
investment.
Four Ways to Make Money

Traditionally, your house adds to your wealth in two ways. The most important way is through appreciation, which has averaged 5% per year in the U.S. for the
past 25 years. This is a valuable source of gain, much better than a savings account. If
you have a $300,000 house, and made a typical down payment of $30,000 to buy it,
your 5% gain is measured against your $30,000 down payment. That returns $15,000
per year on $30,000 or 50%. Your savings account pays less than five percent on average.

The second way your home adds to your wealth is through retiring your
mortgage. For most of us, this is a small but steady gain. If you hold a $300,000
mortgage, and you make $2,500 monthly payments, you reduce the mortgage by only
$1,000 or $2,000 per year in the early years.

A house I bought in 1980 gained $85,000 of appreciation in twelve years, or
$7,000 a year. I had also paid down my mortgage by more than $12,000, or $1,000
a year during the period. Compared to savings, this was a superior gain for us; but
small compared to the gain afforded by owner-building.

Owner-building opens up two additional areas of gain. The first is keeping
the costs down, and the second is pushing the value up. The latter is done by building
Chapter 5: You Will Profit By Building a True Custom Home 53

a house with market appeal, one which sells better and for more money. This is where
selected, researched features come in.

We added $180,000 to our net worth in the eight months it took to build our
custom home. And the special features we managed to incorporate will enhance the
price at sale. We built the house, which was estimated at $115 a foot, for $63 a foot
using the techniques described in this book. But because of the strategic features we
incorporated, we were told that the house would be currently worth $190 a foot in
some markets.

One architect told me that the right design and features will add 15% to the
value of a house. Well-chosen features rank with budgeting and scheduling as your
core tools in making money by owner-building your home. The four ways of increasing your wealth through your home rank as:
1. Reduce cost of construction.

2. Improve resale with right features.
3. Derive appreciation.
4. Pay down mortgage.
Your Dream Home Notebook

One important source for feature and design ideas is your personal thoughts
and observations. The planning you do in this area need not be confined to the year
before you build it can span a lifetime. I started with a notebook, later included
a photo album, and then went to a word processing file that I could keep forever
updated and complete.

My first home was just a thrill that wore off slowly. It was such an improvement from married student living conditions that I thought it was perfect. It wasnt
until a few years into my second home, around twenty-five years ago, that I began to
write down ideas for improvement.

Some of the thoughts I entered into that first dream home notebook were:
- Guest complex with own bath privacy.

- Have a dinner party with other couples who have
built and tape record the session for ideas.
- Make the place as low-maintenance as possible.
- Water filtration system at point of origin.
- Big storage bin or deep freestanding shelves
for seasonal items like Halloween costumes,
Christmas decorations, camping gear, and sports
equipment.

It took many years, but eventually all of those thoughts were implemented.
Samples from our current idea file include:
Forums
Does anyone
know if the
absence of a tub
in a house hurts
the resale value?
It is just the two
of us and we are
sure this may be
our last home;
since we have not
used our tub in
the present house
we are thinking
of having a large
shower with heads
on both walls.
Shower stools and
such would suit us
fine, but as things
go we will sell the
house one day
and wonder how
bad this will effect
things at a later
date.
Marc in Defuniak
Springs, FL
Its just my opinion,
but I wouldnt
waste effort/
money/floor
space on an item
you wont use.
Unless this is a
spec house, I think
you should design
your home the
way YOU want it.
You could design
the bathroom
so that a little
rearranging could
provide enough
space to add a
tub in the future.
Pre-plumbing the
supply and drain
lines is a great
idea. That way,
you get to live
with the shower
you want, but
future residents
can have a bathtub if they want
one.
Jon in Ellicott City,
MD

Personally, I dont
use tubs; however,
when looking at
new homes, a
master bath without a tub or even
a small tub seems
to cheapen the
home. A Jacuzzi
or whirlpool
completes it, in
my opinion. At the
very least, I would
plumb for a tub
to be installed at
some later date.
Doug in Lawrence,
KS
Ah, the freedom
to ignore what
anyone else thinks
and just do it
your own way!
But when you go
to sell, people
expect certain
things and thats
why theyre standard items in new
homes.
Another thing to
consider is a tub
that you can walk
or roll into. They
have a door that
shuts behind you,
then you fill it with
water. You might
want or need that
feature some day.
William in Seattle,
WA
- Wider flutes on woodwork.

- Use slag for base under garage and basement
floor, not pea gravel.
- Floor drain within ten feet of hot water heaters
and water softener.
- Nice to have a ringer on the back porch for the
doorbell, and one for the telephone, so you can
hear on porch and in yard.
- Next time, do solid-core interior doors. Choose
oak or birch for stainability and solidity.
- Insist that all ceramic tile grouts be mixed with
latex additive instead of water.

Our current idea file runs to 100 pages, and we add to it all the time. When
you notice something that could be improved for your comfort, enjoyment, or convenience, add it to your file.

Jim Stark, a veteran owner-builder from Nebraska, has built four times.
He says: Building a house will stress any marital relationship. Making choices is a
strain. We put together a notebook of what it will look like before we even start. We
get most of the arguing out of the way. We take pictures as we build and turn it into
an album. We use the album to develop specs.

Before our marriage, Elaine often cut floor plans and pictures out of magazines and placed them in a file. By the time we began to owner-build, she was unusually competent at reading blueprints and visualizing the final product. She was a
good owner-builder because she had come to a clear idea of what she wanted.

We arrived at common ground as a couple by visiting many Parade of
Homes houses and noting features that we both liked.
I agree. Some
things that seemed
like a good idea,
(i.e. 5,000 sq ft
home with two
bedrooms or a
three-bedroom
home with 9
bathrooms) will
decrease the
amount of potential buyers down
the road.
You or the Market?
You never know

what life will
bring you; a job
change, financial
change, spousal
change, death,

In marketing, we say there are two orientations: product-driven and marketdriven. You may be in love with a product (a house feature), and not find a market for
it. In residential construction, hot tubs and swimming pools are notorious productdriven examples. They cost more than they return on resale in many markets. If your
thinking is market-driven, you may not particularly care about a feature, but you
might incorporate it into your house for the sake of resale. In our case, market-driven
features included open floor design and high ceilings.
Owner-builder Gary Ziser stresses this point:
Be really careful how you design the house. This is extremely important. When
laying out a floor plan, you have to know when to back off your personal taste if
it falls too far outside the norm. Unless you are wealthy, you want to keep resale

in mind. Dont overdo quality. You can spend a lot of money thats not recoupable.
Remember, if you are an average family, you wont live in the house more than
seven years.

To get a feel for the market, Elaine and I made a study of the Parade homes
we visited in the year before we built. We noted features and the work of craftsmen
that we liked in each home we visited, as this sample shows:
Parade of Homes Example

Features We Liked
Parade House #2 Robert Nelson Construction
285 S. Main St., Salem
Total Sq. Footage
Finished Square Footage
Base Price (Construction)
Cost per total square foot
Cost per finished square foot
5,554
5,554
$714,086
$129
$129
Features Noted:

Trex front porch

Brick borders in front walk
Leaded glass lites and transom front door
Courtesy lights in front steps
Oak entry floor
Sports court
Low, middle, and high molding in office
Wider than normal doors
Brass grab bars in bath
Pedestal sink
Marble bath floor and splashes
Clawfoot tub with heat lamps above
Fireplace in master bedroom
Crown molding in master bath
Outdoor drinking fountain
Swinging door to dining room
Turret room with leaded lites over double-hung windows
Porcelain tub in guest bedroom upstairs
Walk-in closet off bath in guest suite
Ten-foot ceilings, wall painting, ceiling fans
Fancy crown molding throughout
Window seats, individual walk-in closets
Wooden wainscoting
Verdi Foresta granite countertops
Six-burner countertop gas range
disability, etc.
Why limit the
market that may
buy your home in
the future? If you
get desperate, you
need to attract
common types
of buyers.
Granted, it could
be 30 years from
now; or maybe
next summer...
My guess is most
ladies will walk
into the master
bath and ask
where is the tub?
James in Broadview Heights, OH
Its a balancing
act (like everything
else in life), isnt it?
Youd LOVE a new
Ferrari, but the
expense would
hurt your family. A
used Civic makes
great financial
sense, but you
may not enjoy the
time you spend
in the car very
much. So, you buy
something you like
thats within your
financial means.
As far as the
house goes, you
certainly have to
keep an eye on
resale. Building
something thats
way out of the
norm could hurt
you in the long
run. On the other
hand, youre
going to be
spending a great
deal of your life in
this house. I think
you should design
your house to fit
YOU, but with
an eye towards
the day when the
house needs to be
sold to someone
else.

This bathroom
could be
designed with a
standard tub and
shower layout,
either side-by-side
or a combo unit.
Then the design
could be modified
to put an oversized shower, and
possibly an extra
closet or makeup
table, in the same
space. That way,
you get a area
that you enjoy
every day, but
allow for a tub to
be easily installed
in the future if
need be.
I wouldnt do it
that way if I only
planned on living
in the house for a
short time. But if
you plan on living
there for the long
term, why not
design it in a way
that makes you
happy?
Its a balance
between your
enjoyment of the
home and the cost
of changing it for
someone else.
Designing your
dream house
based purely
on resale seems
like marrying a
woman that you
think would be
easy to divorce.
MD
I think you have
to temper what
is considered the
norm vs. what
you want yourself.
In all honesty,
after visiting
HUNDREDS of
modern homes, I
have YET to see
a master bath
Tile backsplashes by Terry Robertson

Mirrored exercise room in basement
Immense plumbing manifold system
Shared bath downstairs with urinal
Formica countertops downstairs
Tile bath floor
Concrete window wells
Home theater in basement
Mud and laundry room with tile
Breezeway
Fluorescents and shelves in back of garage

To check our thinking against the market, we enlisted the help of an enterprising Realtor we found. This Realtor pulled Multiple Listing Service examples
from his computer to show the features of houses that had sold recently in our target
price range. The examples showed the prices paid and the features included for each
house.

We used the Multiple Listing Service as a checklist to compare against
Parade homes that we liked. The home in the previous example looked like this on
our checklist:
Multiple Listing Features

Parade House #2
(Numbers in parentheses are MLS codes)
Feature
Bedrooms (MLS 9)
Baths (MLS 10)
Size of garage (MLS 11)
Main floor bedrooms (MLS 35)
Main floor baths (MLS 35)
Main floor square footage
Levels
Upper level bedrooms (MLS 34)
Upper level baths
Upper level square footage
Lower level bedrooms (MLS 36)
Lower level baths
Lower level square footage
Brick construction
Quantity or if present
5
5
4
1
2
3
2
2
4
2

Metal siding
Stucco
Rock
Cedar shakes
Composition shingles
Gas heat
Electric heat pump
Formal entry
Formal dining
Window coverings
Water softener
Garage door opener
Wet bar
Humidifier
Jetted tub
Electronic air filter
Unfinished basement
Walk-out basement
Gas fireplaces
Wood stove
Second kitchen
Vaulted ceiling
Cable TV
RV parking
Satellite dish
Dishwasher
Food disposal
Refrigerator
Complete range
Countertop range
Range hood
Trash compactor
Microwave
Wall ovens
Gas water heaters
Electric water heater
Landscaping
Fenced
Sprinkler system
without a tub.
Model homes,
spec homes, floor
plans, resales, etc.
2
2
On the topic of
cars...When I
ordered my own
Corvette a few
years back, the
dealer had a story
of a special order
Blue exterior/
Red Interior that a
salesman wanted
for the showroom. It was way
beyond normal,
and they sold it
for thousands less
than the others
that were there,
and took much
longer.
And this was
South Florida,
where gaudiness
is pretty much
acceptable.
Expect to take a
hit in selling someday, or plan on
a bath remodel.
JMHO
Your comments
have been much
appreciated, It
even spilled over
to the M-in-Law
supper day. As
with this forum, it
was split.
I like the idea of
the closet, table
where the shower
would be and
have an oversized
shower where you
could put a tub
at a later date,
plumb in for drains
under the table.
I can envision
a 68 shower
with heads on
both walls and
benches. WOW!!

OK, Next
question, Tile or
Marble? I got a
quote for $3/sq
ft labor, 133 sq
ft or so. 12 tile,
around $3/sq.
ft, give or take
$800 for tile. I
cannot imagine a
marble quote, but
I will inquire in the
AM...
I wonder how big
of a fiberglass
drop-in shower
they make (at a
reasonable price)?
Marc in Defuniak
Springs, FL
Very common in
South Florida is
the half-pentagon
shaped walk-in
shower on an
exterior wall with
dual heads and
glass block windows. The only
problem is that the
conditioned air
from the bathroom
makes the shower
cold.
The ones in
friends homes
have tiled 24
benches, and very
nice.
Dont forget that
young families will
need a tub for
bathing children.
Mark in Canton,
TX
Thought I would
drop a line to tell
you all the tub
won out...
We negotiated
a great deal with
FWB Marble and
all the baths are
getting cultured
marble tubs and
showers. The wife
really liked the
Tile flooring
Vinyl flooring
Wall to wall carpet
Hardwood flooring
Patio
Deck
Covered deck
Storm windows
Storm door
Double-pane windows
Ceiling fans
Central air conditioning
Swamp cooler
Laundry room
Ten-foot ceilings
Vaulted ceiling
Family room
Main-floor master
Real Estate Survey

Gradually we arrived at a list of features that we liked
and the market seemed to like, as well. By looking at the Home
Builders Association Parade of Homes we got the ideas that
local builders seemed to favor. There is a risk that builder ideas
are simply personal preferences and represent product-driven
thinking. By using MLS listings of recent sales we tried to get
a market-driven perspective. We decided to test the resulting
ideas with active Realtors.

We took our planned list of features and made a telephone survey of ten Realtors with agencies that sell custom
homes in our area. The Realtors were happy to talk and seemed
to enjoy our survey. We asked them to rate from 1 to 10 each
feature in terms of its saleability in the price range we intended
to build.
A sample list of
features from
the Riverbottoms
house is available
for computer in
our
Free Download
Galley

The following were the features that scored 5 out of 10
or higher:
Realtor Survey
Score
Feature
Jetted tub
Large master bedroom
Large walk-in closets
Closet systems
Formal dining room
Walk-in pantry
Solid-surface countertops
Light, open look
Hardwood kitchen floor
Extensive exterior utilities
Office
Removable windows for cleaning
Water softener
Whole-house vacuum system
Gas fireplace
Tile or hardwood entry
Spacious kitchen cabinets
Whole-house air filter
Sitting room off master bedroom
Bonus room over garage
Vegetable sink in kitchen island
Telephone in bathroom
Courtesy footlighting on stairs
French doors to master bedroom
Whole-house sound system
Home theater
Hot water in garage
Center-meet closet doors
Recycling center
colors, too!! Also,

cultured marble
sinks and countertops in the heads
as well.
In the end, the
resale appeal was
the advice that
swayed us. Our
neighbor is a real
estate salesperson
and she highly
recommended
a tub, no matter
what the house
looks like. If you
do not have a
tub they make for
a hard sell, she
says.
Marc in Defuniak
Springs, FL
Wise choice!
They also make
for a nice water
reservoir during
hurricane season.
Just add a few
drops of Chlorine
Bleach and seal
the drain to prevent slow leakage.
Sources Say
If you can, use
underground
drainpipes instead
of simple splashblocks. Care must
be taken that they
are not completely
buried during the
backfill stage. A
Heavy PVC black
tubing should be
used.
Contracting Your
Home
(See page 263)

Sources Say
Most buyers perception of quality
starts (and finishes)
with how much
molding there is in
the house. (Quoting a Georgia
builder in Builder
Magazine.)
From Your New
House
(See page 263)
Sources Say
Eliminate as
many hallways
and walls as possible. Hallways
waste building
materials and add
to heated space
while making
a house seem
smaller. Air is the
cheapest building
material you can
use.
Contracting Your
Home
(See page 263)
Sub and Supplier Input

To the Realtor input we added input from subs and suppliers that we interviewed. (See How to Interview Subs on page 87.) The idea is to balance what is
desirable with what is doable. The subs helped to explain the costs of doing things
and alternative approaches to consider.

Our wish list of features eventually filled several pages. We decided to incorporate features on three levels:
1. Crucial to quality, must accept costs.
Examples were:
dramatic design and good layout

dual furnaces, air conditioners, and water heaters
custom windows
high-end cabinets
jetted tub
closet systems
hardwood and tile
2. Helpful to resale, if costs not out of line.
Sources Say
You can save
money by purchasing your own
electrical fixtures.
The markup is
incredible.
Contracting Your
Home
(See page 263)
For example:
pre-wire for future-proof house technology

telephone jacks in every room
home theater
courtesy footlighting on stairs
vacuum system
French doors
Sources Say
It is possible to
save more than
20 percent, but it
is also possible to
save next to nothing. It all depends
on how well you
prepare yourself
for the task.
From Build Your
Dream Home for
Less
(See page 263)
3. Personal preferences if costs are low or opportunities arise.
For example:
ceiling fans
bedside light controls
whole-house air and water filters
solid vinyl deck
indoor sports court
granite and marble countertops
Features of a Custom Home

Owner-builders I interviewed from around the country offered their views
of important features to include in a custom home. The following list of their suggestions is ranked by number of mentions:
Tile and hardwood floors

Central vac
Custom woodwork and trim
Granite countertops
Custom cabinets
Pre-wire for automation and security
Custom recessed lighting
Upgraded insulation
Large closets and extra storage
Jetted tub
Large walk-in shower
Stainless or semi-pro appliances
Open floor plan
Generous covered patios, decks and
porches
Large spaces
Customized floor plan
Curb appeal
High ceilings
Two-story entry and family room
Large custom kitchen
Office
ICF walls
Whole-house audio
Custom, low-E windows
Oversized garage
Ceiling fans in every room
Energy-efficient
Built-in media center
Oversized electric service and many
outlets
Location
Water purification system
Upgrade roof covering
Custom plumbing fixtures
Two large water heaters
Well-designed master suite
Zoned HVAC
No-maintenance deck
Lots of windows/natural light
Low-maintenance inside and out
Pantry/wine cellar
Pre-wired and plumbed for expan-
sion
Multiple phone and network outlets
Spectacular views
Multiple separate bathrooms
Custom ceiling lines
Master bath johnny room with reading rack and telephone
Full brick/stone
Custom concrete
Three-compartment kitchen sink
All upgrades
Sitting rooms
Altered roof line
French doors
Study
High basement ceiling
Good acoustics/quiet
Air-to-air heat exchanger
Wood blinds
Two ovens/convection oven
Appliance garages on countertop
Undercabinet lighting
Double vanity
Hardwood trim
Bonus space over garage
Sinks in youth bedrooms
Features that appeal to average
buyer
Daylight/walk-out basement
Three-car garage
Skylights
Custom front door
Custom railings
Cohesive design
Radiant heat
Custom paint
In-ground sprinklers
Wide walks and drive
Sunny breakfast nook
Beautiful lawn/landscaping
Sources Say
Better Houses,
Better Living
gives five reasons
people buy or
build custom
homes.
(See page 263)
Sources Say
Please dont wait
until the meetings, or worse,
the drawings,
are under way to
figure out what
you want. If you
do, you will waste
time and money
on corrections.
And quite likely
youll compromise
your goals so as
not to interrupt the
flow of work or
ruffle the feathers
of the designer.
So figure out what
youre after ahead
of time, and be
willing to stick to
your mission.
From The WellBuilt House
(See page 263)
Forums
Well, I met
with the kitchen
designer at Lowes
yesterday and
was somewhat
disappointed.
I took lots of
pictures to her
and told her what
I wanted, but
feel like she just
plugged a cookie
cutter kitchen
into my space.
I think I could
design a better
one myself, but of
course have no
experience. I was
wondering what
others had done.
We really want to
make a trip to the
Kraftmaid outlet.
Has anyone else
designed their
own? Any input is

greatly appreciated! Thanks!
Marsha in Frankfort, KY
Marsha, pretty
much had the
same experience
at Home Depot
and another local
retailer that has
put tremendous
sales pressure on
me. We have
used the Kraftmaid
layout planner
and the plans
from Home Depot
and kind of come
up with our own
thing. I really want
to go to the Kraftmaid outlet but
dear hubby is very
hesitant. He keeps
looking online
at stuff on eBay
from there, and a
lot of it is damaged and he is
like, I dont want
scratched dented
cabinets in our
new home. He
is also afraid that
we will get started
and it will take
forever to gather
the whole kitchen.
It is a 4-hour trip
there for us so
he is just afraid it
will take 10 visits
and not be what
we really wanted.
Would love some
advice from those
who have been
there often as to
how to go about
planning and how
long it took them
to do their whole
kitchen. Do you
just have a list of
base sizes, wall
sizes and then go
and see what you
find? Or should
we know the
exact cabinets we
are looking for?
Bren in Western,
NY
A House that Works

A house that works is my theme in building a house. My impression after
touring hundreds of houses is that they lack imagination. Most houses are tremendously dull concepts involving little more than boxes stacked on top of each other.
You can change this. By forethought, you can put all kinds of things into the design
and inside the walls that will make your house more usable and comfortable.

I found Don Asletts book, Make Your House Do the Housework (See page
263) refreshing and interesting. This housecleaning expert found that much recurring drudgery can be obviated by good design. As an owner-builder, you have the
unique opportunity I consider it a stewardship to make your home into a facilitative environment for better living. Winston Churchill captured the thought when
he said, We shape our buildings, and our buildings shape us.

Your house has a job to do, and that is to facilitate your life and that of your
successors in the house. Some ideas to put your house to work:

1. Let it process the water with which you will cook, clean and drink. This
can be through water filtration, water softening, water distillation, or a combination.

2. Let your house improve the air you breathe. Through a variety of air filtration systems, humidifiers, and air-to-air heat exchangers you can improve the
healthfulness of your inside environment, and the cleanliness of your surroundings.
Integral building envelopes or housewraps reduce dust infiltration.

3. Let your house feed you. Through forethought, you can simplify the process of preparing and storing food in your new house. You can landscape for a place
to grow food and herbs; you can provide a root cellar or fruit room to store the produce.

4. Let your house give you a workout. You can build a sports court into your
design as we did. You can adapt a room into a workout room by providing appropriate soundproofing, electrical service, and lighting with cable or satellite TV and wireless internet to facilitate the use.

5. Let your house stimulate your mind. Provide spaces conducive to twoperson conversations. Create libraries and reading spots with natural and artificial
light and privacy. Pre-wire for electronic internet and computer sharing pathways
from room to room. Locate student desks in bedrooms. Pre-wire for telephone and
data access to many points, as well as wireless access to full house and deck or patio.

6. Let your house clean itself. Build in a dust-free whole-house vacuum
system. Bring wash facilities to points of use. Avoid designs and surfaces that catch
dust. Use scrubbable, cleanable, renewable finish materials.

7. Let your house warm and cool itself. Provide for air flow, orient your
structure to capture morning and winter sun, design to shade from the high sun of

summer. Provide means of thermal storage and insulate generously to protect your
found resource.

8. Let your house care for you. Make provisions for handicap access if you
have immediate need or if you will stay long enough to experience the ravages of
unexpected injury or advancing age. See that your hallways are wider; your baths,
laundry and entrances are accessible, and your kitchen is open and adaptable. Design
in considerations for children and for pets. Make play spaces, gathering spots, and
storage for toys and personal articles.

9. Let your house entertain you. Pre-wire for whole house audio and home
theater video. Provide for internet, satellite, and computer connections to televisions.
Create spaces for guests and gatherings. Design your house to separate activities and
permit privacy. Provide for musical performances and instruments, for formal meals
and holiday celebrations, and storage for holiday decorations. Facilitate your hobbies
thoughtfully.

10. Let your house make a living. Create and equip space for shop or office,
craft or livelihood. Anticipate the necessary utilities and facilities. See that storage,
display, delivery, and communication flexibility are built in whether you choose to
activate them later or not.
Quality Considerations

In Chapter 6 we will talk about bringing your ideas to an architect or designer
who will incorporate them into a professional design. Before you see your design professional, you should give consideration to the quality you expect to build into your
custom house.

As an owner-builder, you have the cafeteria-style privilege of selecting the
elements and philosophies that go into your home. My interviews with general contractors showed a surprising ignorance on their part of the quality that should go
into a high-end home. Designers and architects, on the other hand, proved to be very
fluent in issues of quality. As O-B, you will consider the issues and assure that your
design addresses all the quality possible on your construction budget.
Consider:
1.
2. Clean air and water.
3. Energy and water conservation.
4. Ease of maintenance and cleaning.
5. Suitable illumination.
6. Longevity of design and materials.
Noise reduction.
We had the same

experience at
Home Depot. The
KD is nothing
more than a cabinet salesperson.
We spent about
4 hours with her,
got the estimate,
and took it to the
bank as we were
only interested in
securing the loan
and getting the
catalog and price
lists.
With a catalog
of different ideas
and a couple of
books courtesy
of the library,
we designed our
own kitchen and
took the ideas to
a custom cabinet
shop. Meryl (cabinetmaker) took our
ideas, suggested
some of his own
based on what
he is making and
installing in some
high-end houses,
and we ended
up with a great
kitchen that is far
superior to what
we would have
gotten from the
so-called KD.
You really need
to think in terms
of how you want
your kitchen to
flow, how many
cooks, your cooking style, how
you break down
tasks, etc. I would
have been willing
to pay someone
for this service as
there are so many
things to consider
(i.e. did you know
right-handed
people prefer the
dishwasher to the
left of the sink,
and left-handed
people prefer the
dishwasher to the
right of the sink I

didnt?), but all of
the KDs around
here are interested in nothing
more than selling
cabinets.
If you design your
own kitchen, I
would seriously
question the
current design
philosophy about
the design triangle
and focus instead
on how you use a
kitchen. You will
notice that most
high-performance
commercial
kitchens are not
designed around
a triangle. We
disregarded the
triangle concept
and focused more
on workstations,
what we intended
to accomplish with
each workstation, and made
sure we had the
cabinets and
adequate countertop to support this
concept.
Kenneth in Lees
Summit, MO
There are a
few free kitchen
design programs
out there. Some
people say they
are pretty good.
You may want to
check this one out:
ALNO-KitchenPlanner.
This one has a
15-day trial:
upperspace.
com/products.
Phil in Gainesville,
FL
Im a little
obsessed with
kitchen design.
Before opting for
our final plan,
I would take
7. Preservation of investment value.
8. Comfort and convenience.
9. Safety and security.
10. Economies of forethought.

Number ten means that you design quality in before you break ground, and
that potential conflicts of design are worked out in advance and without the cost of
rework and change orders. Later expansions and upgrades are facilitated by provisions you make at initial construction.

Consider the uses to which your house will be put and make sure the design
accommodates those uses. Even common activities like food storage and musical performance can raise questions. Inspector Beryl Ford of Tulsa, Oklahoma explains:
People may think they are okay with minimum requirements. A refrigerator
alone weighs 300 pounds. Most residential floors are designed for 30 pounds per
square foot of weight, and the fridge exceeds it. Then you load it with food, and
a heavy person walks up, the floor sags and squeaks due to concentrated load.
A grand piano weighs 1,200 pounds, and has three legs, thats 400 pounds on
each of three square feet. Then a big guy comes over to play. Several people lean
on the piano to sing, and the floor shakes.

The thoughtful observations in your dream house notebook, conversations
with subs and suppliers, the care invested with the designer, and the on-site efforts of
you and your inspector during construction will all impact the quality of your house.
Ultimately, you are responsible for quality it wont happen on its own:

Quality is never an accident; it is always the result of intelligent effort.

John Ruskin

Seven Lamps of Architecture
Comfort and Convenience Considerations

Over the past few years, Elaine and I have visited the homes in ten Parade of
Homes. I always look for the same little conveniences: bedside shelves, ceiling fans,
lighted house numbers, closet organizers, water softeners, gas fireplaces with thermostat controls. One favorite convenience of mine is bedside light and fan controls.
Out of ten Parades with more than 200 houses, only one house had dual bedside
controls in the master bedroom. Everybody probably reads in bed once in a while,
but builders must figure you can take a walk when its time to turn out the light.

In our house, we made sure that there were two individual reading lights
over the master bed with separate bedside controls. There are separate switches at
bedside to control the ceiling fan and the fan light. These are in constant use and a

great convenience. One owner-builder I talked to pushed this convenience further.
South Carolinian Ernie Gerdts added deck lights and exterior floodlights to the bedside array of switches. He floods the property with light if he hears a noise in the
night.

I have never seen a gas fireplace with a conventional thermostat control in
a Parade home, although with a gas fireplace the thermostat is a no-brainer. You
can maintain a constant temperature in one room throughout a cold night with this
simple convenience. Even comfortable features like carpet in the master bath, or an
overhead heat lamp are almost never in evidence.

You are the judge of your comfort and convenience, and many small things
that you can add to your design are negligible in cost. You can make your home much
more livable with features like:
dual-pane low-E window glass

housewrap
outlets in roof soffits for holiday lights or snow melt cables
whirly roof vents in warm climates
whole house fan
central vacuum
hot & cold water outlet in garage for car washing
good lighting and outlet availability in garage and outside house
insulated garage doors
gas and electric outlets for choice at stove and laundry
programmable electronic thermostats
abundant power outlets and access to phone, TV, and computer networks
operable bathroom window
porthole window in master closet or laundry
aluminum drip edge on roof
silent floor joists
glued and screwed sub flooring
conduit pipe from basement to attic for future wiring access
anti-scald shower valves
lawn sprinklers with line drains
nook and pantry storage
lights in all closets with easily-accessed switches
pull-out spray faucet in kitchen
no-maintenance siding and deck
seat and grab bars in shower
framing for flush-mounted refrigerator
extra countertop outlets in kitchen and baths
in-wall blocking for hand rails, towel bars, shelves, drapes and cabinets
reading light over tub
light over shower
courtesy footlights on stairs
conduit under walks, drives and patios for sprinklers, lights and power
hauled-in topsoil to improve lawns and gardens
stock homeplans
and lay out the
kitchen for every
one of them.
We chose our
houseplan after
I was pleased
that I could have
the kitchen of my
dreams in it. For
me, designing my
own kitchen is the
only way to go.
Forget the work
triangle, think of
what will make
your kitchen most
enjoyable for you.
Kraftmaid, Merillat, Thomasville,
etc. have .pdf
files of their stock
cabinetry online.
Remembering that
stock cabinets
come in 3
increments makes
it fairly easy to
design your own.
I cheat when I
first design any
space with cabinetry. I use 1/4
graph paper with
1/2=1. When
Im pleased with
the layout, then
Ill hand-draw it to
scale to work out
trimwork, molding,
etc.
Ive gone so far
as to make a list
of what I plan to
store in each cabinet. It has helped
me decide what
accessories such
as pull-out shelves
or knife drawer
inserts I would like
in each.
Any of the home
design software
out there includes
kitchen design
capabilities in it.
I prefer Broderbunds 3D Home
Interiors for kitchen
design. It was one

of those cheap
software programs
I was able to
get for just S+H.
It prints decent
lateral views and
can print to scale.
Ive used this program to note the
changes to cabinetry and mostly
appliance/plumbing placement in
my blueprint.
We have gotten
the majority of our
cabinets from the
Kraftmaid warehouse in Ohio. It
is a good idea
to be flexible. For
instance, I needed
two 30 wall
cabinets, but they
only had one.
So we substituted
(2) 15 cabinets
instead. Bring a
list and a sketch
and you should
be fine.
Sybil in Leominster,
MA
Sources Say
our experiences
of the last 12
years have made
it obvious that
most homes are
neither designed
nor built to best
suit the needs of
homeowners, the
people that live in
them every day.
We think this can
and should be
improved. Hence
our mission to
help people get
better homes for
the hard-earned
money they spend
on them.
From Better
Houses, Better
Living
(See page 263)

Pay attention to the fatigue you may feel while standing on your kitchen
floor, to drafts or cold surfaces in your bathroom in winter, to noise, and to lighting
in work, reading, and viewing areas. Notice when you must stoop or stretch to reach
something you need. Notice the little things.

Professional builders are notorious for ignoring comfort factors in building
custom homes. Writing in The Brevard Builder, a home building association newsletter, Tom Luce says:
Occasionally a builder will come up with things that are real head scratchers,
like an open-ended shower in a bath with ten-foot ceilings (that must be a chilling
experience), four-and-one half foot bathtubs...

You will do better than that because its your house.
Energy-Saving Features

One of the reasons your new home will automatically be more valuable than
existing homes is the advances in energy-saving technology that you can exploit.
Our new home uses a monthly average of just under 500 kilowatt hours of electricity during the summer. My records of 25 years ago show that my former home in
Columbus, Ohio used over 2,000 kilowatt hours a month during the summer. That
home was a single-story house that is 30% smaller than our Utah two-story.

There are newer, more efficient appliances, furnaces, heat pumps, and air
conditioners on the market now, along with better insulations, glazing systems and air
infiltration barriers. New Styrofoam insulated panel sheathing systems (Stress-skin
Panels or SIPs) offer bonuses to the new home builder in energy savings. Insulated
Concrete Form (ICF) construction, reputed to save a third of home energy consumption, has been enthusiastically embraced by owner-builders who think about such
things deeply. According to TheNewEnvironmentalist.com, only 3% of new homes
incorporate ICF technology. Our website survey indicates that 15% of owner-built
homes do. ICF is far and away the most common search term by all users on our
site.

Even the placement of your house on the lot can save energy. Author Robert
Roy says: The orientation of a house any house, energy-efficient or inefficient
can mean up to a 35% difference in the cost of heating and cooling. You can
begin your energy savings strategy by taking advantage of building orientation, and
you can take advantage of every strategy of design to exploit your savings, such as
deciduous shade trees and lawn around the house for air-cooling perimeter moisture
and heat absorption. Place coniferous trees on the north side of your house in cold
climates as a winter wind break. Economize the use of water by limiting grassy areas
in the design of your landscaping.

Owner-builders relate additional energy savings through the use of hydronic
radiant floor heat, electric heat strips under tile, heat pumps, sealed stove cooktops,
masonry exteriors, argon gas-filled insulated windows, low-E glass, zoned or dual

furnace and A/C systems, dual hot water
heaters, setback thermostats, sealed gas
fireplaces, ceiling fans, computer-calculated heating and cooling capacities,
roof overhangs to shade in summer and
admit warmth in winter, tree plantings
for shade or to block winter wind, gas
appliances, compact fluorescent or LED
lighting, and the lower resistance of 12gauge house wiring.
Forums
Im about to stake out my foundation, exciting stuff!

Can anyone help me with finding true South, not magnetic South?
The compass declination is about 13.5 degrees West at my location
in Beulah Colorado, (Lat N 38 4 30, Long W 104 59 10) Does this
mean true South is actually 13.5 degrees west from magnetic South?
Thanks,
Joe in Canon City, CO
You got it. Generally, when navigating in the northern hemisphere,
West is best.:)
You might do a little poking around I found by spinning my house
so it is skewed slightly off of South, favoring East, I would increase the
overall solar exposure about 20%, because hills to the West of me
prematurely cut off the solar gain at about 5:00 PM. Its designed to
maximize gain during the winter, but shield the windows from direct
solar during the summer.
I dont remember the exact location, but if you dont have any other
close topographical features that might cut off the exposure early,
youd probably be fine to just stake it.
Good luck,
John in Erie, CO
Sources Say
Habitat for Humanity: How to Build a House lists the parts of a typical
house in 15 sections.
Are todays houses the best available for the money? As we will see,
most definitely not. As long as more thought is given to aesthetics, and
little, if any, to function, people will buy what they perceive is attractive. So thats what gets built. But, why shouldnt you have a house, to,
as Francis Bacon said, live in as well as look on? You should, and
you can.
Sources Say
Subject: Home Improvement Trends at NHS
From: Amy Gorga <agorga@clearblue.biz>
The 61st annual National Hardware Show is preparing for a full
house at its Las Vegas event May 9-11, with more than two million
square feet of floor space and 3,200 exhibitors at the Las Vegas
Convention Center. Manufacturers from around the world are working hard to develop thousands of new products youll see exhibited,
including hand and power tools, lawn and garden products, paint
and decorating products and gourmet housewares.
Here are several of the home improvement trends that will be exhibited at the show:
Home Improvement is Looking Up: The long-term outlook for the home
improvement market remains strong. Global Insight projects an average of 4.6 percent total market growth in constant dollars for 20082010 well ahead of the rate of overall economic growth (Home
Improvement Research
Institute and Global Insight).
Women Continue to Roll up their Sleeves: Women are buying more
homes and are more responsible for basic repairs. Women account
for about a quarter of power tool and accessory purchases in the
United States (Home Improvement Research Institute).

New Desires in Gardening: Professional-looking landscaping is going mainstream. Sales for lawn and garden products
including both plants and equipment totaled $36.8 billion last year. The average annual-per-household lawn and
garden expenditures totaled about $449 (National Gardening Association). New gardening styles are leading to baby
boomers getting involved in vegetable gardening, large pot sculptures being replaced by terra cotta, and patios being
turned into comfortable extensions of the house where people are spending quality time outdoors.
How to Warm up on Those Cold Nights: Requests for energy efficient products are up. Home owners can save as much
as 35 percent a month on their home heating bills by improving their homes energy efficiency. Consumer demand for
products that lower utility bills is leading toward more green building. The typical U.S. household is expected to pay
$892 to heat their house this season, up $107 from last year (Energy Department).
Gaming Goes Beyond Scrabble and Monopoly: Homeowners want to create the sports-bar experience without having to
leave their home. Families are integrating game rooms into their homes for more quality family time. Game rooms provide
a place for teens to socialize at home smart thinking mom and dad!
White and Beige are Out: Lots of color is making a splash in homeseven on the ceiling! Ceilings are now colorful
especially in hallways, dining rooms and kitchens. As for walls, finishes with metallic paints and color on top is the new
way to go. Popular colors today have a natural, light look, including softer colors inspired by nature.
Bathroom Luxuries: Where are people going to relax? The bathroom! Chairs and recliners for lounging are becoming
more common. Todays master bathroom showers incorporate the ultimate spa experience with rainfall showerheads and
massaging streams and tubs with whirlpool jets and waterfall faucets. Homeowners design their own bathrooms using
glass and porcelain tiles to complete the look. (National Association of Home Builders Home Remodelors Council)
$400,000 or less
With a few exceptions, heres what you can reasonably expect in a $400,000-and-less home, as well as what you cant
expect unless you pay extra for upgrades. The closer you get to the $400,000 price tag, the more the amenities.
What you can get
Stucco exterior Asphalt shingle roof. Front-facing garage that dominates the front facade.
Single or double doors with glass insets at front entrance. Niches, arches, tray ceiling, recessed lighting.
Crown molding. Eat-in kitchen; aquarium glass in breakfast area. Walk-in pantry.
Wooden kitchen cabinets; Corian or laminate counters. Separate dining room.
Den or home office that can be used as additional guest room.
Small secondary bedrooms with small closets (walk-in closets in some models).
Bathroom amenities, such as separate toilet room, garden tub, walk-in shower, double vanities.
Minimal allotment of ceramic tile; lots of inexpensive carpeting. High ceilings (mostly 10 feet, but up to 15 in public
areas).
Two- and three-car garage. Adequate laundry room with cabinets and sink.
Hurricane shutters and house built to new hurricane codes.
Mediterranean revival design, some Florida cottage and Craftsman bungalow influences.
Houses that line up close together on the street.
What you dont get
More than 3,000 square feet of house, including outdoor living area and garage.
Kitchen amenities, such as two dishwashers, refrigerator drawers, fancy range hood, tumbled marble or mosaic backsplash, granite countertops, center island, gas range. Kitchen appliances concealed behind cabinetry.
Bonus room. En suite secondary bedrooms (i.e., each bedroom has a connecting bath).
Spacious entry foyer. Marble, stone or hardwood floors. Sky-high ceilings (15 feet and taller) throughout.
Fireplace. Wine room. Big closets. Dressing room. Outdoor kitchen. Enormous rooms.
Lots overlooking a golf course, nature preserve, bay or Gulf. Terrace, courtyard, loggia. Tile roof.
Swimming pool and large pool patio. Side-entry garages
Unique modern architecture (but you dont get that in the luxury division, either).
A brand-new home for less than $400,000?
Sarasota Herald-Tribune Sarasota, FL
Chapter 6: Conquer Details Room By Room

and Save 20%
Time line: Eight months before groundbreaking
Change Orders are Costly
change order is an agreement to modify an original contract with a builder at

an added cost. The term applies generically to those changes in the course of
your project that change your original plans and increase your cost.

You dont want change orders. You want to get it right the first time because
change orders are costly for these reasons:
1. DoUndoRedo.

Many change orders result in three times the work. You do the design as
planned. Thats the first cost. You decide you dont like it. You undo what you did,
destroying materials and running up labor. Thats the second cost. You redo the work
in a different way. Thats the third cost. Youve paid for the same item family
room, driveway, shower enclosure, whatever three times.
Readers Say
I had a friend
who was a
contractor in
SLC, a framing
subcontractor, and
he said I loved
it when we had
vague plans and
contracts with customers, because
we could bid it
low, and when
you get half way
into it, you can
say thats extra
because it wasnt
on the plans.
Those plans are a
legal agreement
between you and
the subs, and you
better have all the
detail you can on
them.
Ted & Regi M.
Monroe, UT
70 Chapter 6: Conquer Details Room By Room and Save 20%

Sources Say
Each hour you
spend figuring out
what you want
and how to do it
before you start
will be worth two,
or maybe ten,
to you once the
project is under
way. During construction, changes
cost more than
they would if
included on the
original drawings
or specifications.
Disruptions cost
dollars. It is also
far easier for
everyone to agree
to guidelines and
constraints ahead
of time than when
the crew is waiting
around for instructions.
(See page 263)
2. Short Notice.

The affected item must be changed right now. It stands in the way of other
work. The interest clock is ticking. The schedules of the subs are on hold and beckoning. Youve got to move now. You cant give the item adequate competitive bidding or
shopping time. You have no recourse but to pay top dollar.
3. Tip of the Iceberg.

Once an owner starts doing change orders, its just the tip of the iceberg. If
one thing needs to be changed now that the owner thinks about it, other things also
need to be changed. The change orders are a sign that planning was weak on the
project overall. There is dissatisfaction with many items. But the impatience of the
subs and the unavailability of new and different materials or craftsmen to effect the
change limits the process. The result is that many desired changes are foregone. And
the owner is unhappy with the house, the greatest single investment of his or her
lifetime.

Some changes are too late to be done right, as with the master bathroom in
one house in the Midwest. The owner decided belatedly to add marbled walls and
mirrored ceilings to a sumptuous master bath. The weight of the room became tremendous, and out of proportion to the footings and foundations already in place.
The house sagged, the walls cracked, and a legal fight over responsibility ensued.
Forums
$$$$$$$$$ And
so it begins! What
exactly does
an architect do
anyways? I pretty
much designed
my own house
plan I sent it to
an architect who
then basically
put it in blueprint
format and told
me to get it engineered. I paid a
pretty hefty fee just
to have them take
my design and
put it on paper. I
did not expect the
engineer to ask
for an additional
$3,000! Is this
normal?
I did not research
my architect
They were highly
recommended
and I am happy
with my design
I just didnt
realize I would

For many general contractors, change orders are a way of life, and a steady
source of income. This group gives short shrift to planning, and hurries to break
ground for their customer. When the change orders arise, they are the customers
fault. The contractor gets the business because he bid it lower than a competitor who
included everything and who provided for some planning time. But he ends up at a
higher cost than the up-front competitor. And the customer winds up stressed and
dissatisfied.

In my survey, most of the contractors admitted that change orders arise
on all of their projects. The average of all contractors surveyed was a five percent
increase in original estimate.

Industry expert Ron Horne says that change orders actually add 20% to the
cost of a custom home. When contractors only admit to going over by five percent,
who is right?

By the time a project goes over budget by five percent, all the slop in the
budget has been consumed. Suppose there is a ten percent contingency budgeted for
the unforeseen. Thats used up. Say that everything from concrete to roofing was
estimated a little conservatively, maybe five percent over. Thats used up. The owner
loses any remaining flexibility to divert unspent funds to upgrades and extras. The
project is over budget only five percent but nobodys happy, except possibly the
contractor.
Chapter 6: Conquer Details Room By Room and Save 20% 71

The contractor still makes his planned profit. If the project is getting a little
tight and his profits are threatened, he can make it back with interest on the change
orders. The profit margin on change orders is widely regarded to be much more than
on the original estimate. You are under the gun, everything is rushed, and theres a
real potential for contractor profiteering.

This is one of the places where the value of owner-building becomes clear.
You control the planning, and thus control the change orders. You use the slop in
your budget for extras or you keep your savings. You have the satisfaction of getting
exactly what you know you want in your house, all at fully competitive prices.

Custom Builder Magazine reported that custom homes go over original budget
by an average of 12% to 19%. On a $500,000 project, five percent is $25,000; 20% is
$100,000. If your planning saves $100,000 on your house by averting change orders,
you get the Dime Saved is a Dollar Earned equivalent of $1,000,000 in salary for
your effort.
How Specs Save You Money and Get You a Better

House

A spec or specification is a comprehensive written advance description of
the details of your project. Lets look at the components of the definition:
1. Written.

Because specs are written they force you to think. As Anne Morrow Lindbergh said, Writing is thinking. Once the spec is in writing, you can engage others
in the process of that thinking. For instance, you can photocopy the spec and mail
it to different vendors for suggestions or prices. If you have the written spec on your
computer, you can fax from the computer or email excerpts from the spec to vendors,
subs, designers anyone involved in your process.
2. In advance.

Since specs are created in advance, they provide all kinds of opportunities to
save. With written specs and time to respond, subs can produce far better estimated
bids. The sub can be more accurate and more thorough, and can take advantage of
the power of planning. You can engage the sub in the process of thinking through
a better house.

Say you specify higher foundation walls than usual in your concrete spec
because you want a nice high basement ceiling. One of your selected concrete subs
calls while preparing the bid and says that he will have to rent oversized forms to do
it, at a much higher cost than usual. Are you sure you want the high walls?

You assure him you do, and he asks if you have considered an ICF system.
It would cost a bit more, but the walls could be poured to any height, with a stay-inThe Owner-Builder Book
be putting out that

much more for an
engineer! Once
again I must ask
Is that normal?
What kind of
prices have my
fellow owner-builders put out for their
house plans and
engineering????
I know this is to
be expected lots
of unexpected
or higher than
anticipated costs,
but I think I am still
a little surprised
******
Im beginning to
feel taken by my
architect. I figured
that when we
hired him to draw
up our plans that it
would include all
of our engineering. Most of the
timberframe companies I looked
into on the Internet
provide plans that
include engineering for around
$600.
This kind of feels
like starting over!
Back to square
one.
Angela in Lake
Helen, FL
Angela you
were not taken
by your architect,
you were taken by
your lack of experience. That is why
this website exists.
Your architect did
what you asked
him to do. Its not
his job to tell you
that you will also
need engineering. Our engineer
did not tell us we
would have to
pay for truss engineering. Very few,
if any, people will
volunteer informa-

tion in this industry. You may have
to pay for more
engineering if you
choose alternative
materials.
I know it is hard to
delay a dream, it
is also hard to pay
for our mistakes.
If you havent
already done so,
study The OwnerBuilder Book. Go
on websites like
DIY and HGTV
etc., and learn
more about the
building process.
It is complex and
complicated. You
need to understand the materials
and processes
before you begin
building.
All of us have
made mistakes
and paid for them.
You can recuperate from this.
Lyn
Just a simple
example, my nextdoor neighbor is
getting ready to
close on his house
later this week
(almost done), and
he just realized
he has no phone
lines. While
phone placement
would not normally be included
in the plans, basic
electrical specs
and scope-ofwork should have
included that the
electrician runs
the low-voltage
(phone and/or
cable), otherwise
they will leave
this out of their
bid. Since he has
no phone lines, I
would guess he
has a minimally
code-compliant
install (and since
place form that is made of rigid foam insulation. The insulation means you will save
on energy bills for the life of the house. You take the suggestion, make adjustments to
the budget, and rejoice over the improvement in design.

The detailed specifications make the work go smoothly once construction
begins. The subs have the right tools, the right materials, and the appropriate crew to
get the specified job done. There are no false starts and no disappearing subs due to
inability to complete. There are fewer questions and delays. The sub knows this and
you get lower bids. You save money during construction because there is no rework,
there are no changes, and the job is finished surprisingly fast. You attract good subs
because they prefer planned projects like yours.

Another benefit of advance specifications is that it permits you to separate
materials from labor on your project. This helps in two ways. First, you get the privilege of choosing the materials and components you want rather than those that are
standard or the sub happens to like. Second, you have the opportunity to hunt for
bargains. You have plenty of time to reflect on the advice of suppliers and find the
chosen items at the best prices. You dont miss out on good deals that may require
longer lead times.
3. Comprehensive.

Your spec incorporates all the aspects of your project, including those which
could clash with each other. No decision is made on its own basis alone, or in a
vacuum. I call this systems thinking. Each aspect of the project is made to complement the other aspects of the whole system.

For example, if you know in advance that you want elaborate crown molding
in certain rooms, the framers can provide the proper backing for the molding before
the sheetrock is hung. The finish carpenters install the crown molding easily and
well and it stays perfectly in place. It is easy to caulk and paint, and no microcracking
occurs. You enjoy a better product for years to come.
How to Develop Room by Room Specifications

When you apply for a construction loan, your lender will want to see written
specifications for your project. (See Chapter 11.) The ones furnished by your house
designer may not be sufficient or in the format the bank uses. Bankers have various
forms for specifications. Following are three examples of foundation concrete specification forms that bankers use.
Sample 1
Foundations
Footings: concrete mix _______; strength: psi ________ reinforcing _________
Foundation wall: material ________________ reinforcing _______________
Interior foundation wall: material _________ Party foundation wall: __________
Columns: material and sizes ______________________________________
Piers: material and reinforcing ____________________________________
Girders: material and sizes _______________ Sills: material _____________
Basement entrance areaway: ____________ Window areaways: __________
Waterproofing: ____________________ Footing drains _______________
Termite protection: ___________________________________________
Basementless space: ground cover ______________ insulation ____________
Foundation vents: ____________________________________________
Special foundations: ___________________________________________
Additional information: ________________________________________
Sample 2
Concrete Footings
Concrete footings for walls and piers shall be mixed in the proportion of one part
cement, _______ parts sand and ________ parts gravel. Pit run gravel may be
used if its proportions of sand and gravel are as called for. All aggregate shall be
clean and sharp and free from organic matter. Coarse aggregate to pass 1 1/4-inch
screen and to be retained upon a 1/4-inch screen.
Footings for walls shall be _______ inches thick and ________ inches wider than
wall on each side: pier footings shall be not less than _______ inches square and __
_____ inches thick.
Basement Walls
Shall be of _______________ construction, straight, plumb and level, and as
shown on plans. All joints shall be struck flush on both sides. Beam fill as shown on
plans. Basement wall will or will not be waterproofed with _______ coats of
_____________________.
this is basically
a spec house,
probably a good
assumption). Your
electrician needs
to know what type
of light fixtures
you are using,
where you want
them, where you
want ceiling fans,
that you want a
pathway of light,
kitchen appliances, laundry
appliances,
special electronic
gear such as an
entertainment
system, outside
lighting, security
lighting, etc. All
of this is aboveand-beyond basic
code minimums,
which is what
you will get
bid without any
specifications or
understanding of
exactly what it is
you are looking
for.
The same thing
goes for the
plumber. What
are you using
for your furnace,
hot water heater,
dryer, cooktop,
and oven? If you
dont specify gas,
and how many
BTUs these appliances have, dont
expect that you
will get gas lines
in your low bid.
Does your house
use one of those
fancy new Roman
Tub faucets that
flow at 16 gallons/minute? If so,
you better have
the pipe to supply
this faucet and
you wont get it
unless you specify
this somewhere.
There is no trade
exempt from
this. Does your

roofer know what
underlayment, ice
and water shield,
shingles, and roof
vents you expect?
If not you are
going to get 15-lb
felt and 3-tab
shingles. Does
your concrete flatwork subcontractor know what you
expect for slab
thickness and reinforcement? Does
your tile installer
know you want a
thinset install on
top of a decoupling membrane,
and not mastic?
This applies to
all of the trades.
Provide plans without specs, and
the low bidder
will leave out
everything beyond
basic code compliance. When
you make your
decision based on
price point alone,
that is all you
are going to get.
When you make
changes realizing
you didnt get
what you wanted
and/or needed,
you will pay extra
for the change
orders, probably more than
you would if you
selected a higher
bid that told you
how to do the
job correctly and
wouldnt put their
name on a minimally code-compliant job. With
electrical and/or
plumbing, it is
usually easier to
make changes to
fix your problems,
but with HVAC
and concrete
flatwork wholesale changes are
extremely difficult.
If you provide a
Sample 3
Foundation
Type: ( ) Full; ( ) partial __________x__________; ( ) crawl space; ( ) pilings; ( )
slab; ( ) other _____________________________________
Footer: Depth ___________________; thickness ____________________
French Drains: ( ) Yes; ( ) No; material ______________________________
Basement: Walls _________________ concrete block _________________
poured concrete; ( ) reinforced; ( ) other ( ) outside entrance
Basement Floor: Concrete; ( ) reinforced; other _________________________
Basement Drains: ( ) Yes; ( ) No; __________________ number; ( ) sump pump

All of the lender specifications I have seen differ in degree of detail, ease of
use, definition of categories and scope. Some of them are daunting for an ownerbuilder (like me) to complete. You can get help filling out a standard specification
like one of these if your lender requires them by calling any subcontractor and asking
him how to interpret and fill out the bankers form. They will help you and you get
exposure to a possible choice of a sub for your project.

Most of the technical specs for your project will be provided by your architect or designer as part of your house plans. While the major technical details are
covered by specs like these, they are insufficient in terms of explaining how to build
the house you are hoping for.

For this purpose, your dream home notebook works in concert with the
technical specs. Compare the following typical standard specifications for a bathroom with my own dream home notes on bathrooms:
Bathrooms Specifications
Total Baths: No.__
full __
three-quarter __
half __
Sinks: No.__
Type______
Make____
Color & Finish____
Spigots: No.__
Type______
Make____
Color & Finish____
Toilets: No.__
Type______
Make____
Color & Finish____
Bathtubs: No.__
Type______
Make____
Color & Finish____
Stall Shower: No.__
Type______
Make____
Color & Finish ____
Medicine Cabinets: No.__
Type______
Make____________________
Vanities: No.__
Type______
Make____________________
Heater-Light-Fan No.__
Units:
Type______
Make____________________
Excerpt from Dream Home Notebook

Bathrooms:
- Put blocking behind all the walls where towel
racks and grab bars will go. Also in the wall
where tub will need bracing. 2x12 remnants from
stairs are good for this and for drapery locations
over windows.
- Telephone in bathroom.
- Steam shower.
- Extra electrical outlets in bathroom.
- European bathroom fixtures that can be used as
hand-held. One knob controls.
- Built-in dispensers for liquid shampoo,
conditioner, moisturizing cream.
- A place in shower to put towel so you dont have
to open door to get dry.
- Light fixture in shower that wont rust and is
vapor-proof.
- Have linen and bath supply closet in the
bathrooms, oversized, floor to ceiling.
- Have a deep, wide sink to accommodate the
splash of washing your face.
- Have the fountain-type fixture in the sink that
makes it easy to rinse your mouth after you brush,
and converts to rinse your face after you wash or
shave.
- Ceramic tile around tub.
- Provide access to shower and tub drains for
cleaning them out.
- Antique brass fixtures.
level playing field,

at least all the trades
know your expectations and can provide
the price it takes to
meet them.
Kenneth in Lees
Summit, MO
Sources Say
Appendix J of Be Your
Own Home Renovation Contractor offers
good information for
defining trade specifications.
(See page 263)
Sources Say
engineers often
overdesign like crazy.
They hate the thought
of lawsuits, and who
can blame them?
From The Well-Built
House (See page
263)
Sources Say
Better Houses, Better
Living lists general
considerations for
floor plans, like in
a two-story house, be
sure to include a halfbath downstairs.
(See page 263)
Forums
What are some

ideas/shortcuts, IF
ANY, to bypass
going through an
expensive phase
with an architect OR
designer to get an
approved houseplan
ready to be built?
Can I just buy a plan
on the Internet that I
like and pay a draftsman to make modifications that comply
with the local codes?
Have him approve
the plan and draft
the necessary details
to build the house?
Can this be done?
Any help would be
appreciated.
Jim in WI

Sure, you can do that if your
local building review/permitting departments allow it. Some
jurisdictions require an architect
to design the plans. You need to
check before you buy.
In any case, you MUST have a
structural engineer and a soils lab
to assess your site and design a
foundation for your house for that
specific site. The engineer will
more than likely hire the lab to
give them the numbers they need
for design.
If you choose to purchase plans
over the net, let your other subs
review them for accuracy electrician, plumber, HVAC, carpenter.
Your draftsman may or may not
have the construction experience
to determine if something doesnt
look right about the layout.
Make sure windows are properly
sized for egress, hallways are
wide enough, doorways are wide
enough, minimum headroom clearance in and under stairs, return air
ducting doesnt kill a closet, electrical meets code, etc.
The problem with internet plans
is that they arent designed for
any specific set of building codes.
The disclaimers all over the plans
say to have them checked for
accuracy and for local codes.
You may spend more on getting
your plans ready to build than if
you took your ideas to a designer
and have them create your house
from those ideas that meets local
codes. Or do it yourself.
Programs like 3-D Home Architect
or its professional version Chief
Architect can produce an accurate
set of plans to national IRC code
that you can design and build
yourself. That is, if its allowed.
Before you buy $1,000 worth of
plans you will have to change
anyway, explore designing most
of it yourself. The changes you
make wont cost you by the hour.
Hope this helps you out a bit.
Good luck.
Jim in Austin, TX
Your best bet is to interview local
designers and find out if they resell
plans. The first person to pay for
them pays for the design time, the
- Build double joists under tubs for support.

Insulate the open parts of the tub
underneath to make it more comfortable
and conservative of heat.
- Have reading lights over the tub, angled
for reading in the tub.
- Have plate glass mirror over the sinks in
the bathrooms, and use vanities with both
drawers and cabinets for storage.
- Use quiet-flush toilets with 1.6 gallon
water-saver flushes. Have plumbing bids use
simple white fixtures to compare apples to
apples.
- Cable TV hookup plus telephone jack
because of possible internet connection
through television. Have a GFCI outlet
nearby.
- Separated sinks and vanities in master
bath with angles and height changes.
- Use exterior door-type opening for an
interior door with frosted side lites and
transom to master bath.
- Have a gas fireplace in the bathroom,
shared with the bedroom.
- Have a hot water radiant heat system in
the basement, and forced air on the other
two floors. We can bring the piping up and
at least do a staple-up system under the
kitchen floor, bath floors, and main floor
areas of tile.
- Have a way to warm your towels in the
bathroom, and to pre-warm the clothes you
are going to put on first thing in the
morning. Could use a radiant
wall unit in bathroom like the Runtal brand

that doubles as a towel bar.
- Have the HVAC installer do all the vents,
including bathrooms, laundry room, clothes
dryer, stove, and range hood.
- Outside window in johnny room. Insulation
around bath vent fans for noise, or use remote fan
location.
- How about a steam free mirror in the shower?
There is a barrier-free sink arrangement available
for the master bath sinks. And these are extra-wide
sinks. Make all towel bars function as grab bars by
specifying a rugged type of bar, and providing
adequate blocking in the wall.

From the notes you develop for each room and portion of the project, you
can extract notes for each trade (plumber, electrician, mason, ceramic tiler, etc.) that
will bid on your project. You ultimately have two lists: (1) Descriptions by room, and
(2) Descriptions by trade.
Architect vs. Designer

You need more than a design from a plan book when you build a home.
In most municipalities, the plans must be adapted to local codes and engineering
standards. You can bring sample plans to a local professional to have them adapted
to local codes. Sometimes your design professional has a library of stock plans from
which you can choose at a reduced cost over custom plans.

Most owner-built homes rely on the plans of a house designer or architectural draftsman who is not a registered architect. Most high-end custom homes rely
on the plans of a certified architect. You are an owner-builder and you plan to build
a high-end custom home. Which way will you go?

Traditionally you would go to an architect for more creativity and more artistry. The designers are known for more practicality, buildability, and construction
cost savings. The architects cost five times as much as the designers. (Average: 7.5% of
construction cost versus 1.5% of construction cost in my survey.) They spend more
time on a project and charge higher per-hour fees because of their additional training. They also must cover the cost of the additional liability insurance they carry in
some states.

If you are well-prepared for your project, you have browsed plan books to
find floor plans and elevations (exterior appearance) that you like. You have considThe Owner-Builder Book
second person to
pay for them pays
for printing time
only see what I
mean?
There are several
local designers
I know who do
this. They typically
make their money
on modifications
to these stock
plans (or on developing new plans),
but if you can find
something off-theshelf from their
design portfolio,
you wont get a
cheaper set of
plans designed
to meet local
building codes
than this. You get
far fewer choices
than an internet
site however, so
you may have
to review several
portfolios to find
what you are looking for.
Kenneth in Lees
Summit, MO
Journal
The architect is
the key resource
when building a
custom home. I
got 4 bids for an
architect 2 from
local resources,
2 online one
full-service, one
minimal service.
The minimal service bid was for
$8K blueprints
only from someone who would
never see the plot
or be involved in
the construction.
Full-service online
was approx.
$8/sq foot of
finished space. At
this point we were
thinking of 6,000
sq feet or $48K.
Local resources
I had one that

made me feel
uneasy and his
full-service price
was $48K. The
last one (that I had
gotten the referral
for) started at $8/
square foot but
I wanted a fixed
price. We ended
up at $65K
complete this
was to include
the plans, all
structural including
numerous retaining
walls, basement, driveway,
drainage plans,
landscape plans,
energy calculations, etc. required
for plan check.
While this sounds
like a lot of money
I have found to
this point that it is
a great bargain.
I shudder to think
of where Id be...
ered your needs and preferences and have a well-developed dream home notebook
with room by room descriptions and sketches of your ideas. You have earned your
first cash payoff for your planning work. As one architect told me: If you come in
and know what you want, you dont need me that much. You can use a designer and
save about six percent of your construction budget.

In our case, we used a designer with stunning results. Elaine had a very good
eye for what she wanted. The result was a good dialogue which drew on the designers
skill and his considerable experience to produce a special house. The cost for this
service was less than $1,500 about seven-tenths of one percent of construction
costs.

The next time we build, however, and step up again to a very high-end house,
I think we will use an architect. In the process of telephone interviews with architects
we found one who was both brilliant and economical, an irresistible combination.
This architect is at a distance of 500 miles from our community, but the savings are
so great that we plan to fly to his location for meetings.

There are subtle design factors that mean more in a high-end home. Consider the interview comments of architect Douglas Long, AIA:
A trained architect has a better sense of perspective and design balance
than a designer. We are more concerned about the psychological effect of the
confined space. Sociologically, it can be shown that environment has an effect on
our behavior, like the effect of the beach, the woods, running water, etc. We spend
a lot of time in our houses. It should be taken into consideration. Owners should
spend as much time thinking about their house as they do about their car. Some
of us like to go into our shells, and dont feel comfortable doing that out in public.
There should be a single space that is theirs. You can do it with change of ceiling
height, a change of furniture, designate your corner in some way. Changes in the
feeling of space. Some tight and you feel secure, some wide open and you feel
loose.
Sources Say
The Well-Built
House has a
good section
on remodeling,
some of the most
pragmatic advice
weve seen.
(See page 263)
Sources Say
Habitat for
Humanity: How to
Build a House has
a section called
Moneysaving
design ideas
(See page 263)
Sources Say
Create your own
plans. Youll do
this by drawing
your sketch, to
scale, then hiring
a professional to
convert the drawing into a set of
working plans.
From Build Your
Dream Home for
Less
(See page 263)
How To Find a Good Designer

1. The best source is referrals from other owner-builders or from general

contractors.
2. You can look up designers in the Yellow Pages under Drafting Services,
Home Planning Services, or Home Designers. Some designers will not
be listed. You can call blueprint reproduction services, they will know some
appropriate designers in your area.
3. Call and make the acquaintance of the designer or architect on the phone.
Ask for references.
4. Ask the references about cost to construct, livability of design, resale

value any of your concerns.
5. Go to the designers or architects and view their portfolios of past projects.

Ask about costs and time involved and current availability.
Architect and Designer Comparison

ARCHITECT
DESIGNER
Average 7.5% of budget.
Average 1.5% of budget.
Involved in details of construction.
Doesnt visit construction site.
Assumes some liability carries

errors and omissions coverage.
Assumes no liability.
Develops a written program of

your needs and preferences.
Relies on your preparation.
Designs special spaces and creative structures.
Works from floor plans and elevations you like.
More artistic.
More technical.
Doesnt want you to have preconceived notions.
The more prepared you are, the

better.
More training.
More field experience.
Required to seal your plans in

some states.
Not authorized to seal plans in

some states.
More attention to aesthetics.
More attention to buildability.
Higher construction costs.
Lower construction costs.
You Are Ready to See Your Designer

If you use an architect, you will pay for his attention to details. One architect
explained: You make 20 or 30 decisions for just one interior door. If I make all of
those you could spend lots of money. But you can make many of the decisions.

If you are following the recommendations in this book, you will be very prepared to work with a designer. Architects ask for very little preparation. A woman
architect told me that if you bring a favorite article of clothing to the session, or a
favorite personal object, she can determine your preferences and design from there.

You can save the additional cost and go to a designer if you have done your
homework. Bring as many of the following items as you can to the first session. Each
one saves time or enriches the design product.
...had I gone with

someone else.
Working with the
architect should
be a give and
take. I had initial
drawings going
in, and we have
spent approx 3
months getting the
floor plan and elevations ready to
submit to the city.
My mother (the
designer) helped
tremendously by
looking over the
floor plans and
determining things
like traffic patterns,
furniture size
and placement,
room envelopes,
light and noise
concerns, etc. I
HIGHLY recommend getting a
professional in
this area as well.
They will point out
things that you just
know would have
bugged you forever had you not
fixed them in the
plans. Examples:
I had a breakfast
nook sticking out
the side of the
house original
size was 10x10,
back side open
to the kitchen
French doors
on 2 sides front
was glass with
city view. Sounds
decent looked
good on paper.
Now figure in
your furniture a
5-6 round table in
the middle this
gives you about
2 on either side
for someone to
sit not enough
room and those
French doors?
Forget about ever
opening them
the traffic pattern just doesnt
work. We liked

the nook but expanded it 17x10 French doors
have 17 between them now you have a 6
table and 5+ for chairs on each side more
than enough room to sit and have someone walk
behind you. There are MANY other examples
like that where something looked good on paper,
but would have been disastrous in practice.
Assuming youre building to live in find an
expert in this area save your money elsewhere.
After much back and forth we have come close

to finalizing on a design approx 1,600 sq ft
basement, 4,075 first floor, 4,319 second floor,
800 attached garage. Given this you can see
the value in a fixed bid at $8/sq foot I could
have easily paid $15K+ more!
Alan in La Habra Heights, CA
Journal
Wednesday, June 1st:

More progress! We have our (second) initial
meeting with our designer on the 24th of June.
He will take us through the entire process, start
to finish, including sealing the plans (structural
engineer thing) for the windload certification, etc.
We have a general idea of what we want, both
form and function-wise, so that should help. A list
of a few things that are important to one/both of
us (extra credit if you can guess who wants what)
1. oversized garage with workshop area and
side (east) entry
2. Master Bedroom on east side of house with
east/rear windows
3. large covered patio (sort of closed in on 3
sides by house)
4. summer kitchen (outdoor kitchen for you nonfancy types)
5. rec/game/theater/multipurpose room
6. walk-in pantry/laundry room
7. peninsula-style kitchen (not necessarily connected to wall, but you get the idea...)
8. 94 or 10 ceilings
9. pool/mud room bath (were not building a
pool, but an indoor/outdoor bath would be
handy since we are planning to entertain on the
patio frequently)
10. LARGE great room rather than broken up
spaces
11. study/den/library
12. lots of natural light in master bath
Theres probably tons more, but maybe as I think
of them I can add them and then reference this
when we go to the designer...
When we began this process last October,
we thought wed buy some ready-made plans
on the Internet, be out the door for just a few
hundred dollars, and be ready to build the
house. Not so. In Florida, they need to be locally
approved/sealed/etc. to meet code. The other
issue with pre-made plans was that there were
minor changes (position of garage door, adding
windows) that would cost us several hundred dol-
Items to Bring to Your Designer
1. Your dream house notebook and album including photos of houses and details you like or
dislike. Label your photos with explanations.
2. Site survey or a plot plan of your property.
3. Ideas on size of house.
4. Rooms to include, their size and description.
5. Idea of your budget.
6. Idea of level of finish: builder-type, spec home,

or custom with high-end finishes.
7. Pictures or video of the lot with depictions

of orientation, relation to neighbors, view.
8. Sketches of elevations and floor plans or layouts you like.
9. Any item preferences you have that may be

non-standard. For instance, a two-sided kitchen
sink is 36 inches wide. If you want a threesided sink with the food disposer in the center
bowl, it takes 42 inches. A standard kitchen
range is 30 inches wide, but if you want a commercial-type range, the designer has to allow
36 to 42 inches, depending on the model.
10. Stock plan books with design selections you

have made.
Good Design Saves Money in Four

Ways

Work with your designer to ensure that your
custom home meets your needs. Good design can give you
everything you want and save you money doing it. The
first way that design can save is on construction cost.
1. Savings in Construction Costs

Enable proper bidding. Work the quirks out on
paper rather than in the field.
Keep walls simple and lined up.

lars per change. When we did the math, it made
more sense to get it custom designed. This way, we
get a house that:
a) is well-suited for a lakefront lot
b) is designed to be built efficiently (i.e. not lots of
bumpouts, dimensions of rooms for minimal material
waste)
c) includes construction docs not included on
internet plans
d) we can say custom when we finally resell
e) is uniquely designed for our needs (conducive
to entertaining, conversing, and cooking for many
people)
f) has other things integrated that J wants, such as
propane where needed or light switches in particular places
The list goes on.
At first, it took some convincing for J to see that in
the end, spending more money on plans would
be cost-efficient, but at our first meeting with the
designer, I brought a plan we were considering
and showed it to the designer. I asked him how
he might redesign it to save $$ and he was easily
able to point out things that would save us several
thousand dollars on the building side of things.
From then on out, we were sold on the idea. OK,
enough for now... For those of you still getting to
know me, you now also have some insight into my
personality by my almost obsessive use of lists, both
lettered and numbered ;)
Sunday, June 19th:
Adding to the previous list
13. Tray ceilings
14. Leaning towards a 3/3 plus study/office/
library, plus rec room
15. pocket doors wherever possible
16. We dont care so much about a big master
suite. give us the space instead in the kitchen, study,
living and rec rooms, where we will spend much
more time
Layout of rooms:
Ideally the garage should be on the southwest side,
but Im not sure that will be possible with the septic
needing to go on that side... Im going to generally
speaking lay out some possible room locations
using a grid like this:
123
456
789
Ideally 1= rec room, 2=covered patio, 3=Mbedroom 4=secondary bedrooms, 5=great room and
kitchen, pref in that order, 6=Mbath and closet
(if garage on SW, maybe even MBath reaching
to front of house for light on 2 sides) 7=Garage/
Study, 8=Entry, 9=office/study/library
If in fact the septic placement prevents the garage
from being there, flip flop 7 and 9
I meant to go look at house models this weekend
but didnt have time. Oh well, hopefully its too
early to need to do that anyway.
Ensure that the design is easy to construct.

Organize spaces. A good design can organize the
floor plans of a house in a way that the maximum use
can come from the minimum space.
Stay compatible with conventional construction techniques.
Use cost-effective and environmentally friendly materials. Use local materials and labor.
Provide easy-to-understand construction documents.
Keep floor heights consistent through choice of materials, tile thicknesses, and underlayments.
Take into consideration standard material dimensions.
Plywood, sheetrock, framing, trims and components
come in two-foot increments.
Eliminate change orders and additional work. Provide
detailed specs to reduce the unknowns, and assure
quality control and craftsmanlike workmanship.
Assure site position is best for lot, reduces excavation
and fill.
Use trusses where possible to save labor over stick-built
roof framing.
Take carpet widths into consideration so you dont have
a lot of seaming.
Orient rooms and spaces to minimize hallways and
maximize the borrowed spaces from room to room, as
in an open plan. This could reduce the necessary size of
your home.
Place stairways in two-story homes to limit hallways
and reduce wasted space.
Reduce insulation cost by wrapping the inside of the
walls with plastic sheeting instead of using insulation
faced with a vapor barrier.
Use cantilevering (suspended support for parts of floor
area) versus having the foundation follow every jog to
save on foundations and excavation.
Thursday, June 24th:

Designer: Dave called yesterday, he has come up
with several plans but they dont match the elevation he had in mind. So hes going to work on it
a bit more. Then hell provide us with the draft, as
well as each iteration prior; what he changed in
each one, and why. Awesome! We will have it
before Alaska.
I went to see a few house models last week and
plan to go to a few more possibly next weekend.
Saw a 4br model around 2,500 sf. This reaffirmed our decision to go w/a 3br... We will be
able to make the secondary bedrooms bigger,
and add space to the great room by doing so. A
few things I wanted to make mental note of:
Dont forget about soffit lighting when it comes
time to do electric plans.
Recessed lighting in the shower stall looks pretty
darn cool.
Stucco finishing on covered patio how much,
say, to do arches between support columns, etc.?
Plant shelves in bathroom or other?
17x20 absolute minimum size for great room
Think about walls and furniture placement too...
Where will everything be situated in the great
room?
Definitely still like the concept of a pool bath
adjoining a secondary BR (acts as a guest suite
too!)
Will there be enough room somewhere to eat
inside? If we have a larger livingroom-type area,
this could potentially work. Otherwise, maybe an
eat-in area of the kitchen that adjoins the great
room? Somewhere there needs to be room to
feed 12 people easily.
I love mitered glass eat-in nooks, but I think it
would be too expensive.
Half walls could be an option for the living
room area. It might make the place seem bigger.
Wed be sacrificing soundproofing, but it could
potentially be nice. Good for entertaining, too, I
think.
13x18 is plenty for a Mbr
Hallways are an utter waste of space!!!!!
Kitchen layout is important it has to be just right,
otherwise I will feel crooked while I am in it.
To-do list:
Research construction management software and
pick one.
Research window costs and standard sizes.
Get up to date on owner-builder message board,
get a login and introduce myself
Begin to find out how to get a street address
assigned (please, God dont let there be any fees
for this...)
Get Orange-specific critical path, permitting, and
inspection list to begin project management chart.
Look into taking a construction class at Valencia
beginning in September.
Keep roof pitch below 7/12 (seven inches of

drop for every running foot) to make for lower
cost and faster roof work.

The second area in which good design can save
you money is in the operating costs of the house, including, but not limited to energy conservation.
2. Savings in Operating Costs

Save up to 35% in energy bills through optimum
orientation on the site.
Place deciduous trees for summer shade and
winter sun. Design window openings to permit
breeze to flow through.
Use good quality windows to reduce air infiltration and improve insulation.
Choose maintenance-free materials and
reduced-maintenance mechanical systems.
Reduce cleaning costs with cleaner mechanical
systems, reduction of dust-catching surfaces,
and use of low-maintenance interior finishes.
Reduce temperature swings and heating/cooling costs with high mass building envelope like
masonry, concrete, earth, insulated concrete
forms (ICFs), or solid wood (log).
Choose exterior sheathing of brick, stucco,
cement siding, vinyl, or aluminum siding to
reduce painting expense.
Use natural light to save lighting cost, for
example in bathrooms or master closet.
Use topsoil with high organic content to save on
lawn watering costs.
Save on hot water by efficient plumbing layout
and equipment choices.
Save electricity by using efficient light fixtures
such as compact fluorescents and halogens.
Select higher efficiency heating, ventilating100/15= and air conditioning

(HVAC) systems.
Lay out multiple furnaces and air conditioners or use zoned system to provide room by room control and save energy.
Design wall and attic spaces to accommodate optimum insulation for
energy savings.
3. Savings in Life Cycle Costs

A third area of savings furnished by good design is life cycle savings. These
are savings that stem from eliminating or slowing down the need to replace the structure or its components. For example, you can pay 50% more for a premium food disposer and extend its warranty from two to ten years over a standard model. Another
example is ceramic tile versus carpet. Installed carpet costs about $3 per square foot
($27 per square yard). The expected life is 10 years. Ceramic tile costs about $7 per
square foot and will last over 50 years:
100-Year Life Cycle Costs in Current Dollars

Carpet
Ceramic Tile
Initial cost per foot = $3
Initial cost per foot = $7
$3 X 7 replacements = $21/foot
$7 X one replacement = $7
Life-cycle cost = $24/foot
Life-cycle cost = $14/foot
Anticipate and avoid structural and layout deficiencies to promote longterm viability of house.
Seek longevity and timelessness in concept and aesthetics.
Choose upgraded equipment and materials for durability.
Coordinate electrical and mechanical systems for future flexibility.
Choose features and design conveniences that will meet your needs for the
long term.
Plan the space carefully to avoid the need to add on as your family
changes.
Friday, June 24th:

So we met with
Dave Brauer
(designer) this
morning to have
our initial meeting
basically he
just gets a feel for
what we want,
and we ask him
lots of questions
about how to
save money. Hes
going to go to the
drawing board
and call us in
three weeks or so
with a preliminary
plan. Well take
the plan on vacation with us and
ponder it, and
then when we get
back well have a
list of changes to
give him.
Its looking like
this: 2,400 sf
under air 3/2.5
w/a 3-car garage
(with one door
only), monolithic
slab, hip/gable
shingle roof, tiltwall construction.
Heres a bit more
info on each of
the roomsPatio: Summer
kitchen and hopefully a pass thru
from the indoor
kitchen, sliders to
interior
Kitchen: Range,
DW, walk-in
pantry, natural
gas appliances,
peninsula-style
Master suite: tray
ceiling, garden
tub and walk-in
shower with no
door, single WIC
not in bathroom
Other rooms:
Formal dining
room (a.k.a.
office/library),
utility room w/sink,

hopefully half bath will be a pool bath, 2nd BR is sort of a
guest suite
Livingroom: wet bar
Foyer: single front door w/sidelight and transom, 10 ceilings
except in kitchen/main living area, where they will be 12
Hmmm, I cant think of what else. I love his past work, he tends
to design very open and casual spaces, which is what we
want. He believes that the features we are asking for will make
for a marketable house, and after meeting with him, I def. think
that a 3/2.5 is a better way to go than a 4/3 more room in
the living spaces, as opposed to small secondary bedrooms
well hardly use. I will most certainly be on top of the picture
posting thing by the time the floor plans come in :)
4. Lifestyle Savings:

The fourth area of savings that stem from thoughtful house design are savings in your lifestyle expenses.
Examples are:
Plan rooms and doorways to accommodate
your furniture so you have no need to replace
furniture.
Thursday, July 28th:

We met with Dave yesterday he gave us the first run of
the plans surprisingly on BIG sheets of paper. I thought the
overall idea was okay, but he missed the boat on a few things
we need 3 BR, not 4, one front door, not 2, and 3 baths,
not 2. No problem. Part of the deal is that he will go back to
the plans until we love them. We gave him about 12 changes
to make to the plan. He should have the next run ready when
we get back from Alaska.
If you use a health club, design in club features

like a home gym or whirlpool bath at home.
Save on club fees.
A few hours after we left Daves I get a call from Jason, who
has had several epiphanies regarding the plan and wants to
review them with me. One was eliminating the slider in the
MBr (fine, but only if I get a French door instead I definitely
want porch access from the MBr). The other was the placement of the kitchen. To me, where Dave placed the kitchen is
BACKWARDS. Dont ask me to explain why, because I couldnt
if I tried. Its backwards. It just is. So we had asked him to flip it
around, but then Jason realized that by leaving it BACKWARDS
we could open up a wall to the dining room, where there
otherwise would have been cabinets. It will be much better that
way. So alls well that ends well. Im going to have to figure out
what it is that makes it seem backwards hopefully changing
the placement of the peninsula will help with that. We shall
see.
Design a large, well-organized pantry. Buy in

quantity at the grocery store and save on food
purchases.
Friday, August 19th:

Overall, we LOVE the plan. The first feedback meeting was
obviously helpful, because they really brought us back a good
product on the second go-round. We still have a few minor
changes to make; the pink and yellow highlighting designates
those changes. Well also be taking the back left corner of the
house that is now not under roof and just enclosing it. It will
have a half wall, as will the bar area designated by the pink
line in the family room. On Wednesday, we should have three
sets of updated preliminary plans...
Cara in Orlando, FL
Sources Say
The Complete Guide to Contracting Your Home gives mathematical formulas to figure how much home you can afford.
(See page 263)
Sources Say
The company or individual who draws your working plans
is an ideal source for an accurate takeoff (materials list for
your house).
From Build Your Dream Home for Less
(See page 263)
Design a convenient and capable gourmet

kitchen and spend less on restaurant bills.
Organize and equip your garage to wash your

car and lubricate your vehicles there instead of
commercially.
Equip your house with a natural gas concentrator pump that fuels a car adapted to natural gas
at about half the cost of gasoline. Or provide
the necessary connections to recharge an electric hybrid car.
Provide kitchen facilities for canning and freezing garden produce to save on groceries.
Allow for a cool basement fruit room or root
cellar to extend the use of garden produce.
Design a home office that meets current or
anticipated work-at-home needs to save you
from renting elsewhere to run your business.
Provide a home theater system with capabilities
to share your MP3 and MP4 libraries and video
on demand and streaming video for the latest in
entertainment. Spend less for outside entertainment.
Chapter 7: How to Get the Subs on Your Side

Time line: Four months before groundbreaking
How to Find Good Subs
ne of the benefits of owner-building is assembling a team of outstanding

subs of your own choosing. To do that you will need to start with a list of
candidate subs for your project.

Here is where the buyer must beware. You will want to deal with reputable
subs who have something to contribute. There is a risk that you might wind up with
a very bad apple. One O-B told me:
You can get ripped off easily. Some subs are like animals. They live from
week to week for beer money and their hands are rough and cut. One guy gave
me a medium price on my septic system. He said he would save me money on
materials if he could pay cash for them. He showed me a lower price than I could
get, and I gave him the money. He disappeared after he got it.

On the other hand, some of the subs are unbelievably honest and professional. A woman owner-builder told me:
Forums
OK, just a little

venting during the
building phase
here...
First met with a
guy yesterday
who said he could
put stone over
our French drains
(about 35 tons
over stone and
pipe we already
installed), install a
window well, and
backfill the foundation a little. Cost
would be $1,600.
Next, he would
also dig three
utility trenches
(approximately
40 feet long),
provide the stone
and sand, and
backfill when lines
were installed for
$1,800 more.
Total $3,400.
86 Chapter 7: How to Get the Subs on Your Side

This seemed a
bit high to me,
knowing the price
of stone and that
neither of these
jobs was a whole
day event. When
I called back to
ask if he could
do it for $3,000
cash, he said
no, that was his
bottom price and
also, I would have
to find someone
else to put in the
window well! I
just explained that
was our budget
for the jobs and
also there would
be a grading job
in the pipeline
for spring, and
he said then
go ahead and
shop around and
happened to
add, I know you
already talked
to so and so
and got a higher
price. What do
you really know
about excavating
anyway? Shop
around. YIKES!
So of course I am
steamed.
Thoughts?
Advice? How
youve handled a
similar dilemma?
THANKS!
Jill in Elizabeth, PA
The question
is really one
of identifying
your options to
determine the best
solution:
1) How many
excavators are in
your area? How
busy are they?
Do they have
the equipment
needed for your
job? This all leads
to hiring someone
else to finish the
job for you. In my
When you have a really good sub, you really appreciate them. Our marble
guy, concrete crew, and finish guys were superb. The tile guy was the most respectful of all. Some of them can get crude. When they are businesslike, you appreciate it. He said it was a pleasure to have had the opportunity to work for us. I will
recommend him to everyone. We had many wonderful craftsmen. They kept their
music low, and would notice a woman was there, and they were being nice to
each other, no foul language. That made me feel comfortable.

Your job is to preselect candidates for each of the team members you will
need. Depending on your design, you will use a few or many of the team members on
this list:
Potential Team Members

1.
ICF contractor
24. Drywall finisher
2.
Lender
25. Painter
3.
Independent inspector
26. Carpet and linoleum contractor
4.
Insurance agent
27. Hardwood flooring contractor
5.
Specialty metalworker
28. Cabinet installer
6.
Appraiser
29. Finish carpenter
7.
House designer or architect
30. Countertop contractor
8.
Surveyor
31.
9.
Excavator
32. Construction clean-up
10.
Footings contractor
33. Asphalt contractor
11.
Foundation contractor
34. Sprinkler and landscape contractor
12.
Concrete flatwork finisher
35. Gutter and downspout contractor
13.
Framer
36. Foundation plasterer
14.
Waterproofing contractor
37. Trash hauler
15.
Brick, siding, or stucco contractor
38. Portable restroom vendor
16.
Electrician
39. Security service
17.
Sound, alarm, and video contractor
40. Fencing contractor
18.
Whole house vacuum installer
41.
19.
Plumber
42. Structural engineer
20.
HVAC contractor
43. Concrete sawing
21.
Roofer
44. Water well or geothermal driller
22.
Insulator
45. Septic system installer
23.
Drywall hanger
46. Landscape designer
Ceramic tiler
Window well contractor

Consider this list in tandem with the list of suppliers in Chapter 9. You may
also wish to include an interior decorator on your team. You may have specialty trades
like ceiling specialties, stained glass, conveying or elevator systems, custom stair rail
Chapter 7: How to Get the Subs on Your Side 87

installer, steel erection, lighting and low-voltage system design, house automation,
and others.
Suggestions for Finding Subs

1. Do not use the Yellow Pages.
2. Drive around to subdivisions near where you want to build, go in and ask who did
any job you like. You find small builders very willing to lend out their subs. That way
they keep the sub busy, because you are only doing one house.
3. Attend home and garden shows where you may meet subs that impress you. Some
have booths at shows, particularly if they are pushing a new product.
4. Ask people whose houses are recent and exemplary who performed the trades.
5. Ask owner-builders in your community which subs they respect.
6. Join the local Home Builders Association as an associate member. Attend HBA
functions. Ask generals who they recommend. Get acquainted with subs who participate in the HBA. If you dont join, use the Association directory of members.
7. Seek out the subs who did the work on Parade of Homes houses you liked. Their
names may be listed in the Parade program. You can also call the general contractors who entered the Parade, and ask for the participating subs.
8. Ask the salespeople at the local lumberyard which tradesmen have good reputations. Same with electrical or HVAC distributor, plumbing supply, brickyard, concrete plant, roofing supply, etc.
9. Ask each reputable sub you talk to whom he respects in the other trades. Framers know good foundation people. Footings guys know good excavators. Finish guys
know good framers and so on.
10. Check your names with your states registrar of contractors and the Better Business Bureau. Begin with several names and find the complaints lodged against them.
They all have them. Pre-select the ones with the fewest complaints per volume of jobs
or years of operation.
locale, excavators
for residential service are all hourly,
even spec houses
and custom
house bids I have
seen include
allowances for
excavation, and
not firm fixed cost.
There is a benefit
to an hourly rate,
but there is a
downside if the
excavator is
not especially
busy and tries
to extend the
length of an existing job to fill in
the blanks. Please
note that although
I dont like hourly
bids, I used this
for several trades
and didnt have
any negative
experiences with
it (if you were in
KC area, I would
have no problems
recommending
a great excavator that charges
an hourly rate,
probably the most
honest hard-working subcontractor I
hired).
2) Can you rent
the equipment
to do the work
yourself? This
equipment is not
that difficult for
someone with
basic mechanical skills to learn
to operate. If
you can rent the
equipment, you
also need to be
able to have it
delivered to your
site as even a
small skid-loader
is a fairly heavy
piece of equipment, you wont
likely be hauling
it very far with a
3/4 ton truck and
anything lighter is
simply too small.

In my area, I can
get the equipment,
however the rental
rates are high
enough that it is
not worthwhile for
me to get it without an operator.
3) Do you have
another source for
the equipment,
or another trade
that uses similar
equipment? For
example, my
concrete flatwork
subcontractors (I used two
separate ones)
also used skid
steers to spread
the crushed stone
base. While they
were out there,
and I needed
some excavation
suitable for skid
steer, they were
more than willing
to do so. In one
case, my concrete
flatworker did
some utility trench
work. In another,
he left me the keys
to the skid steer
so I could use it
after hours (he
was trying to sell
it anyway; I might
have been a prospective buyer).
Dont simply
limit yourself to
excavating subcontractors when
you are looking
for excavation
equipment, as I
know some plumbers who routinely
do underground
work and have
their own equipment, as well as
electricians who
also have excavation equipment
(for service lines).
Additional sources
include swimming
pool installers
and landscape
companies. Be
How to Interview Subs

Before you lock in your plans and specifications with the designer, it is good
to have input from the subs you interview. This helps as a reality check on your
plans and sometimes introduces you to new ideas and technologies. At the same
time, you lay the groundwork for selecting the subs who will bid your work.

To interview subs, I recommend using a word processor so you can capture
ideas and phone numbers easily and move those ideas to other files as needed to keep
your project organized. I interviewed over the phone and used a speakerphone so
that I could type. Later, I bought an inexpensive telephone headset at an office supply
store for convenience. I surprised the people I interviewed by faxing or emailing
them a copy of their interview direct from the computer after we finished. None of
them forgot me, and we both had a confirming record of their suggestions.

Dont be afraid to interview subs in advance they are going to become like
employees to you, and they know that. It is free marketing to them when someone
calls in. Your call serves them notice that you are a conscientious builder. At the same
time, feel free to admit your ignorance to a knowledgeable pro. Subs appreciate that,
and you will grow in your ability to make educated decisions.

Create your own questions, or adapt the suggested questions on the next
page. Call in the early morning and early evening, or if you interview larger firms,
during business hours.
Detailed, Accurate Bidding

Make sure you allow time after you get your plans and specs from the designer
to get detailed, accurate bids from subs. With your plans, specs, and room by room
and trade by trade descriptions, you will make it easy for the subs to bid. The subs can
see just exactly what it will take to do your job. They wont have to pad their prices for
uncertainties.

You will ask for detailed bids that provide breakdowns of approaches, materials, and labor steps involved. You want this kind of detail so that you can compare
one sub to another. If two subs come back with one-sentence bids that say Concrete:
$7,200, you dont have much to go on when you make your choice. You want to know
how many yards of what concrete mix at what price are included. You want to know
how they are going to form the concrete, what reinforcing is included, compressive
strength, and how long it will take. Will they commit to a start date?

Ask the subs if they usually supply the materials. Then have them make estimates with materials and labor broken out separately. You need to compare their
material costs with what you can get them for yourself. You have to be careful of what
they are including, and what level of quality each component is.

You ask for further suggestions. This allows you to turn up those who really
want work, and those willing to work for O-Bs.
Questions for Subs

Name:
Phone:
Date:
Q: What do you suggest for a good job?

A:
Q: What do you do that is better than other subs?
A:
Q: What do you need to do a bid for me?
A:
Q: Can you give me an idea about cost?
A:
Q: What can be done to save money?
A:
Q: Is there anything we can do in the way of labor or in purchasing our own
materials to save money?
A:
Q: What coordination is needed between this and other trades? Are there any
tradesmen you particularly like to work with?
A:
Q: What do I need to do to make it easier for you?
A:
Q: What are your scheduling requirements?
A:
Q. How big a crew would you put on a job like mine?
A.
Q. Do you personally do the work?
creative and look

beyond excavation subcontractors
the key is to find
a subcontractor
with the equipment who isnt
busy (e.g. a swimming pool installer
or landscape
contractor in the
middle of winter).
4) Obviously you
have two other
options to complete the work,
one at a higher
price than what
you were planning on paying,
and one with a
subcontractor that
is now upset that
you are shopping
him. I really dont
like that my subcontractors discuss
specific jobs and
bids, to me this is
somewhat a conflict of interest and
undermines the
whole process,
not to mention
starting with distrust before work
is even started.
Good luck.
Kenneth in Lees
Summit, MO
Thank you for your
help. I really liked
the part about
not only considering excavators.
How true! I have
found that out in
other trades/situations so far, and I
really should have
thought of that. I
am going to get
started on that
research tonight :)
Jill in Elizabeth, PA
A template for
sub interviews is
also provided in
our Free Download
Gallery

Sources Say
Dont suggest that
you are looking
for a bid in the
range of $5,000.
If you do, the
subcontractor
will probably bid
around $4,900
when he may
have been willing
to do the work for
$4,500.
From Everything
You Need To
Home
(See page 263)
Our subcontractor
interviews for
the Riverbottoms
house are
included in our
Special Reports
book.
(See page 257)
Forums
In this industry
you have to know
what you are
talking about if
you want them to
take you seriously.
We had to do
many hours of
research before
ever talking to
any potentials on
products we were
interested in. Not
all companies act
like this though,
you have to feel
them out. We had
lots of questions
for some of them
and they were
very helpful. In the
end, the ones who
helped us the most
are the ones we
ended up with.
Go figure...
I can honestly tell
you I deal with
people differently in business
than I did over a
year ago when
I started this all.
A.
Q. How experienced are those who will work on my job?
A:
Q. How long will it take to complete your work?
A:
Q. Will you guarantee your price and schedule for me?
A:
Q: Do you carry Workmens Compensation?
A:
Q: What about errors and omissions liability insurance?
A:
Q: Right now we are projecting breaking ground Sept. 25th. Is this good for you?
A:
Q: Do you have any other suggestions?
A:
Q: How can I contact you? Work, Home, Cell Phones, Email, Fax number, address
for sending plans?
A:
You can isolate those who are willing to do labor-only deals. If they are willing to
talk further, you can ask them some additional things, such as, who do they recommend for other subs, and particularly who would they prefer to work with that affects
their trade. Are there alternate approaches, new technologies, ways to save time or
money they might suggest? The best of your interviewees, those you felt the best
about, become your bidders.

Give them lots of time to prepare detailed bids you get the benefit of their
thoughtful consideration this way. Allow yourself plenty of time so you can follow
up with them and continue refining your plans and tightening your budget: Why
are you approaching it this way? Why are you charging so much more for this item
than the other sub? Can you suggest a place to get good prices on this or that? If
I pay you quickly, or in cash, can I get a discount on your bid?

You want detailed, specific bids. This makes them think, which you want,
and it reduces your vulnerability to change orders because of items they have forgotten or you havent considered in the beginning.
Get Three Bids from Subs on Each Item

I was shocked when I started to gather bids from framing subcontractors for
our house. I had a preconceived notion from interviews and research that framing
labor should come in around eight percent of our construction budget, or $15,000.
The first bid I got was $22,000. The second was $19,250. Better, but far from fitting
our budget. The third bid came in at $31,250.

Now I was worried. I decided to look harder. The local lumberyard recommended two people I had not checked, and the first one came back with a bid of
$14,200. I had to be honest with myself and admit that this framer was inexperienced
and probably not qualified to handle our house. Then the second bid came in, from a
very qualified and bright framer. I interviewed him and had more confidence in him
than any of the others. His bid was $15,300. He turned out to be possibly the best sub
I found.

Your first defense against paying too much is to have an educated guess about
what the cost will be. Then you know if you are hearing baloney from your bidders.
The second is to have several bidders. In this case, I sought five bids. If my top choice
had bailed out, I would have had a back-up plan. I think I would have taken the bid
of $14,200 and watched the framer closely rather than pay exorbitant prices.

It is usually wisdom, however, not to take the low bid. You must examine it
carefully because of the tendency of some to lowball a project and extract change
orders from the owner later, resulting in much higher costs. Some of these contractors also do poor work and expose you to the potential of rework to make it right.

I learned from those five framing bids that the differences can be huge. In
this example, the low bid of $14,200 was 55% less than the high bid of $31,250. If
you only get one or two bids, you may never turn up the potential discounts that
are available. Owner-builders I interviewed gave me many examples of the range
between low and high bids on identical specifications. For instance:
Plumbing, one at $6,750 up to another bid at $11,500. Concrete was from
$8,750 up to $12,500, and all the bidders were licensed contractors. Siding:
$5,625 versus $11,250. Air conditioning: $7,500, $11,250 and $12,500 bids
for the very same thing. Electrical: $6,500, $10,000 and $11,250. I took the
$10,000 bid because the $6,500 bidder didnt have good references. Drywall, $11,500 to $28,000. My electrical came in at from $12,000 to $36,000;
stucco was from $33,000 to $57,000.

Bid examples furnished me by owner-builders showed the low bids to be an
average of 34% less than the high bids. Some O-Bs miss out, however. Those I interviewed for the first edition of this book got less than two bids for each specialty. Im
I have learned
so much about
how to handle
these people in
the industry and
make them respect
you. You make the
decisions because
you will pay the
salary. All it takes
is some background research,
politeness, and
some firm talk.
Once they know
you are on board
and not wasting
their time, its a
cakewalk.
I used to call companies that I had
no interest in just
to practice conversations and learn
the lingo before
calling the one
I really wanted.
Emails work, but
nothing can beat
a live conversation. Secondly,
there are a lot of
stupid people out
there working for
these companies.
I must have used
the word pathetic
so many times
while describing
my conversations
I had with them.
Its amazing
many are even in
business. The construction industry
is probably one
of the dumbest
industries out there
(30% intelligent
people, 20%
average, 50%
dumb), yet they
produce so much
money, but only
because most of
society thinks that
they could never
possibly manage
building a house
or doing anything
in construction.
Well, thats probably true to some
degree, but it

also boils down
to people who
are rich, scared,
lazy, incompetent
or someone who
really does not
have the time.
If you are not in
those categories
than you have
no excuse to try
something like
this. Dont let them
discourage you.
Its how they profit
so easily.
I am in this to
prove something. I
will not lie.
Jason in Orlando,
FL
Sources Say
Ask painters for
names of good
drywall subs. They
paint over it and
know good finishing work.
Contracting Your
Home
(See page 263)
Sources Say
Always get
references and
check out three on
each major sub.
You must see their
work.
Contracting Your
Home
(See page 263)
Sources Say
Habitat for
Humanity: How
to Build a House
offers suggestions
on how to check
out and hire subs.
(See page 263)
An RFQ form
template is
available in our
Free Download
Gallery
happy to say that current O-Bs in our survey got 2.62 bids for each trade. Those who
read The O-B Book first got 29% more bids than those who didnt.

Why dont owner-builders take advantage of potential discounts and get
more bids? One reason is the human tendency to rush to judgment. We like the
first price we hear, especially if we arent equipped with an educated guess of what it
should cost. A second reason is that some owner-builders are in a hurry. They leave
only a few days to gather bids in their haste to break ground on the project.

I discovered a third reason when talking to a construction industry veteran:
Subs make a habit of keeping you from getting more bids. They can do this by
making the process awkward and time-consuming. Each sub wants a full set of your
plans and keeps them for two weeks. If you have 15 trades on your project, as I did,
and you get three bids on each trade, thats 45 bidders. To get it done in a month, you
would need more than 20 sets of plans. This makes it simply too daunting for most
people in a hurry, and they settle for the first thing they hear.
How To Get Bids

1. Allow a full month to gather bids, and a second month to evaluate and
negotiate.
2. Use the Plan Room concept. Set aside a spot at your home or office where
the plans are available for review. Provide a table where the plans can
be spread out, and the sub can take notes and do calculations. Rather than
run yourself ragged trying to meet subs and drop off plans all over town,
have the subs come to your plan room. Have on hand your dream home
notebook for examination. Answer questions and make clarifications on
the spot. This way you will rarely have to loan out a set of plans.
3. Do what you can by fax and email. We had an inexpensive fax modem
($125) installed in our computer. We were able to send and receive faxes
direct to the computer, and view the fax on the computer screen. We took
advantage of this by faxing portions of our plans to our home computer
from an instant copy center downtown. We then had electronic images of
our floor plans on computer. We faxed the needed portions to certain subs
along with the written description we developed for their trades. They
were able to bid from this.
4. Use an RFQ (a Request For Quotation) that summarizes the specs

the subs will have to meet for a given category and provides the essential information. The RFQ instructs the sub to itemize material costs and
descriptions of components along with the estimate of labor cost in detail.
It asks for estimated time to complete, for references, and for any suggestions the sub may have. Send it out in lieu of a set of plans to a large number
of potential subs. Using this technique, some O-Bs have been able to get as
many as ten bids on items.

The ability to buy cafeteria-style and select your own subs and suppliers
is the greatest leverage the owner-builder has for savings. You cant take advantage

of it unless you get three or more bids on each item. After you make your selection,
your additional bidders become back-ups to the chosen sub. If the first sub cant start
or finish the work for any reason, you can often plug in a replacement sub quickly.
Lenders look for this kind of back-up.

Having multiple bids can have unexpected benefits. One second-time ownerbuilder asked the plumber from his first house to bid the next project. The plumber
decided he was too busy to do it. The O-B got three bids from other plumbers. Then
the original plumber called to say, I didnt have time to bid your project, but I would
like to do the work. Give me the lowest plumbing bid you got, and I will match it, and
throw in a free water softener.
Follow Up Your Bids

After you see the estimates, study them carefully. This is very valuable and
instructive. Summarize the line items of the comparable bids on paper or on a computer spreadsheet as I did with the two insulation bids I received. I like to use a computer spreadsheet because it will automatically add numbers in a column for you and
because it can be laid out much wider than on a single sheet of paper. In the following
example I have laid out two bids side by side for comparison. With a spreadsheet, you
could place ten or any number of bids side by side for your examination.
Insulation Contractor A
Item
Insulation Contractor B
Description:
Attic
Exterior Walls
Inaccessible attic
Vaulted ceiling
Rim Joist
Crawl space
R-38 blown fiberglass

R-19 Batt and poly
R-30 Batt
R-30 Batt
R-19 Batt
R-11 drape foundation
Attic vents
Air penetrations
Garage Walls
Garage Attic
Total:
Cardboard baffles
Hilti foam
$2,496
Description:
R-38 blown fiberglass
R-19 Batt and poly
R-30 Batt
R-30 blown and batt
R-19 Batt
R-11 drape foundation w/poly
on ground
Foam
R-11 Batt w/poly
R-19 Batt w/poly
$2,348
Contractor A: Add: Options or upgrades:

Insulate garage
R-38 Batt in vaulted
Net and blow fiberglass
Sound insulation in master and bath
Wet-spray cellulose
R-11 floor
R-19 floor
$438
$95
$700
$110
$1,000
$123
$196

It was easy to select subcontractor B because he included everything that A
did at a price that was $148 under As price. B also included garage insulation in his
Sources Say
The Complete
Idiots Guide to
Building Your
Own Home has a
chapter on Hiring
Subcontractors
and Laborers,
including the
functions of each
of the typical
subtrades.
(See page 263)
Sources Say
Habitat for
Humanity: How to
Build a House
offers suggestions
on how to check
out and hire subs.
(See page 263)
Forums
Okay, we have
gotten two bids
on site clearing.
Both bids include:
Felling the trees
(approx 33 mature
pines, hickory,
oak, sweet gum)
Cutting into 10
sections and stacking close to site
Chipping the
smaller trees and
the branches from
the larger trees
Stump work is not
included
One bid is
$1,300 and the
second bid is
$10,000 !!!!!
Now, how on
earth do we make
sense of that?
While we want
to have a good
deal, we dont
want to make
someone lose
money, either. We
did have our foundation guy say
that he thought it
would run about
$2,500 to have
the site cleared,
but he said it was
just a guess.
What would you do? We have the

$1,300 guy scheduled to start on
Monday (husband didnt know I had
scheduled the second bidder for a look
this afternoon). Both men walked the site
and saw the trees in person.
Yvonne in Helena, AL
The second bidder is telling you that he
does not want the work. Throwing an
outrageous number at a job is easier for
some contractors than saying No thanks,
Im too busy, dont have the right equipment, etc.
Michael in Cave Creek, AZ
Yvonne, I would get at least a third or
fourth quote and compare apples to
apples. Just to have a more accurate
range.
The second guy does sound like he does
not want the work which is fine, but you
also want to be careful that the first guy
knows what he is talking about. Because
believe me the cheapest is not always
the best value! You also want to make
sure that he is not going to add another
couple hundred dollars because I didnt
account for that or I didnt notice this.
Realizing that you cannot account for
everything but you need to have them
spell what they are going to do and then
review it so expectations are clear; and
if things change in price, make sure he
talks to you about them before any work
is being done.
With those mature tress especially the
oak, I would call a local or regional logging company to see what kind of money
you can get by selling the trees, they
might even take them off your hands for a
minimal cost. Just an observation.
Jay in Elkhart, IN
Wow what a past few weeks just trying
to get our trees down! We called several
lumber mills they werent interested
unless I had several solid acres. The
original $1K guy came back and said
he missed a few trees and the price
would be $2,600. We negotiated him
to $2K and then messed with him for
two weeks while he got down 3 trees!!!
The downside now is that we have to
wait three weeks for our Superior Walls
because we waited too long to pull the
trigger on that!
Thanks for the GREAT suggestions I
hope using the wood in the house works
out as I think that would be really neat.
Yvonne in Helena, AL
bid, at no extra charge. This meant that Bs bid was ($148 plus
$438) = $586 under As bid. Bs bid was also better because it
included putting polyethylene sheeting as a vapor barrier on the
ground in the crawl space.

Subcontractor B had not included anything for sound
insulation in his bid. Subcontractor A explained to me the value
of insulating the master bedroom and bathroom from the sounds
of the living room and to keep bathroom sounds from traveling
to the living room. Since he had a price of $110 for the two rooms,
I called and asked Contractor B if he would match the price and
add a third room for $55. This brought my total cost to $2,500,
the number I had initially budgeted for insulation.

The insulation bids had worried us because there were
only a couple of good subcontractor choices in town for insulation. I budgeted $2,500 and when B made his original estimate
off the plans, he came in at $3,800. From interviews and research,
I thought it could be done for $2,500. I called him and told him
so. He said that he would rebid it when the framing was mostly
complete so that he could better gauge the size of the job.

After I received As bid for $2.500 I called B back and said
that I only had $2,500 budgeted, that I had a bid for that amount,
and could he do it for that? He rebid it after measuring the framing, and met the price I wanted. What amazed me was that he also
included garage insulation at that price.

It pays to follow up your bids and negotiate. One industry
veteran pointed out to me that this is a negotiated business. He
recommended the same formula that I used:

1. Compare bids line by line.
2. Choose your preferred subcontractor.
3. Call and tell him that he is your choice but that you
only have so much available for his item.
4. Ask Can you do it for that?

When I got bids for concrete work, I noticed that the subs
figured differently the amount of concrete needed for footings. I
spoke to my preferred sub and told him, One of the other foundation men says that only eight yards of concrete are needed, and
you say 13 on your bid. Would you mind if we just pay for whatever it turns out to be after youre finished? He agreed and we
saved $440.
Chapter 8: How to Build a Budget That Is a

Powerful Miracle Tool
Time line: Three months before groundbreaking
Start with Your Bids from General Contractors
ven though you plan to act as the general contractor, there is nothing to prevent you from asking licensed general contractors to estimate your project. In
a slow market, you may find a real bargain and decide to let a general build it.
You may be forced by the unforeseen, say sickness or accident, to have a general build
or finish your project. You may find a general that you use for a future project or recommend to someone else. For these reasons it is more than fair to take advantage of
the free service that general contractors perform of bidding potential work.

Your bid from a general contractor can be tremendously helpful in planning
your approach to the work, but only if the bid is thorough and professional. I insisted
that generals who bid my project include the following information:
Sources Say
The Achilles heel
of every construction project is
always the cost
estimating. The
sheer number
of items that go
into the house
is staggering. A
computer can help
tremendously with
this problem. Dont
even think of starting a homebuilding project without
a complete and
accurate estimate.
The bank will be
impressed with
a well-organized
printout of costs.
Contracting Your
Home
(See page 263)
96 Chapter 8: How to Build a Budget That Is a Powerful Miracle Tool

Forums
I am looking at
building in the
Sonora, CA area,
Looking for a sq ft
cost for 2,200 sq ft
home with middle
of the road finish
work, I may do the
finish work myself if
it will save.
John in Vacaville,
CA
John I live part
time in Twain Harte
about 2,000 ft.
elevation east of
Sonora and Im
an architectural
designer/drafter
dealing with general contractors.
So, if you let a general contractor bid
the whole house
youre looking at
more than $180
per sq. ft. But if you
manage the job/
project yourself as
an owner-builder
you can save handsomely. This means
that you contract
out the foundation
and maybe you
order the cement,
contract out the
framing, plumbing,
electrical, drywall
and so forth. You
save because
youre not paying
the G.C. to schedule and make calls
to his subcontractors. Also finding
contractors/workers
right now is hard
to find because the
Black Oak Casino
hotel construction is underway.
Not so long ago
you could build a
house for $120 per
sq. ft.
Danny in Livermore,
CA
1. Written cost breakdown or budget. You want to see each line item
separately with its cost.
2. Who would likely perform each line item. You need this to compare
with other generals.
3. Written calendar of completion. Tell them that you want to be sure that
they can complete within your six-month deadline, so you want to see
how long they will take on each line item.

Challenge the generals who bid your project. Tell them that you will
either defer building, or you will build it yourself if his prices arent good enough.
Let them do the homework they are trained to do. This is an opportunity for the
general contractors to try to talk you out of it.

Lay out the bids from the generals on a spreadsheet by line item. This is
the first big step to building a budget that will save you a great deal of money on
your project.

You will be able to use the written line by line estimates that the general
supplies you in your subsequent dealings with subcontractors. If you dont go to
the same subs that a general proposes to you, you nonetheless can cite the prices
he offered you when dealing with other subs: Thanks for your bid of $4,800. I
want to use you but I have another bid here for $4,000. My budget is for $4,200.
Could you do it for that?
Spreadsheet Budgeting

If you lay out the bids you receive from general contractors on a computer spreadsheet, you have the best template you can find for your construction
budget. It is specific to your plans and prepared by a person familiar with your
local market and with current conditions. If you have several bids, you have the
advantage of multiple counselors. If one general says that footings are $5,000, one
says $7,000, and one says $4,000, you have the average of their wisdom at $5,333.
Your footings shouldnt turn out higher than that. And you have a possible $4,000
to contemplate. Maybe his sub will do it for that on your project. Maybe another
sub will match it or beat it. And if you get a bid for $3,700 from a sub, you know
you are looking at a low price.

Using a spreadsheet can be magical fun. A computer spreadsheet organizes items in rows and columns and keeps a running tally of anything you like.
If you make a change, the totals recalculate instantly.

Say you have a list of construction costs like this one derived from the
Riverbottoms house budget:
I will be breaking ground on

our 2,800 sq ft.
EXTERIOR FINISH
Roofing
$4,840
Vinyl siding/soffit matl. & labor
$12,540
Gutter matl./labor
$880
Deck matl./labor
$3,080
PAINTING
Interior painting (DIY)
$1,760
FLOORING
Ceramic tile
$1,980
Carpeting
$5,720
Wood Flooring
$1,980
Total:
$32,780
Other costs:
$187,000
Overall Total:
$219,780
Appraised Value of Plans

or Average GC Estimate:
$400,000
Equity:
$180,220

You see that your costs amount to $32,780 for the selected items, and $219,780
overall. With your house plans appraising at $400,000 you see that your equity in the
project will be $180,220.

When you make a change, the whole calculation changes instantly. Suppose
you are expecting to pay $12,540 for siding, but you find a sub you like at $11,000.
You correct one entry and the picture changes:
EXTERIOR FINISH
Roofing
$4,840
Vinyl siding/soffit matl. & labor
$11,000
Gutter matl./labor
$880
Deck matl./labor
$3,080
home hopefully
no later June/July
in the Lake Don
Pedro Area which
is in Toulume
County. I do not
have a finalized
construction cost
breakdown, but
my preliminary
number is showing
around $130 a
sq. ft. This number
is building and
septic only, not
land. I will be
doing the majority
of the work myself
as I have the time
right now. Playing
general contractor
is a full-time job,
and if you work
out of town it can
be a daunting
task. One word
of caution; if you
dont already
know, is that
Toulume County
is not allowing
septic systems on
some lots due to
poor soil and are
even deeming
those lots unbuildable. I would be
more than happy
to bounce ideas
around with you,
so please feel free
to PM me.
Good luck and
happy build.
Tyler in Lake Don
Pedro, CA
Sources Say
Except in rare
cases, the cost
of the process
of restoration,
rehabilitation,
or remodeling
plus the cost of
the old structure
should not exceed
the cost of a
comparable new
structure.
From Be Your Own
Home Renovation
Contractor
(See page 263)

Forums
Trying to get an
idea of what it
will cost in the
south to brick &
culture stone a
whole house that
is 3,400 sq ft?
Darlene
I was quoted $10
a sq ft here in TN.
Total cost materials and labor.
Earl
In Atlanta, GA I
recently received
a quote of $10.50
per sf for labor
and materials for
stone veneer.
Bruce in Tyrone,
GA
Seems like $10
psf is going rate.
I got the same
quote in Shapleigh, Maine.
Sybil in Leominster,
MA
The $10 per SF
number is per
square foot of
surface area to be
covered with stone
and is consistent
with the rate for
this kind of work in
Arizona. It seems
to me that the original question was
how much will it
cost to put stone
veneer on a house
that has a livable
square footage
(heated floor
area) of 3,400
SF. To answer the
question of what
it will cost to do
the whole exterior
in stone, use the
elevation drawings on your plan
to scale the length
and average
height of each
wall to get the
exterior surface
area that you
PAINTING
Interior painting (DIY)
$1,760
FLOORING
Ceramic tile
$1,980
Carpeting
$5,720
Wood Flooring
$1,980
Total:
$31,240
Other costs:
$187,000
Overall Total:
$218,240
Appraised Value of Plans

or Average GC Estimate :
$400,000
Equity:
$181,760

Now your list adds up to $31,240 and your equity moves to $181,760. In this
sense, the spreadsheet becomes an electronic window on your wealth. As you develop
your project and plug various numbers into your budget, you see the effects immediately.

I have worked with various spreadsheets since 1982. After learning my first
one, a product called Lotus 1-2-3, I used various others with little or no change
in technique. We use Excel for our construction project, and I have used AppleWorks and Quattro Pro spreadsheets with equal facility.

The spreadsheet is a magical tool that I estimate will save you five percent on
your project all by itself. It serves you as a project budgeting tool in the beginning,
then a tracking tool on actual expenses, as well as a construction shopping tool that
makes the implications of comparative bids and estimates become clear. The same
benefit would apply to the use of an old-fashioned paper spreadsheet with your numbers laid out in rows and columns.

A five percent savings could be worth fifteen or twenty thousand dollars to
your project. When you consider the savings in DSDE dollars, using a spreadsheet
could have the effect of $150,000 or $200,000 of salary on your net worth. Its clearly
worth it to learn how to use one. Most people can walk into a computer lab at a local
community college and with a little help lay out a simple spreadsheet in a couple of
hours. You could take a class, do on-line training at a site like lynda.com, buy and
study a manual, or learn through trial and error. If you dont have a computer, you

could probably develop a budget spreadsheet on computer facilities at a nearby school
or library and save it on a personal CD-ROM. You could return to make adjustments
and revisions to your budget as you go.
Riverbottoms House Budget

A century and a half ago writer Henry David Thoreau owner-built a home in
the country. He recorded his budget for posterity:
Boards
$8.03 1/2
Refuse shingles for roof and sides $4.00
Laths
$1.25
Two second-hand windows with glass $2.43
One thousand old brick
$4.00
Two casks of lime
$2.40
Hair
$ .31
Mantle-tree iron
$ .15
Nails
$3.90
Hinges and screws
$ .14
Latch
$ .10
Chalk
$ .01
Transportation
$1.40
In all
$28.12 1/2

Were still doing construction budgets today, though they grow more complex with the passage of time. Elaine and I developed a budget (shown on the next
page) for our custom home through trial and error. We started with a bid from a
general contractor which we entered onto a spreadsheet. We continued to refine our
guesstimates of individual costs as we gathered bids from subs.
The keys to a good budget are:

1. easily updatable on computer

2. accurate estimates of items based on detailed specifications
3. no major items omitted
4. includes a contingency fund for overruns

The recommended contingency fund for a first time owner-builder is ten
percent. This is the slop you allow for spending more than you estimated on the
project. If you have done it before, use five percent. On page 103 you can see that there
is no amount shown for contingency. This budget is our as-built budget what we
actually spent after the dust had settled on our completed project. We had started the
Riverbottoms house with a contingency fund of $6,500. That was used up quickly,
and overall, we ran over our intended budget by about $25,000. We managed to scare
up the needed shortfall from cash and by a loan increase from the bank. Far better
to allow sufficient for contingency in the beginning. On a $300,000 construction
want to cover with

stone.
You can also
do this work a
bit cheaper by
splitting up labor
and materials.
Normally you can
buy the Owens
Corning cultured
stone product
between $5 and
$6 per square
foot from a local
supply house.
Once you have
the material on
site, you can find
crews (at least in
Arizona) who put
this material up for
between $2 and
$3 per square
foot.
Michael in Cave
Creek, AZ
Sources Say
The Complete
Idiots Guide to
Building Your Own
Home
includes a chapter
on how to estimate
costs.
(See page 263)
Sources Say
Chapter 6 of Be
Your Own Home
Renovation Contractor shows an
interesting system
for getting a ballpark figure for a
remodel budget.
(See page 263)

Description
BUDGET LIMIT:
INDIRECT CONSTRUCTION COSTS
Bldg. permit/fees
Setup short-term financing
Interest charges
Plans and specs.
Structural engineering
Survey review
Building lot
Course of construction insurance
Supervision/overhead
Misc. equipment rental
Temporary/mobile phone
Trash pickup
Clean-up
Temporary power
Title insurance
Other:
EXCAVATION/SITE WORK
Foundation excavation
Finish grading
Backfill
Sewer/Water Trench
Electric Trench
Drain tile and gravel
Other:
MASONRY
Footings/labor & materials

Foundation/labor & materials
Rebar & steel
Waterproofing
Termite protection
Sand or gravel & placement
Basement floor
Garage floor/labor & materials
Walks and patios
Driveway & other ext. flatwork
Stoop, steps & ramps
Percent % Amount Spent

100.0%
$220,000
2.3%
1.4%
3.0%
0.7%
0.2%
0.1%
$5,060
$3,080
$6,600
$1,540
$440
$220
0.2%
0.2%
0.5%
0.1%
0.1%
0.1%
0.1%
0.5%
$440
$440
$1,100
$220
$220
$220
$220
$1,100
0.2%
0.3%
0.2%
0.2%
0.0%
$440
$660
$440
$440
$66
2.5%
2.0%
$5,500
$4,400
0.4%
$880
0.6%
0.1%
0.5%
$1,320
$220
$1,100
Notes

Description
Fireplace brick
Other:
SEPTIC SYSTEM
Well
ROUGH CARPENTRY
Framing lumber
Trusses
Framing labor
Crane service
Windows & screens
Skylights
Exterior doors
Garage doors & openers
Decks & porches
Steel beams and posts
Other:
PLUMBING
Rough plumbing
Fixtures & trim
Other:
HVAC
Heating & air conditioning

Other:
ELECTRICAL
Rough electrical
Finish electrical
Fixtures
Vacuum system
Alarm system
Television pre-wire
Telephone pre-wire
Audio pre-wire
Other:
INSULATION
Wall & attic insulation

13.2%
6.9%
$29,040
(incl.)
$15,180
2.2%
$4,840
1.7%
1.4%
1.4%
$3,740
$3,080
$3,080
5.4%
1.8%
$11,880
$3,960
6.1%
$13,420
2.4%
$5,280
0.6%
0.5%
$1,320
$1,100
1.3%
$2,860
Notes

Description
Notes
Other:
DRYWALL
Drywall materials & labor

Other:
FINISH CARPENTRY
Interior doors
Moldings/stair rail/columns
Finish carpentry
Fireplace equipment
Hearth and mantel
Closet organizers
Finish hardware
Other:
EXTERIOR FINISH
Roofing
Housewrap
Siding
Stucco
Brick
Stone work
Exterior trim
Soffit & facia
Gutter matl/labor
Chimneys
Wrought iron
Other:
PAINTING
Interior painting
Exterior painting
Wallpaper
Other:
FLOORING
Ceramic tile
Carpeting
Wood flooring
Vinyl flooring
4.9%
$10,780
0.9%
1.6%
2.1%
1.3%
0.2%
0.6%
0.3%
$1,980
$3,520
$4,620
$2,860
$440
$1,320
$660
2.2%
$4,840
5.7%
$12,540
0.4%
$880
0.8%
$1,760
0.9%
2.6%
0.9%
$1,980
$5,720
$1,980

Description
Stone work
Other:
MARBLE, TILE & GLASS
Tub surrounds
Shower doors, mirrors & glass
Other:
LANDSCAPING
Sprinkler system
Fill and topsoil
Seed or sod
Trees and plantings
Retaining walls
Fencing
Other:
CABINET, COUNTER & APPLIANCE

Kitchen and bath cabinets
Counter & vanity tops
Medicine chests
Laundry cabinets
Entertainment center/built-ins
Kitchen appliances
Other:
0.7%
0.9%
$1,540
$1,980
0.7%
$1,540
0.2%
$440
6.5%
2.8%
$14,300
$6,160
1.6%
$3,520
MISCELLANEOUS
Smoke alarms
Doorbell
Dryer vent
Foundation plaster
Attic fan
ON-SITE SUPERVISION
CONTINGENCY
Other:
Total Cost of House:

Building Costs:
Unspent Amount:
$220,506
Notes

The Budget
Worksheet is
available on
a spreadsheet
template in our
Free Download
Gallery
Sources Say
The Complete
Guide to Contracting Your Home
gives estimating
guidelines broken
down by trade,
hours, and how to
calculate materials.
(See page 263)
Spreadsheet
budget help is
available on Ten
Commandments
DVD #3 (See page
268) and on our
Workshop DVDs.
(page 271)
Forums
We are building in Palm Bay

(Brevard County).
Not counting our
lot we are at $51
per sq ft. If we
count our lot we
are at $62. When
completed, we
will have 3,156
under air with
3,886 total. Three
bedrooms, two full
baths, with two
half baths and a
3-car attached
garage.
The house is solid
poured concrete
and has a solid
poured safe room
(that doubles as
a walk-in closet)
and a bonus room
upstairs that is
34x18 (We will
end up putting a
wall up and make
two rooms an
office at 12x18
and a media
budget, the recommended contingency amount for a first time owner-builder would
be $30,000.
How to Read the Riverbottoms Budget

Compare what we spent on our house to your own plans. Every plan is different, so adjust your thinking to your circumstances. When planning for excavation,
for example, note on the Riverbottoms House Budget on page 100 that we spent only
$440 to dig our foundation. That amounted to .2% of total construction costs of
$220,000.

Say you had a construction budget of $300,000. Could you assign .2% or
$600 to digging a foundation? Youll find out quickly when you interview excavators
on the phone how far off that might be. In our case, the hole for the house was very
shallow because we have no basement, only a four-foot crawl space under the house.
The overall footprint of our 3,500 square foot house was small because it was a twostory, so the breadth of the hole was modest, as well.

Reasonably, you can compare your excavation to ours by knowing the depth
and breadth of the hole you will dig, and what prices are like for digging in your area.
We found prices of around $95 an hour for this work. I was present for every minute
of the process, and the digger charged me an accurate number of hours calculated
to the tenth of an hour. With a clear lot and easy access, he was in and out in a short
time.

Some of the other factors that will help your comparison are that we did four
of the trades ourselves, shrinking the amounts needed for electrical, tile, painting,
and landscaping. For example, painting is shown on page 102 at $1,760; just the cost
of materials purchased carefully. The professional cost to paint the house with three
paint tones and elaborate woodwork to prepare would be over $12,500.

Heres an interesting one caught by some of our sharp-eyed workshop attendees: look at the top of the first page of the budget on page 100 under the line item
Walks and patios. We got our sidewalks, patio and driveway for $1,320. This was
a case of a relative repaying a loan by providing all our concrete flatwork at his own
expense, a cost of $5,733 to him, but no cost on our budget. The $1,320 was just for
incidentals and to pour pads for the air conditioning units at the side of the house, an
item we forgot until the last minute.

Dont let your eyes glaze over while reading the Riverbottoms House Budget.
Many people think that budgets are complicated and sterile. I did, when I started
planning our house. But the budget proved to be a living thing with lots of meaning
when we built. You live or die by your construction budget. Its fun to get it right and
to get it down through your astute planning and shopping.
Budget Worksheet

You can use the budget worksheet starting on page 108 to build your budget.
Make photocopies of the form for your trial runs. At an early point, you should transfer your figures to a computer spreadsheet and use the spreadsheet to revise and
update your estimates of cost as you select subcontractor bids and shop for material
and equipment prices.
How To Use the Budget Worksheet

First, enter the very important number of what you can spend on your new
house, remodel, or addition. This goes on the top of the Worksheet on page 108 in
the third column, Budget Amount. This amount is the key to your project. This is
the amount you can qualify to borrow, or know you can afford. Everything depends
on staying to this amount. For most people, missing this amount by much means
the project dies. If you need to build for $300,000 and discover by building a budget
carefully that it will take $400,000 the options are to change the plan and scope of the
house, or to skip building entirely.

So this becomes decision time. It may take several months to lay out your
budget and verify all the numbers dont rush it. But until you are done with this
part of planning, you wont know whether your project is indeed feasible.

Second, go to the bottom of page 116 and take 10% of your budgeted amount
and set it aside for contingency. From this point on, you will work with the remainder of your budgeted amount, 90% of the whole, to provide for all the parts of the
project. Now, revise the Budget Amount number you put on the top of page 108
accordingly.

Third, allow a percentage for each line item youll need in the second column
of the Worksheet (These percentage amounts must add up to 100%.) If your budget
is $300,000, and you have set aside $30,000 for contingency, then you are allocating
shares of $270,000 to each category. If you allocate 5% for drywall as we did in the
Riverbottoms Budget, you have $13,500 for that category.

Fourth, fill in all the dollar amounts that apply to your project in the third
column of the Worksheet. This is an exercise that takes participants less than fifteen
minutes in our workshop. When you are done behold! you have developed
a preliminary written budget for your project. You need to congratulate yourself,
because a written budget is something even some contractors cannot claim to have
ever done.

Your written budget is not perfect yet, but it is a great key to bringing a dream
to life. Now begins the long process of checking and improving each number in the
quest for accuracy and cost-savings. Through your preliminary interviews with subs
and suppliers and through competitive bidding, you will check and verify until you
have a solid number for your project.
room at 22x18).
We are doing the
tile in the bathrooms and floors,
all the electrical,
sprinkler system,
landscaping,
painting, installing
the windows, roll
down shutters and
all bath, kitchen
and other area
cabinet installs.
I have a friend
who is a GC and
has given me several good subs in
the area. If youre
able to do some
work yourself,
then you can get
it down lower. My
GC friend said Ill
probably end up
at $58 per sq ft
(not counting the
lot) by the time
we are finished.
We have also
purchased bath,
sink fixtures, ceiling fans and other
items when they
go on sale and
stored them at a
family members
home.
Kevin in Palm
Bay, FL
Kevin, we too
are in Palm Bay.
Your numbers
are attractive.
Id like to hook
up with you to
discuss (email or
in person). Our
parameters are
something like
2,800 SF under
air (3,800 total),
4br/4ba, 3-story,
pilings, garage
under, and Im
going to do a lot
of the work...
Our plans are
currently with The
Plan Place on PB
Road for eng.
stamps. I would
like to talk with

you about your subs. I have access to another O-Bs sub
list. We can use to compare. I have an appointment with
Brevard Grouting Services today to discuss pilings.
Randy
Shop Your Budget For a

While
HELP!! I need hard facts. We bought a 1.07 acre lot,

but Im trying to convince my wife that you cannot build
a 3,412 sq. ft. stucco 2-story home in Florida for under
$300,000. Does anyone have a sample or real building
budget from a home built in Florida in the past 1 or 2
years? I would love to be proven wrong.
Greg in Jacksonville, FL

After you have a budget worksheet filled
out with actual bids, price quotations, and guesstimates, take it around to others who can offer
suggestions. In the process of bidding and shopping for materials, you will meet people in the
business with a good knowledge of street prices
and available bargains or alternative approaches.
Hello again: $300,000/3,412 = $87.92 per s.f. I think its

doable. Im shooting for $75/sf
While Im still learning...I do understand some basics...
For example, you can buy a $5K Sub-Zero Refrigerator
or a $1K Frigidaire. You could buy granite countertops
or Formica. You could buy custom cabinets or box sets.
You could buy 3-tab roof shingles or ceramic barrel tile.
You could spend $50K on landscaping or nothing at all,
etc., etc., etc., the list goes on...It all depends on what
you want. If you want nothing but the best...it will be really
tough to build for under $300K. Also how handy are
you? Can you spare $3K by putting in the sprinkler system
yourself, or the fence, tiling a floor, or painting...etc., etc.,
etc.? For estimating purposes, you could say youre in the
$300K +/- $50K range.
As for examples, I did the exact same thing youre trying
to do. I sought out as many owner-builders as I could to
get a handle on my cost. I found 5 sources (including two
neighbors) who all built within the last four years. In summary, their costs were usually between $74 to $100 per
SF. Good luck
Randy
Greg, we are currently under construction in Flagler County
on a 2,800 sq. ft. home and our budget is $285,000,
and Im fairly certain well spend it all. Concrete and block
are high right now which drives the cost up, and unless
you are going with low-cost interior furnishings (tile kitchen
etc.) I would plan on $100/sq ft. Also, the new Florida
code takes effect starting July 1 and it required more
strengthening for hurricanes than the 2001 FBC.
Eric in Flagler Beach, FL
Is the square footage under air or roof? That makes a difference on what your price per sq. ft. will be.
Donald in Port St. John, FL
Just for comparison sake, mine is 2,800 sq ft living 3,600
sq. ft. under roof.
Eric in Flagler Beach, FL
Randy,is my calculator broken? I come up with $102/sq.
ft. with your numbers.
Living space is 3,412, including 2-car garage, porch and
entry comes to 4,246 sq ft. My wife swears that we can
build under $300,000. We dont plan to have marble
and Sub-Zero kitchen equipment. But I dont see a remote

Often a lender is knowledgeable and helpful. Even if you havent selected your lender, you
can get appointments to talk with experienced
construction lenders. The estimator at the local
lumberyard could review your budget. Sometimes
the help counter workers at home center stores
are qualified to help. You could speak to several
house designers about your budget. Fax or email
a copy to anyone who could review your numbers
and call or meet to discuss them.

Most of the owner-builders I interviewed
found three or four significant bargains in the
process of building their house. If you can locate
other O-Bs in your area, they can be very helpful
in confirming your numbers and in suggesting
alternate sources or approaches to save money. If
each O-B you consult has several bargains to suggest, you may be able to line up a large collective
list of exceptional sources for savings.

Sometimes a retired general contractor in
your locale is a good advisor. Some owner-builders have used high school shop or construction
class teachers as advisors. If you will be using
an independent building inspector, ask him to
review your budget. You dont want to: 1) overpay for anything, 2) underestimate anything, or
3) forget anything.

You and your successors will live in the
house you build for many decades, possibly centuries. Take time now while you are in the planning stage to shop your budget for a few weeks.
The harder you work this planning step, the more
money you will ultimately save.

possibility of coming close. I hope someone from Florida can tell me that they were able to build in the under $75 psf
range, so my wife can say told you so. Im not convinced.
Greg in Jacksonville, FL
Dont use that calculator in your financial planning :D
Regardless, $89/sf vs. $92/sf is in the noise. I plan to know my cost as close as I possibly can. I have to...I think the bank
wont loan on speculative planning. As for price/sf calculation, I believe thats under air. Otherwise wed see a breakout
of mansions being built.
Anyone use The Plan Place on Palm Bay Road? We just turned them on to modify and engineer our stock plans. Were
tearing down a 40-year old 3/2 ranch that was damaged in the hurricanes last year. Were getting our temporary housing ready while planning the new home. Keep in touch.
Randy
LOL, sorry, after using a real calculator, you are correct. That oughta learn me to use an aol calc. Don
May I ask what your concrete and block costs were? We are in the drawing stages of our plans in Lake County. This is
our 2nd O-B home and I do have to say we came out under $100/sf...3/4-acre lot on a lake. 1,677 sf per floor. Two
floors including walkout basement and over 5,000 sf with covered porches and breezeway and garage. We finished
three years ago and our total cost was $320,000. Our land cost us $60,000 so our total psf cost to build was $78/sf
and total house was $52/sf (that is minus the land). I know concrete and lumber have almost doubled in the four years
since we started to build. What changes are coming in structural requirements in Florida?
Brenda in Eustis, FL
Greg, Im new to the forum. We COed on our 1st O-B home in two years ago. Our sq ft is 3,512 total & 2,373 living
single-story. We have about $225K in the home. We subbed out the majority of the home, my husband did about 15%
of the work...mostly carpentry finish work. About $64/sq ft total. Hope this helps.
Kristy in Saint Lucie, FL
Holy crap! Kevin, those are great numbers. I thought we were doing good. We are doing all painting interior/exterior,
landscaping, sprinkler system, trim work, all door and window install, floor/bathroom tiling, custom maple cabinets built
from scratch, and all the plumbing trim work. We are still at around $115 per sq ft and for what it is, it is a damn good
deal. We have a slick electrical system going in and lots of extras like tankless water heater, the works in kitchen appliances, 250-gallon underground propane tank, full-home standby generator, few dozen linear feet of Zodiac counters,
and built-ins everywhere.
Even with out all those items we never were anywhere near $50. I think we got it down to like $90 and just decided to
go all the way.
Home is 2,700 under air, 3,800 under roof, on one acre on a lake in a rural part of Orlando. Our major costs were:
foundation $20K
poured solid walls $28K
trusses $10K
electric $22K
framing labor $17K
framing materials $11K
drywall labor/materials $14K
land $40K
land permit + clearing/fill $32K
city permits $18K
HVAC $15K
septic $9K
landscaping $9K
roofing $14K
doors/windows $10K
plumbing $4K (got a deal here)
generator $7K
gas line + tank $6K
All the rest of the money was spent on cabinets, flooring, painting, appliances, and anything else needed. Needless to
say the bill is coming in around $320-$330K.
Budget Worksheet

Description
BUDGET LIMIT:
Percent %
Budget Amount
100%
INDIRECT CONSTRUCTION COSTS

Bldg. permit/fees
Setup short-term financing
Interest charges
Plans and specs.
Structural engineering
Survey review
Building lot
Course of construction insurance
Supervision/overhead
Misc. equipment rental
Temporary/mobile phone
Trash pickup
Clean-up
Temporary power
Title insurance
Other:
EXCAVATION/SITE WORK
Site clearing
Foundation excavation
Finish grading
Backfill
Sewer/water trench
Electric trench
Drain tile and gravel
Other:
MASONRY
Footings/labor & materials
Foundation/labor & materials
Expenditures
Final Cost
Sub/Supplier
Phone Number
Budget Worksheet

Description
Percent %
Budget Amount
Rebar & steel

Waterproofing
Termite protection
Sand or gravel & placement
Basement floor
Garage floor/labor & materials
Walks and patios
Driveway & other ext. flatwork
Stoop, steps & ramps
Fireplace brick
Other:
SEPTIC SYSTEM
Well
STEEL BEAMS AND POSTS

ROUGH CARPENTRY
Framing lumber
Trusses
Framing labor
Crane service
Windows & screens
Skylights
Exterior doors
Garage doors & openers
Decks & porches
Other:
PLUMBING
Rough plumbing
Fixtures & trim
Other:
Expenditures
Final Cost
Sub/Supplier
Phone Number
Budget Worksheet

Description
Percent %
Budget Amount
HVAC
Heating & air conditioning
Other:
ELECTRICAL
Rough electrical
Finish electrical
Fixtures
Vacuum system
Alarm system
Television pre-wire
Telephone pre-wire
Audio pre-wire
Other:
INSULATION
Wall & attic insulation
Other:
DRYWALL
Hang drywall materials & labor
Tape & texture
Other:
FINISH CARPENTRY
Interior doors
Moldings/stair rail/columns
Finish carpentry
Fireplace equipment
Hearth and mantel
Closet organizers
Finish hardware
Other:
Expenditures
Final Cost
Sub/Supplier
Phone Number
Budget Worksheet

Description
EXTERIOR FINISH
Percent %
Budget Amount
Roofing
House wrap
Siding
Stucco
Brick
Stone work
Exterior trim
Soffit & facia
Gutter matl./labor
Chimneys
Wrought iron
Other:
PAINTING
Interior painting
Exterior painting
Wallpaper
Other:
FLOORING
Ceramic tile
Carpeting
Wood flooring
Vinyl flooring
Other:
MARBLE, TILE & GLASS

Tub/shower surrounds
Shower doors, mirrors & glass
Other:
Expenditures
Final Cost
Sub/Supplier
Phone Number
Budget Worksheet

Description
LANDSCAPING
Percent %
Budget Amount
Sprinkler system
Fill and topsoil
Seed or sod
Trees and plantings
Retaining walls
Fencing
Other:
CABINET, COUNTER & APPLIANCE

Kitchen and bath cabinets
Counter & vanity tops
Medicine chests
Laundry cabinets
Entertainment center/built-ins
Kitchen appliances
Other:
MISCELLANEOUS
Smoke alarms
Doorbell
Dryer vent
Foundation plaster
Attic fan
On-site supervision
CONTINGENCY
Other:
Total Cost of House:

Building Costs:
Unspent Amount:
Expenditures
Final Cost
Sub/Supplier
Phone Number

$50 per foot is awesome. I did not think that was possible. I am curious as to how you saved so much on your shell. The
hard costs. Jason
Jason in Orlando, FL
Journal
Were mostly dried in now and working on mechanicals. Our entry door is taking longer to come in than anticipated.
Rough plumbing is all but completely done. The bathtub in the master is a drop-in unit that needs a frame yet, which is on
the agenda tomorrow. Bath #2s tub will also be secured in tomorrow, as will the fireplace (once its frame is built, that is).
HVAC started today and expects to be done at the end of the week, and electrical is scheduled for next week.
Good news on the basement stairs. Turns out, no pun intended, we were able to accommodate a straight staircase,
avoiding our undesired landing and turn. Unfortunately, the basement floor is a mess. The landscaping guys were supposed to put in our landscape timber retaining wall weeks ago, and still havent yet. Runoff from rain came in one of the
window openings and muddied up the floor a bit. We OSBd the opening until they can get the retaining wall up, but not
soon enough. Looks like well be renting a wet vac in the near future. Of course, we dont have water yet, so thatll have
to wait.
In the kitchen, weve opted for a 3 deep peninsula instead of an island after seeing the space in full scale. Our cabinet
guy has measured and weve decided on specifics. One unexpected extra is a spice cabinet that nestles into a 7.5 gap
we have in our base cabinets. I found solid surface countertops for $35/sq. foot installed, and finally settled on a color
too. The same countertop at Home Depot was $52. We bought our refrigerator, range, washer and dryer this week too,
all from Sears. Am very excited to finally have a front-loading washer.
Although the pictures dont show it yet, we went ahead and framed in the rooms in the basement. Since we have to have
drywall over the ICF to get a certificate of occupancy, we had to at least put in end posts for framing where interior and
exterior walls meet. It was barely a drop in the bucket to just go ahead and frame off the four walls we wanted, so we
did.
Our builder bid on drywall, but his bid came is $7K to $8K higher than all of the others we got! Guess he didnt want
to do it :-) So hes out, and the next guy is in. We wont be pocketing that savings though, because we forgot to include
some pretty big expenses early on that couldnt be neglected (pest treatment, pea gravel for radon escape, etc.). As
much planning as weve been doing, it seems ridiculous that such basic things wouldve been overlooked. Thankfully, that
money appeared through drywall savings, so were still doing okay on the budget. Other things that are running higher
than expected (appliances, lighting fixtures, masonry) are being compensated for with savings in areas such as gutters &
excavation. In an attempt to help offset this and other potential cost
, weve paid cash for a few things such as door levers, tubs & shower surround, appliances, lighting fixtures, ceiling fans,
fireplace, and all plumbing pipe and fittings. Although weve kept all receipts and could turn them in for a draw, we probably wont.
Aimee in Kalamazoo, MI
Chapter 9: Commando Shopping Techniques

Time line: Three months before groundbreaking
The Price of Marshmallows
laine and I have been avid grocery shoppers for years. Its a science and a sport
with us. We follow good rules of comparison shopping, we read labels, we
check product sizes for comparability. When we buy a larger size of a product,
say breakfast cereal or olive oil, we make sure that the price per ounce is lower than
for a smaller size.

We took the level of shopping up a notch some years ago in an effort to save
money to build a house. Using a computer spreadsheet, we listed and totaled all the
products, brands, and sizes that we use. We discovered that all of the items we buy
regularly, from applesauce to light bulbs, add up to less than 200 products. On the
spreadsheet we listed the usual price of the item: (one-pound bag marshmallows:
$1.59) and the lowest price we have found for that item: (one-pound bag marshmallows: $.69, Storehouse Market, March, 2004).

When we find a price that comes close to the lowest-ever price we buy that
item in bulk. By organizing our grocery shopping, we have reduced our monthly
Forums
My wife and I are

about to have a
home built. We
have been shopping for home
builders here in
OKC and seem
to get all sorts of
different opinions
and answers to
everything. One
guy says stock
home plans are
usually wrong
and he will draw
up a new set for
free if we hire
him. Another says
they have more
buying power
for flooring, tile,
etc. They each
seem to have
some kind of story
or opinion. Some
even have a
used-car salesman
type pitch. Most
are in the $100
per sq ft range.
But at this price, it
120 Chapter 9: Commando Shopping Techniques

seems there would
be little equity,
especially here in
the Midwest.
I have considered
building our own
home, but my wife
is skeptical and
feels that subcontractors will give
better deals and
be more reliable
for established
home builders
than for a maverick owner-builder.
She feels that a
builder will get
the materials and
subcontractors
cheaper, thus the
savings we would
get from being our
of GC would be
minimal at best,
and the project
would go much
smoother. Is she
right? How much
would we save
on a 1,900 sq
ft home of good
quality? Thanks.
Fred in Oklahoma
City, OK
Hi Fred, we have
lived in Southern
California for the
past 20 yrs. We
just relocated to
the San Antonio,
TX area and will
be building our
own home. I
have a industrial
construction background and have
been a residential
licensed contractor
in CA. I worked
as a sub to several
GCs and most
of their customers were very
unhappy with the
time it was always
taking the GC.
Our neighbor
across the street
had a secondstory addition and
kitchen remodel
done about three
grocery bill from $500 to $300 while still getting the exact brands and products we
prefer.

When we were developing early plans to build our home we took a vacation trip in the car. Elaine brought up the idea of owner-building the house, and I
expressed real hesitation. While on the road, we stopped at a convenience store for
gas. I browsed the shelves idly and noticed marshmallows were selling for $3.59. As
an organized shopper, I mentally compared that price to the $.69 we had paid when
we last stocked up. It was more than five times as much. As I looked closer, I discovered that the convenience store product was in a smaller 12-ounce size. That made it
almost eight times as expensive.

I began to wonder whether the products we needed to build a house
lumber, wiring, plumbing fixtures also could be had at much lower prices than
you see in the first place you look. Would the simple shopping and bargain-hunting
skills of any householder apply to building a house? The answer turned out to be a
resounding yes.

The marshmallows were available at a convenience store for a high price, but
they were convenient. The store was open long hours, and was situated to be a quick
stop for the customer. Lines at the cash register were short. Customers paid the high
prices there in exchange for convenience.

Professional builders follow a convenience ethic much more than ownerbuilders do because they are in a production mode. They have a volume business to
do that depends on consistent, repeatable production methods and procurement.
Since time is of the essence, a contractor wont mess with a convenient established
arrangement to buy something he needs to build your home. But an owner-builder
can and will shop for hours to save money on a single item. Your issue is not convenience, but savings.

Much of the 1,000 hours of owner-builder preparation we advocate has to
do with finding better values than you first see on every item for your home. It takes
time and effort to do the research involved, and a general contractor wouldnt dream
of spending the time that you would. As long as his price is competitive with other
builders, and the builder makes a customary profit, he sees no need to do it differently.

The builder will tend to use the same subs and suppliers for every project.
Often, no bidding is done. Its more comfortable and convenient for a builder to
use the same people. If the builder has found a good sub, he will not rock the boat
by looking for better values. He wouldnt want to risk alienating good help, and he
makes only token efforts to get the prices down.

If a builder handles a $300,000 project in 100 hours of management time,
and earns a clear profit of $30,000 he has been well enough paid at $300 per hour
for his trouble. Even though he could make more profit by shopping, it would eat
up time, and builders are in a production mode. In a 2,000-hour work year, a small
custom builder would hope to do three or four houses. He doesnt want to spend
Chapter 9: Commando Shopping Techniques 121

more than 100 hours on managing any one house. With administration and marketing, the builder only has about a thousand work hours a year to spend on actual
projects.

Since custom builders have found they can make more profit by doing more
of the trade work on each house with their own forces over 50% of the trade work
on average much more of their time is consumed in direct supervision and labor.
Though a very hands-on builder might spend 300 hours on a luxury home project,
very little of that time will be spent on finding bargains. The key to his profit will be
reducing his hours per project.
Bargains

You can and will find bargains that contractors cant match. The savings
may not match those we found on marshmallows, though they occasionally do. The
reward for your bargain hunting is that you will save much more money in total dollars on a single custom home than you can in a lifetime of grocery shopping. The
savings are superior to those from other kinds of shopping, because they mainline to
your net worth.

When we built our house, we stumbled across terrific savings on a number of
items. One was the balusters for our staircase. They were available at more than $13
each from a contractors supply house. We saw them in a lumberyard newspaper ad
on closeout for $4.15 each. We sourced most of our stair parts from that lumberyard,
and negotiated an additional ten percent discount for doing so. This made the balusters $3.71 each. Our savings on 120 of them was $1,115.

We found a bargain on solid granite for our countertops by poking around in
the boneyard of a stone and tile operation where returns and discontinued species
of stone were stored. We paid $5,375 for a more than $12,000 value.

Every owner-builder I interviewed told me stories of savings they had found.
Here are some examples:
We have septic tanks here. I learned that the guy doing my grading was
trying to get into the business of septic tank installation. I was his first customer,
but I wasnt worried because he was a competent digger, and the system gets a
thorough official inspection anyway. He did it for $3,750. The inspector told him it
should have been $12,500.
We have a big home center store close by, and we often buy on sale. With
our photo album of ideas, we have our shopping list. Every weekend we look for
sales. Appliances work well that way. Carpet was another example. We told them
the yardage, and they came back with a low-price factory deal. On windows,
we had a local supply yard that had just taken on a high-end national window
line. We negotiated a $10,000 price on what would be $15,000 worth of wood
windows at contractor prices.
yrs. ago and

used one of the
best known GCs
in the Orange
County area.
It took 11 1/2
months to get him
to complete the
project to a 90%
level; it should
have taken 4 to
5 months max.
The neighbors
finally finished it
themselves.
My sister and
brother-in-law
moved from SC
to the north part
of Houston, TX
almost a year
and half ago to
date. They visited
the area the year
before their move,
and purchased a
new spec home
from The Builder
of the Year who
had not started
construction on
it yet. They were
told that construction on their home
would begin in
February and
would take 6
months. Well a
long story short
and to the point,
380 days later
YES, 380 DAYS
they final closed
on the house.
If you ask around
for every bad
experience an
OWNER-BUILDER
has had you can
most likely find
at least three
examples of a
bad experience
an owner has had
with a GC.
THE KEY TO NOT
HAVING A BAD
EXPERIENCE IS
YOU HAVE TO
BE ON TOP OF
EVERYTHING
AND IN EVERY

TYPE OF CONSTRUCTION A
WELL-DEFINED
WRITTEN SCOPE
OF WORK IS A
MUST. Most GCs
cannot provide
their subs with a
written scope of
work. The GC is
not going to tell
you about the
problems that they
have between
themselves and
subs; that does not
help sell houses,
but they have
them.
James in Spring
Branch, TX
I have to agree
with James and
being in the
middle of my own
construction, its a
whole new ballgame when youre
in charge of the
money and scheduling. Definitely
for the better. You
can also write
time/performance
penalties into
the contract. No
matter which route
you choose. $100
a sq ft is reasonable and unless
youre looking to
do a lot of the
work yourself you
wont be able to
bring it down very
far. Where you
make up the difference, if you have
time to put into
it, will be finding
more reputable
subs and price
shopping. Contrary to regular Joe
shopper, Home
Depot does not
have the best
prices on most
items. Building
your own home is
a second job, it
takes a lot of time
and research for
us non-contrac-
I picked up my windows from a contractor who ordered them and the customer didnt want them. They were brand-new triple-glazed windows worth about
$7,000. I paid $1,500 for all of them.
We found our appliances on a closeout and saved $3,125 on a fridge,
dishwasher and range. On flooring, we shopped heavily, and saved $4,000 on
carpet. On ceramic tile, we shopped subs and got leads, and saved $2.50 a foot.
On cabinets, we used an independent guy who was a dealer for factory cabinets,
and saved $7,500 versus a custom cabinetmaker.
Our kitchen cupboards we found discontinued at a local cabinet shop, and
we got them before we even broke ground because they were such a good value
at 25% off. We stored them in my brothers garage. We did well on light fixtures by
picking up the ones we wanted whenever there was a sale.
We went to one home center store and saw the Jacuzzi tub we wanted for
$2,500. I started talking with the salesman, and he told me that another store
down the street had that model for less. We went down the street and bought it for
$1,500. We had a friend in the import business who got granite for our countertops and saved us $7,500. We had a section of copper roof, and when we called
around, we found it cost twice as much here as what it was in the bigger city 50
miles away. We saved $1,100, even though they came from that far away. We
installed beautiful marble floors after we found what a good price we could get.
Our siding was quoted at $9,000$12,500 and we got it for $4,500. We
found the guy by word of mouth. A good sub will tell you things. You can shop for
the right sub right up until you schedule it. You are not obligated until you sign. We
did a lot of shopping on our windows, and got a bargain on custom made ones.
We bought direct from a factory that makes and sells windows to distributors. We
went to their showroom and saved. If you walk into a wholesaler and find a slightly
damaged version of the countertop you want, you save. Look out for things. When
Hurricane Rita came through, I had a bid on my lumber just before the storm. So I
hurried down and made a deposit to lock it in. Contractor prices on lumber went
up 20% right after that.
My plan of attack is to find a subcontractor on a site, find his best person,
and offer that person an after-hours job. I offer him a couple of bucks more than he
makes per hour. I did it with some of the framing. Also painting I hired a guy for
$10 per hour to work with me. He did some taping, spraying, etc. Remember that
a sub is a contractor, he adds something to the costs in every category too. Go
to other jobs and pick up workers. Its really easy. You ask questions, and you say,
Do you know anyone who wants to make a little extra on the side? Their wage
is the smallest part of the job. Dont hesitate to use skilled laborers. Electric work
is more tricky. Just use them as consultants, or it gets expensive. It helps to know
somebody on that one. On plumbing, you will nearly always find a subcontractor
who has crews. The crew leader is making $15 an hour, you offer $18.
Since I wasnt looking for a specific color, I got carpet for $5 a yard, a Shaw
40 oz., in a discontinued shade. It was a taupe, a good color for resale. The floorThe Owner-Builder Book

ing contractor sent out their guy to install it at $.75 for pad, $1.50 for installation.
They agreed to charge the regular installation price with no profit applied. The
package would have been $38 a yard at retail.
Buy in bulk and always watch for sales. It does pay to shop around. You
need to watch as they select materials, so you get straight wood, etc. Be there
when they load it. I selected a tub and shower unit for the bathroom. I saw it for
$525. Then I saw it at another store for $350. Dont be in too big of a rush.
I went to a door shop looking for a value on a high-end front door for the
house. They often make ones that are ordered with the wrong swing, and I got a
perfect one from the door shop for $750. I saved $1,500.
You can save an incredible amount of money just buying doors at one of
these wrecking or salvage yards. I got a mahogany entry door worth $2,500 for
$50. I got doors with leaded glass, restored them to new condition so they were
acceptable to the inspector, and put them in front rooms.
When I got bids in the beginning, I ran into a local building supply company.
They were not the cheapest, but the salesman was the most helpful person, and I
could bounce ideas off him. I had 3x6 windows, 15 of them, across the back of
the house in the design. He told me about these wood windows that went out on
a job, and were sent back. He sold them to me for $125 each. They were worth
$500 each. I actually altered the design to take advantage of the deal.
I only had one true contractor, the plumber, the rest were all moonlighters. It
takes longer that way, but it is smooth. You have to use weekends. If a portion isnt
done by Sunday, you may lose a week. But sometimes their other jobs die, and
they come full-time. I saved about half this way.

A woman who is an experienced construction lender from Florida told me
that people who build with general contractors dont save money like owner-builders
do:
I have seen people pay too much for what they are getting. They are not
knowledgeable consumers and good negotiators. They make emotional purchases. They buy on impulse. People lose some detachment and objectivity. Paint,
carpet, tile, appliances, toilets, hardware, fixtures. Thats where builders make
some of their best money. People never seem to pick out what the house comes
with. Builders count on people going a little crazy with select items. They will make
30% on select items.
Identify Your Suppliers

Over the course of construction of our home, in addition to about 15 separate subcontractors, we used more than a dozen specialty suppliers. It is important
to get three or more bids or takeoffs from each category of supplier, just as it is
with subcontractors. Subcontractor bids vary widely, but supplier prices can vary
tors just to get in

the front door of
the bank. Permits,
reworking the
plans and engineering for local
conditions, itemized budgets and
subcontractors are
areas of a project
most homeowners
never get involved
with. If you still
feel up to the
challenge, there is
a lot of wisdom in
these forums, read
through them and
dont be afraid to
ask questions.
Tom in Stroudsburg, PA
Fred, as for the
$100 sq. ft., a
contractor makes
at least 35% so
if you take full
control and watch
your purchasing,
get at least 4
bids for the larger
material items, 3
from other than
Home Depot or
Lowes, you should
get closer to $75
sq. ft. If you are
willing to direct
hire and/or do
some of the work
(hang sheetrock,
paint, install
cabinets, etc.) you
will most likely get
it below $75. You
can spend 2 to 3
months just getting
a GC lined up.
The quotes from
the GCs here in
Texas tell us that
once we sign with
them then it takes
about 3 months
to go through
planning process,
then 6 months to
build. SEE MY
OTHER POST
ON THE AVERAGE GENERALS
TIMELINE. So if
you have not read
The Owner-Builder

Book, get it and
read it and have
your wife read it.
Women like the
security of money
in the bank, so
show her how if
you owner-build
you build the
dollar value of
the equity in the
finished home.
James in Spring
Branch, TX
Fred, Your wife
has a point.
Unless youre in
the business youre
not going to get
the same takeoff
as those that build
15+ houses a
year. You would
have to work real
hard getting your
take-offs close to
an experienced
GCs price.
However, you are
losing out on $
per sq by having
the whole house
GCd. Perhaps
a compromise
would be in order.
Find a builder that
will build the shell
(excavation/foundation/framing/
siding/roof). Get
a price for that
then you sub out
the rest. I feel the
GC would compete with the price
you could get for
the shell. But as
was mentioned
above, you lose a
little control. Make
sure you have a
contract that once
started no delays
without penalty.
Jon in Merrimack,
NH
Fred, I am not sure
I totally agree with
Jon that unless
you are in the
business you will
not get the same
price material
even more. Because subcontracting involves direct labor, there is a limit to available
discounts. Materials are inventoried, and thus have a carrying cost to the supplier.

Suppliers sometimes discontinue items because of changes in style or features, or due to lack of demand. The result can be a bargain for you. Suppliers frequently must take back return items, and often discount them deeply. Damaged
items, overstocks, and discounts for quantity purchases are reasons you can save.
Identify suppliers who can meet your needs, and check prices on everything you buy.
You will be able to buy some or all of the items on this list directly:
Potential Suppliers
1.
Sand and gravel
26.
Window wells
2.
Brick and block
27.
Skylights
3.
Concrete supply
28.
Plumbing fixtures
4.
Lumber
29.
Vacuum system components
5.
Floor coverings
30.
Roll roofing supplies and shingles
6.
Electrical supplies
31.
Fasteners
7.
Paints and wallpapers
32.
Insurance
8.
Appliances
33.
Tools
9.
Windows
34.
Specialty supplies
10.
Tile
35.
Doorknobs and locks
11.
Drywall
36.
Heating and air conditioning components
12.
Cabinets
37.
Wood flooring
13.
Doors
38.
Sprinkler supplies
14.
Trims and millwork
39.
Fencing
15.
Stone
40.
Decking and siding
16.
Sealed fireplaces
41.
Title insurance
17.
Trusses
42.
Stair rail parts
18.
Wrought iron
43.
Telephone, alarm, audio and cable components
19.
Closet organizers
44.
Gutters and downspouts
20. Blinds
45.
Countertops
21.
46.
Computer software
22. Mirrors and shower doors
47.
Built-in sports equipment
23.
ICFs or SIPs
48.
Topsoil
24. Plumbing supplies
49.
Plants and landscape supplies
25. Lighting fixtures
50.
Steel and rebar
Cultured marble
When You Pay for Materials Separately You Save

One of the ways that general contractors improve their profits is by buying
materials separately from labor on the trades that go into a house. The contractor can
establish regular sources of supply with consistent discounts for volume purchase
and favorable credit terms. He increases his profits by passing along the materials to
his customer at marked-up prices.

Owner-builders can enjoy the same privilege. 85% of those I interviewed
bought at least some materials separately from labor on the trades. I found out dramatically how much this can save when I shopped for the stair rail system for our
house.

The subs who do custom stair rail work in our region use a formula for bidding that takes the prices for stair rail parts (newel posts, balusters, rosettes, hand
rail, anchors, and so forth) and adds an equal amount for labor to build the system.
The parts for ours were bid at $2,500 and labor was an additional $2,500. The carpenter assured me that I couldnt get better prices on materials. I decided to find
out.

With the discounts I got on balusters (the vertical spindles running from
floor to handrail) I got all the parts for $1,250. Then I looked for a carpenter who
was willing to do labor only. The one I found preferred avoiding the hassle of selecting and sourcing materials and handling the costs. He wanted $850 for labor only. I
offered cash, and he agreed to $750. The total cost came to $2,000.

Generals tell me they have the most difficulty getting labor-only deals on
the mechanical trades: electrical, plumbing, and HVAC (heating, ventilating, and
air conditioning). Nonetheless, 50% of them say that they buy all the supplies for
the mechanical trades directly except electrical boxes and wire, and plumbing pipe
and connectors. O-Bs in our survey report that they bought materials separately on
52% of the trades. You can do the same by having subcontractors who bid your work
furnish you with a list of required materials.

O-Bs seem to need some help in this area. 52% seems low for capitalizing
on the opportunity to buy materials directly. Our on-line survey permits tracking
through on the answers of any one respondent. You can cross-check the occupation
of the respondent with all of his or her other answers. One of our participants is a
G.C. who owner-built his own home. I find it interesting that he reports 100% of
material was purchased separately from labor. Some other very bright O-Bs in our
survey also purchased 100% of materials separately from labor.

Two different owner-builders I know found that they could save by buying
and installing the ductwork for HVAC themselves. HVAC ductwork used to be made
of sheet metal and was difficult for do-it-yourselfers to install. Newer technology
employs energy-efficient insulated flexible tubing that is easy to install. Typical savings on both material and labor: $2,500.
or labor. Some
subs will treat you
differently, but you
would not want to
do business with
a GC that treated
you that way. As
for material, yes
the GC is getting
it at a better price
that he is giving
to you, but the
lumberyard can
only give a GC
so much of a
discount before
they cut into
their own profits.
Just be sure that
whatever direction you go that
you present the
supplier (be it a
GC, lumberyard,
cabinetmaker,
etc.) with a wellwritten request for
bid and MAKE
SURE THAT YOU
ADDRESS IT TO
ALL OF THE BIDDERS. A common
practice in large
industrial projects
is to send out
request for bids
with a cover letter
addressed to all
the bidders, and
then they hold a
job walk that all
bidders show up
on the job site at
the same time. So
if you go out for
bid on a lumber
package and put
a cover letter on
the written request
This lets the lumberyard know you
are serious, have
covered everything and are
looking at price
very closely.
James in Spring
Branch, TX
I disagree completely with this
statement. You can
easily beat builder
prices on almost
all materials. The

reason for this is
most subcontractors only deal
with one or two
suppliers, and
they have for the
past 10-15+ years
thinking they are
getting the best
combination of
price and/or service. How do they
know if they never
shop the competition? I found by
taking my own
quantity takeoffs,
I could call the
suppliers reps
cold and explain
my situation like
a business (I am
a GC. Although
I am limited
production, I build
custom houses that
are sold before
I begin construction, no spec.
I dont think my
current supplier
is giving me the
best value, I am
shopping around
for a new supplier.
I have quantities,
may I fax them to
you for a bid?).
Ask anyone that
owns a business,
it is much easier to
service an existing
customer than it
is to develop a
new customer. I
just dropped an
opportunity for a
new customer into
their lap, an easy
bid as quantities are already
figured and it will
only take them
about 15 minutes
to look up all the
materials in their
computer, their
pencils get real
sharp when they
think about the
prospect of repeat
business.
I found I could get
better prices on

Some subcontractors have the attitude that they are entitled to the markups
they garner from furnished materials. Contractor John English says so in his book,
The Building Buddy:
If you ask a plumber to work on a toilet you bought because it was $50
cheaper than his own bid he may want to charge more for his labor. This is fair
because he cannot be expected to be familiar with all installations. You probably
wont save much, you will use a lot of your own time, and you may upset an honest
man.

You and I are the honest people who are upset by this kind of thinking. First
of all, you already have an understanding with the subs about purchased material.
They know up front. Next, $50 is a lot to save. Its the net worth equivalent of $500 of
your salary, which for most people is more than a day of work. Finally, it doesnt take
much of your time to find a bargain. You may work at it for a half-day and establish
a way to get $50 off on each of several dozen major plumbing items. You save more
than $1,000, the DSDE equivalent of $10,000 in salary for four hours of thought and
effort.

I saved nearly $2,500 off retail on lawn sprinkler parts alone by buying them
directly from the distributor. I saved another $1,250 on faucet fixtures. It would take
a year of work for an average person making $50,000 per year to set aside that much
cash. Your tradesman may or may not charge you more for his labor when you source
the parts separately. In many cases, I have found labor-only deals that actually total
less than the labor component of a bundled bid.

The benefits of buying materials separately include:

1. You save money on materials.
2. You may save on labor.
3. You know what you are getting.
4. You control the quality of components.
5. You have direct access to warranty information.
6. You can get refunds on any excess material you overestimate.
7. You will discover some components that you can install yourself at a
savings.
8. You get contractor pricing you can use on future purchases.
9. You protect yourself against materialmens liens. (See Chapter 12)
How to Use a Computer to Save

Some of the computer techniques for managing your project have been mentioned in earlier chapters. All can save money on your house project:
Dream Home Notebook

By keeping your notes in a word processing file, you clarify your thoughts
and make design choices early. With your room by room and trade by trade descripThe Owner-Builder Book

tions of your specifications, you can make a ready record to email or fax to potential
bidders.
Sub and Supplier Interviews

If you use a word processor to capture the interviews you make with specialists, you can make changes and add detail to your trade by trade descriptions. Your
bid requests to the trades are more detailed and professional, and you get improved
bids.
Spreadsheet Budget

As you build your budget on a computer spreadsheet, you undergo the discipline of obtaining and defining estimates for every cost category for your house.
This process always tightens up and reduces overall costs. Once you begin to make
expenditures on construction costs, you enter them into your spreadsheet and see the
impact on your totals. For instance, you may spend $10,000 for construction permits
after budgeting $8,000. Or you may learn that the soils on your site are unstable, and
you must add concrete pilings at an unanticipated cost of $4,000. As you track each
expense, you can make adjustments in future allocations to stay on target.
Spreadsheet Shopping Comparisons

Alternative bids by subs and suppliers can be laid out side by side on a spreadsheet in every particular and compared. This helps to understand details and find
cost savings. When I laid out my options for plumbing faucets on a spreadsheet, I
discovered expensive features that I could do without. I cost-engineered the faucet
purchases to include only the desired features in the desired locations in the house.
This helped us save $1,250.
Computer Fax and Email

There is tremendous convenience in faxing direct from your computer to
a fax machine anywhere in the world. (Faxes are still the preferred communication
means of the construction industry.) By installing an inexpensive fax modem on our
computer we were able to send copies of many documents to those who could help us.
(New machines often include the modem). We sent out descriptions of requirements
for many of the trades to various subs with fax machines. This saved much time and
brought us more bids than we could get by face to face communication. We were able
to find better prices. We sent around our budget to experts for review.

We installed a second phone line and later a cable modem to handle fax and
email traffic. There were occasions when we were having a conversation with a sub
or supplier on one phone line and we were emailing or faxing him a list of pertinent
specifications at the same time on another line. We were able to complete the conversation with the information in the other partys hands.
engineered trusses
and lumber than
my ICF subcontractor, a custom
house builder himself (he changed
his lumber supplier
when I showed
him my invoice
vs. his suppliers
proposal through
him for the same
takeoff). I got
better prices than
my plumber, using
my plumbers
quantity takeoffs
(my plumber bid
material separate
from labor, and
for his material bid
he simply submitted his takeoffs
and quote from his
supply house he
has used for 15
years and which
he said I could
never match). I got
better prices on
copper than my
electrician, and all
finish electrical fixtures were simply
not available
without a custom
order locally, so
enter larger market
price matching
(my electrician
was amazed at
what I actually
paid for fixtures).
I got better prices
on finish materials
such as tile, however this is largely
because I found
a tile pattern I
liked on closeout
and agreed to
take the remaining
quantity. There
was very little
I couldnt beat
established subcontractor price
on, even though
they claimed I
could never match
their prices. I tend
to think this is marketing from their
suppliers, they
give good service

and make them
think they are getting great prices,
it keeps them
from shopping the
competition.
As to subcontractors, I found that
I didnt want the
same subcontractors that work
for production
builders. You want
the subcontractors
that take pride in
their work, that
are proud to have
their name on the
house. As an O-B,
you can attract
this caliber of subcontractors. They
are very difficult
to find, they are
small independent
shops and appreciate customers
interested in quality over bottom
-line price; they
dont advertise,
yet stay very busy,
and ultimately they
are the best combination of quality
vs. value although
they are not the
cheapest price
(production builders will squeeze
the last dime out
of a house, and
this includes the
subcontractors that
work for them).
Kenneth in Lees
Summit, MO
I totally agree
with Ken when it
comes to materials. Being in the
trade also, when
I need something
delivered to a job
site tomorrow, I
dont call around
to 3 suppliers to
get prices. I call
the guy that I use
all the time and
know will be there
on time and with
the parts I need.
Computer Schedule

In the next chapter, we will show you how to organize your construction
schedule on computer. With a schedule on computer, any change to your plans is
easily understood. Your computer schedule can be distributed by fax or email to
your reviewers or team members. The computer offers you better control and faster
completion.

93% of Owner-builders in our survey used a computer to plan and manage
their project, and 63% did so extensively. O-Bs describe what they are doing with
computers:
Tracking, spreadsheet budget and schedule. Designed house on computer.
Did preliminary design and brought to architect. This reduced the charges. Then
loaded finished design back in my system to do material takeoffs, stairway calculations, and layouts. Set up a website to load photos of our progress. Did Manual
J calculations of heating and cooling loads. Writing my own spec sheets. It really
helped me to cement what I wanted, and get it all in writing. I started out by writing a bulleted, organized list of every detail and grade/quality I wanted. (With a
new document for each subsystem/trade). We got our business cards printed up
on our home computer, and went to all the home center stores and other suppliers
and registered for contractor prices and credit approval. I just wrote up an Offer
to Purchase on a land contract, and kept a schedule of payments with interest, etc.
on our computer. I like to use Excel for budgeting and draw requests. I also use
Quicken to track all of the bank account balances. I saved the house plans in
.pdf on it we use it for those few computer-connected subs
The Internet

With tens of millions of sites now available on the Internet, I just want to
mention two workhorses. Google.com offers a free utility called Google Local that
helps you find vendors of a given product or material or subcontractors of any trade
in cities anywhere in the U.S. and Canada. Just click on Find Businesses and enter
a city and state or province, then a category of business or descriptive keyword.
A woman O-B called me recently and said she didnt think she could save money
through multiple bids because she was building in a small town, Burley, ID. We tried
Google Local and found more than a dozen plumbers in the nearby area including
the towns of Heyburn, Rupert and Paul, and another dozen in the larger town of
Twin Falls a half-hour away.

Some distant lumber dealers have told me that they can beat local prices even
with the cost of shipping over 1,000 miles, so try markets at a distance from your
own. The same may be true of plumbing suppliers and many others. Since there is no
threat to local customers for them, they can serve you freely.

The second site on the Net most-mentioned by owner-builders is eBay.com.
Not a bad place to compare prices on something if you are planning a buy. If you
purchase something from eBay, be sure to inspect the goods closely on delivery (and

reject if not exactly what you expected). Also, use an escrow service (escrow.com) for
high-value items to protect yourself from paying the seller before you receive merchandise.

OwnerBuilderBook.com has become the largest owner-builder site on the
Internet. Since we accept no ads and do not sell or rent user lists, it is a safe place to
get unbiased resources by and for owner-builders to help you build. For instance,
although thousands of links with user comments about helpful sites are offered, we
accept no reciprocal or sponsored links from the numerous commercial solicitations
we receive.

Our Forum discussions amount to over 15,000 pages of user questions, tips,
solutions, and advice. The sophisticated search function can help you navigate to
what you may be looking for when you plan. One O-B called me to ask about ICFs
for his storm-safe house design near New Orleans. He expressed a concern about
concrete mud blowouts during construction. We did a search using the terms ICF
and blowout, and got 150 threads returned that pertain to ICF in general. When
we entered the terms with plus signs in front of them (+icf +blowout), it yielded
three threads that specifically mention the problem. He was able to do his homework
quickly, and even correspond through private messaging with the posters as well as
post additional questions and ideas on the threads.

Tens of thousands of owner-builders have made themselves available for
networking through Owner-Builder Connections, an editor-moderated blind communications utility at the site (i.e. no spam, and no visible email addresses). You can
find someone in your state or province, city, and even zip code to ask questions and
share resources. The experiences of other O-Bs are afforded you through our on-line
interviews and extensive illustrated journals (blogs) of many owner-builders.

User Tools at the website give owner-builders utilities for building calendars
and for posting interactive lists that permit others to comment or answer your questions. One of the best ways to get started on a building project is to develop a list of
your questions and a list of your resources for building. You can view and contribute
lists such as these or lists of house features and contact lists of subs and vendors at the
site.

OwnerBuilderBook.com also provides you with an extensive download gallery of free software templates for construction budgeting, scheduling, and project
management. You can contribute your own spreadsheets and receive and make comments on the work of other O-Bs from around the world or in your neighborhood.
Using this same

logic with subs
is also very true.
Most GCs use the
same subs over
and over after
they build up a
relationship. The
GC knows that
the sub will show
up and perform
every time he
calls. The GC
might get other
bids on items
every so often to
keep the regular
subs honest on
their pricing, but
not as often as
you might think!
So, the GC pays
a premium for the
comfort of reliable
subs and at the
some time doesnt
find out that there
are other reliable
subs that are
cheaper!
Ambryn in Santa
Cruz, CA
As I thought about
this, I really want
to add some more
ideas on how
you can beat the
prices obtained
from other professionals:
1) Nichiha fiber
cement siding
is not available
in my area. I
was particularly
interested in their
sandstone series.
I called Nichiha,
explained that I
am a GC, am
currently building
my own home,
and interested in
Nichiha sandstone
siding. However
there is none
locally, the closest installations
are Colorado
and Oklahoma
(although there
is a distributor in
Lawrence, KS).

Kansas City is a large construction market, you could really gain a foothold here if you had a demonstration house, are
you interested in my house being a demonstration house for your product? I didnt end up using Nichiha fiber cement
siding as I didnt like the local supplier, but this question wasnt limited to Nichiha. I offered my house as a demonstration
house and local reference, in exchange for a below-market price.
2) You can ask for discounts along the line of I am a GC, I wont put anything into houses I build for other people unless
I live with it first and can recommend it as a quality product. I am currently building a new house for myself, and not afraid
to be innovative with my finish materials. Are you willing to help? Obviously this doesnt work so well with lumber, wiring,
etc. but when it comes to finish materials that are highly visible in an area with little market penetration it is a different
story.
3) Lest you think I am being dishonest with these suppliers, look at these statements individually. I am a GC true and I
have the license to prove it. I build strictly custom, no spec true. I know who is living in my house before I break ground
true. I am limited production true. I am building my own house true. You can use my house as a showcase for your
products or workmanship true. I dont think I had too many subcontractors that didnt use my house in some promotional
material of theirs, whether it is brochures, references, websites, or bringing someone by to show them their workmanship,
etc. If you are willing to offer something in return for great materials, prices, and/or service considerations, you shouldnt
be afraid to ask.
Kenneth in Lees Summit, MO
Wow, nice to see the O-B passion on this site. Please look at my post I said You would have to work real hard getting
your takeoffs close to an experienced GCs price. However, you are losing out on $ per sq ft by having the whole house
GCd. It took me 7 takeoffs to get a price I believe is the best available. Its work. Perhaps when you have to run things
by your boss (spouse) maybe a compromise would be to have the shell GCd because saving ~ $5 per sq ft. (est.) isnt
worth it. I too could tell about the savings I received. I thought it would be worth mentioning some options for people to
think of...Isnt that what this site is about?
Jon in Merrimack, NH
Hi Jon, I dont think anyone was directing this at you. This has been a very good example of a good question that people
were able to come up with some great solutions. There are just a lot of people on this site that are trying to get the most
value from their money (at least thats what Im trying to do!). I would have a hard time giving $15,000 or 5.5% to someone to manage the shell construction ($5 X 3,000 sf). Maybe Im just cheap! Im trying to get around paying someone
those fees by trying to plan every detail before breaking ground. I tend to be very optimistic, but Im getting more jaded
as time passes! Of course, I may have to get some help with managing the shell construction myself, as I know that this
phase of construction will be the most difficult as far as time requirements on site.
Ambryn in Santa Cruz, CA
I certainly meant no offense with my posts. In the realm of O-B, you will never save be able to complete the project for the
absolute cheapest possible, there is simply a finite amount of time and resources you bring to the table. However, beating
established GC or subcontractor prices was fairly easy, and I found took a very minimal amount of time. Considering
I dropped $20K +/- on lumber, taking several hours talking to sales reps and by faxing my quantity takeoffs to many
lumberyards in the regional area to save 10% +/- is a pretty significant return on investment. I even found that the same
company with multiple locations you get different prices on materials from the different locations.
Please note that Home Depot, Lowes, Menards, or any of the big boxes will almost never offer you best price nor best
service (although they will offer you price match guarantee and lower quality lumber). Also note that most professionals
I know around here also dont use the lowest price lumber available, they are looking for delivery times on short notice,
who will pick up excess materials, and other service considerations. According to a carpenter who is a friend of mine
(although didnt work on my house), the local source I used has both the best price and best lumber however he doesnt
use them because of delivery issues and how quickly he can get materials on short notice. Savings on materials is something easy for an O-B to accomplish, and realistically one of the easiest tasks of the O-B process.
Sources Say
The Complete Guide to Contracting Your Home has a good section on computer programs that help the owner-builder,
like CAD, spreadsheets, PIM programs as well as internet sites. Also has a master plan, project schedule, sub reference
sheet, plan analysis, lighting appliance order, cost estimating summary and checklist, subcontractor bid control log, purchase order, change order, sub agreement, sub affidavit, loan draw schedule, building contract, and building checklist in
its appendix.
The Complete Idiots Guide to Building Your Own Home has a chapter on Hiring Suppliers.
(See page 263)
Excerpts from The Owner-Builder Book: Construction Bargain

Strategies
Chapter One: Land
1-1. Buy and subdivide.

An owner-builder called me recently, said he had read The Owner-Builder Book, and he had some
questions. He said he worked for the Ford Motor Company, and that most all of his coworkers were ownerbuilders. He decided to take the plunge and bought a large parcel of undeveloped land. He knew that there
was a stadium going in nearby, and figured the city had an interest in the land being developed properly.
They did, it turned out, and put in roads, sewer, and gutter at no charge to the new owner. He said that just
the day before the call he had sold two lots, and already owned his land free and clear.

Many owner-builders have saved on land by investing in a large parcel and dividing it into smaller
building lots for sale to others. Naturally this requires a big investment, but you could reduce risk by advertising for a partner who like you is looking for land and dividing the cost up front. In fact the O-B above
had a partner.

Or you could just buy two lots when you find your land and build on one while allowing the other
to appreciate for a future profit. Some owner-builders have bought an existing home on a good-sized piece
of land and built on the open portion of land, while living in the home. Later they deeded off the existing
house with a smaller yard and sold it to someone else.

Be sure before you invest that local zoning ordinances allow you to subdivide and sell smaller
pieces than you initially buy.
O-B Connections:
To: Derek
From: Kelly
Re: Catalina
Derek, Thanks for the email. I just acquired a 3-ac. parcel in the middle of Feb. just south of Golder Ranch on Swan. I am going
to split 1 ac. and sell it and probably build in about a yr. The land is adjacent to my current home on an acre. I will put this home
on the market when I get about halfway done with the new home. Did you just move from SD or are you in process? Are you
building a stick house? I am strongly leaning toward SIP from KC Panels based in NM. Good R-value and easy to put up. Keep
in touch, Id like to come visit your build and even lend a hand if needed.
Forum Post:
I feel like Im playing Monopoly and the only places available are Park Place and Boardwalk. I live in Fairfax, VA and I would
like to build in an area close to this location, however, the land is just too expensive. There is a 1/2-acre lot for sale a block
away for $400,000. Yes $400,000 and the price was met within a few days. Just on the other side of the beltway in Maryland
its better, but not by much. I work at the Pentagon and the commute can be murder if I find available land within 30 miles.
I put an ad in the local paper asking for others looking for lots so that maybe we could combine our resources to purchase a
larger lot and subdivide it. However, I was told that the politics within the area makes it hard for the owner-builder to be able to
subdivide a lot in less than a years time. Meanwhile, the price of land just continues to rise. I am looking for any suggestions
that could help me in finding a solution to my dilemma.
by Angelique
Being an owner-builder should have nothing to do with dividing land. If it is owned outright and can be divided per zoning for
the area it should not take long.
by Phil in Gainesville, FL
You should check your city/county/state information regarding subdividing land. It is VERY expensive to subdivide land here in
Las Vegas. The reason for this is because the subdividing of land is exempt from the rules that say if youre more than 660 feet
away from a water main then you can drill a well and if youre over 400 feet away from a sewer main you can run septic. If youre
subdividing land here you always have to run sewer and water no matter how far it is. Also, I was told when subdividing land you
are almost always required to have a drainage study done (min $12K) vs. that is generally not required unless youre in a FEMA
flood zone.
Obviously these restrictions probably do not apply directly to your situation, but it is something to check into in your locale.
by Jeff in Henderson, NV
That means that it is time to move to MD! Youve managed to pick the county that has the highest taxes and well as the highest
median home prices in the area to find lots. You havent gotten any replies because no one has found the Holy Grail in Fairfax
VA. A lot for $150,000! Good luck, you are gonna have to look elsewhere!
by John in Port Republic, MD
Hey there, Angelique! After reading you post, I dont feel so bad. I am a little further south in Fredericksburg and I am trying to
make an offer on a lot this week. I cant find a thing. There is next to nothing in Spotsy unless you want to install an alternative
type septic system or go all the way to Lake Anna. I stepped over the county line to Orange and I looked at 5 lots this week all
btw. .25 to .51 acres going for around $75K. Except every single one makes you feel like you are standing in a swamp. I hoping
to sit tight and something else will pop up within the next couple of weeks. If not, I might be offering on a lot that requires a lot of
backfill!!!!!!!!!!! How far along are you in your research? Would love to network with a few O-Bs who are local.
by Paula in VA
Forum Post:
Im asking if anyone out there has experience with purchasing a large tract of land and dividing it, building on one lot and selling
others. Or has anyone purchased a home with a large lot and divided it so you can build on the vacant piece? Unlike Utah, the
area around Seattle is expensive for lots. Somebodys making money, why not me? Any thoughts or experiences? Thanks.
by William in Seattle, WA
Do your research beforehand... If Seattle is anything like our area, things are progressive now... And subdividing will require
significant hoops and cost... If I were to try to subdivide into anything smaller than 35 acre lots here, wed do the following....
1) Pay a surveyor and engineer to draw up a new plat. Youll need to supply new drainage, access, stormwater/water quality and
road/utility accesses. The road access stuff has to stipulate the number and size of culverts, etc.
2) A portion of the acreage would need to be placed into perpetual conservation easement. Typically, unless you can get approval
for a full subdivision, you might get three or four lots of 2 acres each, with the residual being perpetual conservation open lands.
This is the biggie. If you have enlightened politicians and committees, your land prices will be outrageous like ours.
3) Once you have the plat from your surveyor and engineer, you submit it to your countys planning department. Here they will look
through it. There might be public meetings where you have to post and let neighbors comment. Here we have to do that several
times, and work with another group of politicos called the Rural Land Use Program.
4) Submit it for final approval, pay the surveyor to set pins, and get everything recorded. To get stuff recorded, you might have to
go ahead and install the roads, water lines, soil test for lots, power, gas, etc... The county here does this to prevent developers
from selling lots that are not ready to be built...
Good luck! I looked at doing it, and said, nah.
by John in Erie, CO
Forum Post:
Hi Tim, I crossed this same bridge three years ago. I was hunting for some land to build my house. Found one that we love and
could not make the decision because the price was very expensive. With some creative brainstorming, we persuaded a friend to
partner with us and bought the 20 acres of land. We are lucky. As soon as we divided the land into four lots of five acres each,
my friend sold one of his lots for a 100% profit plus owning the other five acres free. I still have mine. Plan to build my house on
one lot, and sell the other when the time is right.
So, if the land meets all your wishes, buy it. You wont be disappointed looking back in a few years. Somebody said: They dont
make it (good land) anymore, and the price continues to go up...up. And it is true.
Patrick in Orlando, FL
Chapter Two: House Features

2-1. Start early.

The earlier you start your planning, the more bargains and ideas you find to make a better house.
If you start just a month before, you never see the problems or opportunities that begin to emerge after two
or three or six months of thought. Your house is built before you even see the key issues.

Suppose you start a month before groundbreaking and just come out with a budget and schedule at
the end of that month. Then you have to go with it. But we recommend working and adjusting the budget
many times over several months, even a year, before you start to build.

Check the seasonality of prices. The National Retail Federation, a trade group based in Washington, D.C., offers this calendar to help consumers look for retail promotions and bargains:
January end-of-season fall merchandise, home goods from linens to cookware and furniture.
February Valentines Day, with promotions of jewelry, fragrances and other gifts.
March summer merchandise arrives, brides begin registering for summer weddings.
April spring fashion markdowns begin.
May Mothers Day promotions, sales of athletic apparel and athletic shoes.
June and July Fathers Day promotions, summer clearance sales.
August back-to-school bargains.
September and October discounts on coats, gloves and scarves.
November pre-Thanksgiving markdowns ahead of the Thanksgiving weekend rush.
December holiday discounts on apparel and appliances.

In like manner, there is a seasonality to construction materials. Study the principal materials you
need and see when they rise and fall. Typically, when new building permits drop, so does lumber. You
can call the building department in the jurisdiction where you are building to check numbers of permits
issued. You cant track this if you dont start early.
2-2. Take time.

It takes time to find savings on anything. You need to research your buys. Allocate enough time to
get the full benefit of your work. Give the most time to the biggest costs. Our single biggest line item was
lumber. I worked on lumber pricing for several days and eventually found a way to get the price down by
$8,000.

Once you start to build, you find you have no time for anything else. Take the time to work through
problems and questions now. Youll have much better luck later if you get stuck on something.
2-3. Know what you want.

I recently reviewed 27 pages of electrical components offered at eBay, the Webs biggest on-line auction site. I wondered if I could use some of the fast-disappearing bargains on our next house, but realized I
would have no idea until I had a detailed list of components needed for that house.

One reader wrote me: I could have been better organized by making a proper lay down on materials so I can see what it is. The point came home again when some windows caught my eye at a lumberyard
staging a going out of business sale. There were hundreds to choose from at drastically reduced prices.
There were some double-hung insulated windows there for $25 apiece. But how many windows of what size
and style would be needed for our next house? I had no details and had to pass on the opportunity.
Chapter Three: Finances, Taxes, Loans, and Insurance

3-1. Avoid the construction loan.

I could have saved $8,000 in loan fees, interest, and title insurance if I paid cash for my project.
Some owners have sufficient equity in their current homes to pay cash for their next house. They can sell
the previous property before starting the new house and work with the cash proceeds. Or, they can take
out home equity loans to finance new construction. Interest rates and origination costs are much lower that
way.

Owner-Builder Lynn Hardy says: Short-term loan for construction saved us $5,000. John Richardson says: Build one, use it for an equity loan, and get loan for much less to build second one. Live in the
first one and get tax savings. (Because this particular loan is tax-deductible.)
Forum Post:
No lender will loan on a non-finished home unless it is a hard money loan and even then they will require an appraisal and you
will be squashed. Lenders do not like to loan on half-finished properties, I have seen deal after deal die on the vine because
people did it this way. If you need more money from a bank cause you run over, youre dead. Dont do it unless you have plenty
of overrun funds and awesome cost estimates up front, and by awesome I mean detailed down to every nail.
However, if you do, doing it all with your own cash is FAR superior. No interest cost, no financing costs, etc., you will save
HUGE. And then when you pull a HELOC (home equity line of credit) when the house is finished to pay back your friends, the
rates will be lower, payments lower, financing costs almost nil to nil as a lot of HELOC companies do no-closing-cost HELOCs
to 75% LTV. This is a dream come true, and most people dont do it cause they dont have the hundreds of thousands in cash
sitting around.
But yes its possible, anything is, especially when you have the cash, because he who has the gold makes the rules.
by Baine
3-2. Negotiate your loan.

When you apply for a construction loan or mortgage, get good faith estimates from several eligible lenders. These give all of the costs involved just like a construction bid or estimate. Enter the various costs in a
spreadsheet for comparison. Let the lenders compete for your business. O-B Kathy Maggiora says, There
is a list of mortgage guys and their rates in the real estate section of the Sunday paper. We called the lowest
guy and it worked great, no surprises.
Remember, too, that the points charged up front are negotiable. I called five or six lenders when we decided
to refinance our house. The origination fees offered ranged to up to 2.5 percent. (2.5 percent of the loan
balance.) We had several offers of 1/2 point. The best offer was for 3/8 of a point.
Forum Post:
We are looking into UBuildIt to build our new home. We have good credit, own our property outright, have money in the bank,
very little debt and earn a decent middle-class income. Should we consider trying to negotiate a lower interest rate (if we think
its too high) with the bank (probably IndyMac) and/or ask UBuildIt to consider charging us a lower percentage rate for their

service because we believe were a desirable client or are these things generally non-negotiable? Thanks for any information
you can offer.
by Laurie
We are also using UBuildIt in central Indiana. After talking with IndyMac, I was very disappointed in the service I received.
Were probably going to go with our local bank here in a very small town. The rates are lower and the terms comparable. I was
also surprised that while UBuildIt has IndyMac as a referred bank for financing, they have found recently that people have a
lot of problems with them. Shopping around is always a great idea. I hope you are doing that -- or have done it -- best wishes
on your new home!
by Jen in Bloomington, IN
Jen, check out agfirst.com, they might be able to give you a decent rate as well. We are using them to purchase some
hunting land in central Texas.
by Jim in Austin, TX
Thanks a bunch, Jim! I emailed them and asked for some info. Our town is small enough that it may even qualify for the Farm
Credit loan, which would be great. Much appreciated!
by Jen in Bloomington, IN
Lets face it; just about anything is negotiable provided you apply the right leverage. From the sounds of it, you seem to be in
a position to bargain on any number of levels. Dont know how far into your financing you are with IndyMac, but you may want
to shop around for additional rates and possibly pre-quals at any number of lenders. With their rate information in hand, you
should be able to negotiate with IndyMac to get their business. At the least, if you dont ask, you will never know what you
actually could have obtained ratewise. Go ahead and bargain...thats why youre an owner-builder and not just the average
pay full price to have your house built person. Good Luck!
by Mike in Budd Lake, NJ
Forum Post:
(Smiling ear to ear) :) This is Baine. heh-heh. Boy did I stir things up, right on!! Thats what everyone needs is to be able to
look at things objectively and as a devils advocate sometimes. I like a little bit of in your face finance. There was extremely
too much BuildMax-only input and chatter going on in here so I stirred up the pot a little and hopefully everyone is looking at
things more objectively. Companies like BuildMax are trying hard to corner the O-Bs out there on this site and others into
thinking that they are the only way to go, and you have to do it their way or else. This is an O-B site where everyone is trying
to do it a BETTER way and cut out the middleman builder, etc.. to save money. Why not cut out the middleman BuildMax also,
the same exact principle applies here and its about time someone saw it.
I have to laugh that the owner of BuildMax posted here in response to my posting, even denying some of their obvious and
regular practices. I can give him credit that he might not have ever called his own company or looked into being a client of it
therefore he might not know how his employees treat people or what the actual client goes through in trying to gain information
from them, but to say they never pull credit from a client and that they give answers to them without having all their information
first is just purely and utterly false and anyone in the world can figure this out in two minutes just by even reading the BuildMax
website. He really hooked himself on a number of points as it is CLEAR what their process is and his own website procedures
contradict what he says. I guess companies like this just dont like to have a strong advocate who knows his stuff biting into
their business a bit...sorry BuildMax, I guess youll have to start working harder for your clients money. :)
O-Bs out there, you are doing tons of research on hiring contractors and every part of the homebuilding process, dont stop
when it comes to your financing. To talk to one company like BuildMax when The O-B Book says always get 5 quotes from
contractors is just plain ludicrous and purely goes against everything The O-B Book states. If BuildMax is the ONLY place
where you can get the job done, well then do it. But since they wont give you any info up front without having anything anyway,
why use em? And if you dont meet their criteria, like so many have posted here, they wont even bother to call you back.
They cherry pick and those of you who really need help and info, you wont get it. And when they go through IndyMac almost
exclusively anyway, just type in indymac.com and save THOUSANDS! Put in your hot tub, buy that Harley, landscape like
crazy, get that big screen plasma, or whatever your heart desires that would have just ended up in some BuildMax reps pocket
anyway, because you didnt follow the cardinal rule of The O-B Book and look elsewhere. And if you like giving away that kind
of money, well, just write me a check, I can put it to better use then any BuildMax rep could :) cheers, Baine
P.S. (working on putting together a 50-unit spec project right now, God, The O-B Book is good.)
by Baine
Chapter Four: House Plans

4-1. Sell your plans.
A designer spoke at our Owner-Builder Workshop and drew applause by saying the plans I draw for you
are yours, you can do with them what you want. Most designers and architects retain ownership of the
plans the develop for your house, but it is negotiable. One reader paid $1,000 for house plans and sold them
after completing her house for $250 in the classified ads.
Forum Post:
I did consider buying a copy of Chief Architect and a plotter on eBay to do my plans but I have run out of time...I think I could
have saved quite a bit of money, especially when you consider the option of reselling them. In Colorado, you still need to have
the plans wetstamped by an engineer and I have a designer/engineer that will do both for $2,500 so I am going that route.
by Ralph in Wellington, CO
4-2. Use a designer rather than an architect.

The usual system of architect fees involves paying a percentage, (up to 10%) of overall project cost to the
architect. This creates a conflict of interest, in my view, because if the architect makes choices that increase
the budget, the fee also increases. It certainly demotivates the architect to save you money. Many residential
designers are in fact degreed architects, and you can get fine creativity from residential designers, degree or
not. Check designer portfolios to find the artistry you want when choosing a designer.
We have a beautiful house design, and our total fees to the designer were well under 1% of the job. In addition, we had complete freedom in choice of materials and methods and built quality for far less than if an
architect had directed the process. Perhaps 50% less.
Forum Post:
There are several fee schedules that both architects and designers use. I found fee schedules of hourly, percentage of house
construction, square footage of finished design (some based on total square footage including garage, some just finished
square footage, all different). These fee schedules all seem to lead to conflict of interest what incentive does the architect/
designer have to save money when a larger house increases their fee and profit? With my architect, I negotiated fixed fees and
scope of work prior to him starting. When he got another large design job (he was a single proprietor), I was able to negotiate
another 20% savings if I could work on his schedule vs. my original schedule. If I need additional consultation with him or want
more construction inspections, etc., we also have a fixed hourly fee that I will pay for this service.
by Kenneth in Independence, MO
Forum Post:
I found my plans on the Internet, however Im going to get a local designer to draw them up. I have an appointment next week,
the guy sounds nice on the phone, the price is reasonable ($.55/ sq. ft.) I already have a personal reference for him, should I
feel obligated to use him, or should I go consult with multiple designers?
by Alexandra in Zachary, LA
Alexandra, at a minimum, you should see if the original designer can make your changes. They are already familiar with the
plans and the changes will probably be by the hour instead of the square foot. Also, for your designer to make any changes,
he/she must have permission from the original designer to do so or they will be in copyright violation. Essentially, if the original
designer finds out, and they will, they can take the house if you build it.
If your designer is willing to acquire a notarized release letter from the original designer, then proceed only with a contract that
you and your lawyer agree upon. If the designer cant wait for the release, you cant wait for them.

One of the reasons I chose to design for 50 cents a s.f. was to drum up business in a poor economy. Things have drastically
changed around here, but I no longer design for profit too many bad checks. The drafting market is essentially hot nationwide. There is no reason to draft for 55 cents anymore. Unless of course you lack the experience to charge more.
Given all that, I would ask around and get additional pricing. You get what you pay for definitely applies in this case. Be very
wary of the good deals. Drafting a set of plans takes time and lots of consultation between parties. Modifying a given set of
plans usually requires more than a few changes would produce. A house is a system, making changes to the system affects
every part of that system. Each change needs to be planned for, engineered, and must be buildable or you are just wasting
money.
Sorry about the length, but overall, planning ahead will save you money and aspirin in the long run.
by JimCadman in Austin, TX
Ive seen many plans that are similar in style to the one Ive chosen. Im not getting a release from everyone whose plans
look like that. Anyway, Im using a designer or architect because there is some stuff that I am changing about the plan, layout,
room size and location and some other things. I have specifics in mind. I have a friend who bought her plans off the Internet
and had to spend $3,000 for someone to bring them to local code. I do agree that $.55/sq. ft. sounds low; Im going to look
around and see...
by Alexandra in Zachary, LA
I would not treat a designer or architect any different from any other supplier or subcontractor. We interviewed dozens of architects and designers before we found one we really liked and were comfortable with using. However we were also not looking
for something mainstream (trying to find an architect willing to use ICF was a challenge in itself).
There is more to design than choosing the lowest bidder. As with anyone else, there is a reason they charge less than their
competition, and before selecting them you need to know why. I wouldnt discourage anyone from using the low bidder, just
understand why they are low and make an informed decision.
Alex, we were very pleased with Nolan (if that is who you are referring to). His demeanor is a little dry, but knows his stuff. His
prices are lower because he works out of his home and doesnt have a lot of overhead (just him & his dad). His turnaround
time was quick and he was willing to come up with several possibilities when we werent sure what we wanted. We spent a
couple of hours out there each time we went there and he never rushed our decisions.
I would interview a couple of them if you want to it depends how comfortable you are with them. Nolan came recommended
to us from one of my husbands co-workers and he was also very pleased with him.
by Heather in Baton Rouge, LA
Forum Post:
Heres a recommendation for a floor plan designer from southern MI. Dont know what his radius of travel is, but if you are
in southern Michigan or northern Indiana its worth a shot. Jason Farmer of Straightline Home Design in Marshall, MI, did a
nice job with our plans. He was timely, charged 35 cents per square foot and $5 for each extra set of plans. PM me if youd
like his number.
Aimee
Do you have an email address or phone number for this designer? Im in NC, but for those prices it may be worth it for me to
meet him.
Scottie in Durham, NC
PLEASE keep in mind that you get what you pay for when you go with cheap designers. There is something they arent including in your plan set, something they dont know, or something they are omitting to charge you extra later down the road. Does
$0.15 per s.f. include ALL the interior and exterior construction details? How about the cross section or accurate elevations?
Cabinets details, interior elevations, electrical plans, and plumbing plans too? Is the building designed to IRC 2005 code? How
about the NEC? Does these plans meet this criteria as well?
Is the plan designed for the land it will sit on? Do they recommend the use of a structural engineer and suggest a soils analysis
to ensure proper foundation construction? Keep in mind: if the foundation sucks, the rest of the building will too. Just because
you dont live in a big city and have a permit department to answer too, doesnt mean your building doesnt have to meet the
building codes. Since there is no official plan reviewer and inspection department, that is all the more reason for your plans
to be right the first time.

Fifteen cents sounds great, but it really might be better to check around a bit more to make sure you are really getting the good
deal you are after. I suggest calling the local AIA chapter or checking here as well: aibd.org/consumers and order their
free guide to residential design. Might be the best time you have spent so far. If you have any questions, or need clarification
on what you are getting with your plan sets, then shoot me a PM and I will answer them the best I can or get the answers for
you if I cant be of help myself. Good luck.
Jim in Austin, TX
Jim, thanks for the input on the plans. Im sure itll get a lot of people thinking. Our $.35/square foot got us all the extras you
are talking about (all interior and exterior construction details, cross sections, accurate elevations...). We knew ahead of time
that the land was good to go for what we want. Didnt think about difficult foundation situations because that doesnt apply to
us. You make a good point, though. Hopefully, people will ask the right questions of any designer they use.
We left out electrical plans on purpose as our building department will leave that up to the subs. Besides, we didnt want electrical plans that we knew wed almost certainly change after our walk-through with our electrician. Lastly, our electrician (who
we selected before all this) didnt need them either. I guess Im not completely sure what you mean by cabinet details, though.
Theyre there, but not in detail...like the way Home Depot (or whomever) will do for us. Is that what you mean?
In terms of the low price, I can only speculate. I know our designer is building his business. Hes been designing on the side
(while working full-time elsewhere), but finally had to give in and go full-time last year when demand really took off. Word of
mouth referrals is how every good entrepreneur gets his start, right? I doubt his price will stay that low for long.
Aimee
Forum Post:
Planning to do a spec build, is there any way to find, select and submit a set of house plans for the building permit without
using an architect? It just seems like we will save plenty if we did not have to use an architect. What if we mimic the plans for
a house already under construction nearby?
Ray
Ray, we designed and drew our plans ourselves, But not knowing the ins and outs of ICF construction, we hired a draftsman.
He gave us the plans and we hired an engineer. No need for an architect. I know you are looking to save money, but having
the engineer available was/is a great advantage. Together our cost for both services has been $3,300 for 5,280 under roof. I
have heard of some plans costing over a dollar a foot. One friend paid $8/SF for his. Over course the details on his plans were
unbelievably intricate compared to mine.
In our county if you build under 2,000 SF, you do not need a stamp. Good luck.
Marc in Defuniak Springs, FL
That sounds much more reasonable. Did you have the engineer draw up the plumbing and the electrical plans?
Ray
Ray, you dont identify where you are located. The requirement for an architect will be dictated by your local code officials. In
some states, you need an engineers stamp to build. In mine, an architect or engineer stamp is unnecessary unless you are
doing certain things (a roof or floor truss plan needs to be engineered, a suspended concrete slab needs engineering, if you
are outside the code book for ICF headers you need engineering, etc.). Even though I identified that engineering is needed,
an architect stamp is sufficient.
Even though an architect is not required, understand that a good architect will save you more money than the fee charged. I
didnt need an architect, I had a good concept of how I wanted my house to flow and had a draft set of plans before we started
interviewing architects and designers. However the architect identified many things in the plans, optimized them for my building method, simplified them and yet made them appear more complex, and ultimately made them easier to construct. I am
convinced I could have done the job without the architect, but the final house wouldnt be as nice and it would have cost me
more money this is the value of a good architect. That said, I could have hired another architect, paid more money for the
services, and ended up with little to no value for my expense too, but then this is true of any of the services I hired out.
Kenneth in Independence, MO
Im in Long Island, New York. I understand that a good architect can save considerable time, effort and costs. However, in my
case, if I am doing a spec build and willing to utilize the same plans of a recently constructed home with slight modifications,
I could get by using these plans and possibly have an engineer stamp them without risking anything.
Ray
Chapter Five: Shopping Techniques and Sources

5-1. Home show discounts

When the building products vendors get together to display at a home and garden show, there is an
atmosphere of competition for your attention. At these shows, many vendors offer trade show discounts.
We purchased our whole house vacuum unit at a savings of 40% this way.

Where there is no discount or coupon offered, you can ask for show special if you use that sub or
vendor in the future. Just make a note on the exhibitors business card, and have them initial the card.

Some exhibitors ship sample products to each show they do and plan to sell them off to avoid
return shipping costs. Jane Himes found a $2,100 jetted tub for $300 at a show in Las Vegas. The exhibitor
did 84 shows that year and shipped 84 tubs one-way.
Owner-Builder Connections:
From: Lynnette W.
To: Eric
Subject: Tile
How is your floor plan planning going? We were able to buy 4,500 sq ft of tile from Pino Tile at the Home and Garden show over
the weekend. We have been looking for this rectified travertine look porcelain tile for months and have not found it cheaper than
$4 a sq ft. We found it there for $1.66 a sq foot. We really lucked out.
5-2. Attend a contractor show.

It is especially illuminating to attend a show for contractors. We went to the giant JLC Live Show
in Las Vegas one year to try the waters. JLC, The Journal of Light Construction, stages the show every September, attracting contractors from all over North America. You can register as an owner-builder, because
for the moment you are engaged in contracting. Its easy to register on-line, with a discount for advance
payment. (Link provided on our website.)

Many competing construction system vie for contractor attention, presented by the manufacturers, not third-party vendors. There are opportunities for show discounts, coupons, (I got one for $500 off
an SIP system) and the sale of floor models of components you may need for your project. Manufacturers
would far rather sell a show model of a device like a radiant heat boiler or heat exchanger than ship it back
to the plant after the show.

These shows are also a great source of information from national experts on ways to save money or
trouble when you build with their products.
Forum Post:
To all those O-Bs in the Northeast...the Builders Trade Show is coming up. I went to the show last year. Admission is free,
if you register before January 30. They offer two days of live demonstrations on how to do everything from installing a new
window, to using I-Joists and how to drywall a barrel ceiling and much more. The other advantage is the vendor booths where
you can get lots of info and get some good deals. The show also offers training for a fee. I havent tried this, but might this year.
Here is a link for more information: builderstrade.com.
One other nice advantage...I got the Professional rate on several of my building magazines (10 bucks a year) by attending.
Fine Homebuilding/Taunton Press is the sponsor for this show. The Journal of Light Construction (JLC) has a show later in
the year.
by Peter in Gilford, NH
Yes, this was a very good show to attend. I went last year but ended up paying forty dollars, I believe, because I forgot to preregister. Ive already registered for this years show, very informative, lots of ideas and how-tos and lots of new products. Im
in the final stages of building now, but these shows are wonderful; much better than a home show.
by Mike in Hopkinton, MA
Forum Post:
YIPPEEE! My partner just found this. It works, I registered us. It is a 4-Day, Exhibits-Only Pass: Free Passes for 2006
Builders Show. My partner says you may give her shoes as a finders fee...
by Phil in Gainesville, FL
Very Cool, we are in there as well. See you at the show!!
by Marc in Defuniak Springs, FL
Just made reservations as well. Im in the early planning stages for my build, this show looks fantastic! Those of us from this
website ought to figure out a way to meet up in Orlando and trade tips from hitting the show floor.
by Steve in Sterling, VA
Youre right, I would like to put a face to the threads. We have not made reservations yet but we are coming on Thurs. night
and staying thru Sat.
by Marc in Defuniak Springs, FL
Just a bit of advice when going to the show. Wear good walking shoes. Start walking to get in shape, now! And a lot! You will
need a minimum of 2 days to see it all, and that is without any seminars. Your head will spin with information overload so make
sure you scan the card they give you for whatever booth you want information from, they will send it to your home. (This will
also keep your hands free to carry the freebies they give away!)
An insider tip: If there is an item at a booth you like i.e., dishwasher, wine fridge, or other appliance type items, ask how much
to buy it. They dont want to bring them back, so they sell them at roughly half off list. I think you have to do this very early in
the show though. It doesnt hurt to ask, right?
We did the biggest building first and never did get to the smaller one nor the off-site or outside exhibits, so look over the registration info they send you and devise some sort of game plan that suits your purpose. Have fun, get great ideas and save
money!!
Don in Port St. John, FL
Chapter 6: Remodels and House Additions

6-1. Buy tools from pawn shops.

If you are doing self-work, it is very valuable to have high capacity tools to get a job done right. But
an O-B doesnt make daily use of the tools, and its hard to justify paying new prices. We have seen significant construction tools like air compressors and paint sprayers for twenty-five to fifty cents on the retail
dollar at local pawnshops.

O-B Toodie West says: We got a Senco Finish nailer for $200 at a pawn shop. It was $450 new. Try
Cash America, they have a network and will call around and find the stuff you want.
6-2. Share the cost of tools.

Since good tools are expensive and for many owner-builders, rarely needed after the project is
done, several strategies can be used to bring the cost into balance:

Rent a tool and share the cost with someone else in your new neighborhood who is also building.

Buy and resell.

Buy and use, and then trade for other services you need.

Borrow a high-value tool overnight from a tradesman on your job who will expect it to be ready
to go in the morning. We borrowed a tile saw from our tile man overnight because we did a portion of the
tiling in our house.

Buy and share the cost of tools with family members. Have a tools lending library. Steve Orton did
this with his brothers for tools like a high-end drill and a reciprocating saw. Karen Morrisons extended
family did it with a pressure washer.
6-3. Shop discount tools store or catalogue.

When we built the Riverbottoms house, a friend told us we would need a bolt cutter for all manner
of tasks. Theres a lesson in the fact that we only used it twice while building. Men are famous for buying
tools they dont need.

We searched first at the home center stores and found a 15% swing in prices from the high to the
low store. Using the high store we price matched the low store and got the tool for $28. Only years later did
a discount tool store open in town and we found a comparable bolt cutter for $12 on special at $6.

That chain, Harbor Freight Tools, has stores in almost every state of the U.S. and sends out a sales
circular to a mailing list. (Contact info available at our website.) In the current sales circular, they have a
comparable reciprocating saw (Sawzall) to the one I bought on a double play for $89, at $35. An 18-volt
cordless drill with case is $40. Ive seen them recently at around $200 elsewhere.
Chapter Seven: Material Savings

7-1. Written budget

All of your construction bargains need to fit within an agreed budget. Unless that budget is in
writing, it is a moving target. Say you find a bargain on wood flooring at only three thousand dollars, more
than fifty percent off the agreed price. You make an advance purchase only to discover that you can allocate
only $1,500 to wood flooring for lots of good reasons. Make the budget decisions first and carry the written
budget with you.

Reader Ted Magleby told me: I will get the best numbers I can from a contractor friend who will
break down the budget, and tell me what he pays for everything. Then I will try to beat it. It will be detailed
with brand names, and all.
7-2. Use a spreadsheet.

There are thousands of unique items in a new house. The task of managing them is overwhelming.
A spreadsheet on computer solves a problem by keeping the items all in one place with infinite flexibility for
organizing, editing, pricing and totaling categories. At a glance, you can see how your planned purchases
in a category compare to your budget decision for that category. You can use subsheets for comparison of
items, brands, and alternatives.
Chapter Eight: Free or Cheap

8-1. Free stuff

When we built the Riverbottoms house several free items fell in our lap, worth over $10,000. A relative paid an old debt by sending over a concrete man to do our walks and drives. The city sidewalk cracked
when the roofing truck wheeled over a corner of it making a delivery. I noted the name of the driver and
the date and replaced that part of sidewalk when a crew poured the cement pads for my back stairs and air
conditioners. I took the concrete invoice to the roofing supply company and they paid it all, no questions
asked, rather than quibble over how much each piece of concrete cost.

After a boundary disagreement, a neighbor sent over 30 loads of topsoil for our yard, valued at
$4,000. Another hauler brought me 10 dump truck loads of composted manure at no charge. Our foundation man gave us a free window well. Our siding man gave us free bathroom tile. Someone we had helped
build gave us bricks for our brick walk.

O-B Bill Harrington says: Well be able to put in top-end stuff for a moderate amount of money.
I got low-voltage quartz halogen spotlights from a friend, like they use in supermarkets to accent displays
they bring the color out. He had them left over from a job and they were going to be thrown away because
they were special order, and I can use them in the house to accent sculpture and other art. Also over the
kitchen island, and for reading and music lights.

Scan the classified ads or place your own ad for items that you need, offering to haul away and clean
up. Be alert for internet promotions involving free stuff, too.
Forum Post:
I have a large fireplace and exterior chimney that I am going to do in the cultured stone. A friend of mine gave me 5 pallets of
the stuff that was left over from a large commercial job at Disney World. I will have plenty of it to do a lot of other things with it
as well. Was just hoping there was an easier way to do it with the ICF. The chimney framed through the roof and dried-in.
Alvin in FL
8-2. Free upgrades from friendly subs

Even better is completely free upgrades from friendly subs already committed to your job. By working
closely with their subs and asking for suggestions, Jeff and Judy L. of Provo, Utah got a $5,000 add-on for
free from a drywall sub who was anxious to please and keep competition out. The upgrades often have very
little real cost for the sub once they are set up and their marketing has been done.
Forum Post:
We are just about to (finally) start as first time owner-builders. We feel like we have thought this to death. Hopefully we havent
missed anything. What we have found is subs come up with the best free advice and ways to save. You just need to let them
know you have a tight budget. For example, our brick mason told us he would try to help us by finding brick that was just off
on the color by a few shades...the savings could be up to 50%! Our painter said he wouldnt charge us to finish a fiberglass
door. We got a suggestion of wrapping the house before windows, cutting out the wrap material and installing the window with
this extra seal. Also marking the studs on the foundation with a marker. When we asked our electrician how to do lighting on
the stairs he said he would do it for materials. (I am sure that was more of a its more trouble to tell you than just do it...). We
have found leftover tile that will finish a basement bath, its top of the line just not enough to do a kitchen or what we are using
in main areas. Anyone who has already started or built, advice is welcome. We are jumping in with both feet. The biggest
surprise to date is the cost of our lumber pkg. has jumped since spring, but not much we can do about that one. We have put
in more than 1,000 hours, so hopefully we will see the payoff.
Connie in Syracuse, UT
Chapter Nine: Shopping Techniques and Sources, Part Two

9-1. Shop eBay for components.
Forum Post:
I know it may sound crazy, but I have saved thousands by buying items on eBay everything from fireplaces and kitchen appliances to bathroom fixtures. I do a search on eBay for the item I am looking for, find out what it is selling for and then compare
to local vendors. In most cases, the shipping is a wash to what local sales tax would be so the difference is your savings. One
caution, check the sellers feedback for negative comments and past problems. I even found a great deal on stair components
which were 50% less than local suppliers. Good luck!
by Mark in Park City, UT
Hi Mark, I have heard the same thing. I plan to purchase lots of stuff through eBay.
by Denise in Elk Grove, CA
eBay can indeed be great, but beware when purchasing large commercial grade appliances like Viking, Wolf, etc. There are
a lot of thieves out there on these. Contact me if you plan to buy, there are many ways to spot those that are thieves and not
legitimate.
by Barbara in Elko, NV
I have a tough time finding a deal on eBay. Seems like every time I look for a specific item, including tools, everything I find
sells for near list price. I guess you just have to work to find the good deals. For instance, I was shopping for cedar shingles
a few months ago and couldnt find much. Today, I see a listing for cedar shingles that are currently at $85 per square, with a
buy now price of $130.
by Jon in Ellicott City, MD
I found eBay to be a great resource for plumbing fixtures. I bought all my bathroom and kitchen fixtures on eBay.
by Sharon in Nine Mile Falls, WA
We also saved by buying our appliances on eBay. We bought a whole kitchen stainless steel appliance package for $3,800.
One thing I learned, I always check the packages before the delivery people leave and note any damage on your waybill that
you sign. We didnt catch a dent until we unwrapped everything and had to really fight to get the shipper to pay for it.
What website store were you able to find your appliance package in?
by Paula in Fredericksburg, VA
Not sure if they are still on there or not but we bought them from Explorer Appliances.
9-2. Home center store remodels

Forum Post:
The greatest info on Home Depot Home Depot is in the process of remodeling all of their stores that are four years old or
older, check with your local Home Depot, ask which ones are being remodeled in your area, one week before the department
is remodeled they will set up a clearance area with 50% off everything, I paid $80 ea. for all of my Anderson 400 series windows as well as my solid pine split jambs for $85 ea, shower stalls for $100, Fabulous Savings!!!!!
by Tom
Chapter Ten: Labor Savings

10-1. Trade.

You could trade almost anything imaginable to subs and some vendors in lieu of cash. You could
even loan something you own, like a tool to someone in trade for something you need. Tradesmen are
famous for doing this between themselves. One tradesman, Ron Thorgersen, offered O-B Joanie Low granite countertop for the price of Formica. He got the granite because he had done some trade work with the
countertop man. Meanwhile Joanie, an attorney, in turn did legal work for Ron to pay much of the cost of
framing, excavation and foundation for her project.

Mike Cambiano told me, I am doing some trade labor, I have a lot of skills, but I am going to
manage my electricians project for him. My wife also has management, money and accounting skills.

O-B Sharmisa Martin says that her husband is an electrician: Weve already started doing trades,
one is to a carpenter, where we have $500 credit built up already. This way well be able to get our trades
accomplished in not too long a time after we build.

If you have something to trade, you could talk to all your subs and vendors, and ask them if you
can trade with them. Make it a standard question in your sub and vendor interviews. You could turn up a
bargain before you even ask for bids.
Forum Post:
As for electrical boxes, I am using the kind that has a metal clip with screw holes on one side of the box. I am screwing them
to the webs. They are also 3 deep and fit perfectly with the 2 1/2 foam. A friend of mine is an electrical contractor and he
got them for me through his supply house. He is letting me get everything through his business at cost and I am doing all of
the grunt work of hanging all of the boxes, running all of the wire, etc. He is charging me by the hour to finish it off after I get
everything in place. Will save me several thousand dollars this way. I am in the middle of this project now.
Am doing the same type of thing with another friend who does all of the low voltage stuff. I will do all of the grunt work for the
alarm system, computer and satellite networking, surround sound, audio system and whole house vacuum system. He will
finish it off after I get everything in place. He is supposed to drop everything off this afternoon so I can do this along with the
electrical stuff.
Same thing again with the HVAC system. My neighbor is in the business and is getting everything at cost and helping me put it
in. He will be owner-building later this year and I will be passing along all of my experience, subs to use, where to get materials,
etc. to make it easier for him. Will also give him a hand with his ICF in trade for his work. Hopefully will get to that next week.
It helps to know people in the different trades. It saves a lot of money if you have the time and are willing to do a lot of the work
yourself. I have been doing similar things throughout the whole project.
Alvin in FL
My plumber is doing the layout from my plans. I just have to take him fishing and catch a couple of groupers. The fuel should
cost me about $300 and that seems like a fair trade. Especially since I need a few fish in the freezer as well. My neighbor has
an A/C business and he is going to cut all the duct board and let me install it. Only charge me for materials. My excavator has
not charged me anything to date and I just am going to let him come and go as he pleases from my dock and catch a few big
bass. My new neighbor is a carpenter and needs a boat. I bought a $50 fiberglass one and will set him up with a trolling motor
I got at a garage sale so he can fish the lake and he is going to help me on the trim work.
Use a little imagination and you can barter anything. Especially with all the junk I have to trade...I am especially keeping an
eye on this thread because in a week or two I will need all the tips I can get. Keep em coming.
Chapter Eleven: Material Savings, Part Two

11-1. Buy in quantity when you find low prices.
If you know how much you need, get that much. But it doesnt hurt to buy extra if you are uncertain. Check
what the return policy is. Sometimes if you need more time before returning items, the manager will initial
the receipt upon purchase to give you more time. This assures a cheerful refund later.
11-2. Save your paperwork.

With receipts, you can get refunds on items you dont need or decide you dont want. You will have a very
large stack of receipts after you build, so you need to organize them for convenience. The receipts provide
model numbers and technical information that can come in handy later. Check your receipts. I found
errors of $350 in my favor in an hour of checking one evening, and got refunds. After we finished the house
I gathered up all the excess material (tile, balusters, unopened painting supplies, caulk and adhesives, etc.)
on site and matched it up with receipts in my file. I got nearly $500 in refunds from various vendors with
no questions asked.
On my first home, a receipt came in very handy because the fence installer had charged sales tax on the
labor and materials, and state law didnt allow sales tax on services. They said the mistake was mine, that
the right amount had been charged, but the receipt showed sales tax on the entire transaction, which
resulted in a nice refund.
If you have doubts about a material purchase, because you arent sure of quantity, or you are buying far in
advance to take advantage of a discount, get the manager to initial the receipt to indicate there is no time
limit on your return. This worked for us at a home center store when we brought back things a year later,
and waited while they told us all the reasons we could not return the item. Then we showed the signed
receipt and the discussion was over. The old manager was gone, but the signature indicated a store commitment. Very easy to get this at time of purchase when they will bend over backwards to get your business.
11-3. Shop for credit terms.

Some suppliers will take two percent off your bill if you pay within ten days. Other suppliers will give you
generous credit of 90 days or more without interest. We got our carpet and wood flooring under a one yearsame as cash arrangement. Oftentimes that same supplier who has given you 90-day terms will accept
your credit card at the end of the period as a cash payment which allows you more time and frequent
flyer credits.
Chapter Twelve: Energy Savings

12-1. Save the shade trees.

It would be very desirable to find a place to build where there are big shade trees because they have
a wonderful capacity to reduce cooling and heating costs. According to residential energy auditor Dan
Schuring, you can reduce or even eliminate air conditioning in some homes with just a few shade trees.
12-2. Build energy-smart.

Orientation, insulation, and mass are the three things Melissa Dunning of Denver, Colorado says
bring her low heating bills. Her mother, the general contractor on Melissas house, says: It shouldnt take
more than a good argument to heat a home. She was featured on Dream Building on HGTV. She says her
heating bills are only $10-$15 a month in winter. She uses insulated curtains over the windows that she
puts down after the sun goes down in winter and when it comes up in summer, completely covering the
windows.
The U.S. government has an Energy Star program offering builders and owner-builders incentives for
building to a high standard of energy conservation. A government-approved energy consultant must verify
the airtightness and energy features of the home. (See our website for updated link to government site.) If
you build to EPA standards, you may get an upfront state or federal tax credit, or possibly mortgage discounts, or special utility rates, or all three. The EPA can issue you an Energy Star rating which will help to
attract a buyer when you sell, as well.
From energystar.gov: ENERGY STAR qualified homes are independently verified to be at least 30% more
energy efficient than homes built to the 1993 national Model Energy Code or 15% more efficient than state
energy code, whichever is more rigorous. These savings are based on heating, cooling, and hot water energy
use and are typically achieved through a combination of:
* building envelope upgrades,
* high performance windows,
* controlled air infiltration,
* upgraded heating and air conditioning systems,
* tight duct systems and
* upgraded water-heating equipment.
These features contribute to improved home quality and homeowner comfort, and to lower energy demand
and reduced air pollution. ENERGY STAR also encourages the use of energy-efficient lighting and appliances, as well as features designed to improve indoor air quality.
Forum Post:
I am trying to find out any info. available to help decide what kind of HVAC system to install in our new 3,000 sf house we plan
to build. Which type is cheaper to install or use, as opposed to the other? We are building in the Smithfield, Virginia area. I am
considering putting in a well for water vs. tapping into county water, if so, maybe I can use the well for the geothermal system,
or since we do not have natural gas available, may consider propane gas, or electric, depending on overall cost/comfort.
by Carolyn in Newport News, VA
Before committing to a natural gas A/C system, take a good, hard look at CURRENT costs for natural gas in your area...
especially compared to 5 or 6 years ago.
When I found out that natural gas is available in my new neighborhood (in Miami), memories of nearly-free natural gas from
my childhood in Ohio (and parental encouragement, because they had the same memories of it) almost got me to go with
natural gas A/C.
Fortunately, I did some cost research, and discovered that the cost of natural gas has been SOARING for the past few years,
to the point where its absolutely NOT cheaper in any way, shape, or form to use natural gas for A/C. Especially when compounded on top of problem #2...
... conventional wisdom also holds that gas A/C also saves money, because gas is allegedly dirt cheap in the summer because
gas companies have to reserve enough pipeline capacity to meet their worst winter needs. Unfortunately, that also went out

the window in Miami...for all intents and purposes, gas furnaces dont even exist in Miami (it doesnt get cold enough to justify
the cost), so there isnt a peak winter demand to drive down summer costs, and the cost is basically the same year-round.
Sigh. I was really looking forward to paying a hundred bucks a month for humidity-free 70-degree comfort year-round (vs. the
$200-350/month I currently spend on electricity in the summer).
by Jeff in Miami, FL
What about Propane gas though? Or does that rise with the Natural gas prices? And what are your thoughts about geothermal?
See the other threads in these forums for geothermal information. A well-designed geothermal system will be the cheapest
to operate, and the most expensive to install. In some areas, geothermal can be 2-4X the cost of conventional propane or
natural gas to install. Propane prices increase along the same factors as natural gas, but are generally more expensive than
natural gas and more volatile.
Another thing to keep in mind in some areas, most of our electricity is generated using natural gas, meaning electric rates will
continue to climb with natural gas rates... Eventually alternative systems like PV and the like will be cost-competitive. But the
market will decide...
by John in Erie, CO
I wonder, do they manufacture whole-house backup generators that can be powered by a geothermal system? I think most of
these are powered by natural gas/propane gas, right?
Geothermal needs large amounts of electricity to heat and cool by moving the hot or cold to/from the ground. Geothermal
systems (in the context of residential housing) do not produce electricity. You could buy a big propane/diesel generator to run
a geothermal system, but not the other way around. Geothermal is essentially like an air conditioner that you run year round.
On a normal air conditioner, you cool the inside and push the heat out to your air conditioner condenser in the yard where a
big fan blows on it. In geothermal cooling, you cool the inside and push the heat into the ground outside. For heating, the cycle
is reversed, akin to if you had moved the condenser into your house. Heating, you run the compressor in reverse, extracting
the heat from the ground and pushing it into the house.
Now, some interesting things about how this works. Im going to describe the heating cycle here in more detail, but cooling is
similar, although reversed. The big thing about geothermal cooling is if you purchase a system with a desuperheater option,
in climates with a high cooling load, the heat you extract from inside your house can be used to pre-heat your domestic hot
water, and will usually do all the water heating during high cooling times.
(The system I describe here is a closed loop system Open loops can work, but require an input well and a second well to
output water to, and can sometimes have problems with minerals, etc. gunking things up). Out here in the West, water is more
valuable than gold, so no such thing would ever be allowed. Your area may be different. The temperatures I use below will
be very different based on your climate, house, system, soils, and loopfield lengths. The numbers are just for illustration, but
probably pretty close to what I was expecting had I gone forward. Note also that these temperatures could change during the
course of the heating system, especially if the loopfield design was not done properly, as more heat could be extracted or
injected than the loopfield can handle, and things would start cooling down or heating up. Also, loopfield should never be near
any utilities (water, septic, leech fields, etc.) as they could freeze your utilities up during heating.
Now, in a typical geo heating loop, the heat transfer fluid, usually some kind of special low-temp non-toxic antifreeze would be
pumped into the loopfield from the geothermal unit. It might leave the house at 30 degrees (yes, below freezing) and then, after
traveling around the loopfield in the balmy 55 degree temperatures underground, come back at 52 degrees. The temperature
difference there (22 degrees) is run through a phase change in the geothermal unit compressor, and extracted to a higher
temperature potential, say, radiant heating water, where the input water from the radiant system is at 90 degrees, and exits the
geothermal unit at 120 degrees. Bigger systems have bigger flow rates and can do more heating, but because of the phase
changes properties, there are pretty significant upper limits that must be designed for when doing geothermal work.
So, keep in mind, that by installing a geothermal system, your gas bill could be zero, but your electricity bill will go up significantly. If electricity is very expensive in your area, you should do an analysis to see if it will work for you. Most good geothermal
guys have software packages that will analyze your house, determine what geothermal unit you would need and how much
piping, etc. for your climate, and then give you a comparison and a time to return your investment when compared to say, 85%
gas furnaces and electric heat.
I found that the energy efficiency of my house increased the time to pay back the cost of the system from 8 years (conventional
framing/insulation/windows) to almost 18 years (ICF, spray-in EPS attic, radiant). With the expected lifetime of a geothermal
unit being long, it was probably still not a bad idea, but I could get much quicker ROIs using other technologies, and keep my
propane as a backup.
Hope all this helps foster ideas. I think its a great technology, but still expensive. I found some dealers/installers sold this stuff
like it was space shuttle parts, and others that sold it like it was nuts and bolts at the hardware store. The quality of the installation is critical, but its not exactly rocket science. Doing geothermal, be sure you really do your research on your installer,
because every poor performing system (there are many described on the net) is due to bad installation/design.
by John in Erie, CO
John brings up a good point that is often overlooked. When we look at HVAC options, the first person we call is an HVAC tech
or an HVAC company. They analyze the situation, and if they are good present us with several options for what might be the
best system to meet our needs. However the only tool they have to offer are HVAC solutions, because that is either what they
know best or what they sell. There is an old adage that goes something like this, when all you have is a hammer, everything
looks like a nail.
Your house is a system. It is interconnected. No component of that system works independently without affecting other components. Your windows, roof, framing, insulation, construction techniques all impact HVAC. The HVAC tech may tell you the
best HVAC components to meet your design criteria (I want to maintain XX temperature during these conditions...). However
your HVAC tech does not understand the entire system. It may be more cost-effective to downgrade your HVAC system and
use this money to upgrade your insulation or windows, change your construction techniques to a tighter construction, etc.
When I looked at my system as a whole, applying principles of engineering economy, I found that the most cost-effective
(combination of up-front capital costs, long-term maintenance costs, and long-term operating costs, the long-term costs all
brought back to current dollars using a reasonable rate of return) system was actually an 80% furnace with a 10 SEER A/C
unit the least efficient unit on the market today. However I also have tight construction, ICF, R-50 in the roof, light gray wellvented roof (as opposed to something dark like slate), constructed to Department of Energy recommendations for my climate.
My system is so efficient that upgrading my HVAC system to save money simply isnt an option. That said, I put in a 90+%
furnace (my installer upgraded me for free since I direct-vented my hot water heater and he didnt have to run the vent flue,
basically he gave me more equipment and less labor for a wash), and a 14 SEER A/C. I upgraded to a variable-speed, twostage furnace because I knew this would have comfort ramifications. However I also understand that the extra money I spent
basically is an upgrade only, and will never pay me back in long-term cost savings. In my climate, for my system, geothermal
was just money down the drain with no hope of recovery.
Ken, John, Im curious how accurately you guys were able to predict your heating and cooling costs. Ive used some freeware
utilities to estimate my heat loss and heat gain. Those figures came pretty close to the ballpark numbers I got from a reputable
geothermal supplier. However, I havent gotten a full Manual J calc done yet.
The house will be a combination of ICF and SIP. I expect it to be tight and efficient with quality windows, radiant barrier on
the roof sheathing, radiant floor heating and significant thermal mass. On the other hand, the house is pretty large (5,500 sq ft)
and Baltimore has non-trivial heating and cooling needs. My estimates were 77,000 BTU heat loss and 53,000 BTU heat gain.
That didnt include my basement or garage. My geothermal guy specd 108,000 BTU of heating and 51,000 BTU of cooling.
Our soil is good, but space for horizontal ground loops is a little tight. We dont have access to natural gas, and we dont want
a propane tank. So oil would be our fuel of choice. Like others here, Im trying to decide if geothermal is a worthwhile investment.
1) What kind of heat loss/gain did you guys predict for your homes?
2) How did reality match up to your predictions?
3) What kind of peak heating and cooling bills are you seeing?
Thanks for your help. You two really contribute a lot of valuable information to this site!
by Jon in Ellicott City, MD
Chapter 13: Other Thoughts

13-1. Be on site.

By being on site, you can often discover cost-saving approaches that didnt
occur to you in the planning phase. Opportunities for free items, cost engineering,
free or low-cost upgrades from subs, and special deals from salesmen often arise.
You answer questions for the subs to prevent delays and ensure that materials are
provided at prices you choose in a timely fashion. Disasters are averted and costs are
controlled.
13-2. Build in the off-season.

The law of supply and demand really does work, and most parts North
America have a low season when more tradesmen are available for immediate work
then at other times. Paradoxically, a sun city like Tucson, Arizona even has such a
time. In wintertime, they get an influx of framers and carpenters who cant find work
in their own climates. Prices fall.

We recommend you take steps to allow you to break ground in the
. You can find good advice locally as to the steps you must take to separate yourself
from the bulk of projects that start in high season.

Lynn and Judy Coy told me: Building a shop right now, and found material
is much cheaper in January, February than later on. Last year the OSB board went
over $10, but was $6.30 this past winter. Its worth your time to plan and shop.
Forum Post:
I have my house under construction. Im using SIPs. Even the local Habitat for Humanity uses
them because they go up so fast. They take a little crane time to do it. Im using log supports in
place of deck supports. The crane guys are cheaper in January than they are in July on their
four-hour minimum.
by William in Redmond, OR
Forum Post:
I dont know if this will help you much, but if you pull for your permits in Aug, you will be ready to go
in Oct, at least that is what we are doing. It seems like every year from Oct thru Jan the trades are
slow and most will take on side jobs or small jobs right now most are so busy I cant even get my
hubby to do anything with all the hours and overtime he is putting in. My girlfriend is also an O-B
and is desperately looking for someone to do her foundation, she has been told by the subs in her
area that they are so busy they dont have time for her and she is getting really stressed about this
as she just put her house up for sale and was hoping to get the foundation in quickly.
by Deby in AZ
13-3. Build in a downturn.

A different kind of opportunity arises when the economy is down. Not seasonality, but cyclicality of the economy is on your side. Materials and labor, even
financing, is available usually at a savings that later translates into improved equity
when the economy rebounds.
More than
400 additional
Construction
Bargain Strategies
are available
in our Bargain
Strategies book.
(See page 262.)
Project Notes
Chapter 10: How to Schedule the Work at

a Savings
Time line: Two months before groundbreaking
Another Miracle Tool
ike a written budget, a written schedule has a magical effect on your outcome.
If you have a deadline, in writing, with written steps that lead up to it, you have
a very good chance of coming in on schedule.

Your schedule would be like a calendar with a start date and an end date.
The steps for building your house would be indicated along with their durations and
sequence.

You need the help of a written schedule because the upcoming construction
phase of your project has a way of getting out of hand. One industry expert calls this
phase Mr. Toads Wild Ride. The construction phase tends to follow Murphys Law:
If anything can go wrong, it will. And at the worst possible moment. A written
schedule gives you a proven control device on the process.
Sources Say
The people you
pick to build your
house will determine the quality
of your home and
the cost of that
house. Finding
the right person at
the right price is
essential.
From Everything
You Need To
Home
(See page 263)
Forums
I was wondering
how long it is
taking people to
get their building
permits. Im in
AZ and everyone is telling me
3-4 months. That
sounds like a
really long time.
Amie in Phoenix,
AZ
152 Chapter 10: How to Schedule the Work at a Savings

Asking on the
Internet wont help
much, since it is
100% dependent
on the locality issuing the permit and
how prepared you
are for meeting
the requirements of
your locality.
The county to
the south of me
requires environmental impact
statements, site
plan reviews, etc.
by the county
commissioners
before they will
even start down
the permit process. My county
puts out a book
with all the drawings and paperwork they want.
My county
indicated that
they needed 1-4
weeks to issue
a permit. This
depends on the
time of year and
permit load. Be
sure you have all
ancillary paperwork like percolation test results,
well or water tap
paperwork, etc.
My county issued
a footing/foundation permit in 2
days, and then
the full permit in 3
weeks. That let me
get going with my
excavation and
footings early without waiting much
on the county.
It cost me $100
extra overall in the
project to get the
F&F issued.
John in Erie, CO
I know in Pinal
county 3 to 4
months is about
right. There is so
much building

Only 22% of the owner-builders I interviewed eight years ago had a written
schedule. Today two-thirds of the O-Bs in our survey report having a written schedule. Those who did it in writing or on computer completed their projects 13% faster
than those who didnt. People building new custom homes finished in a respectable
nine months. The National Association of Home Builders says that the average contractor-built house in the U.S. takes six months to complete. The same group says
that owner-builders take an average of 9.5 months to complete.

The NAHB congratulates themselves on a faster build rate than owner-builders, but lets take a closer look. The average size of home in their survey is 2,400 finished square feet for a build rate of 400 feet per working month. The average custom
home in our O-B survey where the owner had a written schedule is 4,000 square feet,
and finished in eight months, for a build rate of 500 feet per working month, 25%
faster than the professional builders.

I want you to have a written schedule and to take advantage of your planning
to make it an exceptionally good one. Unless you are building a dream home, your
goal should be to finish in six months, the widely accepted middle of the road goal for
home building. Through good planning, this goal is more than possible. What slows
down a project is indecision on the part of the owner, tardiness on the part of subs,
and occasionally, bad weather.

By being organized, you will not be indecisive. By virtue of your planning
you will be exceptionally prepared to run a smooth project and bring materials and
workers together smoothly. This is the management function of Integration. Remember POIMM in Chapter 4? By planning and organizing thoroughly, you are ready to
integrate smoothly. During construction, you will practice measuring and motivating.

Try to get the weather on your side by starting the project in a favorable
season of the year. Most owner-builders I talked to favored the spring. In our region,
I favor the fall (along with 15% of O-Bs in our survey). My reason is economy. There
is less construction work available in the winter, and more competition for the work,
hence lower prices. But in our area you need to start in the early fall to be closed in
before harsh weather hits.
Picking the Right People is Half the Battle

I had always thought that picking subs was a price issue. After building a
house, I see that what other owner-builders tell me is true. Its just as much an issue
of character and fit. The character part is that the sub you choose does what he says
hell do. The fit aspect is that you can work well with this sub, and he can work well
with others on your team.

Remember that the first qualification of a successful owner-builder is that
the O-B can come to work each day prepared to fire his help, if needed. Prevent the
need for firing people by making your expectations clear to the sub and seeing that
Chapter 10: How to Schedule the Work at a Savings 153

they are met. You will be able to work with some subs more easily than with others.
You alone can assess the chemistry, communications, or fit you have with the candidate subs.

The process of assessing fit is to: 1) Interview subs in the early stages of planning. Get a feel for the communication you have with each. Ask each whom they like
to work with in the related trades, and if there is anyone they are unwilling to work
with. 2) Seek bids from candidate subs on your detailed specifications. Evaluate their
responses to the bidding process. Negotiate with preferred subs after receiving bids.
Determine the ease of communication with the sub and the level of understanding of
your needs. 3) Check references.

Checking references is a lost art. Consumer Reports found in a study that only
one percent of the public actually checked references when making a buying decision. Heres how you do it:

1. Do it.
2. Ask the sub for references of past customers in the bidding process. Call
the references. Ask:
Did the sub show up and finish on time?

Did he do what he promised?
Did he do quality work?
Were there any surprises?
Then ask if they know of other past customers. This is important because
the sub will have the normal human tendency to refer you to those who like
him a lot. Possibly the aunt or cousin he did some work for. You dont want
to hear good things, you want to find out how he will fit with you and
your team.

3. Check the other past customers.
4. Look at projects physically that the sub has completed.
5. Call the contractors licensing division of your state or province to see if

there are recorded complaints against your candidates. Check the Better
Business Bureau also for complaints. Usually there are some. You just want
to avoid someone with an undue proportion of complaints, or unresolved
complaints.
going on, the

county can hardly
keep up with
the permits. I am
thinking Maricopa
County would be
about the same
right now. We
are going to start
our house this fall,
99% O-B as the
family is in construction. We just
dont want to be
out there in 110
degrees on the
weekends while
my hubby already
works it during the
week.
Where are you
planning to build?
We are going to
be outside of Florence. We were
able to purchase
10 acres a couple
of years ago for
$20,000 and
boy has property
really taken off in
price we were
lucky.
Good luck to you
Deby in AZ
I dont know
if this will help
you much, but if
you pull for your
permits in Aug,
you will be ready
to go in Oct, at
least that is what
we are doing. It
seems like every
year from Oct
thru Jan the trades
are slow, and
most will take on
side jobs or small
jobs. Right now,
most are so busy
I cant even get
my hubby to do
anything with all
the hours and
overtime he is
putting in. My girlfriend is also an
O-B and is desperately looking
for someone to do
her foundation.

She has been told
by the subs in her
area that they are
so busy they dont
have time for her
and she is getting
really stressed
about this as she
just put her house
up for sale and
was hoping to get
the foundation in
quickly.
Deby in AZ
Deby, Im building
in north Phoenix,
17th Ave. and
Happy Valley
(Maricopa
County). We also
got a screaming
deal on our land
about a year ago.
Prices have tripled
I could not afford
to buy out there
now. I feel very
lucky. What did
your friends bids
for her foundation come in at? I
cant believe how
expensive concrete has gotten.
Amie in Phoenix,
AZ
LOL you are what
we call halfway
to CA! We are
closer to Oro
Valley/Oracle
than Florence.
My friend has
no bids, no one
will talk to her
right now. She is
estimating about
$6,000 but I
think that is low
considering what
type of excavating she has to do
(she is on a very
rocky mountaintype soil). And
when I asked
her what she
planned to pay
for an excavation,
she hadnt even
thought about that.
Her foundation
Computer Scheduling

Your first step is to use the schedules provided by the generals who estimated
your project. These are valuable to you because they reflect the actual construction
steps deemed necessary to build your plans. I told the generals who bid my project
that I wanted a written schedule with a six-month deadline. They responded with
very helpful information about the sequence and duration of each trade involved.

From the sample schedules and my interviews, I developed a calendar for
construction on the computer. I used a calendar creator program that laid out the
tasks on the pages of a calendar. Better still would be a project management program.
You can use such a program, or a spreadsheet, or even a word processor program. The
important elements are:

Is dynamically updatable;
Includes the right tasks;
Is in about the right sequence (many jobs can and will overlap);
Shows correct durations for tasks;
Provides some margin for error between steps.

The overview schedule sample on page 156 was constructed using the rows
and columns format of a computer spreadsheet. Once you line up your construction
steps on the left, and the weeks across the top, you have a very usable format for your
schedule. If you pencil in the durations of each task by shading or drawing Xs, or
type them into your computer version, you will have a clear picture of your schedule.
The sample schedule provides average durations of typical steps as a comparison for
you. Use the durations that bidders provide you to make your calendar accurate.
Live in Your Schedule for a While

Lay out your own schedule carefully. Piece together the tasks, durations, and
lead times that have come from your bidders, from your telephone interviews and
from the general contractors who estimated your plans. The durations that bidders
provide you are particularly important. They are committing to you that their work
will be done in four days, or two weeks, or whatever. Enter these commitments accurately on your schedule.

Now walk through the schedule mentally. You will be the genius who will
manage this well-planned construction project. This particular bit of planning will
make a big difference to your success. As you think through each step with a pencil,
telephone, copies of bids you have received, your construction calendar and your
own day planner at hand, some important items will pop out for you. For instance,
when you see that framing will start in the second or third week, you ask yourself
when do I need to order the framing lumber?

You pick up the phone and call your lumberyard and ask how much lead
time they need. Or, you call one of your framing bidders and ask how this is done.
You discover that with your lumber estimate on file with the lumberyard, you can

call two days before. You make a note right on the framing lumber line of your calendar, or in your day planner.

So far so good. You remember that roof trusses are a part of your framing.
You call one of the truss suppliers who bid your plans and ask what the lead times
are. You are told that it normally takes a month, but they are backed up and it might
be six weeks. Congratulations! You have just dodged a bullet. Because you are still in
the planning stage, you will be able to place the order before you get in a bind.

You look on the bid documents for doors or windows and see that your preferred supplier has noted that you need to place the order three weeks before delivery.
Or, you notice the information is missing and you call. You find that three weeks are
needed, but to be safe they suggest six weeks. Once again, you found out soon enough
to protect your future schedule.

Many first-time owner-builders, and even some veterans have found themselves waiting for a crucial delivery while their unfinished project just sat. I know
of a two-month stoppage caused by delays and misunderstandings on a truss order.
Professional builders occasionally slip up as well, especially when dealing with an
unfamiliar supplier.

I found that I could sometimes move heaven and earth to get an overlooked
item delivered fast, but I wound up feeling that I paid too much or got a less than
perfect choice because I didnt have time to shop. The scheduling phase is the time
for you to avoid these disappointments.

Once you have thought through your schedule, submit yourself to the discipline of having others review it. Many possible reviewers are available to you. I suggest you think about the subs and suppliers who have just bid your project. You have
probably turned up some bright minds and helpful people in the process of bidding.
These people in the industry can tell in a flash if you are on the right track.

Fax or email a copy of your work to your reviewers. Or you can phone and
carry the documents to your people and talk the schedule through with them. There
is strength in multiple opinions. This is a good time to talk to people because you
havent yet broken ground, and as they say, nothing is set in concrete yet. You may
get new suggestions to save time or money, improve your design, or run a smoother
project.
will be smaller
than ours; she is
doing a 28x36
foundation 2-story
home; that is what
I believe she said.
She wants to
build with just her
family and friends
they have no
construction background and is
not willing to pay
for much outside
help. I think she
is headed for
trouble. I was a
little worried when
she told me she
could just pull
a septic permit
and that was
also her building
permit; and she
wouldnt get or
need inspections.
She is in Yavapi
County, and when
I looked at her
codes it said differently. She wants
to build everything
buying new and
including utilities
for $50,000. I
am figuring $50K
just for the house
with already
owning most of
the tools/equipment (we have a
tractor), friends
in the business,
and getting stuff
free or at builders
cost. Cheap is not
always better and
I tried to tell her
that if she doesnt
do her foundation
well she might as
well not build the
house. I think she
is talking to a lot
of non-construction
people who are
not giving her the
facts.
Our foundation
will be about
30x50, modest
single-story and I
am figuring about
the same price;
Sample Construction Work Schedule

Weeks from Start:
Site work and excavation
3 days
Temporary utilities
1 day
Foundation preparation
1 day
Underground plumbing
3 days
Foundation Inspection
Foundation erection
5 days
Slab, basement and garage
2 days
Rough framing
2 weeks
Windows and exterior doors
2 days
Rough plumbing
7 days
Decking and sheathing
5 days
Rough electrical
7 days
Cornice trim
2 days
Roofing
4 days
Exterior paint
5 days
Rough HVAC
7 days
Four-way Inspection
Insulation and Inspection
3 days
Brick work or siding
2 weeks
Hrdwd. floor & underlayment
4 days
Interior wall finishing
12 days
Interior trim and doors
1 week
Cabinetry
3 days
Interior paint
13 days
Countertops
2 days
Vinyl and tile floors
3 days
Exterior flatwork
2 days
Plumbing trim
1 week
Heating trim
1 week
Electrical trim
1 week
Appliances
1 day
Carpeting
4 days
Clean-up
3 days
Landscaping
4 days
Final Inspection
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Schedule Worksheet
Weeks from Start:
(Duration:)
Temporary utilities
Foundation erection
Rough framing
Rough plumbing
Rough electrical
Cornice trim
Roofing
Exterior paint
Rough HVAC
Four-way Inspection
Cabinetry
Interior paint
Countertops
Exterior flatwork
Plumbing trim
Heating trim
Electrical trim
Appliances
Carpeting
Clean-up
Landscaping
Final Inspection
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Schedule Worksheet
Weeks from Start:
(Duration:)
Temporary utilities
Foundation erection
Rough framing
Rough plumbing
Rough electrical
Cornice trim
Roofing
Exterior paint
Rough HVAC
Four-way Inspection
Cabinetry
Interior paint
Countertops
Exterior flatwork
Plumbing trim
Heating trim
Electrical trim
Appliances
Carpeting
Clean-up
Landscaping
Final Inspection
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

but we have a
friend who owns
a union concrete
business and he
owes us some
favors. We were
told cost for the
materials and pay
cash and food
(steak dinners) for
the labor and we
will get it a much
lower cost. Now
my husbands
brother said we
need to estimate
about $15,000 to
$20,000 for the
foundation. But
he was building a
2,500 sf adobe
home and the
number was just
off the top of his
head. He actually
makes his own
adobe bricks. But,
I think he needed
a better footing
with the weight of
the adobe. We
are doing metal
stud framing which
I dont think needs
as much. My
dad did asphalt
and concrete
for a living, so
we will do all
patios/driveways
and stuff ourselves
with him. We also
already own a
mixer/water tank
truck, forklift and
many other tools.
But I want the
foundation hired
out to make sure
its a good one.
Back-up Plans to Keep the Work Going
My hubby does
metal stud framing
and drywall for a
living as did his
dad. His dad also
does plumbing;
his brother can
just about do it
all, uncle was a
state inspector
and we have lots
of construction
friends we have
helped build for

Eventually Elaine and I checked out some books on wiring and read them.
We then jumped in to fill the void. It took a long time and plenty of paid advice, but
we ultimately did a superb job. However, our schedule was shot. I had to make many
phone calls moving other subcontractors affected by the delay.

An engineer I know says he is a belt and suspenders kind of guy. His pants
wont fall down because if the belt fails, the suspenders go to work.

Your scheduled plans will in some part go awry. That is Murphys Law. If
you anticipate that possibility, you can go to Plan B without a hitch. Your plan B is
a back-up plan for all the things that can hurt you on your schedule. Of course, the
biggest problem is subs that wont show up.

My footings contractor told me the week before construction that he had
broken his back. He was convalescing, and his brother-in-law, an established footings contractor, was covering his work. I called the brother-in-law, and learned that
he was scheduled out a month ahead. And he wanted about 50% more money than
the injured contractor had agreed to. It was a scramble to find an available sub and a
decent price in time to preserve our schedule.

What do you do in a case like this? You go to plan B if you have a plan
B. You do indeed have a plan B if you have gotten multiple bids for all of the trades.
Even though you select one bidder to get the work, you should leave the door open for
the other subs who bid. I suggest that you write each bidder a note expressing thanks
and saying that perhaps we will do business again some day. To those bidders who
were close to being chosen, send an email or fax saying that they are your alternate
or back-up choices for this work. If anything goes wrong with your first (or second)
choice, you will contact them immediately and ask them to participate on your project.

To have this luxury, which almost guarantees your schedule, you must get
multiple bids in the first place. Having made the effort to get several bids, you can
count on back-up. Having as many as ten bids on something is a great comfort,
though I erred on this when building our house. I had multiple bids in some categories, but not where people were going to help me or do me a favor. For instance,
the construction advisor I used agreed to help me wire the house. I trusted this man
implicitly, but my judgment was off. He never came as planned to show me how to
wire the house. I had not budgeted for the category, and I felt very inadequate to
start without help. I thought or hoped that he would yet show up. I spent some lonely
weeks at the site waiting.

We had an unbelievably hard time getting the unpaid helpers who agreed
to work with us on painting, cabinetry, deck work, and stair rail work to show up. I
was disillusioned. I was new to this part of the country, where Elaine was raised. I
thought a persons word was their bond. Elaine explained to me that the local culture
is that Yes means maybe, and maybe means no.

The moral of the story is that you should be very sure before relying on volunteer labor. And you should have a back-up plan. I should have bid the volunteer
categories just as I did the paid categories. In the paid categories I did fairly well, but
I found that almost no subs were precise about their show-up times.

While you are waiting for people to do what they said they would do, the
interest clock is ticking. At the end of our project the interest was running $1,250 a
month, $65 a day, and $7.50 per working hour. You need to beat the big, bad interest
monster, and back-up plans will allow you to do that in style.
Schedule Reinforcement Program

1. Communicate in writing

By following the planning steps in this book, you have had communication
periodically with the subs who will do your work. Be thorough with this communication. Send thank you notes to subs who interview with you I faxed them a copy
of the interview with my thanks. Follow up with those who bid your project, thanking them or letting them know you have received their bid. After you select your subs,
thank the others who bid and let your alternates know that you have chosen them as
back-ups.
2. Get written schedule commitment

When you commit to a chosen sub, extract a return commitment of start
date, duration and finish date, or at least two of the three. Include the time commitments on the subs estimate and you and the sub should both initial it.
3. Distribute schedule

When you have refined your written schedule, follow the advice found in the
American Institute of Architects Project Checklist. Distribute the written schedule
to each member of your team. If you have fax capability, you can do a mass faxing to
the group in a very short time. If not, email; or make photocopies of your schedule
and send it to the participants.
4. Call, call, call

Veteran owner-builder Jim Stark provides the next bit of advice.

The rule is to call the subs once a month to remind them of your schedule until
the month before they are due. Then call them once a week to report progress and
verify that they are still on schedule to show up as planned. In the week before their
start time, call every other day to confirm and verify that you will have any needed
materials on hand. The night before they are to start, call and confirm that they will
free over the years

who have already
offered to help for
beer and food.
The nice thing is
these are the kind
of people that
really know what
they are doing
and will bust butt
to go in and get it
done versus sitting
around.
We are also
not building a
regular house
like most people,
we are taking
a steel building
and making it
into a house. We
will dress up the
outside and stucco
it to look southwestern. We have
been hoarding
materials from
some leftovers
on demos and
new builds. We
have gotten things
like real nice oak
French doors with
all the hardware
from a remodel
for free, free new
insulation, a stainless 3-area sink
that sells at Home
Depot for $650
we paid $20.
Like new designer
bathroom sinks
and cabinets
for free; and we
know a tile guy
that saves his
leftover travertine
and marble highend fixtures for us,
so we are hoping
to come out at
about $28 a sf.
But we either get
this stuff for trading
work/favors or
told to throw it
away after a job
is done. I couldnt
believe when we
got the brand new
still in the wrap
R-19 insulation
for free, because

they ordered too much and just told my hubby to throw it out.
Well, we did, right into the back of our truck. There is a lot
of waste in commercial building and they dont care because
they just pass the cost on to the consumer.
be there in the morning. Successful general contractors follow this advice to the
letter.
I attended the home show last weekend and found a place

that buys construction lots and sells them at a discount, I cant
wait to check them out.
5. Strengthen relationship
Our goal is to do this all mortgage-free, sure hope we can.

We just got our plans back and need to hook up with our
foundation guy. So I dont have a bid yet.
Be very careful with subs out here, I have seen many people
ripped off or poor work done. Check out their work before
you pay them. Also, dont pay them in advance. Most times
they want $$$ for materials that is normal, or you get the
materials they need and have it there for them.
If you get a good sub, be nice to them by doing so you
would be surprised on what some of them will just throw in
and do for free/inexpensive. Little things like just having a
cooler of water for them really help, especially in the summer
or if you can bring coffee in the a.m. in the winter. When you
want the work done dont ask for a lot of changes; I know it
makes them nuts. Most cant stand changes, and will charge
you plenty for it while they wont say it to you. I know I hear it
all the time at home, especially from the tile guy. Depending
on when you start your project out here, keep in mind these
guys start early. Right now with summer getting ready to hit,
my hubby leaves for work at 2 am to start beating the heat.
Most important, be safe.
Deby in AZ
Sources Say
You can run the gauntlet of government percolation tests and
planning boards and zoning and wetlands acts. Do this in
the fall. Perc and soil tests are often the bugaboo, because in
some towns they can be done only in certain seasons.
From The Well-Built House
Habitat for Humanity: How to Build a House lists 67 steps
with color illustrations in 14 sections to building a typical
house.
The Complete Idiots Guide to Building Your Own Home has
10 illustrated chapters on the process of housebuilding from
site preparation to outdoor options.
(See page 263)
An enhanced schedule worksheet template is

available in our Free Download Gallery. A calendar
creator program, for day by day project details, is
available in User Tools.

To let the sub know that I care and
have serious expectations, I made it a point to
visit them at their current job site before they
started my work. I did this both in the bidding
process to assess their workmanship, and later
to strengthen communication. If the schedule
changed at the last minute, I went to a lot of
effort to inform them so that they would not
lose a day of work.

In one case, I went to the excavators
home the night before a planned start to inform
him that the city had delayed our permit at
the last minute. From our meeting when he
inspected the lot and bid the job, I remembered
that his five year old daughter had a birthday on
his planned start date. I apologized and brought
a gift for his daughters birthday. That excavator
was very reliable for us over the course of his
several contributions to our project. He always
informed us if he would be a few hours late,
for example. These are the kinds of things you
expect on both sides when you have a good relationship with team members.
6. Bonus program

Owner-builder Jay Sevison, who is a
manager in a computer software company, used
a further technique to strengthen his schedule.
He offered $100 to each sub who started on the
designated day he physically handed them a
$100 bill. Later, if the work was as hoped and
finished on time, he surprised some of his subs
with another cash bonus.

This, too, can work both ways. You can
negotiate liquidated damages with subs in
advance which specify that they will pay a penalty a reduction in your invoice for each
day they miss the agreed deadline.
Chapter 11: How to Make Your Lender Swoon

Time line: Two months before groundbreaking
Your Next Thousand Hour Payoff
y this time in your preparation, you have been rewarded for diligent planning
by saving money on house design, by finding good subs, and by pinning down
some real construction bargains for your house. You are ready for your next
payoff smooth sailing through the loan application process.

The myth that you cant get a construction loan without a licensed general
contractor is widely circulated. You can indeed get the loan, but there are many
people who will tell you that you cant.

Of the lenders I surveyed, 45% made owner-builder construction loans routinely. 15% did so on a case by case basis. Thats more than half who will make these
loans. If your preparation is well-done, you will get a loan from any of the 60% who
will consider it. You may come out so prepared that the 40% who dont do it will
make an exception for you.
Forums
Hi, everyone. Im
a mortgage broker
out of Washington
State and have
built three ownerbuilt homes in the
last four years,
(on my fourth).
I was going to
offer some of my
experiences for
those of you just
starting out.
#1 house 2,600
Sq. ft. built for
$283,000 sold
for $367,000 conventional financing
20% dn. stuff.
#2 house 2,770
Sq. ft. built for
$297,000 sold for
$402,000 conventional financing
10% dn.
#3 house 3,500
Sq. ft. built for
$290,000
166 Chapter 11: How to Make Your Lender Swoon

(screaming deal
on the land)
IndyMac 5% dn.,
(my brother lives
in it) appraised at
$470,000 at time
of loan funding
re-appraised 15
months later for
$620,000. I have
a 5% interestonly loan locked
for 5 years; the
payment is only
$1,200 a month
and the loan is
assumable. (IndyMac product).
#4 current
project, just broke
ground. 4,100
Sq. ft. budget
of $550,000
appraised @
$845,000 on
21/2 acres in a
gated community.
I will be using
an Alt A neg.
Amortization loan
@1.75% locked
for two years to
carry the house till
it sells. My payment will be about
$1,900 a month.
# 5 My own personal residence to
be built with my
own cash!
The reason I
posted the above
was not to toot
my own horn but
reinforce the idea
that it can be
done you simply
wont believe how
many people told
me you cant do
that! including the
7 banks I talked
to before I got my
first loan.
Back to financing,
I have heard a lot
about Bismarck on
this board their
product goes like
this: 70% loan to
cost, not future
What the Lenders Want

The lenders want what you and I want. They want you to be prepared for a
smooth and successful project. Several lenders used the same words with me in interviews: They have to convince me they can do it.

Lenders are justifiably wary of the typical O-B candidate for a construction
loan. Construction lenders find O-Bs woefully unprepared on average to control a
project and bring it in on budget or on schedule. The owner-builders I interviewed
before the first edition of The Owner-Builder Book had averaged only 238 hours of
preparation before breaking ground. The lenders know that over the course of construction these same candidates will spend much more time than that trying to make
things right (original average: 1,068 hours during construction phase). After the third
edition of the book, owner-builders who participated in our online survey indicate
688 hours of planning and only 492 hours during the construction phase. This is a
much more livable ratio and a 54% reduction in construction effort required.

Since its the banks money, the lender cant help but wonder why uninformed
candidates wont make the effort to reduce project risk before they take out the loan.
Most owner-builders leave too much to chance, and lenders know it. The lender
wants to see that this is a no-risk proposition. Which is exactly what you want.

Remember, when you take out a construction loan, its not your money. The
bank lets you use their money in return for your commitment to repay them (with
interest). They have to be sure you will repay, and in the event you dont, they want
the house you build to have plenty of equity so that they can resell it and recoup their
investment.

When you meet with a lender, you should address their concerns decisively.
The leading concerns are:
Risk

Prove that you have done the necessary planning to pull off a successful project. Document your financial soundness and financial qualifications. Show that you
have secured the necessary insurance coverage to protect the lender from liability.
Quality

Show that your house will meet any and all quality standards, resell easily,
and be a good risk for their investment.
Cost Control

Demonstrate that your house will be built for a competitive price, and that
you will stay reasonably within budget.
Chapter 11: How to Make Your Lender Swoon 167
Job Control

Convince the banker that your house will be finished well within average
and reasonable time limits.
Your Loan Proposal Book

You can do all this with a loan proposal for the lender. By proposal, I mean
a written book or portfolio that documents all of your answers to the lenders concerns.

You should not go in empty-handed. One lender told me that a couple came
in to see him and said they were sure they could owner-build at a savings because all
builders make 30% profit. The lender asked them the penetrating question: Have
you built before? No. Have you remodeled a house? No. Do you maybe have
relatives in the industry? No. Did you perhaps have a summer job at some point
in construction? No. But we did read a book about owner-building and we know
all about it. The lender declined the loan.

You wouldnt dare tell a lender that he should make you a big construction
loan because you read a book, would you? Particularly our book, because you know
by now how to prepare and this is your moment to show off that preparation. You
might say: I have worked for six months planning this house and I have this proposal to give you.

Your proposal should knock the lender on his or her Fanny Mae. Heres how
to put it together:

Before your meeting with the lender, stop into the bank and ask the secretary
or loan officer for copies of all the forms you will need to fill out for the eventual
loan. Ask for a list of all the documents they will require in evaluating the loan. Ask
for a copy of their Lien Release for your records. Ask what insurance coverages they
require of borrowers so you can line up the coverage.

Go home and assemble the documents required. The application they provide will undoubtedly ask for your employment and banking history, and your credit
references. You will need to bring in copies of your last few tax returns. These are
pretty standard requirements for loans. All applicants need to supply the same financial paperwork. The difference in your case is that you will have prepared it thoroughly in advance.

To the financial paperwork you will add the construction and management
documents that you have been working on for months. Some of these are also standard, but you will provide some documents that the lender has never seen before.

Make your proposal or portfolio neat and organized. If you are not skilled
with paperwork, get help! There are many people who handle these types of documents for a living. Use a copy shop to reproduce original documents that you supply
value, cost to
build. That means
you would have to
come in with 30%
down, not a lot
of leverage there;
not to mention the
points and high
interest rate, NO
GOOD!
If you live in WA,
OR, MT, or ID I
have an excellent
lender If you need
something outside
of the box, I am
using them on my
most current project. The product
goes like this: First
off they are no
income verification (No ratios) no
credit explanations
(they do look but
not a determining factor). Loan
approval in 24 hrs
(they did mine in
6 hrs). Can fund
within 10 days,
They are 70% ltv
based on future
value or 97% loan
to cost whichever
is greater. (If you
can build in 30%
you would only
be required to
belly up 3% dn)
They do charge
10% and 31/2
points which they
fund into the loan;
that is the tradeoff
for the ease of
financing. They
also fund in three
months worth of
payments, and
there are no
reserve requirements.
This loan is based
on your future
equity, not much
else. I started
using them after
I added up how
much of my time
and MONEY
the banks were
wasting going

through their loan process (or should I say
ringer). This product needs to be broker
represented.
Good Luck To All !!!
Jl in Vancouver, WA
(like subcontractor bids), and shrink or enlarge them to a consistent size. If possible, make a notebook or have a printer do
a spiral binding of your papers and put a professional looking
cover on it.
Sources Say
If you can demonstrate some knowledge of
how youre going to go about building your
home, the lender might say: Okay well
take the risk. The more knowledgeable you
are about homebuilding the more likely a
lender will be to loan you money.
From Everything You Need To Know About
Building the Custom Home

Not all lenders want the same documents. But, all the
suggestions below are pertinent and demonstrate your readiness to bring your project in on time and on budget:
(See page 263)
Forums
WRITING A LOAN PROPOSAL

This can be a daunting task. Cara happens
to be a grant writer and consultant, so this
came naturally to her. However gathering
all the information is not so easy. Whenever
you submit anything to a potential lender
make sure it will provide every piece of
information they could ever inquire about.
Your proposal should be tailored specifically
for your project. You only get one chance to
make a good first impression.
On My Construction Website we
have uploaded the proposal that was used
to acquire our loan. It has been edited
because not all information should be made
public, but you should get the idea.
NO MONEY = NO PROJECT
Jason in Orlando, FL
Journal
Loan: Our lender told Jason that our

proposal was the best hed ever seen. If
he only knew... If you remember, we sent it
out the door sans letters of support, Gantt
chart, and statement of self-work. And we
still blew him away. That feels really really
freaking good. The lender says that we are
good to go pending our appraisal, which
should occur this week. The appraiser will
also pick up a copy of the plans. This is
the final puzzle piece we needed to make
the project work. Or the only puzzle piece,
depending on how you look at it.
Cara in Orlando, FL
Forums
I live in Comal County near San Antonio,

and I am owner-building as well. Texas
does not have licensed GCs, so it is
not required for any kind of permitting. If
you are building in the hill country like I
am outside of any major towns, you many
not need that many permits. For example,
Comal County is just outside of San Anto-
Your plans and specs from the designer

This is standard. Include engineering report and soil
conditions report if unusual conditions exist. Include any
engineering for non-standard structural design.
Land purchase contract or warranty deed of

ownership

A standard requirement.
Copies of bids from subs and suppliers

Having this is rare. This sets you apart and makes the
requested loan amount a realistic number.
Your room by room descriptions

This will surprise your lender.
The text of your interviews with subs and suppliers

Theyve never seen this before. You have become a
unique applicant. They will likely say in the loan committee
meeting: This person has put a lot of thought into this.
Evidence of the construction insurance the bank

requires

You can photocopy the one-page binder the insurance
company provides to show you have coverage. If you havent
signed up yet, give the name of your chosen agent, and carrier,
and the quoted cost of the policy.
Include a copy of the banks lien release form

This is the paper that subs will sign, when they are paid, that says they have been paid and will not
put a lien on the house. You are showing the banker that you understand the process.
Cost breakdown

Put in the written budget you have developed for your project. Include a ten percent contingency
in the totals. Include any work you are doing yourself at market price. That way they know you can still get
the project finished if something happens to you.
Written schedule

They may have never seen one of these before from a candidate.
Qualifications Statement

Give the background on you and your spouse showing what related experiences to construction
you have had, even if its your management experience at work. Indicate how your employment situation
will allow you to spend at least two hours of daytime on-site supervision.
Rsum of construction advisor or superintendent

If you or your spouse cant be on site for two to four hours a day, include the credentials of someone
you have arranged to provide this service.
Lenders Want to Put a Copy of the License in the File

Most of the lenders I interviewed said they wanted the candidate to have some construction experience. If you cant prove this experience to the bankers satisfaction, you may have to get creative.

I recently interviewed my own construction lender. He told me that his bank absolutely refused to
make construction loans to owner-builders. I said, What about me? He answered, You had a contractor. This amazed me. He was an advisor and you know he never did anything! I said. I know, but we
needed to put a copy of his license in the file, was his response.

Evidently this satisfied the loan committee at the bank. When I was told that my qualifications
were insufficient, I found a semi-retired general contractor to help. He provided a photocopy of his license
for the file. The bank furnished me a perfunctory construction agreement which he signed, although no
money changed hands. This satisfied the bank.

It is not hard to set up an arrangement like this. Half of the general contractors I interviewed said
they had at some time provided a copy of their license to an owner-builder friend who needed to pass
muster with the bank, at no charge. You could call around and even offer a fee for this service. Try semiretired contractors. Meet with your candidate builder and show them your dream home notebook.

The banks agreement with my general contractor said that he would be paid a set amount per hour
for his services. My advisor agreed to $35 but said that I could help him out on his projects in trade. I never

nio, and I only
need floodplain
and septic
permits; that is all.
Lenders like to see
a GC signed on
as a consultant,
and I know a few
people that simply
signed a support
contract with a
GC to sign on
with the lender
as an available
consultant. The
contract only
stated that the GC
was available for
a fee to consult
on the project.
The GC never
got paid a dime
as no consulting
was ever needed.
I looked at the
owner-builder
network as well
as other internet
owner-builder
lenders, and they
all look like a
scam to me. The
fees were way
too much. Also, I
have a friend that
used the OwnerBuilder Network
in Houston, and
she did not use a
single sub on their
list as they were
all priced too
high compared
to the subs that
she found on her
own. I looked at
her Owner-Builder
Network binder,
and it was worthless. I could create
the same binder
in one hour using
Google for advice
and the Yellow
Pages for a few
phone numbers: I
would NOT suggest using them.
David in San
Antonio, TX
had to spend any money on the arrangement, although it turned out to be a comfort
and source of good connections and information.

On the other hand, your bank may accept your qualifications as an ownerbuilder without a license for the file. (Lenders accepted two-thirds of O-Bs in our
survey at face value.) You may have had experiences they will accept if written up in
an official-looking way in your loan proposal. Talking with lenders, I found that the
remodel I did on my last house could be acceptable experience, or the months I spent
helping a friend finish his house some years ago. I never thought about it, but my
consulting assignments to commercial contractors would have been applicable, and
most banks would have accepted the time I spent as a vice president of a construction
company. They wouldnt have to know it was marketing vice president.

You can acquire experience if needed. For instance, you could put in time
building a Habitat for Humanity house in your area. Document your experience for
your Qualifications Statement. Get a letter from the supervisor or chapter director
describing your involvement. Youd be amazed what banks will accept if its in writing.

Altogether, your loan proposal will overwhelm your construction lender.
Your proposal itself is evidence of your qualifications to manage the project. By the
time you have spent a thousand hours planning and have documented it for the
banker, you are more than halfway home no pun intended!
Dont Budget Self-Work

Suppose you have a construction budget of $290,000 including all of the bids
and bargains youve gathered, and including several things you intend to do yourself
at low cost on the project. Further, say you have a borrowing limit of $300,000. You
feel you need to submit the budget as is so that you will qualify for the loan.

Dont do it.

If you flesh out your budget to include outside bid numbers for items you
will do yourself, it will be larger. For example, you may have painting in the budget
at $2,000 the cost of materials, because you intend to do it yourself. But the bid
prices you received vary from $8,000 to $12,000. Include the $8,000 in the budget
you submit.

This is a very important item with lenders, who all tell stories of people who
intended to do some of the work on their homes but didnt. Many reasons exist for
the failings, and you might get lucky and do all that you intend to do. But the banker
doesnt want to take that risk.

Never before have I had surgery, but two months before I had to start our
house, my orthopedic surgeon informed me that the pain I was feeling in my knee
was real and it had to be operated on. I was to report in for surgery in two days. I
thought maybe I would recover quickly and bounce back like an athlete does. Not

this time. I was in bed for a week and got around with crutches or with great caution
for several months.

Things like this happen to owner-builders all the time. Sometimes things
come up at work that force a change of plans, sometimes they have health problems,
sometimes they go through marital difficulties, sometimes they are simply overwhelmed, and just cant do what they thought they could. The lender wants to know
if the bank could take over the project in the event of disaster, and finish it for sale
without losing money.

If you have budgeted the work fully, there is no disaster. The project can
stand on its own feet. As long as there is enough equity to protect the lender, you will
be approved.

However, you may not qualify for the loan at the larger amount. Suppose
your $290,000 budget becomes $325,000 with street prices for self-work and a ten
percent contingency. If you only qualify for $300,000, what to do? In our case, we
didnt see anything we could do, and we presented a skinny budget to the lender and
got away with it. But not for long, because although we did the work we intended,
volunteer help and favors didnt come through. We went over by about $25,000.

Before we could convert the construction loan to long-term financing, we
had to find a cosigner. It was an anxious time, because if we didnt find one, we would
lose the house. We found a relative to sign the papers as a cosigner. We qualified and
the mortgage loan closed. Later, the relative agreed to quit-claim the deed on the
house, surrendering any rights of ownership.

If you confront the possibility of a shortfall in the beginning, and line up a
cosigner then, you are spared the grief. Your banker wants to see that you have qualified for the larger amount. If you succeed in doing all the self-work you want, and if
all your bargains materialize, you will finish the project under your borrowing limit.
You can then take out your long-term mortgage without a cosigner.
Your Loan Presentation

Most of the lenders I interviewed said that the candidate had to convince
or sell them on their ability to handle construction without a general contractor.
You are equipped with a written loan proposal loaded with information. What else
do you need to do?

One O-B told me that he got his loan without a contractor by making the
mother of all presentations to the lender. Give some thought how to present the
information you have gathered in a cohesive way. You could go Hollywood and
make up overhead transparencies or PowerPoint slides to convey your main points
of preparation and qualification. Or you could simply mark places in your proposal
with sticky notes and turn to those pages and describe them to the banker.
Sources Say
To present your
best case to the
lender know your
project. Never
say, Well, I dont
know.
From Everything
You Need To
Home
(See page 263)
O-B Connections
Hi Brenda, I saw
the response of
the other poster
today on the
forum and I think
they are right.
Your plans should
explain all the
construction details
and as far as finishes well, that is
tricky. If you have
a good spreadsheet with all the
quotes from subs
you should have a
good idea of your
finishes and what
they cost. I didnt
really water
down the spec
list because I had
quotes to back up
our finishes and
I wanted to get
enough money to
do those things. If
I had put lowerend finishes I think
they would tell
me my amount
would be high to
build that so I
followed as close
as possible to it.
I made my own
spec list but used
ontariocontractors.com
list from their
site as a guide
in format and
making sure it
was complete.
But each bank is
different and they
should be able
to tell you what
they are looking

for. Also, in our price we included all labor,
even the trades my husband plans to do, so
then the final loan will be lower but at least
we have a contingency. Good luck. What
bank are you going through? We went with
American West and they are great they
service your loan too. Bye! Kari
Hi Kari, thanks so much for your response
thats a good idea about using the sub
bid labor as contingency money. I think we
will do that my husband will be doing
most of the labor, but that will give us a
nice financial padding as well. We are still
getting our financing: we are looking at
Timberland and working with a broker. I will
check out American West.~Brenda
Sources Say
Lenders will probably require you to have
cash equal to a down payment, but they
probably wont require you to use it if you
are successful in building equity as a general contractor.
(See page 263)
Sources Say
Everything You Need To Know About Building the Custom Home has a good chapter
on getting a loan, coauthored by an
attorney.
(See page 263)
Sources Say
The Complete Idiots Guide to Building Your
Own Home
has a section called Understanding Lenders and a section on preparing a net worth
statement, loan evaluation factors, and what
you can negotiate with your lender.
(See page 263)
Forums
Ive uploaded our budget for the lender. It is

Excel hopefully you can open it.
When we requested the loan, we asked for
$262,000. Midcountry Bank was leery to
loan us that LITTLE of an amount and asked
IHE (IHEonline.com) to write our loan
amount for $302,500 as you can see in the
sworn lender statement.
So the IHE rep called to ask where we
wanted the extra money put. I told her I
didnt care since we had no plans on using
it. Since then I have learned about frontloading a loan. In hindsight, I would have
done that with the extra money.
Lori in Sparks, NV

This may be a key to commanding the lenders attention in a tight market where O-B loans are generally not made
and there are few institutions to choose from.
Shop for the Right Terms

With your proposal and presentation, you may find
yourself uniquely well-received. My research with bankers tells
me that you will be the most prepared owner-builder the lender
has ever seen. This puts you in the drivers seat.

Your lender will want to make the loan, and so will
other lenders in your area. Since you are no longer in a hat in
hand position of subservience, you get to take your pick of the
available lenders. Its no longer a case of will they take me?
but of whom will I take?

Consider the terms and conditions of the construction
loans available before you choose. Lay out a spreadsheet of the
loan differences discussed below and others you are concerned
about. Before you see the lenders, call and ask their policy on
the key terms. After you present your case to a lender, talk
through their terms using your checklist. If you are considered
a good candidate, the lender will negotiate any or all of the
terms.
Origination Fee

This fee can vary from zero percent of the loan amount
to as much as three percent.
Loan Rate

The interest rate could be fixed or adjustable, and
pegged at some percentage over prime. Adjustable rates are less
risky for the lender and more risky for you.
Down Payment Required

Is the land you have secured enough of a down payment? Do you have to have the land fully paid for? Is additional
cash required, and how much?
All-in-one Loan

Some enlightened construction lenders are offering
combination loans that you close on only once. When you

finish construction, the long-term mortgage automatically kicks in and pays off the
construction loan. These loans save on origination and some other fees.
Interest Rate Locks

If you catch the market at a good time, interest rates may be temporarily low.
Rate differences can mean thousands or tens of thousands of dollars on your interest costs on the long-term mortgage. You may be able to lock in a low future rate by
paying a small fee. What rate can you get and what will it cost?
Title Insurance and Other Fees

What will be the other charges on your closing statement? What will be the
cost of title insurance (a big ticket item)? What other fees will you see?
Draw Procedures

Construction lenders can make your life miserable with restrictive draw procedures. What does it take to get money to pay the bills? Does the lender require any
home office or out of town approvals before disbursing funds? Are there completion
percentage inspections required? How often can you get a draw? How much advance
notice do they require? Is there a fee? Is the money paid directly to subs and suppliers,
or to you? Who handles check writing and lien releases?
Uninstalled Item Draws

Kitchen cabinets are often ordered weeks or months before installation, and
a 50% deposit may be required. Can the bank deal with this, or will they be difficult
with you about the fact that you make the deposit before the cabinets are installed?
To get bargains on some other items such as ceramic tile, you may have to pay cash
for supplies before they are installed.
Cost for Inspections

Lenders want to have the project inspected periodically to see that the work
they pay for has been done. Some lenders insist on an inspection before every draw,
and make you pay for the inspections. Most lenders have a program of periodic
inspections. Some lenders charge nothing for inspections; many, however, do.
Title Update Fees

Some banks take a legal precaution of updating your title periodically. This
limits the conditions under which subs and suppliers can file a lien and verifies that
no creditor has any claim on your property. Do you pay for the procedure?
Sources Say
Your New House
Lists eight questions to ask
when getting a
mortgage loan
and four potential
problems with
mortgage loans.
(See page 263)
Sources Say
The Complete
Idiots Guide to
Building Your
Own Home
includes a typical
five-stage construction loan draw
schedule. First
draw: Twenty
percent when footings, foundation,
first-floor joists,
and subfloor (or
slab and pumbing rough-ins) are
completed.
(See page 263)
Readers Say
Banks think that
owners are total
dummies. They are
used to working
with developers
who have a nice
little pat package.
When you walk in
with something to
present, they dont
know how to deal
with you.
Jean & Bill H.
Lansdale, PA
Dont be concerned about getting a construction
loan. Ive been
a banker for 20
years. Community
banks like the one
I work for want
to loan money to
anybody who will
take it.
Bob O.
Santa Fe, NM
Im going through
my credit union
for the permanent
financing, and a

bank did my construction loan.
My long-term relationship with
my financial institutions helped
a lot.
Ivealia D.
Tulsa, OK
I was surprised how easy it
was for me to get a contractors
license for myself. It took $400
for the class and one day of
time.
Joan L.
West Mountain, UT
I put my loan out on the Internet
and asked lenders to bid on
it. Construction to perm. The
first company came back with
$6,900 then one at $5,200,
and then the third one at $800
plus interest during the term.
Aaron & Daylene S.
Heber City, UT
We used a portfolio for the
bank like you suggested with
all the info, which causes us to
get a higher appraisal. It will
go through every room, and all
the materials. This will go to the
appraiser with samples. Like we
have a bamboo floor, and a
sample for him to touch.
Also samples of the Rastra
foundation material and pictures
of similar applications.
John & Cyndee M.
Bend, OR
Every bank I called wanted
to loan us money. After many
calls to lending institutions in
the area, I finally found three
willing to loan 100% with us as
the general contractors. The first
one wanted 15% interest!!!! The
other two were at current prime.
Just keep calling around. Also,
keep a record of the calls and
who you spoke with and the
terms. I keep this in a file on the
computer.
Jodenia & Jim M.
Blacksburg, SC
We got our construction loan
through our credit union. No
problems.
Vern & Catherine P.
Willard, UT
I used a short-term loan for construction and saved $5,000.
Lynn H.
Tremonton, UT
Category Shifting

If you save money on one area of the project, for example excavating, can you apply the extra to another area, such as kitchen cabinets?
How user-friendly is the procedure?
Insurance Cost

The lenders have arrangements with various insurers that could
save you money on course of construction insurance.
Time Limit

With most construction loans, you get a loan on which you make
no payments. A construction loan accrues interest as time goes by, and
that interest is usually paid off by the long-term mortgage on completion.
How much time will they give you before the loan is over and you must
make interest payments? Six months is common, but very optimistic since
the average owner-built house takes longer to build. Many banks give nine
months on a custom home.
Cost of Extension

If you go over, is there a fee for extra time before you have to make
monthly payments? What will the interest rate be?
Additional Amounts

If you need more money to finish your project than anticipated,
and you qualify for it, can you get it? Do you have new origination or other
fees to pay? Is there a change in interest rate?
Disputes

What recourse do you have if there is a disagreement? Our loan
was tied up for a month late in the project because the bank insisted that
we had spent 92% of the funds but that the project was only 87% complete. We had subs that wouldnt do more work until paid, but the bank
wouldnt advance a nickel. It turned out that their computer spreadsheet
had a totaling error and they were off by six percent. We had no way of
getting their attention in the meantime.

Review the items that concern you before you make a presentation
to a candidate lender. Negotiate for the terms you want. With competitive
information from other institutions, you have even more leverage. If you
are not satisfied, reserve your final decision until later. See other candidate
lenders, make your case and negotiate. Dont sign on the dotted line until
you have found a package that suits you.
Chapter 12: Paperwork Before You Begin

Time line: One month before groundbreaking
Anatomy of a Lawsuit
e made the mistake of not having backup plans for those budget categories where volunteers were to help on our project. One of the volunteers,
someone to whom we had loaned money, never showed up to do the finish
carpentry he promised. Since our project was already delayed, I moved hastily to find
a replacement carpenter.

I hired someone I knew who was retired and seemed grateful for the work.
He said he could finish the task with a helper in a week and a half. I agreed to pay him
the hourly wage he asked for, with the proviso that payments would not exceed eight
days for two men or 128 hours of work time. Since I knew the man slightly, I only
made notes in my day book. We didnt sign anything. Then our nightmare began.

For one reason and another, the men kept telling me that it would take longer
than expected to finish the work. At the same time they came to me every Friday and
asked for advances on their pay, saying they would not be able to stay in their apartments or have transportation if they didnt have some money. The task dragged on,
Sources Say
Dont count on
getting anything
you dont ask for
in writing. Remember, Not written,
not said.
Contracting Your
Home
(See page 263)
Sources Say
If you allow contractors to insert
an or equal
clause in their bid,
you are at their
mercy.
From Build Your
Dream Home for
Less
(See page 263)
176 Chapter 12: Paperwork Before You Begin

Forums
Were having
a lot of trouble
finding an insurance company,
and Im guessing
other Florida
OBs (particularly
non-GCs who are
using a bank loan
to finance) are
having the same
trouble. Please
post the following:
1. What types of
policies you had
to carry
2. What company
you used
3. Whether you
are a GC
4. Other information/advice/etc.
Thanks in advance
hopefully this
will help us and
others find reputable insurance
companies.
Cara in Orlando,
FL
and I eventually wrote out personal checks totaling 140% of the agreed amount, with
only 65% of the work completed. Finally, on the advice of an independent inspector
friend, I refused to pay any more. They left with curses and threatenings.

In a few weeks I got a notice that our place had been liened. We were almost
finished with construction, so I called the mortgage lender and asked if this would
affect anything. I was informed that an amount equal to two times the amount of the
lien would be escrowed at the mortgage closing. We felt we owed the men nothing,
but we would still have to escrow $6,500 at closing. I protested that under state law
these men werent qualified to file a lien as unlicensed contractors. I was told that its
a case where the owner is assumed to be guilty until proven innocent.

Later we got registered letters from the carpenters attorney stating that we
were liable for Breach of Contract, Unjust Enrichment, Failure to pay a Mechanics
Lien, and violations of the State Bonding Statute. Much to our chagrin, the relative
who had cosigned on our mortgage loan was named in the action. There was nothing
to do but hire an attorney and respond to the motions that had been filed with the
Court.

We were informed that these claims were standard in attempts by tradesmen
(mechanics) to enforce a lien they file. We traded volleys with the other side, each
time showing that the claims were groundless. But the other side wouldnt go away.
They responded with a willingness to consider our offer to settle.
Ugh! Yes this

was tricky for us.
We secured our
policy before all
those hurricanes,
and unfortunately
we had a claim!
Theft...lots of
power tools and
fortunately just one
appliance.
1. Builders Risk
policy
2. Allstate
3. Not a GC
4. I understand
that Florida Farm
Bureau writes
Builders Risk
policy or try Zurich
North America

During the months of this turmoil we felt unsafe in our own house. There
was anxiety and insecurity prompted by unfamiliar and uncomfortable legal proceedings. The matter never came to trial. We eventually cleared the lien, but the
damage was done; we suffered just because it was filed.
Good luck!
Kristy in Saint
Lucie, FL

These liens have priority even against permanent financing, so the bank will
ask you to pay the mechanic or materialman before you get your long-term mortgage. If you are unwilling to pay off the lien, you will be required to set aside money
to pay for the lien later in the event you lose your case. The bank may escrow two or
more times the amount of the lien, so that legal expenses are also covered.
zurichna.com

You, too, can have an unwanted experience with the courts. More than a
20% of the owner-builders in our survey stated that they had been liened at least
once. Ironically, their average estimate was that less than 10% of all owner-builders
wind up getting liened. Its a case of Although I got liened, Im probably an exception.

What is a lien? Its a claim filed against your property for alleged non-payment
for materials or services. In our state a mechanic (tradesman) can file a Mechanics
Lien without paying a fee, or even showing identification. A second type of lien is a
Materialmens Lien which a supplier can file against your property, even if you are
only late in paying his bill.

You can be subject to a Materialmens Lien if a tradesman procures material
for your project from a supplier and fails to pay the bill subsequently. You are liable,
Chapter 12: Paperwork Before You Begin 177

and the supplier will lien you. This is one big argument in favor of your buying materials separate from labor when you build. In addition, even if you pay your mechanics
and materialmen fully, you can still be liened. In our state, no proof of non-payment
is required at the time of lien filing. It can be done to harass or intimidate you.

The magical key to preventing this misery is a lien waiver. (See sample on
next page.) Every time you make a payment to a supplier or a tradesman, you can
require that they sign a lien waiver which deprives them of any right to legally file a
lien for non-payment. Many lenders incorporate the language of the lien waiver on
the back of their checks. When a sub or supplier endorses a payment from that lender,
they also relinquish any right to file a lien.
Get Good Protection

Most of the time nothing goes wrong, no one is injured, and you are not sued.
But when you are sued, someone is injured, or you become the target of the unscrupulous, the loss can be very great. Although infrequent, these situations can be costly,
and you can lose your house or your future income if you are unprotected.

You may not be aware of insurance requirements, and you may unwittingly
hire an uninsured roofer, and he falls from the roof, and becomes permanently disabled, or worse. You have a builders risk policy and you think youre covered. But it
doesnt cover subcontractor personnel. A subcontractor is supposed to have a Workmens Compensation policy for situations like that. Needless to say, if the sub doesnt
have coverage, you become liable.

Before you engage subcontractors, you need to talk with your attorney, your
lender, your insurance agent, and your state or province offices of lien recovery and
Workmens Compensation. Find out if any of the following requirements from
around the U.S. apply to you:
Payment Protection
1. Lien Waiver Forms

Some states have a blanket lien waiver arrangement where once the necessary
document is signed by all parties, the mechanics and materialmen cant lien you. In
most states, you must get a lien waiver signed by the sub or supplier upon receipt
of payment to be protected against liens. To be extra careful, you can have every
employee of the subcontractor who works on your site sign a lien waiver before you
make payment to the sub.
2. 1099 Filings

Currently in the U.S., if your subcontractors are not incorporated with a
federal tax ID number, you must file a Form 1099 with the IRS for all payments you
make to that subcontractor if he receives more than $600 for the work. You must proThe Owner-Builder Book
Sources Say
Look for any
situation that can
void workmens
compensation
coverage. For
example, in some
states, drywall
subs experiencing
accidents while
using drywall stilts
are not covered.
Contracting Your
Home
(See page 263)
Sources Say
Everything You
Need To Know
About Building
the Custom Home,
written by an
attorney, includes
a sample contract
with subs and a
land purchase
contract.
(See page 263)
Sources Say
Most states have
special statutes
that require builders, even when
using subcontractors, to have
workers compensation insurance
protection for
anyone working
on the building
site. Since you
are providing
insurance to cover
these workers on
your site, make
sure to deduct
the amount of the
insurance from the
price paid to the
subcontractor.
Contracting Your
Home
(See page 263)
Lien Waiver
Customer Name: _______________________________________________________________________
Customer Address: _____________________________________________________________________
Customer City/State/Zip: ________________________________________________________________
Customer Phone Number: _(_____)_________________________Fax: _(_____)_____________________
Job Location: _________________________________________________________________________
Type of Work: ________________________________________________________________________
Contractor/Subcontractor/Materialman: ___________________________________________________
Contractor/Subcontractor/Materialman address: _____________________________________________
Description of work completed to date:
Total Payments received to date and/or Payment received on this date:

$__________________________________
The contractor/subcontractor signing below acknowledges receipt of all payments stated above. These
payments are in compliance with the written contact between the parties above. The contractor/
subcontractor signing below hereby states payment for all work done to this date has been paid in full.
The contractor/subcontractor/materialman signing below releases and relinquishes any and all rights
available to place a mechanics or materialmans lien against the subject property for the above described
work. All parties agree that all work performed to date have been paid for in full and in compliance with
their written contract.
The undersigned contractor/subcontractor releases the general contractor/customer from any liability
for non-payment of material or services extended through this date. The undersigned contractor/
subcontractor has read this entire agreement and understands the agreement.
__________________________________
Contractor/Subcontractor Signature
_________________________________
Date

vide the subcontractor with a copy of the 1099 form as well. If your construction
lender is making the disbursements on your project, the lender must file the 1099
forms.
Insurance Protection
1. Builders Risk Insurance

This coverage, also called Course of Construction insurance, is almost
universally required by lenders. Be aware, however, that a policy might not cover
everything. For example, one O-B told me that he filed a claim with his insurer
over some stolen lumber, and discovered that unless the lumber was under lock
and key, it was not covered if stolen.
2. Liability Insurance

You probably have some liability coverage under your current homeowners or renters policy. For a small sum, you can increase the coverage to $1,000,000
or more for the duration of your project. Ask your agent.
3. Workmens Compensation Policy

This coverage is issued by individual states or private insurers throughout
the U.S. It provides for replacement income for a worker who becomes disabled
due to injury. You need to verify that your subs have this coverage. You can ask for
a certificate of insurance proving that they do. But even that sometimes backfires.
One owner-builder became liable for a claim with a sub who had shown him the
certificate. It was expired, and the O-B didnt look closely enough to notice. You
may be required to carry coverage for your own work on the project and for any
other uncovered workers (like day laborers) who participate.
4. Payment Bond

Your lender may require you to purchase a payment bond from your
insurer that provides payment to suppliers in the event that your subcontractor
should default or disappear during your project, leaving unpaid supplier bills.
These bonds are expensive, and pretty rare for residential construction, but some
lenders have told me that they require them.
5. Disability Insurance

If you become injured on your construction site and are forced to miss
work, you can receive compensation through disability insurance. Many people
have disability insurance as part of their employment benefits, but typically their
coverage is for Long-Term Disability, not short-term. Check with your employer.
The Lien waiver

and the Contractor
Agreement forms
shown in this chapter
are also available as
templates in our
Free Download Gallery
Sources Say
Put payment amount
and payment schedule
in writing and have it
signed by both parties.
From The Complete
Guide to Contracting
Your Home
(See page 263)
Sources Say
Habitat for Humanity:
How to Build a House
lists and illustrates the
house plan sections
you must submit to get
a building permit in
most jurisdictions
(See page 263)
Forums
Hi all, weve just sold

our McMansion in
Denver and are moving
back to California
where I plan to do
an O-B house in the
Atascadero, CA area
(Central Coast). Ive
been planning this for
years and was a little
taken aback at this
notice that I found on
the CA site for contractors:
Owner-Builders.pdf
What are your thoughts

on the liabilities they
mention here? Is this
minimized if all your
subcontractors are
licensed? I cant tell if
theyre simply talking
about hiring unlicensed
subs. I have no problem taking responsibility
for the overall project
(thats why I insist on
doing it!) but the injury
thing is whats getting
me. Thanks.
Mark in CO

You can purchase disability insurance from your insurance agent to replace your salary in the event of a
disabling injury for a surprisingly small amount of money.
6. Term Life Policy

Some lenders want the additional protection, (its not very expensive), of having a policy on your
life and that of your spouse, with the bank as the beneficiary. Should you die during the course of construction, the bank would have to replace you with paid help to finish the project and recover their investment.
At the same time you may want a private life insurance policy that would permit your survivors to complete
the house, and possibly to own it free and clear.
Write Good Contracts

One very tough construction lender I met has made 75 construction loans to owner-builders over
the years. They all had ten percent contingency reserves in their cost breakdowns. This lender made a bet
with each of his borrowers that they would use the entire contingency before they finished. If not, he would
buy them a steak dinner. He has only had to buy one steak dinner, and I interviewed the lucky winner,
Mark Benson, a professional purchasing agent.

Mark had a simple phrase that he wrote into each subcontractor agreement he signed. Here is his
explanation:
Get a signed contract on the dollar amount for labor, and for materials if you go that way. Have a
clause: Will not exceed the quoted price. I dont sign their proposal until I write it on there. We both initial
and sign. I try to have the owner or principal of the subcontracting company sign it.

The second biggest regret (after insufficient planning) of O-Bs I interviewed is that they didnt
get more things in writing. Make sure that you have written agreements with your subs. These protect you
against disasters, and they give you a very potent means of controlling the outcomes on your project.

There are some items that should be included in any construction contract to make project supervision easier. Examples are:

Deadlines for completion with possible penalties (liquidated damages) for delays.
Start dates and possible reward for timely commencement.
Detailed descriptions of tasks and level of performance expected.
Cost not to exceed $_____ with initials of both parties.
Insurance the subcontractor must maintain.
The subcontractors license number.
Responsibility for cleanup on the site.

The very useful book Everything You Need to Know About Building the Custom Home, coauthored
by attorney John Folds, (see page 263 in the Resource Guide at the back of this book), explains six elements
that are recommended for a good subcontractor agreement.

Owner-builder Jim Stark, who is a professional engineer and has built four times, stresses the value
of describing performance in detail:

Be clear about what you expect and hold them accountable for it. You are writing the check, youre
in power. You can get rid of a tradesman after he starts. You have sequential payments in the agreement
performance, then payment. You can write him a check and he is done if you are not satisfied.

Most of the process of contracting with subcontractors revolves around fixed-price bidding. You
can sometimes save money by paying your subs not by the bid, but by the hour, on a cost-plus or time and
materials basis. Owner-builder Alex Acree, himself a commercial construction and maintenance supervisor, used this technique effectively:
I had a painter who charged $15 an hour, and did the exterior of the house in a week. I had carpenters where the lead guy was very trustworthy. He had a super work ethic. I did some cost-plus contracting
with him. I would monitor it on a daily basis, and if I thought it would take a lot more than he thought, I
would limit it. Like crown molding. I let him do two rooms, and I saw it only took one day, so I said, do
the whole house. Keep scope in small manageable pieces when you do a cost-plus. He first quoted me
$5,000. But I only let him do it in small chunks on an hourly basis, and it wound up being $2,500. He was
unique, though. In areas where I have no experience, like plumbing, I always took a fixed-price bid.

In my own case, I naively accepted a time and materials arrangement with our plumber. I told him
I was concerned about the bill getting too high, and he hooked me by looking concerned and saying to me
with sincerity, Ill just bill you for time and materials. He wound up charging me lots of money, and at
least in one case reworking one of his own mistakes at my expense.

When you act as owner-builder, you are a contractor, responsible for contracting with others to
complete your project. Because of the liabilities and the need to control your project, this part of your work
requires your serious attention.
City Permits

Provide enough time before your intended groundbreaking to procure all the necessary permits
and authorizations from your city. I thought a week would be plenty, but it took about six weeks to get
everything through the system in our case.

You will be paying thousands of dollars to meet all of the citys requirements. There are fees for
connection to sewer, water, and power. There is a plan review fee in most jurisdictions, state or county fees,
impact fees, and of course, the cost of a building permit. In our municipality there is a refundable deposit
to pay for any sidewalk that you crack or break during construction. Our tab was around $5,000 for permits and fees. In some communities impact fees alone easily exceed $20,000.

If your construction plans include anything that requires a zoning variance from your citys Planning Commission, you may have to wait months to get on a meeting agenda, plead your case, and follow up
before you can begin construction. Plan ahead, and maintain communication with the inspector who will
be handling your project.
Contracting Agreement
__________________, referred to as OWNER, and _______________, referred to as CONTRACTOR, agree as follows:
CONTRACTOR shall perform the following services for OWNER: ___________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Schedule Start Date: __________________ Completion Date: __________________
Not to exceed the following price: $ ___________. Owner Initials:_____________ Contractor Initials:_____________
Contractor shall be responsible for the following in addition to the workmanlike performance of the work stated above:
The materials and construction supplied by the CONTRACTOR shall meet the specifications as described on the approved
blueprints and shall meet code.
The CONTRACTOR shall provide the following types of insurance matching or exceeding the amounts specified:
1. Workers Compensation Insurance in the minimum amount of $__________________.
2. General Liability Insurance in the minimum amount of $__________________.
3. ____________________________________________________________.
The stipulated contract price shall be paid as follows: __________________________________________________
_____________________________________________________________________________________
____________________________________________________________________________
The CONTRACTOR shall daily remove all trash and debris from the premises.
Any disputes arising out of or related to this agreement shall be arbitrated under the rules of the American Arbitration Association
before a single arbiter.
This agreement may be terminated by OWNER upon substantial abandonment of the project, defines as at least __________
business days without substantial activity, except for delays caused by:
a.
b.
c.
d.
e.
f.
bona fine weather disturbances;

strikes;
shortages of material;
material delays not caused by the general contractor;
governmental delays except those caused by the fault of the contractor.
persistent failure of workmanship to meet high quality standards for which adequate assurance of correction is
not provided.
In any disputes related to this agreement, the adjudication body may assess reasonable counsel fees to the prevailing party.
This is the entire agreement between the parties and this agreement may only be altered in writing.
Dated: ____________
Owner: ___________________________ Contractor: ___________________________
Mark, it sounds like the contractors are getting a bit scared. As you can see, it is written by a pro contractor source, i.e.:
the CA State Contractor Board. Seems to me they may be losing funds by not licensing contractors. First, unless you are
employing actual employees, then you do not need to provide Workers Comp. Dont misunderstand, the subcontractors
on your site need to have it on them and their employees, but that is where the liability for that stops. You do need to
check and make sure they are current on their workmens comp and insurance, license and bonding, but all of this can be
done easily. Up here in WA state you can do it online, on any contractor in a matter of seconds. You also should carry a
course of construction insurance policy on your project, as well as homeowners coverage.
Dont let anyone tell you that you cant do this on your own. If you can set up a schedule, a budget and line up a sub for
each trade, you can do this. The money you will save just by doing those 3 things, and following up on each of those
things daily will be incredible. I will give you an example. We were going to build a 2,200 sq ft home and had a contractor bid it all out last Aug. He bid it out doing it all for $270K. We decided not to go that route and also changed our
plans and went with a much higher-end home of 2,900 sq ft. I have finished all of my bids and am starting in 3 weeks.
All of my bids total $240K, and that is with a safe amount of padding involved. Short story, I am saving $70-90K by just
getting rid of the general, and lining everything up myself. I dont have to lift a hammer. Its a no-brainer.
Contractors will tell you that you will run into all sorts of problems and issues. I have found just the opposite to be true.
Everyone I have dealt with has been great. From the county, to all my subs. Sure there will be problems, but if you do
your homework beforehand, youll know how to deal with them when they arise. Once again, YOU CAN DO IT! One
more thing. Think of it like this...You have a leak and hire a plumber to fix it. Are you worried about liability? Same goes
for installing a new electrical outlet and so on.............
Bruce in Union, WA
Sources Say
The Complete Idiots Guide to Building Your Own Home has a section on Getting Adequate Insurance Coverage, and
lists eight components usually required by building departments to issue a permit, and nine special circumstances requiring
unusual documentation.
(See page 263)
Forums
We interviewed a framer for our new house last week. He seemed to be very honest and forthcoming in answering all of
the questions we asked. He mentioned that at times his wife comes out to the job sites to bring him and his brother lunch
and oftentimes brings the kids. He also stated that the family may be around from time to time to assist in cleanup.
At first this didnt really concern me, but as I got to thinking about it, am I liable if one of the family member gets injured on
my property? Is there a general waiver of liabilily I can have him and his family sign to protect myself or something? Any
thoughts please.
Scott in Kouts, IN
Check with your insurance carrier. My Builders Risk policy covered everyone on the site that was not employed or
involved with the construction. Visitors were covered, the same way my homeowners insurance covers visitors to my house
if something were to happen.
Forums
Folks, Ive run into a couple of uninsured subs, one of which I would like to use. I know that this is the kiss of death, is
there any way to protect yourself if you use an uninsured sub? Can you have them sign a waiver of liability, etc.....???
Randy in Dunlap, TN
Randy, I know some states do not require a contractor/sub to carry Workmens Comp if they have no employees. I also
seem to remember a thread that Florida or Texas allowed them to do without it and there was some generic waiver of
liability.
Brian in AK
Forums
My husband and I are planning to build in Pasco County. We are concerned because most subs dont seem to have
Workmens Comp because it is too costly. They have signed the exemption form though. I spoke with an attorney who
said that the exemption forms are accepted here in the state of Florida, but that it wont really keep anyone from suing me
if they get injured. Has anyone found an insurance company who will provide temporary Workmens Comp to an O-B
who is not a GC? I have called many companies without any luck. Are most O-Bs just going ahead and building without
any Workmens Comp. coverage?
Susan in Tampa, FL

Susan, the form you are referring to is called a DWC 250, NOTICE OF ELECTION TO BE EXEMPT fldfs.com. Here are
the only 2 people that can fill out the exemption form and qualify for an exemption: CONSTRUCTION INDUSTRY CORPORATE OFFICER, or a NON-CONSTRUCTION INDUSTRY CORPORATE OFFICER. So therefore, unless these contractors that you are making reference to are one of these, they are in violation of the law and are subject to a big fine.
So dont hire a contractor who cant provide a current State contractors license number. One of the requirements for
obtaining a contractors license in the State of Florida is to get Workmens Compensation insurance. Once the contractor
provides you with his or her contractor license number, call the DBPR (Dept of Business and Professional Regulation) and
verify that hes actually licensed to do what he claims that hes licensed to do.
I would go a step further and require that they have liability insurance as well. That way you as well as your house will be
protected. I hire quite a few contractors for Orange County Government facilities and have never had a problem with a
contractor failing to produce both workmans comp and liability insurance.
David in Tallahassee, FL
Journal
Heres the update for the past few weeks:

Wetlands: I sent in the remainder of our mitigation payment, so when those checks clear, were officially done! Woohoo!
Permitting: I stopped in at the permitting info desk on Friday, only to be met by a harried, terse, but not unkind man (albeit
with no sense of humor). I asked where we were and when wed be done. I also had a few documents to add to our
permitting packet. I gave him our property address and he came back with youre number 93 on the list. I asked him
how many they typically get through in a day, and he simply said it doesnt work like that. The guy next to me in line,
obviously an old hand at this, laughed. He said they had 300 customs, 600 tracts, etc. So I asked so 93 isnt too bad
then? He said check back in a week. I asked what number I should call, as I was never able to get a live person on the
phone, and again, the guy next to me laughed. He just said to stop by again in a week. Okay then.
Septic/Well: Dropped off the paperwork to these fine folks and also received some basic education about wells. Also, I
ran into a family who owns two lots on Starry and is o-bing there. They are from Port St. Lucie. I referred them to this site
and gave them my phone #. We need to call back in a few weeks regarding the septic permit. Also, we need to hire the
well co. ASAP because they need to submit for the well permit. We are going with a HOOT septic system, as advised
by our soil guy. Its supposed to be better, but more $$, and should raise fewer flags in permitting. I hope its worth it and
were not being taken for a ride!
Cara in Orlando, FL
Journal
Well my Friday morning at regional was pretty productive. I managed to get Zoning/Planning approval (even though its
not reflected below) and Mechanical in the bag. Mechanical was actually an interesting experience. The first Heat Calculation I submitted had me maxing out the boiler for just my heating needs. They obviously had issue with this, because
they felt I needed 40K BTU capacity for my domestic needs. I knew I had enough capacity because the heat calc didnt
adequately reflect the needs of my home. Basically, after having some conversations with regional we ended up modifying the heat calc to fit an ICF and SIP home. Kinda cool that they worked with me, but it took about five hours of conversation to do it. Permit progress summary below. Ive uploaded the heat calc, and a example energy star brief as well.
Department
Status
Date Checked
Reviewer
Comments
Mechanical
Approved
14-apr-2006 10:09:00
DARYL
Out to Review
Approved
11-apr-2006 11:41:46
JAN
Arnold W.
Mechanical
Disapproved
11-apr-2006 08:15:56
DARYL
1. Please provide information on water

heater to verify efficiency and BTU input and suit

ability for dual use. What about the domestic

use--it does not seem you have any sizing left for

it. 2. Please describe symbols in loft and family

room. 3. Need fan cfm and static and OSA duct

sizing for fan in theatre room. 4. Safe room is non-

habitable therefore no ventilation needed.
Construction
Disapproved
10-apr-2006 07:48:42
JOHNP
Walk through OK.
Out to Review
Approved
06-apr-2006 07:55:31
JOHNP
Zoning/Planning Disapproved
03-apr-2006 07:18:00
MINDY
03/30/06 BG
Floodplain
Approved
29-mar-2006 09:01:28
JEANNINE
Enumeration
Approved
29-mar-2006 07:39:14
MARLENE
Chapter 13: Six Months to Victory

Time line: Groundbreaking
Integrate
ou remember the duties of a manager POIMM Plan, Organize, Integrate,

Measure, and Motivate. You are two-thirds through this book and you have
only dealt with planning and organizing so far. This reflects reality, because
a general manager should spend 65% 75% of his or her time on the future. As the
contractor for your home, you are about to get down to the present and handle your
responsibility to integrate.

Integration is the coming together of the parts. It will be your job to get the
people on your team to work together. You have selected people with a common work
ethic and standard of construction quality. Nonetheless, there will need to be careful
coordination to make your project run smoothly.

You will need to coordinate the trades by running the schedule smoothly
and managing the site for efficiency. In many cases you will need to bring people and
their required materials together in a timely manner. Take responsibility. If a portion
of the work is not done in time to enable the work of somebody else who depends on
O-B Connections
One lesson I have
learned is that
we should have
hired one sub to
do both plumbing
and HVAC. We
didnt save that
much by hiring the
moonlighting guys.
And, now were to
the point where its
getting confusing
about whos supposed to do what.
For example, we
have to have a
power vent on our
hot water heater.
The plumbers
install the hot
water heater,
but they say the
HVAC guys should
be doing the vent
and they cant
agree on whos
responsible. If we
had just hired one
shop in the first
place, it would
have been trans-
186 Chapter 13: Six Months to Victory

parent to us about
who was doing
what it would
have just been
done.
Susan
Sources Say
The Complete
Idiots Guide to
Building Your
Own Home
details a DIY surveying procedures
for marking out
your site.
(See page 263)
Sources Say
[Self-] work
can distract you
from your more
important job of
overseeing the
work of others.
Your most valuable skill is that
of boss scheduler, inspector,
coordinator, and
referee.
Contracting Your
Home
(See page 263)
Forums
Hello everyone,
I just wanted to
let you know a
method that has
yet to fail for me
in managing a
project. I show
up in the morning
and hold a small
meeting to find
out subs concerns
and shortcomings,
material shortages
and the like. I
then walk the site
briefly then I leave
them to do their
work. I show back
up after lunch to
receive materials, if any, and
speak to each
foreman to check
for problems. If
there are none, I
leave again FOR
THE DAY. I do a
it, you are responsible. If materials are not there in time for the next sub or the next
step, you are the one responsible. You settle disputes and facilitate the work of others.
Your function is to make things easier for everybody else on the team.

The average owner-builder in our survey had about a dozen different subcontractors to coordinate. It is possible to have up to 50 subs and up to 50 suppliers
serving your project.
Step One

How do you begin?

After we had laid out all our plans for the project and came close to groundbreaking, I realized, believe it or not, that I had nothing to wear. We headed for a
thrift shop and bought a construction wardrobe for about $15. I found later that I fit
right in.

In order for groundbreaking to occur, your lot needs to be staked and marked
with the pattern of cuts that your excavator will dig. Staking lots is one of the few
things that general contractors may actually do. My construction advisor supplied us
the service, using an engineers transit, a couple of long steel measuring tapes, metal
stakes, string, a sledge hammer, and powdered lime to mark the surface.

A very good description of the task is found in The Building Buddy by John
English. You can attempt to do it yourself with instructions, but I suggest having a
surveyor perform the service. It is not a major task less than half a day for a flat
lot. Check prices by phone. If you are having an official survey of your lot performed,
you can purchase the staking service as part of a package from a surveyor.

Once your staking is done, and there are no permit hold-ups with your project, you can break ground. When we got to this point, we held a groundbreaking ceremony of our own, took pictures, and watched while the excavator started. Within an
hour, there were four inches of snow on the ground. Our intrepid excavator jumped
down from the cab of his backhoe and dragged a booted foot on the ground in several
places pulling the mud and lime into a smear that he could see. He finished the job
perfectly even though the lines were covered with snow.
How to Get Subs to Show Up

The contract documents you have signed with your subcontractors provide
you protection from unexpected loss, but they dont guarantee that youll get what
you want. As in any management situation or any human situation, results depend
on reciprocity, relationships, and follow up. Owner-builder Gary Ziser explains:
You run into the fact that things are often done in a kind of simple form. Its
difficult to enforce a bid. You have to have a good relationship with contractors
to have a meeting of the minds on things. Specifications on homes are not that
Chapter 13: Six Months to Victory 187

detailed. Thats why you need a meeting of the minds, and much is based on trust.
This is one of the biggest problems faced by owner-builders because it is a onetime situation and expectations are not well-understood either way. I dont think
you can cover it all on paper.

You will build trust and relationships with subs through a series of steps:
1. Through interviews, bidding, and checking references, choose trustworthy
tradesmen.
2. Agree on contract terms including start and finish dates.
3. Send the subs a confirming letter indicating that you will do your part to
make this a smooth project.

Indicate that you will keep the job clean, pay on time, and be available on
site or on cell phone for fast answers and decisions. You will keep people out of each
others way as much as possible. Remind the sub that 20% of the marketplace is
owner-builders like yourself, and jobs like yours will help him build market share. If
he fulfills his part of the bargain, you will recommend him actively to others.

Underpromise and overdeliver on these items. This establishes reciprocity.
4. Call once a month before the target month, once a week until the target
week, and two to three times until the target day. Call the night before the
scheduled day.
5. If they miss an agreed time, call within hours. If they miss three promised
show-up times, make arrangements to replace them with a back-up sub.
6. Dont pay until the work is done and inspected fully. Pay promptly.
Rules of Work
You know you have good subcontractors when:

They start on time.

They finish on time.
They do what they say they are going to do.
If a problem arises, they work with others to determine whose fault it is.
That person fixes it on his dime.
They are honest in their quote, care about their work, and their final bill is
what they quoted.
If they cant do something, they admit it.
They have the right tools for the job.
The work is straight and sturdy, plumb, square, and level.
Neat finish, work matches specifications, plans, and contracts; done using
best known methods.
They use good materials, well-joined, clean, and thorough with attention
to detail and quality. The work lasts, and requires zero subsequent maintenance.
There are no obvious flaws.
You could picture the work in a million-dollar home.
You are satisfied.
walk-through after
everyone has left
for the day basically a mini punch
list for tomorrows
meeting. None
of the subs are
required to work
on Saturday IF
THEY ARE ON
SCHEDULE. All
the subs clean
up daily, and I
always thank them
each morning and
afternoon. I find
that leaving these
people to do the
work that they
have been hired
for and PRAISING
them for that work
has been very
effective. Again,
this method has
been effective so
far. The approval
process is stringent
but the results are
worth it.
Jim in Austin, TX
Sounds like a
good plan, but on
my first O-B home
the subs werent
all able to be
there are the same
time every morning. My subs also
had lots of other
jobs to do.
Kevin in Henderson, NV
My framer started
last week and I
guess I have been
being the mother
hen type. I work
1:30 pm to 10:00
pm at my regular
job, and I figured
this would be
great for contracting my home. It
has been great up
until this morning.
I purchased my
land almost a
year ago, and
have cleared
it, designed the
septic, drilled a

370 well, brought
all utilities to the
site, bid everything
out, excavated,
poured footings
and foundation
etc...basically I
have become
quite intimate with
my 5 acres.
Running the Job
My framer asked
me this morning
whether or not
I was going to
spend 5 hours a
day, every day
at the site. To be
honest I was taken
back a bit. He
informed me that
he worked better
and faster when
left alone. He
asked if I could
only spend an
hour or two a day
at the site while
he is framing.
I agreed, but
have been angry
inside all day. In
addition to that he
informed me he
would be done
with phase one
of our contract
tomorrow, and
would be expecting payment for
phase one to wit.
He had told me
to expect him
to be done with
phase one at the
end of the week
originally. Not a
big deal except
trying to pull $9K
in cash out of the
bank (Washington
Mutual), on one
days notice. I got
it done, but thats
beside the point.

Sometimes the input you make into the construction process is as simple as
reminding the subs how many stories to build. If you are not a construction person,
you may feel unqualified to run the job, but youre not unqualified. You have done
detailed planning of budget, calendar, and specifications. These are the keys to a
good project.
The point to this

post is that after
talking to my
support group I
have come to the
conclusion that the
last thing I need
at this stage is
an upset framer.

One family from Tennessee (mentioned in Chapter 1) went on vacation
while their house was in the framing stage. When they got back the roof was on, and
they sat in the car for a moment admiring the structure. Husband and wife then felt
a sudden sinking feeling as they realized that the framers had forgotten the second
floor. Their two-story was a one-story.

As the owner, you are really the most qualified to say if a thing is done right
during construction. At the same time, you should avoid the temptation to be a
know-it-all. By respecting the opinions of qualified subs you can learn much and get
a better house. In management, there is a term for attempting to supervise the small
details:
. You will get better work out of subs if you dont micromanage their work.

Your job as contractor is to facilitate and coordinate the work of others.
Make sure their materials are on hand and the preliminary steps to their task have
been completed. The best way to do this is to be on site. I found the work endlessly
fascinating and stayed on site full-time during our project. Most of the owner-builders I interviewed recommended half-time, that is about four hours a day. Particularly
the first and last work hours of the day. This schedule enables you to check on the
work for the day in the morning and inspect it in the afternoon. (In our survey, the
average owner-builder couple spent a combined 2.5 hours a day in management time
and a like amount in self-work time during the construction phase.)

Subcontractors have often told me that it is important to have one person in
charge of the project who can be decisive. If you are married, work out the decisionmaking roles of the spouses for the various phases of the project, and work within
them. You will be called on to answer questions and explain plan details constantly.
If you dont know the answer on something, you can talk it over together and network with people you trust in the evening. You can provide an answer the next day
or very soon.

Part of your time on site can be to inform affected trades of the upcoming
schedule and arrange delivery of needed materials by phone. With current bargains
available on wireless phones, you can easily carry one with you wherever you go. Take
time to program in all the sub and supplier numbers you think you will need. Use
your phone to check prices on materials for which you havent yet found a bargain
price. Check all deliveries that come to the site for completeness, quality, and pricing.
Make sure the site is clean, and clear any obstructions out of the way of your subs.
Should the work of subs not meet your standards, its up to you to point out deficiencies and insist on remedies. Be prepared to let a sub go if it becomes necessary. It is
your project.
Cost Accounting

The fourth function of managers, after Plan, Organize, and Integrate is
Measure. One of the key measures you will track on your project, the one that
makes a difference to your wealth, is costs. You need to track every actual cost that
goes into your house, and project expected costs.

Actual costs are the as delivered and as performed charges you pay for
materials and labor on the project. Expected costs are the prices you will pay for
items not yet delivered or performed. Together, the two costs give you an ever-changing total of the cost of your house.

You can use a computer to great advantage in measuring costs. Our computer spreadsheet reflected the total of all items by categories and showed the effect
of any actual or projected change on the total construction budget. In some ways, the
spreadsheet was cumbersome however, because of the sheer number of items we paid
for. You cant really view all of your costs on one computer screen.

Perhaps a better system is the one we use to track our family finances. We
have a financial management program called Quicken on which we enter every
normal check, credit card, or cash expense, and categorize them. For instance, we
might make a supermarket purchase and when entering the charge into Quickens
register, we specify that it falls under the grocery category. We can have Quicken
report all grocery expenses for the past year with a simple command.

If you use a Quicken-type personal financial program to track construction
costs, you can create categories that make it easy to match up totals to your original
budget. For example, you could have categories for new house electric, new
house lumber, new house tools, and so forth. You can produce detailed
reports by categories or time periods at any time.

It can be very valuable to track your expenses closely. You dont want to leave
it to your lender, who produces periodic reports, for several reasons. First, the lender
doesnt have knowledge of all costs on your project. By actual count, we purchased
more than 500 items separately from our bank loan, even though the lender paid
most of the big bills directly in our case. The separate purchases can make a big difference in your totals.

Second, your tracking will provide you control and overall project savings.
You may find mistakes in prices and quantities on some of your invoices, and usually not in your favor. You can change and adapt as individual costs go beyond their
planned limit, in order to protect your overall total. When you find cost savings
on some items, you can apply them immediately to reduce projected overruns in
other areas, or spring for upgrades. None of your choices will be made in a financial
vacuum.

Third, cost control brings you onto a par with professional builders. They
have developed some sophistication in tracking costs for the purpose of protecting
Ive made the

personal commitment to manage
my project, but
not overmanage
my project. Its
my own control
issues, I suppose.
Im tired, stressed,
worried and a
whole bunch of
other things Im
too tired to name,
but Ive done my
research and
homework, so I
suppose I need
to step back and
let the process
happen. Besides,
I could use the
extra sleep.
I thank Mark for
his book and
this website. It is
a great source
of support and
information.
I suppose its time
to get something
to eat, and try to
gain back the 8
lbs. of weight I lost
last week:)
Thanks for letting
me share.
Bruce in Union,
WA
In reading your
post, Bruce, I can
relate to the issue
in both aspects.
Having been in
the business for
25 years as a
electrical contractor, Ive seen it all
almost. When my
wife and I were
wiring custom
houses, we were
known for the
quality of the
job because we
always treated the
house as though
we were the
ones who were
going to live in it.
I always enjoy the
personal contact
we had with the

owners. On the
other hand, there
are some of us as
owners who the
contractor hates
to see our smiling
faces on the project. Ill tell you a
story about a lady
years ago that Ill
never forget. I was
installing a 400amp service with
a couple of Cutler
Hammer panels.
Cutler Hammer at
the time was one
of the superior
products in electrical distribution.
She proceeds to
ask me about the
Bryant panels,
which were
basically builders grade panels
that we refused to
use. She tells me
that she had read
about them in a
home book and
that thats what
all the professionals are using! You
can only imagine
my reaction. I still
laugh about it
today.
I was always upfront on payment
schedules, unlike
your framer. My
payment was half
due after rough-in
inspection and
the remainder
after final. Easy
system. More than
once after we got
started we had
owners insisting
on taking a small
draw so that we
wouldnt be strung
out, but were talking large 5,000+
sf houses that had
over 100 fixtures
in them.
Now that Im on
the other side,
starting my own
O-B on 7 acres,
their profits. You, too, have profits (equity) to protect, and the effort you make tracking costs will likely exceed anything a general contractor can do on any one project.
Daily Record

Once your job begins, you will find it helpful to have a daily record of what
happens on the job. Various tradesmen, salesmen, inspectors, and service representatives will visit the job site. Deliveries will occur. Promises, decisions, arrangements
will be made. You may lose a phone number or forget an important fact. Remember
that a short pencil is better than a long memory.

Keep general time records of tradesman work. These proved useful to me in
settling disputes. Keep specific time records of your own activity on the job.

Time records help you track effort and redirect it. From a management
point of view, they will tell you if you are really saving money. By knowing your time
investment you can make your next iteration of a task, or process, or indeed, your
next house more efficient. My time records tell me that I was on site much more than
I needed to be to do my job. The 800 hours we spent doing the electric work pointed
up my painful lack of planning. I now understand that we could have done a month
of planning on that task and saved nearly 500 hours in execution. With that change,
we could have done the electric work completely in 320 hours.

Owner-builders in my first interviews reported over 1,000 hours of time
spent managing the job and less than 300 hours of advance planning. This is backwards. Later surveys show that with an average of under 700 hours of planning, an OB can spend less than 500 hours in management time during the construction phase
and bring in a successful project. More money is saved, and less effort is expended.

James C. Maxwell said that, To measure is to know. I would add to that to
know is to control. Your time records help teach you how to manage your efforts and
accomplish more in much less time.
Your Video Camera and Other Unlikely Tools

What will be your most valuable tools in managing the construction of your
house? For me, any project is an excuse to buy a tool, and building a house was a
chance to buy more than a hundred tools. I started with new toolboxes and a tool
belt, and enjoyed tremendously buying tools on sale and at contractor prices. In truth,
however, traditional tools dont help you perform your role as general contractor for
the project.

What I used the most was a broom. I bought a good stand up dustpan with
a long handle that allows you to pick up without stooping. My five-horsepower shop
vac was also very useful for keeping the site clean.

I thought I would need a cellular phone, but budget constraints forced me
to cancel that. With current low wireless prices, though, you can put a cell phone
to good use. I thought I would need a pickup truck to haul things. That, too fell to
budget constraints, and I never missed it. Most all of the suppliers provided delivery,
and I accomplished a lot with the trunk of the family car. Once in a while I slipped
down the highway with pipe or lumber traversing the passenger cabin and sticking
out the side window, hoping not to get pulled over. The house got built without my
owning a pickup truck.

The major management tools that you will depend on are your written budget
and calendar, your plans and detailed descriptions. Your daily record will become a
lifesaver as well. To this, I would add a long and a short carpenters level and a long
and a short measuring tape for checking the straightness and squareness of the work
you inspect daily. A handy homemade tool is a corner of a four by eight-foot sheet of
plywood. Cut it as a triangle with the two factory edges measuring about two feet.
Cut a hand hole in the middle of the triangle and shove it into corners as a shorthand
way of determining straightness and squareness.

A computer can be a very powerful tool for managing your project. You can
shop, plan, estimate, track and communicate with the aid of a computer. A video
camera is another electronic friend to an owner-builder. Use it to document work
and to record what is inside the walls of the house and underground. Narrate your
pictures with explanations of the decisions you made when building.

The video camera came in very handy for us. During construction we placed
a conduit pipe inside the wall of the laundry room to receive wires for the eventual
electronic lawn sprinkler controller that would go in that room. After the house was
sheetrocked, we couldnt locate the pipe until we reviewed the construction video. By
using the known thickness of wall studs as a scale of measure, we figured the location of the top of the pipe within one inch. We have also used the video for locating
underground pipe when making changes to the sprinkler system. We didnt own a
video camera we borrowed one. But we did own a computer.
Emotional Roller Coaster

When we built our house we were surprised at the intensity of feeling the
project brought to us as first-time owner-builders. There was real anxiety and disappointment. When my schedule was blown away by a boundary dispute with the neighbor, I was tremendously disappointed and angry. For the first time I can remember, I
cried myself to sleep that night.

There were real fears about performing adequately and building a respectable house. Many times I veered into areas of uncertainty where I experienced an
unaccustomed lack of control and felt lost and inadequate. I felt alone and lonely
many times and wished for support from anywhere. Very little was forthcoming.

When the house was built, Elaine and I both felt tremendous pride and satisfaction over the accomplishment. It was a kind of glow that stays with us continuThe Owner-Builder Book
I know where
youre coming
from. This project
is a part of me
and itll be hard
for someone to tell
me itll be better
if I stay away.
However, the only
items that Im subbing out are the
foundation and
the drywall.
Good luck on
the rest of your
project!
Ron in Bealeton,
VA
Ron, thanks for
the reply. I have
an update on my
situation. I fired
my framer on Saturday. It took him
and his helper 6
days to set my first
floor I-Joists, posts
and sheathe the
floor. On Weds.
of last week he
had informed me
that he had been
working 10-12
hr. days on my
project. Curious,
he knew I went
to work at 1:30
pm. My neighbor
across the road
informed me he
would leave about
2 pm every day.
He finally finished
sheathing the
floor on Thursday
and informed me
that he would be
setting walls on
Friday. He asked
that I pick up an
additional couple
of items at the lumberyard on Friday
morning, which I
did. I called him
from the lumberyard at 7:30 am
on Friday and he
answered, informing me that he
was at breakfast
and that they

would be out to the job in a little bit. No
big deal. My lumber guy had another
question, so I phoned him back within 2
min. after hanging up. He didnt answer.
I proceeded out to my site a 1/2 hr
away, and guess what, no framer. I
had other things to do, so I went about
them until I had to leave for work at
12:30 pm. When I left, still no framer.
On my way to work I tried calling him
but all I got was voicemail. About a
half-hour after I got to work I had my
lumberyard call me questioning an order
my framer had just called in. He stated
that he had some below grade lumber,
and that he would need a whole UNIT
(~200) of 2x6 20-footers. I only have
about 40 2x6x20s in my entire 2,900
sq. ft. house. He also said we needed
the garage lumber. It was delivered
on Weds. of that week, along with my
entire 1st floor package.
Needless to say, I left work and went
back out to my site. I tried calling him,
but once again I only got VM. When I
arrived, I could tell he had been there,
but had left since. I left him another VM
telling him I needed to speak to him
immediately.
My wife in the meantime on Friday
afternoon decided to make sure he was
current on his insurance and bond. Mind
you, my wife is a commercial insurance agent and has written contractor
insurance for 21 years. Lo and behold,
he had let his insurance lapse the week
before he started on my project. We
checked his insurance mid-Feb when
we locked in our contract, and he was
current then, but not now.
Now you may ask, if my wife has
done contractor insurance for 21 years,
why arent we working with one of
her longtime customers? Its because
we are building 150 miles from where
she works currently, but when we are
finished, she will work from home. But
thats all beside the point...
We finally got ahold of our fabulous
framer on Sat afternoon, and informed
him we were firing him.
I have two other framers I am meeting with this week, so hopefully I will
have something locked in soon. In the
meantime I have $10K of lumber sitting
at my site tarped. Im just glad to have
the bum gone.
Bruce in Union, WA
ously. I could say that the project, however frustrating and painful,
yielded the most enduring satisfaction I have ever known.

All of this became reason to write this book. We wanted
to help others to steer around the pain and loneliness that we felt
with so little guidance planning and building our house. As we
met and talked with numerous others who shared the experience
we learned that we were not alone in any of these emotions.

Owner-builder Debbie Crosby stated her feelings articulately:
This was our first owner-built house. It was scary to sign
paperwork to owe this much money. I was sick to my stomach.
There is a fear to be able to build what you have in your mind.
Its exciting to see your dream materialize. You anguish over
almost everything, that you made a wrong choice. I redid my
window in the kitchen three times. It wasnt coming out like
I wanted. I tried using two windows, and stared at the gap
between them. I tried a garden window not right. Then I just
got a big picture window. I had to eat the cost of one of them.
I really stressed over that window.
Other common owner-builder emotions:

- Worry over staying on budget, running out of money
- Fear of not meeting the deadline
- Friction between spouses
- Self-doubt
- Aggravation
- Miss the family because of so much time away
- Disappointment over those who intend to help but

dont
- Uneasiness over decisions made without adequate

information
- Discomfort over many incomplete tasks and nothing

finished

Although good preparation makes every bit of this easier,
you will still feel a surprising intensity of emotion when you build
for the first time. You are not alone.

Sources Say
The Complete Guide To Contracting Your Home gives list of things to have at job site, like first aid kit, extension cords,
hose, trash can.
Have materials delivered early so they can be exchanged or corrected before they are needed
Pay schedule: 45% after rough-in, 45% after finish work complete, 10% 2 weeks after finish work complete.
It may take ten years to learn how to lay bricks properly, but only ten minutes to check the work for quality craftsmanship.
Make sure when paying cash for work that you keep documentation of the work done for the IRS. Write a check in the
subs name and have him countersign it. Then cash the check. This way you have an audit trail to prove that you paid the
sub for the work done.
The Complete Idiots Guide to Building Your Own Home has a chapter running the job including dealing with subs,
inspectors, suppliers, and lenders.
. . . youve selected your subs. Youre satisfied . . . that they are honest, trustworthy, and experts in their fields. Now
let them work. Dont try to supervise every blow of a hammer, the placement of every stud. They know more about their
trades than you do . . . they take pride in their work. Let them do it.
From Be Your Own House Contractor
(See page 263)
Forums
Hi, I am an owner-builder who started building in Feb and finished in Dec. Since I did it myself, are there any special
deductions I can take for the year? Or is it still the basic deductions youd get buying any house (points, interest, etc.)?
Marty in Indian Trail, NC
If this is a primary residence you can only deduct the interest on the first $1 million in mortgage (ha! sorry Hillary Clinton!)
and you may deduct the property taxes you actually paid for the year. If you paid points out of pocket during the escrow
period, these MAY possibly be deductible (certain criteria need to be met.) If this is a rental then there are other possible
deductions.
However, as an OB of primary residence, you should keep track of every penny spent...as this is what establishes the
basis for your house. The basis is used in calculating your capital gain. But even if you are building for your own use...
always save all the receipts since you NEVER know what may happen in the future. This could turn into a rental. Who
knows!
Paulita in Aptos, CA
Paulita, if I were a real builder and building houses for re-sale, I assume that I could deduct the costs of the house in the
year that I spent the money (assuming Im using cash accounting) against ordinary income. I would ignore basis rules and
take the sale of the house as income in the year I sold the house. If Im right, real builders can use the deduction earlier.
Any ideas?
Peter in Gilford, NH
You would have to do the research to confirm, but I believe starting with 2004, there was a new law for Itemized deductions which will allow you to deduct Sales Tax paid instead of State & Local Income tax paid... if it is higher. If you paid a
lot of Sales Taxes on Building materials, as well as other purchases, this may be an option and might save some money. I
currently plan to build, and will keep receipts for everything this year and do a comparison at year-end. Of course, it may
end up my State & Local taxes are more than sales tax... but, it is an interesting option.
Kevin in West Chester, OH
In IRS Publication 600 (new for tax year 04) it states:
New for 2004, you can elect to deduct state and local general sales taxes instead of state and local income taxes as
an itemized deduction on Schedule A (Form 1040). You cannot deduct both. Generally, to figure your state and local
general sales tax deduction, you can use either your actual expenses or the Optional State Sales Tax Tables contained
in this publication. Actual expenses. Generally, you can deduct the actual state and local general sales taxes (including
compensating use taxes) you paid only if the tax rate was the same as the general sales tax rate. Do not include sales
taxes paid on items used in your trade or business. These taxes (in trade or business) are deducted from Schedule C.
Just my luck...NH doesnt have sales tax. If you build for profit as a business, you would deduct sales tax under your
Schedule C and still take the state tax under Schedule A. You would get both.

The sales tax paid as an independent contractor cannot be deducted under Sched. A (Itemized deductions) and in any
case cannot be deducted twice. No double dipping!
Any business owner who sells retail products to the public double dips. The retailer gets to deduct the sales taxes they
pay for products they sell to the public as part of their business. In addition, any state/county/local income taxes/fees
paid would be also be deductible.
So a real builder must be able to do the same. They must be able to deduct the sales tax they pay for materials they
purchase to build the house (on their schedule C or separate corporate return) and also deduct any state/county/local
income taxes/fees on their schedule A.
The election to choose to deduct sales taxes vs. state income taxes is allowing you to choose to deduct sales tax that was
not otherwise previously deductible (such as an individual who doesnt own a business or a business owner who pays
sales tax for items unrelated to the business).
The sales tax you paid as part of your business are always deductible if the item you purchased was deductible.
My two cents worth...
Paulita, I think you have explained this well in your post. What the IRS website states is --> Remember that the deduction
for state and local sales tax is available only if you itemize deductions on Form 1040, Schedule A. Check the box on line
5 of Schedule A to designate whether you choose to deduct state and local sales tax OR state and local income tax on
your federal taxes. You cannot deduct both.
We tried to see if we could do this for our Federal taxes last year, but had not spent enough that year on sales tax. Well
see what will happen for this year we dont have a state tax in Nevada only sales tax. Thank you Paulita for contributing to this forum.
Another post referred to retailers paying tax. When a retailer e.g. Home Depot buys supplies from the wholesalers they
do not pay state sales tax, that sales tax is paid by the consumer and collected by HD. When a contractor buys supplies
they can give their sales tax ID number and also not pay tax, but that tax is passed on to you and I the users of the actual
product when it is used for our job.
Lori in Sparks, NV
Forums
It is a huge roller coaster and we havent started yet and I have never had so many dreams in my life all about homebuilding I sometimes wake up already sick of the subject. Keep this thread going. I am learning a lot.
Kari in Colbert, WA
How do you stay sane during the building process? I felt so rich going into this. Now I feel so poor. We have run through
1/3 of our loan. There isnt a single check I have written which I cant justify to the bank. Im not buying marble floors...
What do you do to avoid going crazy? Drinking myself to sleep isnt an option...
Joe in Elkhart, IN
Sorry Joe, no drinking allowed unless you budgeted for it. After all, if you didnt plan for it upfront, drinking now will just
bring you further out of budget requiring further drinking, spiraling into the money pit.
I think every O-B should rent the Money Pit movies (both the original and the remake) before the attempting this process.
Peter
P.S. Might have to start a new thread on just how much you need to budget for remedial drinking? LOL...
Joe, I feel your pain Im getting close to done, and we are going to pretty much hit our budget, but there was some
ebb and flow. By the time I had the structure dried-in I was burning money fast. But as I continued, I started coming under
budget, and the unders are starting to counter the big overs. Im assuming you have a budget for each item, e.g. ICF, footings, floors, appliances, trim, etc.? Are you consistently going over on everything? You might need to initiate a corrective
steering now to be sure to finish the project if everything is coming in way off of your budget. If it wont cause problems
for your final appraisal, you may be able to leave a couple of rooms unfinished, or downgrade the finish materials, to be
sure to complete your project. My plan was to install carpet in a couple of rooms that we had planned wood floors, until
everything started coming back into alignment. Now Ive recovered most of my overages, and am within the margin of

my contingency, starting paint next week. In my case, my budgets were pretty good, but the volatility of steel caught me
off-guard, and I went over by 100% on my structural steel, and 100% on my rebar. Ouch! Good luck. Hang in there!
John in Erie, CO
Forums
After many, MANY, many months of planning, delays, disappointments, more delays, etc. we finally broke ground
TODAY! Since I found out the excavator was moving the equipment yesterday I have been so anxious, to the point of
wanting to throw up! Anyone else experience this? Please tell me this is going to go away!!!! Any thoughts from you
experienced O-Bs? Thanks!
Marsha,
This is a pretty big project that youve obviously invested a lot of personal time and money in...I think anxiety (or some sort
of nervousness) is something that all owner-builders face.
I would try to turn this into a positive, though. Try to distance yourself from the project a little. Try not to take personal
ownership in the way everything happens on the site.
I poured my basement walls on Friday. In the middle of the pour my ICF sub had a major form blowout that lost about 4
yards of concrete. I helped them get rid of the concrete, reform the ICF forms, and we proceeded with the pour.
Afterwards, the ICF guys (who have worked with a bunch of owner-builders) asked me why I didnt freak out. I simply told
them it wasnt my problem. Theyre job is to give me ICF walls...any mistakes they made in the process were going to be
on their dime, not mine. I hope it goes well, Marsha.
Arnold in Colorado Springs, CO
Thanks Arnold! Ive actually been much better since that first day! We have had our land for six years in which we have
had many picnics, bonfires, etc. and it really freaked me out to see this guy making a mess of it all! Ive tried to remember
that this is going to be FUN!!! We have been urged by friends to buy other houses and not go through the headache
of building, but this is actually what we WANT to do! (If we are going to spend this much money on a house, we want it
to be something that we really love!) Turns out the guy is not going to finish the excavation this weekend, so now Ive got
to get a hold of the footer guy and reschedule him and I think its great!!! Ive just decided Im going to focus on really
ENJOYING this project and not getting bogged down in all the details Ill leave that to my husband! Thanks again for
your advice and good luck with your project!!! Marsha
Forums
Last year my friend finished his and his wifes dream home on our lake. They had so many setbacks, contractors fired, hurricanes, sub problems, It was a mess. It took 17 months to finish. During this time the wife and I were getting plans drawn,
setting up subs, excavating the lot and doing all the things the first 1,000 hours require. I remember thinking that I was
going to have no such problems, the subs I had lined up were top-notch; the ICF contractor visited our home and we felt
great about him as well. Everything would go smoothly, we said, our lives are blessed.
WELL, this post is to give all the planners a heads-up. ALL will not go smoothly and there will be problems. Concrete trucks
get stuck, walls are not plumb, doors not in the right place, people do not pick up after themselves (bad mommy training?) lumber gets wet even when you put someone in charge of covering it, footers fill with water, tools will get stolen and
people will lie...
So grand illusions of smooth sailing will most likely not be in your weather pattern. Only keep your chin up and look
down the road to the end results and you will make it through. Oddly enough our marriage is holding strongly!!
Even the pooper door gets blocked.....(photo at link above)
Easier to move the Jiffy-John than your whole home. Cheer up, it will get better...
Thanks James, all is good, our Dietrich flooring is in, and the 3/4 T&G will be next.
I started this thread to get some more stories and to let the disillusioned know they were not alone. I remember a post from
Phil where his concrete trucks slid down a muddy slope. When mine got stuck, I thought about all us O-Bers and the trials
and tribulation we go through, might make a good book (not to outsell Marks O-B Bible of course.)

AS O-Bs we all have some challenging days. I think the rewards of ultimately completing a project are very satisfying and
can be financially rewarding as well. As an O-B, you get to use your creative skills, management skills, tradework skills,
and physical strength to make all aspects of a project come together. Do a halfway decent job and you will have a home
you love to live in for one third less than your neighbors. Keep this in mind on your rough days.
If people dont show: Evaluate what it takes to replace them and do so if it is the right decision for the good of your project. If you elect to self-perform a trade where you had a flaky contractor, you get to control the schedule and do the work
today instead of manana. Find people working at job sites (especially late in the day after the motivationally-challenged
tradespeople have gone home) in the trades you need and offer money for on the weekend to deal with AWOL subs you
hired.
For low quality work, give the tradesman a chance to explain or correct it. Compare the work to industry standards. If it is
below, document, photograph, inspect, and refuse to pay for it. If the tradesperson still doesnt get it, grab your jackhammer, chainsaw or crowbar and dispatch the work to the dumpster. Find a jobsite where good work is being done, and
get those tradespeople to do your work next.
You need to take responsibility for your own actions, inaction and mistakes and learn lessons from each one. If you dont
want this responsibility, you should buy a tract house or maybe hire a GC. With that spirit in mind, dont worry about
the little setbacks too much, just learn from them and overcome them and everything will come out fine. Dont ignore little
problems or they will become big.
Michael in Cave Creek, AZ
Dietrich Trade-Ready nice choice of joists. This was my first choice, although I ended up with wood trusses. Around
here, steel work is only commercial so finding subs was going to be more difficult. If the price point was right, I would
have used steel knowing this.
Your also right about the book. The truth is stranger than fiction, and O-Bs all have stories to tell. Most of them are
completely unbelievable unless you have been through the process. Your porta-john got blocked, mine got knocked over
I had to cancel the service so they would come pick it up as pretty much no one was willing to use it after that. My
neighbor hired a GC to build his house, he doesnt know the stories he is missing out on (among other things, like at this
point an agreement that he could have done a better job managing the project and saved money).
One of my biggest short-term setbacks was dealing in plumbing materials. We were dealing with a local supplier for all
plumbing materials (PEX manifold, PEX supplies, PEX, PEX tools, finish fixtures, tub, whirlpool, etc.) and had just turned in
a final list of materials we needed for their final bid and scheduling. The next day, their warehouse burned all the way to
the ground, nothing salvageable. Their primary focus was on dealing with commitments they already had in the warehouse, parts already sold, etc. Since we hadnt paid for our parts yet, we no longer had any leverage and they had no
interest in our job. Enter several new suppliers, all of them more expensive than what we had negotiated. As with anything
in project management, you have good, fast, and cheap, and unfortunately you can only get two at a time. We definitely
needed fast, I always like good, cheap fell by the wayside.
Sources Say
Leading from the Center: Influencing and Collaborating for Results
Keep good company: Those with the strongest networks will be in the best position to garner the resources and support
needed to successfully achieve their challenging goals. Be purposeful about your network and keep good company.
Build goodwill: Networks only matter if others are willing to participate in the projects you have. Build your reservoir of
goodwill so its there when you need it most. There will inevitably be challenging situations ahead and you cant draw
upon an empty reservoir.
Engage: Work gets done and relationships are built through shared activities, interactions, and challenges.
Invest in trust: In this networked world you cant rely on control to make things happen. Trust is the essential ingredient of
reliable engagement and action. Be trustworthy and respected so others will reciprocate.
Make connections: Leading from the center poses some unique challenges and terrific opportunities. Effectively seizing
these opportunities requires that you think and act like a connector, integrator, and catalyst. Consider and understand the
interdependencies, connect the right people to the work, and work simultaneously to drive results and build relationships.
The New York Times
Chapter 14: Smooth Execution Saves Money

and Improves Quality
Time line: Three to five months out
Other Daily Duties

With you as the contractor, there are a surprising number of things nobody
will take care of but you. You oversee the details that, taken together, make a clearly
successful project. There is a saying that God is in the details. Every day you
should:
1. See that people are showing up.

Make phone calls to subs who are about to begin the night before they are to
show up. Call subs who will be coming soon in the evenings or in the early morning
before work. When you get to the site, if people are missing, call right away from the
site. Your records should include cell phone numbers for each of your team members.
Sources Say
The first steps,
such as digging
the foundation
and pouring
footings, will have
more impact if
done improperly
than if a door is
hung to swing
in the wrong
direction. Hence,
your utmost care
should be taken at
the beginning of
the project when
every step is critical particularly
through the framing stage.
Contracting Your
Home
(See page 263)
198 Chapter 14: Smooth Execution Saves Money and Improves Quality
Forums
We built a
garage apt. a few
years ago. If we
had good subs,
no problem, bad
subs 10% retainage they walked
away. Now we
are getting ready
to build a house.
1. How much up
front deposit the
framer wants 30%
and that seems
high
2. How much
each draw, percentage-wise?
3. How do I
negotiate if he
wants a higher
deposit that I want
to pay?
4. How do I word
a contract of what
has to be done for
each draw?
Thanks,
Kathlyn
It is my policy
never to prepay
for work; the only
exception I make
is for custom-made
items like cabinets
bought from a
reputable supplier.
Any subcontractor who wants to
work for me and
wants any kind of
advance payment
needs to bring
materials to the
job site. I will pay
invoice price for
materials on site.
Then I will pay
weekly based on
percent complete.
The contractor
can propose a
percent complete,
but I decide if it
is reasonable. I
will not pay over
90%, if the work
has not passed
inspection.
2. Check the work.

One owner-builder who is a physician from Atlanta paid a premium of
$12,000 to upgrade his cabinetry from Georgia pine to solid cherry wood. He left the
office to check on the installers in the middle of installation day. He discovered that
they were installing particle board with a cherry veneer. They claimed he was getting
what he had ordered. He had it in writing, and stayed on the vendor with calls and
visits until the solid cherry was furnished a few days later.

Check the work on your job daily and in detail. See that:
a) It is straight, square and sturdy.
Carry a tape measure to verify dimensions. Measure the square dimensions

of the house by running a tape measure diagonally from corner to corner.
The opposing measurements should be identical if the work is square. You
can check doorways, walls, window openings, and the outline of the house
itself this way. Use a corner of a sheet of plywood (described in Chapter
13) to check the squareness of small corners like doorways and windows.
Shove the factory edges of the plywood into a corner and observe if the
edges are all flush. Use a four to six-foot level to check the plumb of all
doorways.

b) Proper materials are used.
One owner-builder found the electrician installing aluminum wire, when he

was paying for copper. Several others found that carpenters tried to install
basic moldings instead of the more elaborate upgrades they thought they
had ordered. There are many possible variations in quality in each building
component from windows to shingles. Check constantly.

c) Proper designs and approaches are used.
Never trust your subs completely. Always question their motives when
they make choices about the work. For example, they may say, This is
what you need, when it is a material or an approach that is simply cheaper
and less work for them.

d) The quality of the work is as expected.
3. Give clear directions.

Be available to answer questions and provide direction. If you are not on site
all the time, spend a block of time in the beginning and end of each day to provide
direction. At the end of the working day, review with the subs on site what has been
done to determine if it is what you expect. If there are questions you cannot answer,
take them home and call your trusted advisors or your inspector for input. If possible, bring back clear direction the next morning for that sub.
Anyone who
doesnt like my
Chapter 14: Smooth Execution Saves Money and Improves Quality 199
4. Anticipate needs.

Anticipate needs for tomorrow, for a week out and for a month out. Make
sure the materials needed tomorrow will be delivered on time, and that the needed
subs will be there. Look ahead to subs and materials needed in the next week, and
touch base with the necessary parties. Look ahead to completion dates and goals for
the next month and anticipate them. Inspections may be difficult to schedule and
require lead time. Once you have a date set for the next inspection, keep everyone
informed of it and on schedule.

Have a Plan A and a Plan B. Alex Acree observed his framing carpenters
floundering and somewhat at a loss to handle the work after a few days. He provided
them clear direction, but anticipated their possible failure on the job. He paid them
only for work completed and made calls to line up possible back-ups. The framers
walked off the job, but the back-up framer was on the site promptly.
5. Keep the site clean.

A clean site is safer and more productive for everyone. Dispose of packing
and scrap materials. Lay down scrap wood or crushed packing boxes for footpaths in
and out of the site. Sweep or vacuum dirt and sawdust regularly from the structure.
Keep it free of water, snow or ice.
6. Meet inspectors on site.

Be on site to meet your inspector for scheduled inspections. Many times
the inspector will waive a problem item after a suitable explanation by the owner.
Flagged items are easier to resolve if you have the chance to query the inspector about
them on the spot.
7. Receive deliveries.

Make sure the deliveries are complete and accurate. Check that you are being
charged accurate prices for each line item. If you were shopping for a pair of pants,
you would be very concerned if the price came out to be $500 instead of $49.95. But
delivery invoices can be off by hundreds of dollars and often go unchecked. Also
check materials for quality. Reject what you dont like such as crooked lumber or
chipped cabinets.
8. Pay bills on the spot.

You can pay subcontractor bills on the spot if you have been inspecting work
daily, if it meets your expectations fully, and there are no questions about its suitability for follow-on work. However, you should withhold a portion of the fee. Many
builders hold back ten percent as a precaution until after the house is finished and a
Certificate of Occupancy is issued. If it needs to be inspected by the city or tested by
follow-on subs (as a sheetrocker needs to verify a framers work, for example) you can
make a partial payment pending inspection if you are satisfied.
rules, doesnt need

to work for me.
For most good
subs, this is no
problem. Many
of the larger firms
I work with (e.g.
grading, HVAC,
roofing) will send
me a bill and let
me pay in 30
days.
I am on my 3rd
O-B project and
have never had
a problem. If you
pay before the
work is done, you
will have problems. It is human
nature; do you
work on the job
where there is a
paycheck waiting
at the end of the
week or do you
finish up that job
you have been
meaning to get
around to, where
you have already
collected all the
money?
Michael in Cave
Creek, AZ
We finally signed
the loan paperwork and our
draw schedule
goes like this,
Slab Draw 20%
Framing Draw
30%
Trim Draw 30%
Final Draw 20%
It is a tough way
to go, but it is a
great rate and
it has been no
hassles with O-B.
Since I am doing
ICF with the slab,
footers, and walls
all being poured
at once, I have
to finish the slab
draw with no
money taken out
and work into
the framing draw
before I can get a
% of money for it.
I figure 100% of
the first and 60%
of the second is
where I will be
when I get my
first monies. Until
then, we have a
second on our
occupied house
to get us through.
(One thing though,
I have to pay the
$35 inspection
every time I ask
them out.)
I looked for a loan
like Ken where I
could get money
any time as long
as I had receipts
but it did not
happen. Since we
found out about
the second today
things have been
a lot less hectic.
Marc in Defuniak
Springs, FL
Sources Say
Much of a
contractors job is
human relations.
If you cut down
trees yourself: Cut
them four feet from
the ground. The
bulldozer needs
a good piece of
the tree to pull the
roots out of the
soil.
Trees to be saved
should be marked
with red tape
or ribbon. Also,
remind your excavator to be careful
about knocking
the bark off of
trees to be saved.
This could kill
the tree or invite
wood-hungry
pests.
From The Complete Guide To
Contracting Your
Home
(See page 263)
9. Observe the work.

Generally, people work more carefully and meticulously if they are observed
and appreciated. Every aspect of the work seems to go better if you are close at
hand.
Why You Need to Be On Site

The on-site tasks of an owner-builder are what management types would call
non-trivial. Owner-builders in our survey who had not read The O-B Book spent
an average of 533 hours in on-site management a third more than those who read
the book. Still, you need to plan to be able to handle the commitment. If you have
planned fully, you may be able to get satisfaction from a 400-hour effort. This means
at least three hours per working day, during working time, for a six-month period.

The 500 hours I estimate do not include any trade work whatsoever. You
must add to your management hours the time it will take you to do the trade work,
and that too is non-trivial. (Survey average: 644 hours) For example, electric work
took us 800 hours. For many O-Bs site time is a way of making up for failure to plan.
It can run to much more than 500 hours if you havent settled everything you possibly can in advance, before you break ground.

The first reason you need to spend so much time on site is to prevent disaster.
An amazing number of things can go wrong, and will. Lack of communication is a
common problem on a construction site. You must explain, explain, and explain.
One couple in Florida took a vacation during construction and patiently told the
framing crew before they left that they wanted the family room to be six feet longer
than the plans specified. When they returned they found the family room had been
built six feet shorter than the plans specified.

Some trades will not show up consistently or when promised. You have to
keep after them to get the work done. In some cases, you will have to hunt them
down to get them to show up. You learn that even a written contract guarantees
nothing. Conscientious supervision gives much more assurance. You need to keep
after the subs, remove barriers, settle conflicts and prevent disasters through your
supervision.

The second reason to spend time on site is to get a better house. Several O-Bs
told me the more time they spent, the better they did. Like planning time, the more
time you spend, the more money you save, the better the quality, and the more features you get.

You save money because of opportunities that come to your attention while
on site. As an eager O-B, I always offered to help the subs and to help the vendors
with deliveries. The concrete sub took me up on my offer, and allowed me to tie
reinforcing steel before the footings were poured. I benefitted in several ways from
the experience I made sure the steel was tied more than code required, I reduced
my footings bill by $400 in exchange for my efforts, and I kept track of delivered
concrete. When the amount of concrete for footings and foundations turned out to
be much less than originally thought, the sub agreed to further reduce my invoice by
$450.

Quality improves in many ways because of your supervision. You make certain that implementation of the house corresponds to its use. For example, since you
know how each room will be accessed you can ensure that light switches are placed
on the correct side of doorways, and not blocked by open doors. You see that electrical outlets and phone jacks are placed where they will be convenient to your use.
You catch doorways that may interfere with planned stairs or windows that would
interfere with future walls.

In spite of your efforts at planning, your perspective on site is better than the
abstract visualizing you did during the planning stage. We caught a planned window
at an early stage and had it moved to a different wall to capture a beautiful mountain
view rather than a view into the neighbors upstairs bedroom.

You will get more extras, greater quality, and improved comfort out of your
house by your thoughtful time spent on site. Many opportunities present themselves
to add extras, conveniences and improvements, sometimes at no cost, if you are on
site to seize them. You need to participate in the process while it is happening to
make a variety of small changes. Some of the opportunities we grabbed were:
Stuffing insulation behind shower units and between rooms
Placing water lines under footings, rather than through walls
Installing nailing blocks inside walls where needed
Putting sleeves under walks and drives for future sprinkler pipes
Doubling sheetrock in rooms where quiet is important
Moving access to crawl space to free up a pantry space
Installing electric outlets in floors where furniture would be placed away from
walls
Using balusters instead of half-wall on bridge over family room to improve view
Placing heating vent under tub and shower
Moving rocks from around property to foundation cavity to improve drainage
and facilitate landscaping
Stuffing insulation into outside framing corners before covered over
Putting pesticide granules on sill plate behind walls
Pouring drives and walks early to keep mud out of structure
Sheetrocking portion of garage early to allow doors to be installed and house
to be secured
Widening halls where door frames didnt accommodate molding
Creating a camping equipment shelf instead of a high uninterrupted wall in
garage
Turning garage with high ceiling into sports court
Creating electrical path from crawl space to attic for future wiring
Adding heating and cooling vents in garage and crawl space
Making sure fill dirt was compacted fully in areas where concrete was to be
poured.
Sources Say
Make sure to
check periodically
to be sure that all
the carpenters
walls are square.
It is easier to get
this wrong than
you think. Stairs
and fireplaces
are another
source of potential
problems. Check
them carefully for
squareness.
Contracting Your
Home
(See page 263)
Sources Say
The Well-Built
House
provides suggestions on how to
care for lumber on
the site.
(See page 263)
Forums
My wife and I
may be moving
along a lot faster
than I thought we
would. Received
an offer today,
one day after
Thanksgiving.
Buyer wants to
close December
20. I am now
very nervous and
having a lot of
anxiety. I thought
I would have a
whole lot more
time to study the
issue. We sat
down tonight and
discussed seriously
making an offer
on the property. I
guess the first thing
to do is lock in the
property and go
from there.
Tim in Dunlap, TN
Tim, take a deep
breath. Assess
your skills and
strengths in construction. My hus-
band and I were
in your situation
not so very long
ago. Our property
sold much more
quickly than we
had anticipated.
We ended up
pushing ourselves,
but it was worth
it in the end. We
did make some
mistakes, but we
learned valuable
lessons from them.
Such as, always
get a copy of the
cover page for the
insurance for any
subcontractors you
hire. Always get
a list of references
for previous jobs.
Check out the jobsite daily to make
sure progress is
being made. Are
the subs cleaning
up the site daily?
We found out that
our problems were
self-inflicted by not
keeping a close
eye on the work
we farmed out.
You have an
ocean of friends
out there willing to
pass along advice
and strategy to
complete your
project.
Teresa in Martinsville, VA
Sources Say
The Well-Built
House, though
written by a
general contractor,
acknowledges
the owner-builder,
mostly saying
he should be
prepared to be on
site a lot, and that
he should be prepared to mediate
conflicts between
subs.
(See page 263)
Consensus Breeds Creativity

How will you manage your subs?

For some, particularly those O-Bs with a construction background, the
temptation is to tell them what to do. Some general contractors are this way. They
micromanage people, telling them what to do in detail and the way to do it. For
others, it seems safest to go with whatever the sub wants and does a laissez-faire
attitude.

Remember your responsibilities as manager: Plan, Organize, Integrate, Measure, and Motivate. The integrate is the coordinating of all the members of the
team, with their disparate needs and wants. Left to their own devices, the subs you
hire may get into each others way, damage each others work, and become hostile and
alienated.

ect:
Owner-builder Debbie Crosby describes a situation that arose on her proj The plumber did not work well with others, and if something was in his way
he would saw right through it. We might have seen these things if we visited the site
at midday. He sawed through some of the framing and a gas line also. I told him
the master tub was not level, and he busted a big hole in the drywall to level the
tub, and I said he would be responsible for repairing it, and he refused. I figured
he made the hole, he should fix it just one of the things you learn in kindergarten.
I said I would retain part of his fee, he threatened a lawsuit, and I said, see you in
court. He came back, apologized, and fixed the hole.

The best way to manage subs is to show them you respect their abilities and
need their contribution. Some take responsibility well and can be given a lot of freedom. Some need close attention. Where possible, I apply consultative and consensus
styles of management.

A consultative decision-making process is one in which the members of the
team have been asked to provide their information and suggestions, but one member
you reserves the right to make the final decision. A consensus decision-making
process is one in which the resolution is achieved only when all members of the
team agree that it is the best possible decision given the available information. Every
member has the authority to veto the decision until, in fact, each member has found
it possible to agree on a solution.

After a 15-year career as a management consultant and 10 years as a manager,
I believe you get the best cooperation from a team by a consensus approach where
everyone, including yourself, has an equal say, and decisions are unanimous. I named
my company after the concept. However, in a construction situation, the members of
the team change rapidly, and you are the only common denominator over the course
of the project, which suggests that you should reserve the right to decide.

One day I stood in the dirt in front of our partially finished structure and
joined in a debate between my concrete man, who is a respected general contractor,
my construction advisor, also a general, and the areas largest interior door supplier. I
had to make a decision about hollow-core or solid-core doors for the house. All three
of them told me they had hollow-core doors in their houses. I wanted solid-core,
but it would cost $2,000 more. I relented and accepted the hollow-core doors, out of
respect for the three men. It turned out to be a poor decision, because my house is an
open design, and much more sound travels inside than in their houses.

Better to have used a consultative approach, thank them for their ideas and
say that I would get back to the vendor with a decision. The doors didnt pan out perfectly, but each of my helpers got the message that I respected their ideas, and many
more ideas came from them after that day.

Many of the writers who have tackled the subject of owner-building in the
past have minimized the need to be on site. Most of these are contractor-authors who
have a natural resistance to being overseen. Most people want unlimited freedom in
their behavior. You want a smooth project, a quality home, and the greatest possible
savings. These things dont happen on their own. You need to manage your subs
consultatively to provide a good working environment wherein you will achieve all
of your goals.
Clean Job Saves Five Percent

One of the unglamorous but valuable functions you can perform is to ensure
a clean and organized job site. General contractor Matthew Rittmanic, an unusually
perceptive builder I interviewed, provides his reasoning for the claim that a clean job
saves five percent of the cost of construction:
When its clean, the sub has a better feel for the job, and gets in and out
faster. It raises his standard of meticulousness, elevates the spirits of the team, fosters
an atmosphere of cooperation and reduces rework. Missing supplies that might
cause delays in upcoming work are more readily apparent. The inspector likes it
better and is more helpful. It streamlines the final bidding process for bids that get
finalized during the course of the project like insulation, drywall, cabinets, floor
coverings, finish carpentry, and painting. There is a reduction of waste. Parts that
arrive early and are needed later like finish covers of all types and door and cabinet hardware are protected. Ultimately useful remnant specimens of shingles, tile,
carpet, hardwood, balusters, paints, and wallpaper are not damaged or lost.

Construction experts say that 70% of the dust that will ever get into your
house is there when construction is finished. You can virtually eliminate that dust.

We used scrap material and broken-down packing boxes laid down as walking paths to keep mud from being tracked into the structure at early stages. I placed
fresh bales of straw as steps into the house which helped brush work boots clean. At
an early point we had our sidewalks and drives poured, and kept them swept. We
used a shop vac to clean up sawdust and plaster dust. Before we painted and before
Sources Say
Provide a drive
area of #57
crushed run to
avoid muddy
areas.
Get a roll of poly
sheet to cover
materials.
Call local police
dept. and have
you site put on
surveillance.
Contracting Your
Home
(See page 263)
Journal
Jason has been

spending many
long hours on the
property, supervising, learning,
and answering
questions. We
have quickly
learned that being
on-site is imperative, otherwise
subs dont know
who to ask when
they have questions, so they just
make executive
decisions. Baaad.
Its working out
well too because
Jason can be on
site, and if he
needs something
researched, he
can call me and I
can look it up on
the Internet right
away.
Cara in Orlando,
FL
Sources Say
The Complete
Idiots Guide to
Building Your
Own Home
describes typical
inspection points
for a single-family
residence
(See page 263)
Forums
Do you have to
be present during
inspections?
Jacklyn in Hillsdale, MI
No, you dont
have to be present
for inspections, but
I would suggest
that you always
are. There are a
lot of questions
or issues that can
come up that can
cause you to fail
an inspection if
you are not there
to explain to the
inspector what is
going on. I only
have my final
inspection to go
and never failed
a single inspection throughout
my whole build. I
was always there
and walked the
inspector through
everything. I could
see that I might
have failed several
times if I had not
have been there
to answer the
inspectors questions.
Alvin in FL
Its good to be
there for another
reason Its a
little-known secret,
but 99% of the
time, the building inspector IS
YOUR FRIEND.
Its another set of
eyes, making sure
things are done
right.
As mentioned
above, being
there can answer
questions for
him and make
things pass, but
also, you can get
feedback from the
inspector. Things
might be legal
the carpet was laid we even wet-mopped the floors. The result was a pleasant work
environment and the peace of mind that our house was deep-cleaned before occupancy, not to mention the savings.
The Inspector Is Your Friend

My advice is not to fight with your building inspector. Consider him a
member of your team and check with him far in advance of the need. The building
inspectors job has historically been to protect future owners from unwise, unsafe
building practices. You are the future owner, hence the inspector should be on your
side. Likewise, you are on the inspectors side because you want your house to be of
the highest quality.

Nevertheless, conflicts can and do arise. O-B Jay Sevison described one situation he had with his inspector:
He failed a wall on a nailing inspection three times. He failed it because
you are supposed to have screws and nails and there were only screws in the
sheetrock. I said screws were better, but he didnt let it pass, even though I was the
owner and contractor. His supervisor said it was a question of shear strength when
I called him. I replied you dont need it on this inside wall. Persistence paid off for
me the policy was changed, and I wound up with a different inspector.

I have heard inspectors denigrated many times by contractors and occasionally by owner-builders. As in any trade, there are better and worse practitioners. And
there may be personality conflicts. The inspector can help you and can make observations and suggestions you will get from no one else. It pays to cultivate the inspector even before the start of your project. Make it a point to be present whenever he
performs an inspection.

When you meet with the inspector before groundbreaking, ask what he will
be looking for, what inspections your city or county requires, and how to schedule
them. We had inspections of:

1. Temporary electric
2. Footings
3. Underground plumbing
4. Shear walls
5. Framing and electrical, plumbing, HVAC rough-ins (four-way inspection)
6. Insulation
7. Final electrical, plumbing, HVAC

One municipality described in Jim Hasenaus book, Build Your Own Home:
A Guide for Subcontracting The Easy Way, required more than 30 inspections. When
you meet with your inspector, check off the inspections from the master list on
page 206 that you will be required to undergo.
You Can Get Independent Inspections

There is a class of inspectors known as independent construction inspectors
who can be of great help to you. These are paid professionals who represent your
interests in inspecting a house during the course of construction. Unlike city inspectors, these specialists can be sued they are liable for their opinions.

For many owner-builders, the independent inspector may be the key to a
successful owner-built home. Consider using one if you are not knowledgeable about
all phases of construction. Their advice may be the key to admitting you to the fraternity of construction privilege and greatly increased net worth.

The independent inspectors I interviewed say they come out to inspect a
house under construction an average of ten times for an overall average fee of under
$1,300. Some come out as many as 20 times on a typical custom home. Most of them
are former or retired contractors with a lifetime of experience in construction. They
know the business, they know the habits and culture of the industry, and they inspect
not for city code, but for quality in construction techniques and material.

One independent inspector I interviewed, Beryl Ford, from Tulsa, Oklahoma, showed the tremendous detail that can be studied in an independent inspection. Ford is a forensic inspector who is often hired by insurance companies to
investigate the causes and origins of structural failure in houses. He describes his
approach to evaluating a composition shingle roof:
You have to nail it right, nails in the right place, the right fasteners, in the right
pattern and quantity, or the warranty wont be valid. Right pressure on nail gun,
right angle and depth. Below the seal strip. If you have a material that deteriorates,
they will not honor that warranty unless you meet the standards. If you dont have
the right deck to receive the shingles, if its not nailed properly, it will hump up.
Proper ventilation in attic space. One and a half feet of ventilation space for every
100 square feet of space in the attic. Moisture migrates from the living space via
ducting over Jacuzzis, over cooking area, over laundry areas; it migrates to the
attic, and if doesnt discharge right it will condense and collect on the back sides of
the shingles. On a hot day, the moisture is drawn through the shingles and deteriorates the belting. In the winter, the moisture on the back will freeze and expand and
destroy belting fibers. Environmental creep will eventually destroy it prematurely.
You want 20 years of useful life on a 20-year warranty. Valleys should have a liner:
roll roofing with composition shingles, or metal with cedar shakes, clay tile, and
masonry types. If you use metal with composition shingles, due to differences in the
coefficient of expansion, it will slide. Youll see wrinkles, humps, and hollows.

The independent inspector can be a key to evaluating the performance of
your subs and verifying that you have received what you are paying for. There are so
many potential pitfalls in construction quality and technology, that I find the assistance of an independent inspector a relief and a bargain. They can answer your questions, make suggestions; even point out construction savings you have overlooked.
Their fee pays for itself quickly in promoting a smooth project, ensuring quality, and
in reduced replacement and operating costs.
and meet code,

but look sloppy, or
could have been
done better. You
can then go back
to your sub (whom
youve not paid in
full yet, hopefully)
and say I dont
like that this looks
like x; to be done
properly it really
should be y and
99% of the time,
they will come fix
it to get that last
10%. Managed
right, its like
having a paid
inspector reviewing work.
Of course, many
building inspectors
dont care...But if
managed right,
the inspector can
be excited about
your project, and
his work will be
better, too. Hes
used to dealing
with GCs and
subs all day who
are trying to skate
by on the cheapest cra$ that they
can get away
with, as long as
the finished product looks OK.
Here hes working
on a project with
someone who
can be genuinely
interested in good
work, and in his
opinion. YMMV.
My building
inspector was
great, and generally never had
any problems. In
fact, he gave me
my CO without
my kitchen sink
being installed
(it was sitting on
the floor) because
he knew as an
O-B, I would finish
my sink, and he
was happy with
the quality of the
Inspections Checklist
Inspection
Building
Required ?
Date
Notes
Footing open
Rods in footing
Grade
Ready for backfill
Floor joist
Before sub flooring is applied
Truss on ground
Rough framing
Sheathing
Lath
Final grade
Final
Electrical
Rough
Finish
Heating
Rough heat
Insulation
Final
Plumbing
Septic tank & field
Sewer
Inside drain
Shower pan
Rough plumbing
Water test
Well water test (in case of well)
Final
Concrete
Forms
Compaction
Rods or wire
Basement floor
Backfill
Forms outside (walks and drive)
Final
Other
Other
Notes
project. He failed
an HVAC termination, and I was
glad he did, I had
missed it. And he
was hard on my
framers (what little
framing I had) but
that was good,
because after
he beat up my
framers for missing
some nails, they
spend a day
double/triple
nailing, bracing,
pressure blocking.
They went way
beyond what was
required, thanks to
a good lashing by
the inspector.
John in Erie, CO
This may be a
dumb question,
but which components need to be
inspected? I dont
see this documented anywhere.
Foundation,
Framing, Electrical,
Plumbing? etc.?
Ray
When you pull a
permit from your
code department,
they will identify
what inspections
you need.
Kenneth in Lees
Summit, MO
I was hoping I
wouldnt have to
wait that long. Is
there a standard
set of inspections
required for a new
construction?
Ray
The exact inspections required
will vary based
on your local
codes/inspectors
and your specific
house Some
houses will require
different inspections based on the
types of materials
Staying on Schedule

Its actually possible to build a house in one day. It has been done by Home
Builders Associations several times as a public relations event. They pour the concrete the week before and blitz the project on a Saturday with dozens of craftsmen.
Some general contractors routinely finish projects in under four months. But you
might not believe that when you are in the middle of your project. Schedule overruns
are common for generals and for O-Bs. Occasionally a house project goes two years
or more, despite the best intentions of the owner-builder.

If you have done detailed planning as suggested, you will not be far off, but
you may need a little encouragement during the construction phase. You should
know your schedule by heart and whats coming up. Know what week of the schedule
you are on by number. (This is week seven. Where are the roofers?) Its not too
complicated. If you are building in six months, you are dealing with 26 weeks.

We adopted a tradition when we built our house of wearing different ball
caps every month of the schedule. We put on fresh ball caps on the first day of every
month and discarded them ceremoniously on the last day of the month. The next day
we started with new caps. The ball caps were easy to get because most construction
materials vendors have logo caps they will give to their customers.

Owner-builders report 30 dead work days on average where no subs set
foot on their sites. Another 34 days are reported where only one sub was on site for
at least part of the day. There is room for lots of improvement in staying on schedule.
Follow the call, call, call procedure described in Chapters 10 and 13, and remember
the rules of thumb: replace a sub who fails to show three agreed times, or who doesnt
show within three days of an agreed time without other arrangements made.

Staying on schedule is one of those things that takes your active management. Its easy if you work it hard, but its hard if you work it easy.
If You Do Self-Work Control It

Benefits and Trade-Offs

Occasionally I see a whimsical sign on the wall in a print shop or service
providers office reading:
Do you want it good, fast, or cheap? Choose two.

You want your house good, and as an owner-builder you likely are motivated by saving money (cheap). To get it built fast usually costs more. This is the
problem with self-work on your house. For most of us who are inexperienced at the
trades and are juggling a house project with full-time employment, extensive selfwork is prohibitive.

The average owner-builder in our survey did four to five of the trades (4.8)
on his or her own project. The savings were very impressive, an average of $50,000 or
62% off the quoted price for each trade. The O-Bs estimated 644 hours spent on 4.8
trades, which equals 134 hours per trade performed.

Elaine and I didnt work nearly that fast. We are fairly dedicated at measuring work hours, and we find that people often underestimate time spent. Our fastest trade was ceramic tile work, which we accomplished in about 100 hours. This
includes taking a class (twice), reading a couple of guides to tiling, shopping for tools
and materials, doing the work, and clean-up. Our slowest trade was electric, which
took us 800 hours of work, as mentioned earlier.

Painting is an often underestimated trade which took us 650 hours of work,
the bulk of which was spent after we occupied the house. Painting is almost all prep
work, and we sanded and patched and caulked until our fingertips literally bled. The
woodwork in a custom colonial house is very extensive, and the gorgeous high gloss
trim paints available today show off even tiny flaws.

Our fourth trade was landscaping, a 350-hour effort, performed after we
occupied the house. O-Bs we interviewed had performed 25 different trades. The
most popular were:

1. Painting
2. Finish carpentry
3. Tile and Flooring
4. Electric
5. Plumbing

For us, the trade work was a matter of economic necessity. We couldnt fit the
budget under the borrowing limit the bank imposed on us, and we had to cut back.
In the relaxed environment before groundbreaking, self-work seemed like a nice way
to save money. It did extend the time of our house completion, by perhaps two frustrating and anxious months. But it cannot be said that construction interest ate up
our savings because we saved about $6,500 average on each trade we did and spent
only $2,500 of interest on the two months of delays.

In business, a decision like the one to do self-work is called a make or buy
decision. A manufacturer can sometimes do better by allowing outside suppliers to
provide some components rather than make them in-house. Factors like cost and
capacity have to be weighed. Look at savings versus interest costs when you decide,
and be realistic about the time it takes. I would urge you in any case to strive for
project completion in six months.

Rather than let self-work gobble up the calendar, make your self-work highly
efficient. Recognize that it will take you from two to ten times as long as an active
tradesman to do any trade. Utilize the Greenewalt Principle which states that one
month spent in planning will save from three to four in execution. Plan your work
thoroughly and manage your performance closely.
or methods you
are using. A safe
rule of thumb is to
not cover anything
until the inspector
has seen it. Here
is a rough list,
not all of these
are required in
all places, and
keep in mind that
in some localities, inspection
protocols might be
different.
If I recall correctly,
I had the following inspections.
(Im also listing
a few that didnt
apply to me, but
are common in
my area, to give
you an idea)
Many inspections
are sometimes
performed at the
same time as
other inspections,
for example, the
building setback
and footing
inspections are
performed at the
same time, and
occur on the same
day as the wildfire
hazard inspection,
but the wildfire
hazard inspection is a different
inspector...
-Open hole soil
inspection (post
excavation),
Wildfire hazard,
building setback/
location, footing
width/reinforcement (pre-pour)
-ICF or foundation
wall inspection,
pre-pour (This had
to be done by
my engineer at
my expense, the
county inspectors
wont inspect ICF
over 8 high).
-In-ground plumbing inspection
-Electrical service
in-ground inspection, electrical ser-
vice temp power
inspection
-Radon Mitigation
inspection, footing
drain inspection
(They didnt care
to inspect the radiant piping in my
jurisdiction).
Main level ICF
wall inspection
(pre-pour)
Framing 4way inspection
(Framing, HVAC,
Plumbing Rough,
Electrical Rough)
Weatherboarding/Stucco Inspection, mid-roof
inspection (getting
firedeck on roof
inspected before
covering with
roofing)
Insulation Inspection (spray foam
walls and attic,
sealed attic. Otherwise just walls
here, then attic is
inspected at building final.
Sheetrock/drywall
inspection Electrical Trim inspection
Building Final
(Building overall,
fire doors, health/
safety, plumbing/
HVAC trim, roof,
etc. inspected
here).
There are others.
Some jurisdictions
require mid-stucco
inspections, deck
inspections (done
at building final
here).
John in Erie, CO
Thank you for the
detailed write-up.
Its more involved
than I thought it
would be.
Ray
Readers Say
When you start
to do labor, everything else stops.
Lucy & Ivan B.
Provo, UT
Risks, Dangers and Difficulties

In our city recently, an owner-builder died tragically while working alone
late at night at the construction site. This man had kissed his wife good night and
returned to his site at a late hour to put in a few more hours of work. On site were
typical stacks of sheetrock leaned against walls where they would be hung in a few
days. The man was doing some work on hands and knees when a stack of sheetrock
fell over on him, crushing him under its tremendous weight. His wife had gone to
sleep at home, and didnt notice his prolonged absence until dawn. His body was
discovered in the early morning.

It saddens me very much that a courageous owner-builder would die trying
to build his house. It is a lonely occupation, and sometimes working alone is very
risky. Fatigue can be a big factor, along with inexperience and the improper use of
tools. Many injuries and sometimes fatalities result.

We were surprised at our limitations when we began to do self-work. I began
to set junction boxes for electrical outlets about one month into the project. I went
on hands and knees and used a hammer to pound in the boxes after sighting their
heights with a story stick. As I nailed in the first box, my knee began to ache with
throbbing pain. I had had knee surgery three months before and had thought I was
fine. I hurried out to buy knee pads, but continued to experience pain with each
kneeling task.

Doing electrical work also involved climbing a tall scaffold to make connections in vaulted ceilings over 20 feet from the floor. It was painful to climb the scaffold. When I got up the first time, I discovered I had an almost paralyzing fear of the
height.

We all have some limitations in doing physical work, be it inexperience or
inefficiency. Allow for your limitations and for the unexpected, like bad weather,
illness, or injury when making your plans. You may find the work surprisingly complex. Most household tasks involve a very few steps to completion. Construction
tasks can involve dozens of steps, posing a challenge to even the brightest among us.

The worlds greatest chess players are able to envision as many as 30 moves
ahead of the present move. Most normal people have trouble seeing beyond six or
seven steps ahead. The result is frustration for a first-timer. I counted 30 steps to
complete a minor electrical task, installing a single duplex electrical outlet in the roof
soffit over the deck:
Get tool belt, find an unused duplex outlet and cover, get ladder, look for
safety glasses, clean safety glasses, get boom box, plug into next outlet, flip possible breakers until music stops on radio, mount ladder, test if powers on, strip
sheath of Romex, strip ends of black and white wires, loop ends to fit around
screws, place black wire under bronze screw and tighten, place white wire under
silver screw and tighten, place bare copper wire under green screw and tighten,
push back into box, secure outlet with mounting screws, replace and attempt to
screw in face plate, climb down, search for longer plate screws, remount ladder,
screw in face plate, dismount ladder, reactivate power, mount ladder with boom
box, plug in to see if music plays, put away boom box, tools, and ladder.

This task took me about an hour. It can be unsatisfying and frustrating to
deal with the cumbersome steps in a complex task for members of our instant gratification generation. You must learn to be satisfied with a single step as an achievement instead of an outcome as an achievement.

Another phenomenon that surprised me in doing unfamiliar self-work is
called the learning curve. Initial attempts at tasks invariably took much longer
than subsequent repetitions. For instance, installing the first recessed can light in the
family room ceiling took me two hours. The second took one hour, the third onehalf hour, the fourth took 17 minutes. All the rest took less than 15 minutes each.
When I taped over the first window unit before spray painting, it took two hours, the
second, 45 minutes, and eventually less than five minutes each. When sanding walls
with a pole sander, the first wall took 30 minutes, then 20, and on down. Each repetition was better than the last.

Consider the learning curve when planning your work or if you get discouraged. Your work will improve in quality and speed as you persist.
Rules of Self-Work

At first, unfamiliar work is a novelty, then its boring, and then, if you stay
with it, it becomes like a drug. You wonder how you can live without it. To paraphrase Karl Marx, Self-work is the opiate of the owner-builder.

1. Be a good learner. Gather materials and organize your study of the task.
Pay an expert for advice if appropriate.
2. Plan the task in detail before you start.
3. Allow enough time overall. If you dont have enough time, let someone else
do it.
4. Dont worry how long each step takes.
5. Redo something if youre not satisfied.
6. Do one thing at a time.
7. Use good materials.
8. Assemble all needed materials first.
9. Use good tools.
10. Assemble all needed tools first.
Sources Say
Resist the
temptation, even
on a big lot, to
bury the stumps
off in a corner
somewhere. This
extends the scarring on the landscape and usually
makes later work
both necessary
and difficult. Trucking stumps away
is preferable.
Its perfectly easy
to do a quick-anddirty backfill job
and have everything come out
looking good. The
owner, thinking
nothing is wrong,
is happy. The
builder, money in
hand and hoping
nothing goes
wrong, is happy.
The architect most
likely wasnt there
during backfilling and doesnt
know anything
was amiss. Two or
three years later,
or maybe not
until a particularly
severe winter, the
wall may crack,
piers lift and tilt,
and the brick
steps slide away
from the door.
(See page 263)
Sources Say
Your New House
lists key inspection points, six
sources for finding
an independent
inspectors, and
questions to ask
independent
inspectors.
(See page 263)
Sources Say
You might get
your dream home
and a years
income in equity
just by devoting
an hour or two
a day and some
weekends to
building your new
home, even if you
never pick up a
hammer.
From Build Your
Dream Home for
Less
(See page 263)
Sources Say
The best inspectors are retired
contractors or
licensed engineers
with residential
construction
experience. Such
individuals would
be most likely to
spot problems
with new construction. Many home
inspectors specialize in evaluating
older or resale
homes; their
cursory, cosmetic
inspections would
not be appropriate for a new
home construction
project.
From Your New
House
(See page 263)
The inspections
checklist shown in
this chapter is also
available as a
template in our
Free Download
Gallery
11. Keep all tools in good condition, sharp, oiled, and operating well to promote quality and safety.
12. Do the important thing, the hard thing; dont just stay busy.
13. Start early.
14. Keep at it until youre done.
15. Pause to rethink your approach.
16. Keep the area clean.
17. Work a full day and dont leave your task.
Accomplishments and Satisfactions

One of the satisfactions of doing self-work is that you constantly invent
things when you build. I devised little paper circles I cut to trace a hole for a can light
above the front porch. I used a strap tie to hold up a heavy fluorescent can while I
secured it on a high ceiling. I put a screw in the framing and hung my drill by a strap
while my hands were busy with other tools working on a high ladder. A friend and
I struggled to make a stubborn electrical supply cable reach to the wall panel. We
finally turned the rear panel mechanism upside down, and it reached. You get meaning from solving constant problems and from constant striving.

You have to laugh at yourself and marvel that you ever finished any of the
projects. Our electrical consultant checked our work after we finished wiring the
master bath. He studied the wiring quietly for some moments and said, I was looking at this wiring, Mrs. Smith, and what youve got here is that two of these vanity
lights will be on at all times regardless of the switch. And the fan light in the johnny
room will only operate when the switch is thrown for the vanity lights in the main
bathroom.

When I tour people through our house I enjoy pointing at the ceiling fan
high above the family room and saying that Elaine installed that fan. We had a tall
scaffold set up in the room and we both climbed up to put the fan in place. I stood up
to screw in the mounting bracket and my knees began to shake from fear of heights.
Elaine volunteered to take over, but at the very peak of the ceiling height, she too got
unsteady. So I sat down and hugged her legs and she worked with one hand while
firmly gripping my hair with the other. From such things are lasting satisfactions
made.
Sub Recognition

The last of your P.O.I.M.M. responsibilities as a manager is to Motivate.
You motivate your team from the very earliest point by respecting their opinions in
interviews and in the bidding process. Throughout the job, it is your responsibility to
provide a work environment that motivates the team.

Studies consistently show that respect and job challenge rank over wages as
motivators. You show respect for the subs by seeking their opinions and giving them
the deserved freedom to operate. Respect their needs for an orderly schedule and
clean work environment. Run a job where the subs can get in and out quickly. Little
things like helping to unload material will facilitate this.

Inspect early and pay fast, which is a great sign of respect. If you ask them to
do extras, be free with additional payment. Many things that you will want done are
not clear on the plans or in bids. Pay for these promptly. One O-B who saved nearly
40% on his project kept a $2,000 $3,000 fund available in 50 and 100-dollar bills.
When the schedule slipped, he asked subsequent subs to put in extra hours or weekends and offered them cash for the extra effort. He got amazing productivity.

Your subs may want to erect their signs at your site or use you as a referral
to get future business. Go to extra lengths to facilitate this for responsible subs. I
provided a word-processed letter of recommendation on my letterhead to several
without being asked.

Some O-Bs buy lunch once a week, or have daily refreshments on site for
the subs. Think of what you appreciate in a working environment and do likewise
for your team. Two cautions: 1) Dont allow alcoholic beverages on your site. Alcohol
and construction dont mix. 2) Dont get too chummy with the subs. Maintain an
appropriate relationship of mutual respect.
Sources Say
Habitat for Humanity: How to Build

a House offers 14
tips called Working Safely on a
Construction Site
and offers illustrated overviews
and tool tips for
DIY of major house
trades.
(See page 263)
Sources Say
The Complete
Idiots Guide to
Building Your Own
Home
offers fifteen rules

for job site safety
and security and
another list of 30
rules for self-work
safety.
(See page 263)
Sources Say
Dont try to do
too much of the
actual physical
work yourself. Your
time and skills are
often better used
managing the
job.
Contracting Your
Home
(See page 263)
Forums
You folks call

yourselves ownerbuilders. Thats
fine with me, but
most of you dont
build anything.
You pay other
people to build
it. You are really
owner-GC. That
probably makes
you more sane
than me, but it
leaves me with
a nomenclature
problem. It is not
just you guys.
Everybody calls
owner-GC by
the name ownerbuilder.
What is the word for people who buy some land and want to build a house without paying anyone to do it for them? In
other words, whats the official term for owner/architect/GC/subcontractor/day laborer? Surely Im not the only one.
There must be some other idiots out there like me who own both some land and a hammer. What do they call themselves? Where can I find their forum?
I Googled owner-idiot, but didnt find anything useful there.
Jeff in San Diego, CA
I think owner-builder is still the right term... I did a lot of work (see my other posts) myself, and it has tradeoffs. I was
owner/designer/gc/surveyor/foundation guy/hardwood guy/low-voltage wiring guy/tile guy/radiant heat guy/cellar
guy/deck guy/painter/garage door installer and a few other things. I hired excavation/blasting, framing, stucco, flatwork,
drywall, plumbing, electrical, vent. Doing a lot yourself is a BAD idea if you are borrowing funds, unless you are hiring
some people to work alongside you. It will burn you out, and you will very likely spend more in interest than you would
had you hired the work out. If you have a hoard of cash and can take time off from a real job, I cant imagine anything
more rewarding.
Nevertheless, I really enjoyed doing a lot of the work myself. There is another thread (titled Are there any REAL ownerbuilders out there) on this site that has a bunch of good insight on the advantages and pitfalls of doing it all yourself.
As far as nomenclature, I think its about as good as it can get. Kinda like DIY can mean anything from you installed
some shelving you bought at Home Depot to you stacked and poured your entire ICF envelope.
Most of the hard-core owner/real builders I know (2) dont even mess with the Internet. They know what they want, how
they are going to do it, and pretty much ignore the rest of the world. They are also building way off the beaten path,
which is probably a good reason to DIY most stuff, since labor costs skyrocket as you get away from populated areas.
Hope this helps a little, at least with the pointer to the other thread. Even real Builders dont build, they hire it all out too.
The folks who really can do it all are pretty rare, by either lack of skill, or the outright specialized nature of the tools and
experience needed to work with a lot of todays building materials (not that they are all that exotic, but stucco, LV wiring,
roofing, insulation, HVAC, even electrical and plumbing to a lesser degree have all evolved a lot.)
John in Erie, CO
Maybe you should look out for forums entitled 1.) learning to pick your fights, or in your case, 2) I just enjoy the fight. In
an ideal world most would love to say I built this home. But, in reality most of us dont have that cushion of time, I once
was a finish carpenter (many years ago), and even the company that I worked for subbed most of the work out. But good
luck with your quest. I know I can do 80% on my house, but time is money ...that I dont have.
Drue in Henderson, NV
Hi Drue, seems I inadvertently touched a nerve with you.
If I didnt have a growing family, I would just get a smaller house and have no mortgage, but such is not to be. I also will
be lucky enough to have a flexible work from home job, so I can do a lot of work on my house instead of commuting. I
also plan on building my own house (see My Construction Website), though I imagine I will sub out some jobs, like
excavation, concrete, some electrical, and plumbing. Most projects that fall into this category will probably take too long,
require expensive one-use tools (for me), or be too expensive or dangerous to mess up for me to do myself. I will probably
do everything else myself, perhaps with a college kid general laborer to help me.
Dustin in Cedar City, UT
If I own the place and I am doing everything a builder would normally do...Im an owner-builder. Builders dont hammer
many nails either.
Zack
Hey Jeff, I do understand where you are coming from, I was a carpenter and joiner in England for 5 years for small
building firm that dealt with projects rather like the ones on these forums, as well as Banks and restaurants. I worked and
assisted all the trades because it was a small family contractor business. I love tools and labor work, but sometimes we
have no choice but to manage the project, and in my case that is very difficult to sit back and watch, knowing that without my present job (not in any shape or form building), this project would not be possible.
Drue in Henderson, NV
I could do everything, but it would take three years of nights and weekends. I choose instead to do things that can be
done without slowing the progress. Its great if you have the time but between designing the house, specing windows,
appliances, cabinets, plumbing fixtures, HVAC, brick, trim, roofing, flooring, woodwork, doors, hardware, insulation,
paint, stain, caulk. Come back when youve done it and well talk about it whos a real owner-builder
Zack
Chapter 15: Mistakes You Can Avoid and

Successes You Can Achieve
Time line: Six months out
Mistakes
uring the course of our construction, I kept a notebook of mistakes we

made. Some of them were items that came out okay, but not as Id hoped.
For instance, the stairs in the garage step down straight out of the mudroom.
This was as originally planned, but it cuts a foot or two out of the basketball playing
surface in the garage. I wasnt thinking too clearly the day they poured those, or I
would have had them form a landing and turn to parallel the garage wall.

After being in the house, we saw that the smoke alarms went off occasionally
from excess kitchen smoke. I decided that next time I would put a 200 cubic foot per
minute fan in the wall or ceiling to supplement the downdraft range. Then one day
I mentioned it to an appliance repairman. He showed me that there was a removable
collar in the neck of the downdraft fan. We removed it, and have never had a smoke
problem since. Lots of little things work out eventually.
Forums
Well, my husband
and I just had our
hole dug 3 days
ago. The footings guy, Doug,
was all ready to
get to work on
our project this
morning, when he
noticed that we
might not be far
enough back on
the lot. He said
it had to be 40
feet back and we
were only 30 feet
back. We told
him that we had
been informed
that the setback
minimum on the
property was 30
feet, and so that
is where we put
the house because
we wanted as
much space in the
backyard as we
could get. Doug
said he knew
it was 40 feet
216 Chapter 15: Mistakes You Can Avoid and Successes You Can Achieve
because the house
on the same side
of the street as us
just 3 lots up had
the same problem,
they had to have
some of the digging redone. He
told us that there
was an additional
10-foot easement
for a sidewalk (first
time I have ever
been told that a
sidewalk will be
going in). Needless
to say, he hurried
on to another
job, and we were
left sitting around
wondering what
we were going
to do to fix this
mess. The city says
that its common
knowledge that
there are setbacks,
and then there are
easements! I guess
it is not common
knowledge to all of
us suckers out there
considering that
the neighbors just
up the street had
the same problem.
Im very frustrated
and upset. We
had our footings
and foundation guy
out today to get
things going and
done for us by the
end of the week
(we offered him
an additional cash
incentive for the
work to be done
this week) because
our excavator will
be leaving town for
2 weeks following
this Friday and
we wanted him to
finish with the fill
dirt and everything
else before he left.
Believe me, I will
never be stupid
enough to make
this mistake again.
LIVE AND LEARN.
Karlie in Ogden,
UT

Most of the mistakes were items that didnt go smoothly where the process
could be improved next time. My biggest were:
-relying on donated labor or the return of favors from volunteer helpers;
-waiting too long for subs who didnt show;
-not hiring an electrical consultant soon enough;
-allowing the consultant to do some actual work;
-paying some subs on a time and material basis without an advance estimate;
-allowing the plumber to supply some heavily marked up materials;
-Not having back-up subs where we thought we had a friend to work;
-hiring some no-goods as subs because I got in a hurry when the first
choice (friend or volunteer) didnt show;
-not having a written agreement to protect me from the no-goods;
-giving some subs too much payment before they were finished.

The owner-builders I interviewed cited five principal mistakes repeatedly:

1. Self-work problems.
My worst thing was painting the house. In the summer heat it was horrible
and I will never do it again! Tried to do too much work myself. Next time I hire
more subcontractors, and focus on what I do best, which is organization, screening subcontractors, shopping, and inspection. Took on too many things in the last
stages of construction resulting in a traffic jam of delay and doing the most visible
elements of the house with rapidly declining funds. Rotozipping extra plastic from
window bucks, nearly lost my finger.

2. Insufficient planning.
Concrete perimeter basement walls were too short and had to cut all interior
walls down. I should have started looking for someone to pour our driveway and
steps earlier than the last 7 weeks before we closed. In the middle of summer its
incredibly hard to get someone to even give you a bid for it. By waiting so long
to get it done, it put our porch railing guys off and they ended up charging me an
additional $200 dollars to get the rail in only 2 days before our closing date.

3. Not picking subs carefully.
Didnt wait for quality framers we had contracted with. I didnt have a reference for the stucco guys I used, and just pulled them out of the phone book. They
took a long time and they left their equipment all over our lot for two weeks after
they finished. I had one subcontractor I didnt check out completely as I was in
a hurry. This one caused me problems, and took me more time to fix than it would
have taken to check him out.

4. Not putting more things in writing.
I was too trusting. We paid people based on their draw, and when the
money ran out before the work, they wouldnt finish. Next time, we will hold a
higher retainage. Hiring people by the hour and paying them before completion.
Chapter 15: Mistakes You Can Avoid and Successes You Can Achieve 217
Disasters

Sometimes the mistakes lead to disasters. In my case, the mistake of hiring
dishonest carpenters led to a small disaster. I compounded the mistake by making
progress payments instead of one payment at completion. I then compounded that
mistake by not having them sign a release of lien for the payments. The result was a
lien on the house and a lawsuit considerable aggravation.

One owner-builder I interviewed made the same mistake of paying his framers weekly. He compounded the mistake by paying fully, not partially, on work done.
After receiving two payments, the framer didnt show up for two weeks. When the
O-B hunted him down, the framer said Go ahead and fire me. He had nothing to
lose.

Another O-B made progress payments to his bricklayer. The bricklayer then
failed to show up for four weeks, or stopped in to do a little bit of work and left. When
challenged he asked for a payment three times as large, which the owner refused to
pay. It turned out the bricklayers went out and spent the money each time getting
drunk. The owner fired them but had no back-up plan, and it was very difficult to
find a new bricklayer.

One O-B remembered to schedule all his inspections except the insulation inspection all municipalities make just before sheetrock goes on the walls. The
inspector put him through the unwanted experience of tearing out sheetrock in several locations around the house to expose the insulation for inspection.

Sometimes the disasters are big ones. One O-B, who was in the Bobcat
equipment business, bought land in Florida that had been a dump and was very settled. He used his equipment to level the land himself, and never got a survey to see if
it was sitting at the right elevation. It was four feet below road level. Subsequent rain
filled the lot up and went into the house. After experimenting with retaining walls
they gave up and tore the place down.

Several lenders told me about projects that got started and dragged on for
years. One lender told me about two O-B houses he knew of that took over ten years
to complete. Lenders also tell stories about people who start the house planning to
save money by self-work, and get injured on the job. One of these got a hernia, one
broke his back. The houses wound up costing much more than planned.

In the top this category is a story from California about a couple that also
failed to get a survey before breaking ground. They got the entire house finished
before they discovered it was on the wrong lot. I think that would ruin your whole
day.
Successes

Remember Vince Miner, the college tennis coach mentioned in Chapter 1
who saved 52% on his construction costs?
Karlie, Dont take

anyones word
for it. Run, dont
walk down to
city hall or the
township building
or whatever you
have there and
ask to see the
zoning requirements regarding
setbacks. Almost
all setbacks are
from the property
line and do not
include easements. Good luck.
Karlie, sorry to
hear about your
troubles, but hope
you appreciate
how remarkably
lucky you were. If
you did make a
mistake in your setback, you could
have poured a lot
of concrete before
someone figured
it out.
There was a
story in our local
paper of a house
that was built to
completion before
a similar problem
was discovered.
The owners filed
an appeal, but
lost. They werent
O-Bs; they
contracted the job
out. The builder
has filed for bankruptcy, so he cant
be held liable for
the mistake. The
owners are left
with a choice of
pouring a new
foundation and
moving the house
or selling the lot
for a huge loss.
Either way, it must
be financially and
emotionally devastating for them.
You probably owe
Doug a really nice
gift, or generous
bonus, for saving
you from a similar
fate.
Doesnt your
county require a
site plan? I had
to file a plan with
the county that
detailed every
setback for my
house.
Hope you get
things straightened
out!!
MD
Jon, my husband
and I were VERY
grateful that
the foundation
contractor noticed
the problem, and
yes, we did have
to give the city a
copy of our plot
layout which did
include all of the
setbacks as we
had put them.
That is why my
husband is now
trying to get a
hold of the building inspector and
ask him that if our
plans were wrong
in the first place,
then why did he
approve them!?
Of course, even
though the city
told us we would
be getting a call
from the inspector
today, he hasnt
called at all, and
when my husband
tried getting a
hold of the inspector himself, he was
conveniently out of
the office for the
whole day and
unreachable on
his cell phone!
We dont want
to fight with the
inspector because
Im sure if he
became upset

Vince Miner built a custom house some years ago for $145,500 that had eight
bedrooms and four baths, amounting to 4,000 square feet. ($36.50/foot) He framed
it as a helper, helped pour all the flatwork, insulated it, and made sure everything
was ready for each sub as they came along. The house appraised at $375,000 immediately, or about $94/foot when finished. (Allowing for land, a 52% savings.) He did
the things he wanted wide hallways and stairways, high ceilings, and lots of extra
insulation. He has two feet of blown-in insulation over the ceiling. He didnt bother
to install air conditioning; in that house, ceiling fans are adequate. His heating bills
are negligible.

He was required by the neighborhood CC&R committee (Covenants, Conditions, and Restrictions) to put cedar shake shingles on the house, and he called
around and found a supplier in Montana who trucked down a load of short shakes
at a discount that were more than adequate. These saved him $1,700. Many people
were out of work at the time, and he got deals on subs. The roofer was in between
jobs and put the roof on for $42 a square. The tile sub was a student from the college where Vince taught. Vince never had anybody show up late on the schedule.
The result was that he built the house in four months. One luxury was a professional
estimator from a lumberyard who did his budgeting and scheduling, and found him
some deals, for a $5,000 fee. I have toured Miners house and was very impressed with
the workmanship. His savings are off the charts for a civilian owner-builder.

Another house with even greater savings that I toured was that of a tradesman, a sheetrocker who owner-built a high-end custom house. His house is valued
in the $145 per finished foot range, but he built it for $86 a foot. He traded for all
the services he could and further reduced the out of pocket cost to $43 a foot. It took
some time to fulfill all the trades, but he occupied his home at a 70% cash savings.

Another tradesman I know built a 3,800 square foot custom home for
$147,000 in construction costs ($39 a foot). He traded extensively to achieve this. I
have toured the two-year-old home of owner-builder Jay Sevison, the software manager mentioned earlier. It is an absolutely posh custom home built on an amazing $51
per square foot budget.

I asked one naysaying lender who refuses to do owner-builder loans how his
past O-B loans came out. He said they typically went over budget but admitted their
projects were done at a savings. I asked him to describe a successful project and he
described a woman owner-builder who came in right on her $257,000 construction
budget, ran a smooth project, and finished in eight months. Her secret to success?
She had three written bids for each trade when she applied for the construction loan.
She didnt work and ran the job full-time.

One lender told me about a couple where the husband was an engineer and
the wife ran the job full-time. It went so smoothly they did another, and earned
handsome profits. The woman got a license as a general contractor and now builds
for a living.

Several lenders described to me projects that saved 35% off estimated costs.
One lender in Alaska told me of a couple who saved 50%. A lender in Florida told
me that every owner-builder he has financed has moved in with a minimum of 20%
equity.

Success in residential construction is to come in on budget, on schedule and
on specifications. For owner-builders, I would add: at a savings. As we go to press
with this edition, O-Bs in our survey report an average equity on completing a new
house of $179,365. Interestingly, as O-Bs they bought land to build on, and land
appreciation alone added about $20,000 to their savings on average. Factoring out
land, they saved an average of 36% on construction. To me, this disposes of the myth
that owner-builders cant save money over using a general contractor.

We did some things right on our house that we consider successes. One was
the use of a spreadsheet budget. We got a lot of mileage out of the computer and fax
capabilities that saved us money. We had a very clean job site and beautiful finished
product. We found some stellar subs and used very good material. We were able to
upgrade many of the components to the very best available. We ran over our budget
but got a satisfyingly overbuilt house. We saved 45% over contractor-estimated cost,
and with appreciation on our paid-for land, we had an overall equity of nearly 60%
in the property on completion.
How to Score Yourself

Budget

The most important measure of your success as an owner-builder is how
much money you saved building your house according to specifications. You can
score yourself if you know what your construction costs are estimated to be by general contractors in advance. Or you can take the appraised value of the house (minus
land) immediately after you complete construction to compare it. Use the college
system, and give yourself a letter grade: D if you beat the GC estimate by ten percent (a 1.0 grade point average), C if you beat the estimate by 20%, B if by 30%,
and you get a 4.0 average, an A, if you beat the estimate by 40%.

In my case, the house was estimated at $106 a finished foot, which we calculate at $115 to reflect landscaping, construction interest, window coverings, and
other items which builders usually do not include in their estimates. We built the
house for about $63 a finished square foot, a savings of $52.
Estimate:
$115/ft.
As-built:
$63/ft.
Savings:
$52/ft.
Percent:
45%
Grade:
with us enough
he could make it
very hard for us to
pass our inspections or even to
schedule them
in the first place,
but if some of this
is his fault, then
something has to
be done about it.
If we find out that
we are not wholly
responsible for
this, then we are
thinking of asking
the city to recoup
some of the costs
to have our hole
dug again. Fat
chance getting
the city to comply
with something
like that though!
I guess well just
have to see how
things go.
Karlie in Ogden,
UT
Tom, we looked
at the plat for
our land that we
were given when
we had it under
contract. The way
they have our
lot marked, and
everyone elses
for that matter,
clearly shows our
property line right
up against the
street we are off
(or in other words,
it starts where the
curb and gutter
are). There are no
other indications
of an easement
or otherwise.
Believe me, we
have studied and
studied that thing
over the past 24
hours. We are
in the process
of trying to get
ahold of someone
(preferably the
building inspector
who approved our
plans) who will
talk with us about
the details of our
lot so we can
move forward as
soon as possible.
Karlie in Ogden,
UT
Karlie, The plat
map wont tell you
setback requirements. The setback requirements
are usually part
of your zoning
ordinances or statutes. Mostly you
need to read the
language of these
to find out whats
going on. A lot
of places include
typical setback
requirements with
the building permit
application. For
example, if they
say they want a
50 setback in the
front this means
they want 50
from your property
line not 50 plus
10 or 20 for
easements. The
easements are
usually for utilities
and if the house is
set back 50 there
is no interference
with their ability to install and
maintain these
systems. Sounds
more to me like
the foundation
guy wanted the
weekend off.
Tom, when I
called the building inspector on
Monday to get
some sort of guidance as to what
was going on, he
told me that the
setback is from
our property line
which he said
is ten feet back
from the curb
and gutter and
not from the curb
and gutter which
Schedule

In order to compare apples to apples, lets look at what it takes to build the
average American single-family home. The average home last year came in at 2,400
finished square feet, according to the U.S. Census Bureau. The average time to complete for general contractor projects was six months, according to the National Association of Home Builders.

Lets combine those two statistics (as we did in Chapter 10) and make one
of our own. 2,400 square feet divided by 6 months to build equals 400 square feet
per month. (F.P.M.) This is the rate of production of the average general contractor. This is a fairly poky pace of building. Some builders in the NAHB study came
out building homes at 878 feet per month by my calculation. But lets use averages to
score owner-builders.

The average contractor-built home came in at 400 feet per month of building. To score myself, I calculate that my 3,500 finished square feet were built in eight
months for a production rate of 438 feet per month:
Finished square feet:
3,500 square feet
Months to complete:
8 months
Feet per month:
438 f.p.m.
National builder average:
400 f.p.m.
Percent over average:
10%
Grade (1.0)

My own score was an A for budget, and a D for schedule. Score yourself
when your project is over. Let us know how you do. Visit us at OwnerBuilderBook.com
and start a journal or blog of your experiences.
If You are Married

No report card tells the whole story of success. How your project affected
your personal life is not measured by grades on schedule and budget. There are
many stories about marriages and families suffering during home building projects.
A common saying is: A marriage that survives building a house will survive anything. One architect told me he contracts separately with both husband and wife in
case they divorce.
we thought all along was the property line. Even though the
only thing written on our documented and approved permits
was a setback limit of thirty feet in the front and the setbacks
for the sides and back, he told us that was only the setback
minimum, and that there was an easement of an additional ten
feet in front which he claimed was just common knowledge
(again, there was no mention of any additional setbacks or
easements on the approved permit except for the initial
thirty feet). We even turned in a plot layout as they specified
with all the setbacks on all four sides of the house as we had
prepared and drawn up. Why then did he approve the plans?
All along weve been told by the developer and the city office,
thirty feet, thirty feet, thirty feet!!! Why would the inspector
then assume that we would just figure things out on our own?
Ive never done this before, maybe Im being stupid, and if
Im wrong Ill admit it, but some things just dont seem to add
up! This happened to the house 3 lots up from us also and I
believe they are using a builder who does this sort of thing all
the time. I cant figure out how someone who builds houses for
a living and is used to the ins and outs of building could make
the same mistake as someone like me whos doing it all for the
first time!
Karlie in Ogden, UT

Owner-builders
I
interviewed
acknowledged the stress, but often said that
the project was ultimately a bonding experience. Some mentioned added closeness with
children who were involved in various ways in
the undertaking. Elaine says that our project
brought us closer together and was very enjoyable. I think she has a short memory, but I am
grateful for her attitude.
Property line is property line. They are not allowed to interpret

the law as they see fit. It has to be written in the law. If you
dont want to pay twice for work you probably have done
right to begin with asking to see it in writing. Another option
is to call your lawyer, but I would do the footwork first and go
from there. If you go to their office try getting the info from an
office clerk instead of the inspector himself. He is not likely to
be helpful if he is trying to defend himself. If they are uncooperative, keep going up the food chain until you get to an
elected official. Again, good luck.

I remember yelling about something
one day on the job site, and when the dust settled looking around red-faced to notice that
we were in the middle of a busy neighborhood
in a house without doors or windows.
The person I would call is your surveyor. My surveyor did the

plot plan, as required to pull my building permit. My surveyor
laid out the corners of the house, offsets, and excavation
depths.
Your building code should not have been issued with a mistake in the plans, and an inappropriate setback is an obvious
mistake (they would have caught that locally, but you arent
building here). However your surveyor should have known
better, and this is where the mistake first occurred.
We had to put our house back 10 further than we were
expecting, but we learned this when we got the plot plan
back so it really wasnt a surprise other than we cut down a
tree we would have otherwise liked to keep and had to cut
down another that we wanted to keep. This is a common firsttime O-B mistake.
Karlie, if your local govt. is anything like ours, they wont
assume any responsibility for having approved your plan. That
approval is simply permission to proceed with the project, not
an assurance that youve satisfied every aspect of the code.
Generally, theyll help you out if they can, but the responsibility of knowing and satisfying the code is the builders, not the
inspectors. At least, thats the way it works around here. Hopefully, youll get this ironed out soon and get progress rolling
again. Good luck!!!
Jon in Ellicott City, MD

One O-B told me that he got so upset
at his wife when they were hashing out details
that he left the car and walked all the way
home from the job site (three miles) on several
occasions. I have heard similar stories from
others who have built homes, with or without
a contractor.

The antidote to serious marital friction in building a house is planning. As experienced owner-builder Jim Stark of Nebraska
City, Nebraska (mentioned in Chapter 5) says:
Building a house will stress any marital relationship. Making choices is a strain. We put
together a notebook of what it will look like
before we even start. We get most of the arguing out of the way. We take pictures as we plan
and turn it into an album. We use the album
to develop specs.

Georgia Architect Robert Byington
adds: If the marriage is not stable, dont start.
If you can decide on a plan, and become almost
concrete with that plan, you will succeed. Preplanning is paramount. The average person
does not understand the effect of moving a
wall three feet. Planning lessens the number
and complexity of the problems.
Sources Say
The Complete Guide to Contracting Your Home lists nine reasons construction projects fail, like underestimating costs.
Better Houses, Better Living illustrates hundreds of typical user-unfriendly design mistakes and explains how to eliminate
them.
If you have average organizational skills, you can be your own general contractor. If you have trade skills, you can
extend your equity by a considerable amount.
(See page 263)
Journal
OK guys, I know this is gonna sound soooo lame, but I cried today when I went out to the property.
To see our dream our hundreds of hours of planning, our attention to detail on every aspect of the house become concrete (and wood, and glass...) is unbelievable. For those of you just starting out hang in there! There is no feeling like the
one I had today, walking through the house, replete with wall and soffit framing now, and imagining. Remembering when
we thought of this closet or that window. Yes people, clearly I am emotionally attached now. And the coolest thing is that
I know there will be so many more of these wow moments each time some critical new aspect of the house comes into
being. When the drywall goes up. As the lighting is installed. When the kitchen is no longer a skeleton, but a gleaming
announcement that you have arrived in the heart of our home. And, finally, when we move in and it becomes our home.
Wow.
Enough cheese. The guys are gagging, or may have already quit reading, and even the women are thinking ummm, is
she OKAY?! On to the stuff you are interested in...
Cara in Orlando, FL
Journal
ICF is going along nicely as usual.

I found my first two Oopss.
1. The roof is drawn incorrectly on the plans...theres really nothing I can do about this one. Its my fault...its just nobody
caught it in time. My SIP panels are already formed, but if you look at the pictures (see link above), I raised the ICF wall in
two places to try to compensate.
2. I forgot to increase the garage door height to 9. (Subsequent edit:) Realized while out on site that I had increased it
from 7 to 8. Im drinking tonight to try to decrease the evil thoughts that keep making me think Im screwing everything
up.
Arnold in Colorado Springs, CO
Jon, its true, the city isnt assuming responsibility over anything, and we decided that instead of fight with them over this
and delay the project another couple of weeks, that we could just do our best and move on. Our excavator came out
yesterday and dug the extra 10 feet out on the backside of the house. He charged us an extra $350 for the rework
which with the initial cost of the dig at $500 only brought us to a total of $850. With the charge for the rework added,
our excavator was still less expensive for the digging of the hole than the minimum $1,000 on all of our other bids. Our
footings guy showed up early this morning and by this afternoon they were pouring the cement even though at that point
the rain was starting to come down heavily. Im just glad to see that we are moving forward again. I hope that at least for
a few weeks (?) we wont have any major problems!
Karlie in Ogden, UT
Forums
Is it me, or are my wife and I just going through a difficult time? I love our new (uncompleted) home. But at the same time I
am totally sick of it. It is like a millstone around my neck. And my wife and I bicker more than we ever have. We will finish
it. But this is a heck of a load to take on. Lets see...I now have blurred vision, high blood pressure, bronchitis and am
short-tempered with the people I am building this house for. I would love to hear your comments as to how this affected
your marriage/sex life/job/health/attitude.
Joe in Elkhart, IN
Whats the good of a home if you cant enjoy building it for the people you love? When you decided to tackle the job
yourself, you knew it wasnt going to be easy yet you took the task. IMO, theres no appreciation in the things you do if
you dont lose sleep or have headaches over what youre building. Its normal for people to go through what youre going
through. No one is immune from the frustration of building a home yourself. However, you should never place a home
ABOVE your marriage no matter how frustrating the process is.
If anything you should take care of first, take care of your marriage. You home doesnt breathe or have feeling, but your
wife and kids do. My 2 cents. Jim
Txhim in WI
Thanks for the tip. Im trying to hand this over to God. I can deal with it, but sometimes it frustrates me that I am there on a
Sunday night, sweeping up, while she is at home reading to her daughter. I guess I didnt expect $75K in equity to come
easily. But it is a big headache. It keeps me up at night worrying about people breaking in and stealing all my tools, etc.
Or the wasted five yards of concrete. Or not hitting lumber at its lowest. Or subs lying to me. Or selling the house we are
in now. Or worse yet, money. Im over budget on framing due to ICF, but under on plumbing, heating, and electric. I went
overboard with the master bath. Glass block/marble shower and deluxe soaker slipper tub. In-ceiling speakers. Concrete
kitchen countertop. Faucets. We will be over budget. I am hoping a bit less than 10%.
Joe in Elkhart, IN
Joe, sometimes its better to take 2 steps back than 2 steps forward. Ive heard too many marriages being destroyed in the
process of building a new house, because they placed everything above their marriage. This, I will NEVER do to my own.
You sound like a spiritual man with a loving family and thats a good thing. The greatest reward awaiting you is NOT so
much your NEW HOME being completed, but the LOVE of your family that is still there when the house is completed.
And to enjoy it with them is the GREATEST REWARD. Good luck on the house. Jim
Txhim in WI
Hi Joe, remember: you and your wife are a TEAM! Right? Maybe the fact that she IS at home reading to the kid(s) is
allowing you to be at the site doing some work. At least thats how it is for my husband and me. Sometimes I get frustrated with him because I never get to contribute in actual hands-on as much as he, because Im the one home with the
kids 95% of the time in order to allow him to be doing the physical work on the project(s). Just a thought.
Remember to appreciate each other. It gets hard sometimes when you feel youre working so hard to do something for
those you love and its a struggle. Hopefully you can find an evening when you wont have to be at the site so you can
spend time with wife/family and all show appreciation for each other! This too, shall pass. As my mama always says.
Good Luck!
Michelle in KS
Early in the decision process about building a house, I was given some advice that really did not sink in until we really got
busy. That advice was REMEMBER, THE HOUSE IS NOT YOUR RELATIONSHIP.
We still have our good days and not so good ones but the important thought is the relationship is more important than
the house. We are planning a vacation for the whole family at the end of construction, sort of as a reward for surviving it
together.
Ralph in Wellington, CO
We are in the early building stages after a year of planning, and I do wake up in the middle of the night at times with
worry. I hope I will get into the swing of things as we move along. I used to complain that I was doing all the work and
making all the decisions while my husband worked and played golf off in la-la land somewhere. Now I realize that this
project is better as a one-man job. I cant wait around for him to investigate with me, or approve of the decisions I have
to make on the spot every day. Thankfully, he is pretty much keeping out of my way. I have told him that if he has any
aspects that he must have, just let me know way ahead of time, and Ill work that into the plan.
Building the house is fun. My stress is not having enough hours in the day to do all I want to. There always will be a
better deal around the corner, but you have to just do the best you can as you go along, and NOT LOOK BACK!! :-)
Betsy in Midlothian, VA
Thank you for starting this thread. I am also at the early stages of stress planning/bids/selling current home)! Everyones
advice is helpful and I have to keep reminding myself to calm down and take a look at my family. Please keep this thread
going. All of you are indirectly encouraging and keeping me focused on what is important. Thanks, Jessica
Jessica in Midlothian, TX
Im glad I started this one. I was feeling pretty low. Wife and I went out to a Builders Showcase of houses last weekend.
Looked at a lot of houses between $250-300K. None of them, not ONE was as nice and neat as what we are building.
That was a psychological turning point for me. We didnt see any tile, claw foot slipper tub, glass block walk in shower,
concrete countertops, ICF construction, private deck, walk-out basement, basement steps from garage, central vacuum
system, whole house audio, network wiring or any of the other amenities we have built in. Are we going over budget?
You bet. By about 8 or 9%. But we even looked at $450K houses and we still didnt see any of that stuff, just a bigger
house. Has this been a huge hassle? YOU BET. If this doesnt kill me then I think its worth it. I would probably do a few
things differently, but so far seems worth it. Drywall is going up today, along with backfill and septic.
Joe in Elkhart, IN
OK, first of all you need to look at your project as a series of small steps to complete, ultimately arriving at the final one.
Take a look at your schedule and contractors see what is coming up in the near future. Prioritize. Fix any gaps in your
schedule. Dont worry about 3 months from now or whether or not someone isnt going to show up next week. There
is only so much control and certainty you can have in building a home. Everyone runs into glitches along the way but
anything can be fixed, corrected or handled to get you back on track.
John in Clarkston, MI
Just after the basement and 1st floor framing was complete, the storage shed of my lumber company burned to the ground
with a million dollars worth of lumber along with it. They think from a hot plywood delivery. They are tap dancing like
crazy to replace the lumber and fill orders. I am driving my pick-up to other lumberyards and getting material they dont
have. So far, only a couple days lost on material, and the subs are finding ways to work around the situation. No one
has left the job!
This is a business that comes with many headaches. Im a control freak, so many lessons are being learned, and Ill be a
better person when its done. This is an adventure, and Im meeting lots of characters along the way.
We will be moving into our house this weekend. After 7 months of hard work, lost sleep, money crunches, etc. This last
month has been the most stressful. We had a couple of big curve balls thrown at us right at the end and it proved to be
very stressful.
We have a 2 year old, we both have full-time jobs, and we too have had the discussions over who is doing what and
the other one feels like they are doing more. My husband did most of the hands-on things while I kept our current house
going (groceries, bills, shopping, cooking, cleaning, etc.) and made most of the phone calls. It is important to take time
to thank each other for their work sometimes that is all that your spouse will need that small gesture when they have
had a terrible day! And if there is a fight, you may have to be the first to apologize there is a lot of give and take when
building a house. Compromise, compromise, compromise!!!
Towards the end I would make my to do list in the morning, go over it with my husband, and then tell myself We are
going to get through this day and then we will worry about tomorrow or next week later. Take one thing at a time, plan,
and TRY to stay organized. The end will be here before you know it!
Heather in Baton Rouge, LA
Thanks for starting this thread. I have heard many warnings about this area and it has worried me a bit. We are in the
planning phase and I will try my hardest to work out as much detail/planning in advance to save from headache later.
But I am planning on stressful days ahead and will leave that up to God because you can only do so much, right? I want
to daily give my building project over to God and just hope/pray for the best. I know attitude is a big factor for us, my
husband is a pessimist and I am the optimist. This should be fun, lol. Count it all joy right? Many people have told me if
your marriage can survive building house together you can survive anything. Glad to hear things are getting less stressful
and more rewarding.
Mrs. Owner-Builder in Nw, WA
Anyone who is going to take on a project this large needs to be prepared to spend lots of time and energy. Turning it
over to any entity and hoping for the best is bound to cause problems. Ask for strength...pray for guidance, but, certainly,
dont count on any outside source to take care of things. Learn what you can ahead of time, and be prepared to drop
back and punt; you will find you need to be flexible. As every sub so far has told me, building a house is NOT an exact
science. Some aspects look very different on the plans than they do in reality, and things will require alteration every step
of the way. It IS an adventure...and certainly will have its rewards. Getting stressed out will not help. There are very few
things that may happen that cant be fixed, as long as you are on top of things. Good luck.
Marriages can survive building a house, but only if you are prepared to make some serious discussions and compromise
a part of the process. I have been doing this kind of stuff for others (designing or building for 20+ years) and have had
only three couples split because of the process. What I unexpectedly found was that the design process is sometimes
worse than the construction process. The reason is the design is a very emotional, wants, dreams and reality check issues.
Construction is just working a plan and scheduling details. Too often the reality of designing a home involves things that
you will never encounter buying a used home or a new pre-built (or tract) home.
Dale in Tucson, AZ
The Ten Commandments shown in this chapter have been expanded into a series of DVDs.
(See page 268)
Sources Say
MEN DO ASK DIRECTIONS
Home Improvement Survey Shows Differences Between Sexes
Money Pit News Bureau While homeowners turn to home improvement television more for entertainment than education, they tune into home improvement radio for project advice, tips and product information.
Tom Kraeutler and Debby Robinson know this better than anyone. The expert team hosts The Money Pit, a nationally
syndicated home improvement radio show that fields hundreds of calls on home improvement hang-ups each week.
Robinson and Kraeutler recently teamed up with Fred Miller, President of Consumer Specialists, and Managing Director of
the Home Improvement Research Institute (HIRI), to determine the most common problems and projects home improvement
minded consumers wanted to tackle.
By analyzing detailed records of almost 2,000 listener calls and emails to the program over the last two years, Millers
team was able to determine the most common problems and projects consumers were concerned about. Among the findings:
Men were one and a half times more likely than women to ask how to do a project, perhaps proving that men will ask
for directions. Women, on the other hand, were four times more likely than men to call and ask how to fix a project gone
wrong.
Women were twice as likely as men to use email to ask a home improvement question.
Men were more likely than women to contact the show to get help with a home improvement problem.
Women were over twice as likely to ask a safety question then were men.
Almost 80% of consumers with home improvement questions want to know how to do a project, solve a problem, find a
product or clean something.
The top 10 projects consumers have questions about were: Floor Coverings, Plumbing, Windows/Siding, Kitchen/Bath,
Walls/Ceilings, Heating/Air Conditioning, Roofing, Bugs, Pests & Rodents, Indoor Air Quality/Mold; and finally Basements/Crawlspaces.
We were able to determine who calls, what problems they want to talk about and what projects they want to do,
explains Miller. For example, we determined that almost 80 percent of the shows audience wants to know how to fix a
problem, do a project, find a product or clean something. We also learned how consumer questions can vary by gender
and by geography. And by comparing emails to calls; we even know how they prefer to ask those questions, he said.
Kraeutler says that callers to the program are looking for easy to understand answers for home repair projects and 14
percent of those reaching out to the show did so purely to get a product recommendation from the expert team. They
are often confused by advertising claims and turn to us for independent guidance on the right products, economical ways
to complete their projects, new ideas and even to prevent them from getting in over their heads, he says. Surprisingly,
more men (63 percent) than women (37 percent) contact the show to ask questions and they do so in disproportionate
numbers to the actual audience makeup. We know that 46 percent of our audience is women yet they only account for
37 percent of those who contact the show. It may be that while women are playing an increasingly major role in home
improvement, they still may be somewhat more reluctant than men to reach out for help, says Kraeutler.
Women Seek Help Fixing Problem Projects
When it comes to whos calling for advice on how to do a project, the study showed that men are one-and-a-half times
more likely to pick up the phone to ask for help. However, when it comes to calling to ask how to fix a project gone
wrong, women are four times more likely to ask that question. It sounds like men will ask for directions but that doesnt
necessarily mean theyll get it right, says Robinson And, the team learned that while men dont seem to mind calling to
ask a question, women are twice as likely as men to email their question.
The data shows key topics on womens home improvement list are plumbing, kitchens/bath, roofing, bugs, pests/rodents,
indoor air quality/mold, basements and crawlspaces, and painting and wallpapering. Men prefer to talk about floor
coverings, windows/siding, foundations, insulation/ventilation; and decks. In our industry more than half of all home
improvement dollars are spent by women, says Robinson. While it might not surprise you to learn that women show
more interest than men do in kitchen/bath or painting/wallpapering topics, even we were surprised by how many more
roofing questions came from women than men.
Where listeners live also has a huge impact on their concerns. Consumers in the South were far more interested in doing
projects themselves than those in the Northeast. Floor coverings were a big concern for those in the Midwest, heating and
air conditioning was a unusually high level concern for those in the South and West, and Northeastern consumers, who
must batten the hatches for winter, were very concerned about issues like indoor air quality and mold. This has been a
fascinating project for us, says Kraeutler. Its just like tearing open the walls of a house. Once you get inside, you never
know what you might find.
The Money Pit The Money Pit is a nationally syndicated live call-in home improvement radio show, hosted by veteran broadcasters Tom Kraeutler and Debby Robinson. For more information go to moneypit.com.
Chapter 16: If You Decide to Use a Contractor

There Are a Lot of Reasons to Use a General
n experienced construction lender whom I admire puts his loan applicants

through hoops to make sure they are prepared to begin building. He insists
on thorough preparation and a commitment to the time-gobbling process
of on-site supervision. If the candidate cant make the commitment, he steers them
to the use of a general contractor. 65% of his O-B candidates wind up going with
a general.

Perhaps you are in the category of the 65% who intend to owner-build
but acknowledge that they cant make the commitment to succeed. It involves too
much time or disruption. You may be under a tax or land contract deadline that
impels you to move more quickly than you can prepare properly.

It helps to be honest with yourself. You know the facts. You can save a great
deal of money, but only if you conscientiously take the steps needed to effect the
savings. You know the time commitment involved. You know the tasks involved
and can make an informed and mature choice.
Sources Say
Your New House
gives 13 questions
to ask a general
contractor before
using him.
(See page 263)
Journal
Signed contract and

agreed the construction starts on May
15, and ends by
Nov. 15. Any day
later than promised,
contractor will be
charged at $300 per
day.
Hugh in Irvine, CA
Sources Say
The Complete Idiots
Guide to Building
Your Own Home
includes a chapter on
how to hire a contractor; sample contract,
change order form,
and GC interview
questions.
(See page 263)
228 Chapter 16: If You Decide to Use a Contractor

O-B Connections
Hi Mark, I had a builder give

me a price from my plans. I
signed his contract. He has not
started construction yet and the
contract has no start date or
completion date. How would I
go about firing him? He hasnt
done anything yet. I filed the
permit with the city, I hired
the surveyor and he is just not
reliable. Do I owe him anything
since I signed the contract?
Jeff in Hampton, VA
Im copying my response to
Jeff Lewis, our webmaster, and
experienced owner-builder, so
he can comment too. I think
you can walk away, but it may
depend on the language of
your contract. You can run it by
an attorney in a no-cost initial
consultation (call and ask for
one). You could do this with
several attorneys until you see a
clear picture.
All the best, Mark
Standard I am not a lawyer
disclaimer, but I would be
surprised if the contract doesnt
tell you what you need to do
to cancel it. Usually it would
be just written notice XX days
prior to start. Since there isnt a
start date, Id say the sooner the
better.
It wouldnt hurt to have a lawyer
look at it though. Hope everything goes well for you!
Jeff in Provo, UT
Thanks Jeff, for your response.
I dont want him to build our
dream home which is over half
a million, but he is trying to get
something out of it. To be fair
I asked him how much time he
spent preparing his estimate for
me. He came back and said it
was recommended that he ask
for 10% of the first draw and he
would walk away. I think he is
nuts. He wants me to pay him
$6,500 just because he is not
getting $65,000 that he was
banking on. He almost never
meets his deadlines and I just
didnt want to deal with that
through the course of construction. All through the process of
trying to sever our relationship

You may want to go through a contractor-built process before
attempting to solo. Like me, you dont want to do something halfway.
Life is long there are many chances to implement your growing
knowledge.

For many people personal time is scarce, and realistically, there
is a good-sized part of the public for whom money is more abundant
than time. You may be in the happy circumstance of being able to afford
all the house you want to build, general contractor notwithstanding.
How to Hire a General

You may choose to dedicate the limited time you have to do
a thorough job of hiring a general contractor. You have a good deal of
knowledge of the system from reading this book, and you wont go
into this process naively. Like the steps in the owner-builder process, you
need to be organized and tenacious to get what you want.

Start by interviewing possible general contractors. Dont invite
them to give you a sales pitch yet, just interview them as background
before deciding what to do. Use the subcontractor interview form on
page 89 as a guide and add other concerns you have to the interview. Be
professional about this much is at stake. Follow the suggestions in
Chapter 7 for a well-documented interview. If you go to the trouble of
interviewing many generals, say six to ten, with the same form, a picture
will emerge of their differences and your preferences.

Select the generals from whom you will solicit bids. Follow the
guidelines in Chapter 3 for a detailed bid from a general. You will supply
written descriptions and specifications along with your plans to elicit
a detailed bid. The generals will supply line-item pricing and a written
schedule.

You dont want any of the many contractual disasters that owners
have endured with their generals. Thus you will ask for the keys to a thorough evaluation of your builder from a financial and legal standpoint:

Evidence of workmens compensation insurance.

Evidence of liability and builders risk insurance.
Evidence of performance and completion bondability.
Identities of the likely subcontractors.
References of three most recent customers.
Recent credit report.
Three trade references.
Bank reference.
Copy of state contractors license.
Terms of House Warranty.
Chapter 16: If You Decide to Use a Contractor 229

Experienced California construction lender Jan McClary explains:

Hire an experienced contractor. Check their license. Do they have workmens
compensation and liability insurance? Hes responsible to make sure that every sub
has the insurance, and that the policies name the owner as additionally insured.
Two years down the line, the neighbor comes over and says, your contractor did
this to my property, and it will cost $20,000 to fix. If the owner has the certificate
of insurance naming the owner as additionally insured, (and the bank, too) then,
even if the contractor is out of business, it will be covered. He has to make sure that
every sub has the workers compensation and general liability insurance naming
the owner and certificate holder as additionally insured. Require a performance
and completion bond. Check out him and his documentation. Credit report, three
references, two trades, bank and license boards. Have a consultant review the
cost breakdown and the general contract, and check out the insurance.

Take the time to check the references you get and to record your findings.
Ask past customers of the general: Did you have problems? Did he service problems
promptly even after you occupied? How long have you been in, and what kind of
problems have you had? What was it estimated for, and what did you wind up paying
for it? How were relations during the project? Was your move-in date met?

If the references have been in their homes for a long time, the contractor
didnt give you the three most recent like you asked. He may have given you a his
friend or relative. Pass over that contractor, or get fresh references from him and try
again.
Whos Got the Risk?

There are several contractual arrangements under which homes can be built
by general contractors. The first and most well-known is the contract bid. 90% of all
custom residential construction is contracted this way. The general tells you the price
and signs a contract saying he wont go over it. Theoretically, there is a risk for the
builder that it will cost him more than what he has agreed and he will lose money.

But what is the reality of the situation? Heres a multiple choice question:
If the budget starts to go over, the builder is likely to:
a. Shop for bargains.

b. Cut corners.
c. Hit you with change orders.
d. Take a loss.
(Answer: He will resist a and d. If you resist c, he will go to b, whether you know it or not.)

Generally the risk returns to you in any of the major contract formats, but
there are differences:

You decide what you want for yourself. You are under no obligation to accept
a contract bid arrangement from a general. You are in the drivers seat and you call
the shots, even if it takes passing over several builders until you find the one you can
work with.
he continued to
say Id like to
build your house.
$65,000 is a
lot of money. He
never acknowledged my wants
or needs. I see
him as a contractor, not a builder.
Ill keep you
posted and when
we finally get
started Ill use the
Forums and log
my progress.
Jeff
Forums
I currently live in
the suburbs of
Washington DC
in the eastern
Panhandle of WV.
My wife and I
have been looking
at contractors to
build a home for
us and we have
been running into
all kinds of crazy
pricing.
We consulted with
a very established
Realtor who
informed us that
a well-built home
would run us from
$100-$130/sq
ft. So we were
planning on this
amount. We
approached three
different contractors to bid out our
home. It was a
1-story home with
1,880 sq ft. Here
are the prices that
we got:
1. $167 sq ft
2. $176 sq ft
3. $187 sq ft
This seems way
off from what
our Realtor
had informed us.
So we are now
exploring the
possibilities of an
owner-built home.
Are huge savings

possible in this
case? Are these
prices way out of
whack?
Aaron in Bunker
Hill, WV
Costs may be
higher than you
realize. The costs
per square foot
can vary widely
based on finishes,
locations, and
labor costs. Your
numbers would
not be out of line
for my area.
I forgot our exact
costs (Ive probably posted them
if you search the
forums on this site),
but I think it was
around $150 psf,
but that included
my utilities, which
amounted to
several tens of
thousands for
my location. It
appraised for
around $250 psf.
Some folks here
are able to do it
for very low costs
per square foot,
either because
they do a lot themselves, or because
they have lowercost markets
where labor is
more affordable.
A local builder
in our area was
charging $100K
plus costs, for a
reference.
John in Erie, CO
Costs per square
foot do vary quite
a bit depending
on location. As
they say in real
estate...location,
location, location.
Costs within
about a 30-mile
range around us
Major Construction Contract Types

Owner-Builder
Fixed Fee
Cost-Plus
Contract Bid
Description:
No contractor
You hire and buy.

You pay a fee to
contractor.
He hires and
buys. You pay
a percent of
costs as fee to
contractor.
He just charges
you the agreed
amount.
Risk:
Yours
Mostly yours,
reduced technical.
Mostly yours
Mostly his
Quality of
House:
Savings:
Control:
High
High
High
Low
High
High
Medium
Low
High
Medium
Medium
Low

In any case, it is good to permit the builders to estimate your project in the
normal way, where they estimate the costs in a contract bid. With cost estimates in
hand, you can reflect on the best way to proceed.

You could turn to a cost-plus arrangement where you pay the costs directly
for the subs and materials used. If the costs come out to $500,000 and you have
agreed to a ten percent fee, you pay $50,000 to the contractor at the end. Review the
discussion on cost-plus in Chapter 3 to understand why this is not a high savings
approach.

Fixed fee, however, is a winner if you handle it right. Without specifying
fixed fee you can entertain the bids of several good generals. You can then negotiate
with your preferred general. With his estimated costs in hand you can ask how much
profit he will make on the job. The answer will come back as 10%, 15%, or some
number that is certainly negotiable. Ask, Then to build this house with a ten percent
fee, you would expect to earn $50,000? If so, would you be willing to accept that as a
fixed fee and let us pay the subs and suppliers directly?

Under this arrangement, you would receive and pay the invoices for subs and
suppliers directly without any markup or profit to the general. You are free to substitute your own subs or suppliers in any category and to negotiate with the generals
usual subs. You can do any self-work you wish. Since your general is not getting
markups on subs and materials, he may ask for more than customary profit something to cover overhead. If he doesnt dont offer it. If he does, it is now a negotiable
number, which is an advantage to you. If you have several contractors vying for the
work, you have leverage in setting this fee.

Any agreements like the above need to be settled with your contractor in
advance of construction, while he is in the position of competing for the job. Let the
contractor know that you intend to have a well-defined relationship in the beginning,

and get protections that are very solid. You will be in a very rare and enviable position
among new custom homebuyers.

It does pay to shop and negotiate, even if you think you have a very good deal
before you. When I was restoring my house in Ohio in 1983 after a house fire, I got
a estimate from the insurance company who said flatly: This is what we will pay to
restore your house. I decided to get a second estimate, from a restoration contractor.
He found several additional items that he suggested be included in the restoration.

I called the insurance company one morning from work and described five
or six items to them that they hadnt considered. The conversation took about 15
minutes and resulted in the insurance company paying $7,500 more than they had
planned. This resulted in an improved payout of $500 for each minute of the phone
call. In DSDE dollars, I would have had to earn $75,000 to add that much to my
net worth. That would have taken me a year and ten months at my then salary of
$42,000.

Prior to finalizing your contractor choice, before you sign the agreement,
take time to do some telephone shopping to check with other generals on your acceptable list to see how close they would come to the terms you can get from your first
choice.

Bide your time. Based on normal market fluctuations, experts tell me that
your bid for the same work could be 15% higher or lower. It may pay to be patient,
or to be ready to move if the numbers are right. Your preparation will help you to
recognize a bargain.
You Know What You Are Getting Into

Having read this book, you know all about the planning steps involved in a
thorough custom home project. The planning work is like shooting foul shots at the
end of a basketball game when you are behind. You can score without taking time off
the clock. You can reduce your costs substantially before a shovel of dirt is turned,
and before the interest clock starts ticking. Even if you hire a contractor.

You can decide after you do all the prep or at any point along the way if you
want to go the contractor route. Keep your options open at first. Everything you do
and all you learn will help you at points along the way, and give you a better finished
product and more equity.

A recent story in the newspapers in Phoenix, Arizona was about a homeowner in the historical district. The owner there got a licensed remodeling contractor
and gave him $90,000 to remodel the home and never saw him again. Dont be casual
about a decision to use a general contractor, thinking that you can place yourself in
his hands and relax. You must be vigilant to use the legal safeguards of contracting
described in Chapter 12, including the rule of not paying before work is done.

Review Contractor Games in Chapter 3. Be savvy in looking out for your
own protection.
probably vary by
$30/sq ft due to
location. Build
out in the sticks
and you can do
it reasonably, tell
somebody youre
near the North
River Yacht club or
the Country club
and look out! Ive
also found that if
you get people to
quote your work
who are used
to doing work
in those neighborhoods, their
pricing seems to
reflect where they
spend most of
their time.
Once again it
comes down to
shopping around
and trying to get
the most for your
money, but even if
you pay more in
those areas youll
still see savings
come appraisal
time if you O-B it
or shop around
a bit.
Ted in Northport,
AL
Forums
Recently I visited
a local Parade of
Homes and came
across a program that a local
(reputable) builder
was advocating.
The program
national program
called the UBuildIt
program, and it is
essentially a partnering program for
people who want
to be an OwnerBuilder. For 4% of
the construction
cost of the home,
you get to use
the contractors
resources and you
get to use their
subcontractors
and vendors at

their rates. They even have agreements worked out with the bank to help you finance. I was curious if anyone had experience with this program.
Thomas in Toledo, OH
Thomas, My only experience with UBuildIt is that I had considered opening up a franchise myself for the Austin area.
However, someone has beat me to the punch. The system is essentially a construction consultant service targeted
exclusively to Owner-Builders. The fees range from 4% up to 10% for each project and are based on the total cost of the
project and how much involvement you, the owner, want UBuildIt to have. The program encourages current construction
knowledge, however, they provide training as well. They direct O-Bs in obtaining financing, permits, materials, etc. for
their specific project. If you do not have subcontractors chosen, the UBuildIt consultant recommends them. These could be
ones he/she has used in the past or chosen from a specific list available to the UBuildIt franchisee. They also provide all
the forms that are needed over the course of the project. Overall, if you dont have the time to do the project yourself, or
feel overwhelmed by the process, then this could be the way to go. You can also check your local Yellow Pages under
project management or construction management and get comparable bids from firms already doing it. Hope this helps.
Jim in Austin, TX
All you are really doing with these companies is paying the General Contractors fee to someone else. While it MAY be
a little bit less, I dont think that it changes much.
Jeff in Provo, UT
Thanks for the feedback. I ended up meeting with some representatives from UBuildIt, but I was not convinced that their
service was worth the requested 4%. They were not able to guarantee me that I would be able to get any better pricing
from subs than if I were to go it alone. However, I was impressed with the overall service, and if I didnt have 8 years of
commercial construction experience under my belt, I would probably spend the money and hire them.
Thomas in Toledo, OH
BuildMax.com may be able to help you. They are like the UBuildIt folks in some ways, but it sounds like they are a bit
cheaper.
Anonymous
We were not impressed with our local UBuildIt representatives and chose not to contract with them. I trust you have a
better result. Take care.
Robert in Chandler, AZ
We started out using UBuildIt. It did help us get our loan. But, after the first two quotes being much higher than when we
went to get our own quotes we got a bad taste in our mouth. The reps answer was, you get what you pay for. We
still used the better quotes and were completely pleased. Our UBuildIt Rep contracts with Wausau (panelized building
system). So, my husband negotiated that we only pay the fees on that part, since we felt the cost was very fair. I was so
glad he was able to do that because every time I saw their fee in our spreadsheet it would make me sick.
Another thing that is odd. The fee is a percentage of the quotes that they come up with. No incentive to keep quotes low.
Angie in London, OH
Congrats on getting UBuildIt to come down to reality!
BTW, they should have had nothing to do with getting your loan. Although since we did not use them, I cannot prove it;
but with my 23 years in mortgage finance, I am [reasonably] sure they are getting a kickback from IndyMac or whoever
is the lender on their loans.
Robert in Chandler, AZ
I just started with UBuildIt in Las Vegas and I have been very pleased so far (although every office will be different). My
local UBuildIt office charges a flat fee of $6.50/sf living space to handle the whole thing which basically encompasses
helping you through the plans process, selecting subs and bidding out your plans, and then they provide around 25 site
visits to check construction quality and whatnot.
My total cost to construct is in the neighborhood of $260K $270K and my UBuildIt fee is approx $14K; no contractor
around here would even consider speaking with me for a fee like that. Even O-B construction consultants I spoke with
started at $25K-$30K for their fee. Most full service GCs I spoke with charged 20% of the construction cost to handle the
project.
I have no doubt that a person COULD do this themselves, but this particular office has many sub contacts and more
weight in getting them out to the jobsite and getting the job done. Plus they take a lot of the stress off me knowing I can
call them when I need help. I feel I could easily make $14K in mistakes on my own. Plus you can get any of your own
bids and do whatever portion of the work you want yourself.
I was ready to give up on my entire project until I met with the UBuildIt guys and now we are working on the plans and
getting the engineering done. Im actually doing the architectural drawings myself and the UBuildIt guys are proofing them
to make sure it has what I need. Im saving a few grand just in plans.
I will also say that my office didnt push IndyMac at all, in fact they suggested against them and sent me to a local lender
with much better terms and closing costs are about half what they would have been with Wells Fargo. They have been
very helpful in providing advice on how to save money all around.
Jeff in Henderson, NV
You get the knowledge and relationships of an established builder vs. a one-shot amateur deal.
My experience with BuildMax is that they charged a cheaper % than UBuildIt, but they based their percentage on TOTAL
cost including land, not just the wholesale cost of the house like UBuildIt. Works out the same for a lot less help, no ONSITE expertise, and no local sub and supplier relationships.
Anthony in Lebanon, OH
I was impressed by UBuildIts organization but, I was not impressed by their fee for consulting. Basically all they do is be
there for questioning and give you tips. You still do most of the legwork yourself. My local UBuildIt office charges $2,500
for preconstruction (budgeting, plans, land, etc.) and $8-$9 per sf for construction consulting. If you build a 3,000 sf
home, your UBuildIt fee would be $24K $27K just for construction consulting. I would rather pay a GC to do all the
work than pay this ridiculous amount for consulting. Just my two cents.
Scottie in Durham, NC
I have just completed Phase 1 with UBuildIt. This is the phase where they help with budgeting, do the initial bidding, (in
theory) help with land & planning, etc.
I have been very unhappy with my experience. I think this could be very driven by the Franchisee, but at any rate, I have
not been happy and DO NOT plant to continue to Phase 2. I know the lot next to ours is progressing with a different
local UBuildIt rep, so, apparently, some people find value.
My issues/dislikes:
1) In our land selection, we provided the UBuildIt person the Plat plan for our division. He said things looked fine. Later...
we found out we needed to have a GeoTechnical assessment (~$3.5K) done on our lot. He totally missed this as it was
stated on the plat plan he reviewed.
2) We purchased two lots, which it turns out, in our county needs to be combined into one. He had worked with multiple
lot owners before, and neglected to tell us this. Fortunately, I was independently calling surveyors (not based on his suggestion, though he is supposed to provide that guidance) and found that out. I was lucky; I called at a perfect time to get
this done the following month vs. if I had been a week later, it would have been two months. Additionally, the cost of
this is $2K.
3) We are on a hillside lot, so we had been out to the lot on three different occasions with our UBuildIt rep. We were
measuring how deep the house could be in order to avoid having to have sub foundation walls based on the slope.
Each time, with his Expert Guidance we measured from the road curb to the 30 building line, then to the back of the
house to assess the drop-off. We did all of our planning based on this process. Turns out, the county/township has a set
Right of Way at which you measure the building line from there. Which is ALWAYS behind the road curb. I had even
specifically asked about this as my current house had the same building line, but was further back. He assured me that it
was from the road. Net, this adds $10K to our budget.
4) Timing... we expressed clearly back last August that we wanted to start by this March. One of the services is they are
supposed to help you with the Timeline to keep you on track to start when you want, and also manage the schedule of
the building process. I had asked a few times when I would need to have house plans selected and he said Ill let you
know... needless to say, it is now two months past our desired start date and we dont even have a building permit
yet... So, that was frustrating.
5) The initial Ballpark budget, which he stated was +/- 10% was WAY off. We made several changes to go with some
less expensive options, so we thought we would be nearer the -10% end of the range. The actual bids came in about
20% higher than the HIGH end of his range. So, if you consider we had kept the house as initially planned, I am guessing it would have been 25-30% higher. A budget miss of nearly $60,000 is not very expert.
6) I really didnt see any benefit from using his Contractors. One of their big sales pitches is Well get a lot better prices
since we do close to 100 houses a year. Very few of his bids were better than mine, and NONE were substantially
better. Several of my own bids were better than his.
7) He wasnt open to Alternative construction techniques. I asked about SIPs and ICFs, and he said they were both
Ridiculously expensive and he wouldnt even bid those out as options. I have chosen ICF, and it is more expensive for me
but, not nearly as much as he portrayed it to be.
8) The cost structure... I found a General Contractor with a good reputation who would charge me 14% of the cost
that they managed. My UBuildIt fee was 7.25% of THEIR projected costs. So, when I figured in the ~ $60,000 of work

and direct purchases I planned to make... these fees became much more similar so to have someone fully manage the
project would have been at about the same cost. The UBuildIt said well, I still charge you 7.25% of the $60,000 even
if I have nothing to do with it whereas the General Contractor said If I dont touch it, why should I make money on it? I
wont charge you for work you do or supplies you provide without me.
9) His help wasnt very helpful in my opinion. His help on Building Permits was, Well, you could get a building permit
now. No guidance, no forms, no this is what you need to take and where, no contact names, nothing. Just get your
permit. If that is the help I was going to receive, I can figure that out on my own and save $20,000.
The one thing I did find helpful, was the Specification sheets. These were the sheets used to identify what I was looking
for from subcontractors when bidding. I havent compiled a list yet, but plan to at some point. I know some people have
good experiences, but I absolutely did not.
I think if you want to minimize the legwork, the bidding process is a lot of work so, if you just went with the UBuildIt
bids, you could save a lot of time and effort. I havent seen their Phase 2 guidance, but the reading I have done, and
what I have learned on my own makes me confident I can save money... which is really needed now that the budget was
as far off as it was!
Why anyone would use UBuildIt rather than a GC is beyond me. I have seen the UBuildIt franchise literature and one of
the main selling points is that their franchises can make as much profit as a GC but without the work and the LIABILITY. In
my opinion, UBuildIt is a scam.
Paul in Canyon Lake, CA
We have just had the worst experience with UBuildIt located in Mill Creek, WA. It is a SCAM. We were told by the
owner that if we found out early in the process our plans would not work, we would only lose the site assessment fee
of $600. Wrong! More like $2,000! Beware of their contract wording. You lose the non-refundable portion of your
fee. AND if youve only paid part of it they require you to cough up the extra! We found that they do very little for the
owner-builder you do almost all the work yourselves, all they do is collect the fees. Go with a GC so you at least get
what you pay for.
Bill
My experience with UBuildIt in Orlando was the same. Different details but no expert advice, higher bids, not maintaining timeline, etc. I would not recommend them.
Lyn
I had a similar experience with the UBuildIt office in Bellevue, WA. We had them give us a budget estimate as part of
their Phase I service. Their cost estimate was more than spec homes being built by GCs in the same neighborhood our
lot was in. I also had trouble in how they calculated their cost/sq ft estimate. They added both garage and porch areas
to the heated square footage and then used the total square footage to determine the cost/sq ft price. My understanding
is that cost/sq ft are usually quoted on heated living space only. This had the nice effect of making UBuildIts cost/sq ft
estimates appear lower than they really were.
Our UBuildIt fee was going to be $36K on a 3,500 sf house. They basically provide consulting but we would still have
to do most all the work. I also share the same concerns about their subcontractors that others have had. They planned on
using their own subs and would not bid the trades out. They claimed to save money, but I dont see how when there is
no price competition.
We are planning to break ground in January and we will not be using UBuildIt. We are going to hire a GC to do the site
work, foundation, framing, siding and roofing. I will then personally oversee the finish work on the house.
Mark in Redmond, WA
Mark, we are about on the same time frame. We hope to start building about then. We also decided the best we could
do would be have a contractor get to the stage the roof is on, and then take over. Good Luck
Lyn
My experience with the UBuildIt program was completely different than those I have seen in this thread. I am using the
UBuildIt program in Louisville, KY. The franchise was recently purchased by a new owner and he is really a go-getter. He
is providing me with lots of support. He talks to my subs almost every day and he is really as involved as a GC would
be on this project. Also, the fee is very reasonable and I am still saving 15-20% over using a GC. So if anyone is thinking
about building in the KY area, I would highly recommend UBuildIt.
Carole in Elizabethtown, KY

Carole, as I told the franchisee here, I didnt think his program was bad, it just wasnt for me. He wasnt saving me any
money over what I could save myself, since I had already done one project as owner-builder, and he didnt know any
more about the city regulations than I did.
Lyn
I am surprised you say you could save 15%-20% vs. using a GC. I found several builders, including a Homearama
builder (Not sure how widespread Homearama is... it is basically a home show of high-end homes) who would only
charge a total of 12% on top of cost. Compared to UBuildIt at 7%, this was only a 5% savings... and you would have
to do none of the work with the GC. Maybe it is market-dependent, but I would strongly encourage everyone to look
around at other alternatives. If I found someone to GC my home for 5%, I probably would have vs. doing it on my own!
Since each office is independently owned and operated, I think the owner of your local franchise makes the difference.
The office that I am working with did not charge me a percentage of the cost to build my house, just a set fee which is
going to be about 4% of my cost to build. Also, unless you are the person who pays the subs and suppliers directly, the
GC can mark up the cost to get more profit. I know that not all GCs do this, but they can. Since I am controlling much of
the process, I am shopping around for bargains on all of my supplies and negotiating with the subs. If you have a GC
they will not have time to shop around, and they usually have the same subs with set pricing. I realize that UBuildIt will not
work for everyone, but I just wanted to let others know that it worked for me. I considered doing everything myself, but
since this is the first house that I have built without a GC, I just wanted the support.
Carole in Elizabethtown, KY
Ive been with the UBuildIt in Orlando now for months and stayed with them due to three different GCs not being able to
match the price I can get with UBuildIt. They give me great prices until I ask for it on paper with specs of what I want then
all of them started backstroking. I have bids in writing that show that I would save almost $100,000 or more on my home
over the price of a GC. That is with the sq ft charge of UBuildIt.
They have stuck by me and help with the issues the county I live in has thrown at me time and time again as well as the
subs that I chose for walls and roofing when engineering became an issue with the countys numerous unannounced
requirements as well as code changes that occurred. It hasnt been a piece of cake but unless the GCs know who to pay
off in the county, I cant see how they could have completed it any easier. But, I was told in our initial meeting that I had
to do the legwork to get the job done. Well, if that is all it takes to save more money than I make in almost three years,
I think its worth it. Plus, I get the house I want, not what the GC thinks I want.
Kathy in Ferndale, FL
Halfway there now that we are through the county. The guys at UBuildIt have been helping me every step. These guys
have even gone above and beyond what Ive paid them for by finding more efficient and cheaper ways to do my
project. They even got me with a new sub that came on board with them and has a cheaper more efficient insulation that
is going to save me almost $4,500 as well as a new cabinetmaker that saved me $2,500. Im elated with them for that.
Hoping to finish up in the next 2-3 months, weather permitting. So, for now Ive had no real issues.
Kathy in Ferndale, FL
I thought I would give a quick update on our project. We started in January, currently are trying to wrap up rough-in and
get drywall up and hope to move in by end of August.
As I mentioned before, we decided to hire a GC to get us through the first half of construction. My GC still has a few miscellaneous tasks to finish, but he is almost complete with his part of my project. I have been managing the rough-in subs
for the past month. We did cost +21% which is a bit steeper than I wanted to pay, but it is a builders market in our area.
When finished, I will have paid my GC ~$30K in fees which is less than the $36K UBuildIt wanted. My house has been
the only one my contractor has been working on and he is on the job site daily. He is letting me use his subs and in many
of my trades I am ahead of budget because they have given me much better pricing than Ive bid out my own. There
has also been many times when he has suggested alternative products or solutions that have saved me $$. Im hoping to
finish at around $105/sf.
Overall, I think Ive been extremely lucky and have found an outstanding GC. One who is honest, hardworking and has
been helping me keep costs down. On the other hand, Ive been watching a neighbors custom house go up across the
street. They are using a GC, started in September (8-9 months ago) and still dont have drywall or siding on.
Mark in Redmond, WA
Mark, you just made us all happy, give our best regards to your honest, hard working, money-saving GC. Then tell him to
move to Orlando. As you can see from this website, there are a lot of us who would love to work with someone like him
to get dried in and then proceed on our own. Best of luck to you both.
Lyn

Forums
My husband and I have done quite a bit of research on the approach we want to take, from complete owner-builder, to
panelized, to have it completely built, to a combo.
Our strengths:
Husband works in the building industry and has customers who have agreed to
* provide top of the line doors/windows at cost and install.
* building package (all trusses, lumber, etc.) at big builders prices (good discount)
* drywall at cost or deep discount
* etc.
Weaknesses:
* both have FT time-consuming jobs and we lack the time to manage the project
* dont know the good subs from the bad subs
* dont know what a good labor price is.
We built our 24x40 barn as a test run...and that was enough of headache IMO. We tried getting contractors on our
own. But, they either wouldnt return calls or the prices seemed outrageous. When my husband was complaining to the
gentlemen that we purchased our lot from and who were building the home behind, they always provided us with a
name of contractor that worked out well. They actually approached us about building a home for us and we were getting
pretty discouraged with the Panelized guys recommendations for subcontractors...especially on the prices their subs were
quoting us. The folks we purchased the land from are excavators by trade but also have built several homes.
We think we found a potential compromise solution, but I want to get some feedback. They are willing to GC this project
and leverage all of the deals that my husband can get us. Show us all invoicing. They will do this for a 15% markup on all
of the costs. Is 15% a fair deal or is this too much? Should we continue planning/negotiation?
Mary in OH
Maybe offer them a flat fee for their GCing the project.
Jeff in San Antonio, TX
The question becomes why are you interested in O-B at all? The intent of O-B is to get quality construction (much higher
than spec), save money (eliminate GC OH&P), and to get exactly what you want. You can accomplish two of these goals
without O-B. The GC puts up with a lot of headaches in the construction process, and are compensated accordingly. For
me, I built at the top of my neighborhood (wonderful setting) so in order to get better quality construction on a customdesigned house, I had to save money if I ever wanted to consider that I might sell it sometime in the foreseeable future
and still cover my costs, so it was all about cutting costs as my primary reason to O-B.
Just because you O-B doesnt mean that one person does everything, or that you cant hire a foreman or construction manager or accountant or subcontractor or inspector. I worked with my SO, and we really had a clear delineation of tasks
she did vs. tasks I did, and there was very little overlap. Given that we had clear tasks and expectations between us, it
would have been fairly easy to use what you coin a hybrid approach and hire the services of a person to fill in for one
or the other, for a reasonable fee of course. I would argue that anytime you hire a subcontractor, you are moving toward
this hybrid approach, but this doesnt make you less an O-B.
If you decide the best option is to pay a GC for his services, I would recommend a fixed price for a certain package
of services provided. I do not like percentage-based fees. Lets use lumber as an example. How much incentive does
your GC have to call around to every lumberyard to try to get the combination of best price and service? Any money he
saves directly results in less fee for them they will simply use the lumber supplier they already have a relationship with
and quite likely this is not the lowest price you could find with simply an hour or two of faxing your material takeoffs to
the different lumberyards in any geographic area. I dont believe they will purposely look for the highest price for lumber
either, just dont expect much in the way of work to minimize your costs. The professionals will tell you (and most of them
honestly believe it) that because they do $XX,XXX worth of business they get better prices. This is pure fallacy. I found that
I could universally beat my subcontractor prices on almost everything (HVAC being the exception, you cant really get
this stuff without being licensed). I hired several subcontractors who changed their suppliers after my job simply because
I could significantly beat their delivered price, much to their surprise (every one of them told me I didnt have a chance at
meeting or beating their prices from their sources). Another example is architects or designers who charge by the square
foot; exactly what incentive do they have to minimize square footage? I dont disagree that these people that you hire
dont have your best interest in mind, but their fee structure is directly in conflict with the service they are providing which is
to ultimately save you money.
Afterword: Once Youre In...

Minimize Punch List

As a quality control on the house, make sure that items arent hanging over
after you occupy. They can become enormous. I had six pages of punch list (unfinished or incorrect items needing fixes before the contractor can punch out) after
my house restoration in Ohio, and refused to make my last payment until it was
completed. The contractor didnt want to take care of the little things, so he decided
not to pursue collection of the last ten thousand dollars. I took care of the items at a
big savings.

You dont have that advantage as an owner-builder. You will be stuck with
whatever is not right when all your subs have gone home and you have paid them.
The little items can linger for a long time. My list on the Riverbottoms home was over
100 items, most relating to my imperfections as a painter.

If you have a list, manage it. Use the worksheet on page 238, or put the items
on a spreadsheet with a column to tally an unfinished item count. Track your progress to completion.
The punch list

checklist shown
on the next page
is also available
on a spreadsheet
template in our
Free Download
Gallery
238 Afterword: Once You're In...
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75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
25%
50%
75%
100%
Notes

Forums
Hi all, I noticed
that many of you
brag on the high
appraisals of
your homes after
the building is
finished. In our
case, wed like
the appraisal to
be lower because
were trying to
avoid the outrageous property
taxes that we pay
on our current
home.
It seems like I read
in The O-B Book
that one way
to avoid higher
taxes is to take
receipts, etc., to
the tax authorities and prove to
them the amount
of materials that
actually went into
the home. Sounds
like a good idea,
IF it works. Out
here, appraisals are done by
comparing houses
to other houses
that are similar. So
wed like to avoid
that...
Im wondering,
has anyone actually done this? Did
it work? Were
building in a
high-tax area, and
although well be
building a smaller
home than our current one, we are
building next door
and are looking
for some tips on
keeping the taxes
as low as possible
(especially since
this is a semi-retirement home).
Bobbi C.
Bobbi, there
is a difference
between an
appraisal and an
Lower Your Property Taxes

Many owner-builders find themselves in the position that I did on moving
into their new homes. The new house is assessed much higher for property taxes than
their former residence. (The average owner-built home in our survey is 50% bigger
than the one it replaced.) My new assessment resulted in much higher property taxes
than I anticipated. I went down and appealed my assessment before the Board of
Equalization for my municipality and got a generous adjustment.

You are in a uniquely opportune position to get an adjustment as an ownerbuilder, and it can be a big savings. My evidence before the Board was that my home
cost less to build than they assessed it for. They accepted that argument along with
my statement about costs. I interviewed tax assessors in several locations around the
United States and they all acknowledged that receipts for construction costs would be
considered good evidence for adjustment.

The value of your adjustment can be substantial because reassessment does
not occur for as many as ten years in some localities, according to Peter Sepp at the
National Taxpayers Union. If you save $500 a year, your savings may mount up to as
much as $5,000. Mr. Sepp told me he is constantly amazed at the citizens who will
not make the effort to prepare and present a case for adjustment, no more than a
half-days work. Four hours expended for $5,000 saved is $1,250 saved per hour.
Better than Wall Street

Some homeowners are surprised to learn that mortgage interest usually
exceeds the cost of the house itself over a 30-year period. With interest, your home
can cost you two to three times its original price over the life of the mortgage. For
instance, principal and interest payments on a $350,000 loan at 8% interest would
amount to about $925,000 over 30 years. At six percent interest, the payments would
equal $755,000 over 30 years.

By planning carefully, you can turn this phenomenon to your advantage.
One way to make a quick reduction in overall interest is by setting up your mortgage
over a 15-year rather than a 30-year period. Principal and interest on a $350,000
loan at six percent for 15 years totals $532,000. (The monthly payment is $850 more
than the 30-yr. mortgage.) Another approach is to make balance-reduction payments
periodically in addition to your regular mortgage payments. By making one extra
mortgage payment per year, you can pay off a 30-year loan in 24 1/2 years.

Another option is to pay your mortgage biweekly, dividing your normal
payment in half, but making 26 payments a year. This strategy shortens a 30-year
mortgage by six years. Or, you could make an extra balance-reduction payment each
month. By adding $250 per month to $350,000 mortgage payment, you would spend
$67,000 to reduce a 6% mortgage by 7 years. You would save $111,244 in interest over
7 years thereafter. The return on your $67,000 is $111,244 and unlike stock market
returns, its guaranteed!
Help Someone Else

By following the steps in this book, you, the courageous owner-builder, will
accomplish one of the most substantial achievements available in our society. You
will gain all the advantages and status of owning a well-designed and meticulously
constructed home. Your personal wealth will jump substantially. Share your good
fortune. Put your knowledge to work on behalf of someone else.

97% of O-Bs in our survey state a willingness to help other owner-builders
in some way. But the answers to the survey question Did you have a good mentor?
are disappointing. Some things you can do for someone else: Join us on our website at OwnerBuilderBook.com. Respond to Connections messages from other O-Bs
and coach another owner-builder. Show up to offer on-site support and assistance.
Help build a Habitat for Humanity house or restore a Christmas in April (now called
Rebuilding Together) house or similar charitable construction project. Join a
church or civic group in repairing the home of an elderly or disadvantaged person.

Ask your questions and contribute your ideas in our General Forums, or join
our Local Forums organized for every U.S. state and Canadian province. Or, start a
construction Journal. Add to your knowledge and help others to beat the system.
Allow us to help you with further materials or answers to your questions. Call us tollfree at 888.333.BUILD.

Be sure to thank, in writing, the subs and suppliers who made you a success.
Share their names and business cards with others. Promote their success as they did
yours.

Now go build.
Whatever you can do, or

dream you can, begin it.
Boldness has genius, power
and magic in it.

Goethe
assessment. Your
taxes are based
on the assessment,
not the appraisal
(in fact, they never
even see the
appraisal, this is
between you and
the bank).
What my bank
does is appraise
the house before
construction to
determine the
amount they
are willing to
loan (they will
loan 80% of
the appraised
value). However,
if the estimate
you submit is less
than this, they
will lower the
appraisal. For
example, if my
bank appraises
the house at
$200K, they will
loan $160K.
However, if the
estimate I turned
in is only $150K,
they will lower
the appraisal to
$187.5K and
loan you $150K
(for this reason I
had to fatten my
estimates because
I didnt want to
limit my construction loan prematurely). At the end
of the project, they
will do another
appraisal because
now I have a
permanent mortgage, and not a
construction loan.
The appraisal will
now be based on
the amount of the
permanent loan.
Believe me, I am
going to use this
artificially low
appraisal to try
to lower my tax
assessment and
my insurance rates
(you should insure

for full replacement value anyway). My insurance agent said with my house, they would do their own appraisal anyway
due to the unique construction (ICF) in this area.
OK, the house were in now was based on the appraisal because we got a construction loan. For the new house, however, we are doing cash-only as we go along. That will probably make a difference. Sorry, I should have mentioned that.
But here in TX, they really do rely on other houses similar to the new ones in order to get some kind of value. I dont really
think thats fair, considering well probably pay much less for ours than some of the other new builder-built ones.
Bobbi
Forums
I bought this house. How do I find out about property taxes? or Where do I go for ask someone about property taxes?
Richard in Springfield, TN
What is the best way to appeal my new house tax appraisal? I would like to lower my property tax.
J in PA
I know on our property tax bill, it specifically states if you dont agree and would like to fight who to contact. In our
county, they have specific days and times that you can go to fight the assessment.
Dorthy in Muskegon, MI
I am an assessor, and I will tell you how I defend values. The best indicator of value is the market. If I had to defend a
value on your home I would look for similar homes that have sold recently. This is called a sales comparison approach to
value. Keep in mind that no home is going to be exactly like yours. Always make adjustments to the comparable homes,
never to the subject. Also surrounding neighborhoods make a difference. Try to keep local homes in your comps.
If all the homes that are comparable to yours are selling for more than two times your assessed value you might not want
to appeal. The appeal process can RAISE your taxes too. I would recommend getting a copy of your property record
card and see what information the assessors office has on your property. If you do decide to make an appeal, do the
work on the appeal yourself, there is no need to spend $300 on an independent appraisal that probably wont carry
much weight anyway.
Also, in Michigan there are two different values relating to homes, there is Assessed Value and Taxable Value, they sound
alike but are very different numbers. Assessed value is 50% of the True Cash Value of your home, or TCV. However if your
assessment goes up $5,000, thus the TCV of your home went up $10,000 that doesnt mean your taxes went up very
much, because you pay taxes on the Taxable Value.
Proposal A back in 1996 put a cap on property taxes so whenever there is a transfer of ownership the property becomes
uncapped for that year and the Taxable Value and Assessed Value are made equal. Then the property is capped
again and the Taxable Value can only go up 5% or the CPI whichever is lower, plus any improvements or additions you
might have added that year. I wish you the best of luck, in your tax situation........ and home building process. I am 24
and looking to build my first home as well.
Evan
Sources Say
Habitat for Humanity: How to Build a House lists items usually left to the owner-builder and how to handle them, such
as installing toilet paper holders, mounting a fire extinguisher, nailing up house numbers, putting in the medicine cabinet,
door locks, deadbolts, drawer pulls, towel bars, and smoke detectors. Also provides advice on water and gas shutoff
and changing furnace filters.
O-B Connections
Hi Alan, I am a resident in Whittier, CA and in the process on planning a O-B addition to our residence. I was looking
through your journal and am interested in talking to you as a mentor if you are open to that.
Kevin
Index 245
Index
B
Back-Up Plans, 162
Balance, Loan, 14, 128, 134,
Symbols
242
Bargains, 18, 121

Barter Club, 269
Beneficiary, 180
Bids
Follow Up Your Bids, 93
How To Get Bids, 92
Blocking, 65, 75
Blueprint(s), 78, 182
Bond, Payment, 176, 179
Boneyard, 121
Breakdown, Cost, 88, 96,
169, 180, 229
Budget Worksheet, 108
How To Use, 105
Building booms, 3
Building codes, 261
12-gauge wiring, 67
A
A/C, 67, 144, 146, 148
Absorption, 66
Accomplishment, 5, 191,
258
Accounting, 189
Accurate Takeoff, 84
Acoustics, 61
Acre, 14, 29, 106, 131
Addition, 9, 120, 244, 261,
268
Administration, 28, 121

Advance Planning, 190
Advance Specifications, 72
Aesthetics, 67, 79, 83
Aggravation, 192, 217, 259
Aggregate, 73
Agreement(s)
Contracting, 23, 182
Lien Waiver, 177, 178
Air-to-Air Heat Exchanger,
61, 62
Alternative Building Materials, 261
Appraisal, 1, 5, 29, 134, 168,
174, 194, 231, 242, 244
Architect, 5, 30, 40, 53, 63,
74, 77, 79, 128, 136, 163,
220, 259
As-Built Budget, 219
Auction, 133
Clean-up, 100
Clean Job Saves, 203
Clearing, 48, 109
Closings, Loan, 16, 134,
173, 176, 216
Compact Fluorescent Lighting, 67
Comparing Bids, 88, 93, 94
Competition
Atmosphere of,, 137, 139,
142
Computer
How to Use to Save, 126
Scheduling, 154
Consensus, 202
Consensus Breeds Creativity, 202
Considerations, Quality, 5,
7, 26, 55, 63
Construction Advisor, 6,
24, 34, 162, 169, 186,
203
C
Cold Sweat Equity, 3
Cafeteria-Style, 5, 23, 63,
92
Calendar, 96, 129, 133, 151,

154
Cantilevering, 81
Ceiling Fans, 5, 18, 60, 64,
212
Cellular Phone, 191

Ceramic Tile, 102
Certificate of Occupancy,
199
Change Orders, 23, 64, 69,

81
Cheating, 6
Checklist, 35, 56, 163, 172
Classified Ads, 38, 136, 142
Construction Bargain Strategies, 131, 149, 260

Construction Contract
Types, 230
Construction Loan, 8, 72,
134, 165, 259, 268
Construction Work Schedule, 128
Consumer Reports, 153
Contingency, 70, 99, 103,
116, 169, 180
Contract
Bid, 7
Contracting Agreement,
182
Contractor Games, 21, 231

Contractor Show, 27, 99,
139
246 Index
Contracts, 23, 180, 182, 187,

220, 270
Cosign, 171, 176
Cost-Engineering, 149
Cost-Plus, 23, 181, 230
Costs
Breakdown, 88, 96, 169,
180, 229
Insurance, 177, 179, 228
Life-Cycle, 83
Operating, 82, 148, 205,
E
Emotional Roller Coaster,
191
Energy Savings, 66, 145

Engineer
Structural, 168
Equalization
Board of, 242
Escrow, 129, 176
Estimate, 2, 6, 9
Extras, 201
257
County fees, 181

Coupons, 274
Curb Appeal, 61
Custom Builder Magazine,
51, 71
D
D.S.D.E., 18, 98
Daily Record, 190
Design, home, 53, 63, 75,
223, 257, 261, 264
Designer interviews, 259
Developer, 3, 36, 132
Directories, 87
Disability Insurance, 179
Disasters, 149, 180, 200,
217, 228
Do-It-Yourself, 125
Door, 54, 156, 244
Downturn, 149
Draws, 84, 173
Dream Home, 8, 17, 52, 212
Dream Home Notebook,
25, 53, 169
Duties, 31, 34, 185, 197, 271
F
Fax, 36, 71, 88, 90, 92, 106,
127, 155, 162
Features, 1, 5, 53, 60, 66,
127, 133, 200
Fees, Impact, 13, 181
Fees, Title, 100, 124, 134,
173
Fees, Title Update, 173

Financing, 109, 134, 149,
176, 263, 264
Firing, 11, 152, 217
Fixed-Bid, 7, 23
Fixed-price bid, 5, 181
Fixed Fee, 136, 230
Forms, Lien Waiver, 167,
270
Forums, 38, 243, 272

Frequent Flyer Card, 145
Future-Proof, 60, 260
Helpful Links, 152, 243

agfirst.com, 135
aibd.org/consumers, 138
ALNO-Kitchen-Planner,
64
builderstrade.com., 139
Construction Journals,
129, 220, 243
eBay, 62, 128
energystar.gov, 146
Forum User Links, 129
Free Download Gallery,
58, 89, 92, 104, 164, 179,
212, 237
General Forums, 38, 243
Google.com, 128
IHEonline.com, 172
indymac.com, 135
Local Forums, 243
lynda.com, 98
O-B Search Function,
129
ontariocontractors.com,
171
Owner-Builder Connections, 38, 129, 243

Owner-Builder Survey, 8,
20, 34, 35, 66, 92, 125,
128, 166, 188
Passes for Builders Show,
140
Sample Loan Proposal,

168
User Tools, 164

G
Guerilla Economics, 20
Calendar, 129
Lists, 129
zurichna.com, 176
Home & Garden Show, 5,
42, 87, 139
Index 247
Home Center Stores, 106,

121, 143
Home Design, 259, 261
Home Show, 139
House Features, 129, 133,
257
House Specifications, 72,

88, 99, 127, 153, 186, 219
How-To, 268
I
ICF, 61, 66, 71, 82, 86, 124,
129
If You are Married, 220

Impact Fees, 13, 181
Independent Inspections,
205
Inspection(s), 156, 206, 211,

212, 265
Inspector(s), 6, 12, 22, 86,
106, 181, 198, 199, 204
Insurance, 179, 228
Insurance Cost, 174
Integrate, 32, 185, 189
Interest Rate, 134, 172
Interior Decorator, 86
Internet, 128, 142
Interview(s), 127, 129, 144
Itemize, 92
Tax deductions, 194
L
Labor, 3, 23, 69, 81, 177,
180, 189
Land, 128, 131, 168, 172,
177
Landscaping, 57, 61, 66,

158, 201, 209, 257
Lawsuit, 75, 175, 202, 217
Lender(s), 5, 9, 35, 72, 86,
93, 106, 172, 193
Liability, 79, 90, 166, 178,
179, 182, 228
Lien, 25, 126, 167, 168, 178,
264, 270
Lien Release, 167, 270
Life Cycle Costs, 83
Liquidated Damages, 164,
180
List of Features, 40, 55, 56,

58, 60, 61, 65, 66, 257,
260, 268
Loan, Negotiate, 134, 172
Loan, One-Close, 172
Loan Presentation, 171
Loan Proposal, 46, 167, 168
Low-E, 61, 65
Lowering the Threshold, 4
Lumberyard, 6, 40, 87, 91,
106, 121, 134, 154, 218
M
J
Job Control, 167, 270
Manage, Management, 31
Manufacturers, 67, 139
Margin, 27, 71, 154, 258
Mark-Up, 5, 27, 126, 230
Market-Driven, 54, 58
Measure, 31, 185, 189, 202,
219
Mechanical Trades, 8, 125

Micromanagement, 188
Middleman, 26, 135
Misconceptions, 9
Mistakes, 6, 35, 181, 189,
215, 223
Moonlighters, 123
Mortgage, 4, 134, 146, 171,
173, 242
Motivate, 32, 36
MP3, 84, 268
Multiple Listing Features,
56
Multiple Listing Service, 56

Myths and Propaganda, 5,
21
N
National Hardware Show,
67
Negotiate, 92, 121, 134, 153,

164, 172, 230, 269
Network, 38, 129, 140, 188,
196
Newsletters, 66, 272
O
Off-season, 149
On-Line Auctions, 133
On-Site, 9, 24, 34, 48, 64,
116, 169, 200, 243
Need to Be, 200
Operating Costs, 82, 205
Organize, 25, 32, 120, 134,
167, 203, 228
Origination Fee, 16, 134,
172
Overruns, 6, 99, 189, 208

Owner, Sell By, 260
248 Index
Owner-Builder Exclusive, 16
167, 187, 228
Shade Trees, 66, 145

Shop, Shopping, 24, 34, 70,
104, 106, 119, 122, 127,
139, 143
Shops, Pawn, 140
SIP, 66, 124, 139
Software, 124, 129
Special Reports, 90, 266
Specs, 30, 54, 71, 88, 92, 109,
168, 222
Spreadsheet Budget, 104,
127, 219, 269
Step-Up Strategy, 14
Strategies, Construction
bargain, 131
Structural Engineer, 86, 109
Subs, Subcontractors, 46, 87,
89, 93, 177, 269, 270
Finding Subs, 87
Good Subcontractors, 187
How to Get Subs to Show
Up, 186
Sub and Supplier Input,
Refund(s), 126, 145

Releases, Lien. SeeLien
Remodel, 99, 105, 140, 167,
231
P.O.I.M.M., 213
Package Plan, 23, 174
Paperwork, 175
Parade of Homes, 34, 55, 64
Pawn Shops, 140
Payment Bond, 179
Permits, 48, 181
Plan Hard, 32, 42
Planning Steps, 36, 38, 163,
Resale, 52, 60, 78

Research, 67, 91, 120, 133,
172, 272
Rsum, 169
Retirement Plan, 17, 22
Rights, 171
Risk(s), 7, 22, 58, 85, 120,
131
Dangers and Difficulties,
231
210
Plans, 5, 30, 48, 69, 75, 77, 81

Pre-wire, 60, 62, 101, 112,
Running the Job, 188
260
Pricing, 22, 126, 133, 141

Procedures, Draws, 173
Project Notes, 50, 150, 250
Property Taxes, 3, 16, 242
Proposal, Loan, 167
Protection, Insurance, 177,
179
Punch List, 237
S
Savings, 26, 80, 82, 83, 84
Savings Account, 17, 52
Savings Suggestions, 1, 18,
259
60
Scare Tactics, 22
Schedule, 22, 25, 30, 128,
Sub Recognition, 213

Successes, 215, 217
Superintendent, 26
Suppliers, 124, 168, 173, 179,
186, 230
Surveyor, 86, 186
Sweat Equity, 3
133
Q
Qualifications, 8, 11, 169
Quality, 5, 26, 55, 60, 63
Quicken, 25, 128, 189
Quit-Claim, 171
R
Radiant Heat, 76, 139
Realtor, 56, 59
Reasons to Use a General,
227
References, 9, 78, 91, 153,
Staying on Schedule, 208

Schedule, Computer, 128
Schedule, Written, 151, 163
Schedule Reinforcement
Program, 163
Schedule Worksheet, 160,
164
Score Yourself, 219

Self-Work, 3, 34, 140, 170,
188, 208, 270
Risks, Dangers and Difficulties, 210
Rules, 211
Sell by Owner, 260
T
Tax, 2, 3, 16, 36, 134, 145
Taxes, Property, 242
Team Members, 86
Telephone, 8, 54, 60, 154,
231
Template, 96, 129

Index 249
Ten Commandments of
Owner-Builders. See221
Term Life Policy, 180
The Journal of Light Construction, 139
Thousand Hours of Planning, 34, 170
Three Bids, 30, 44, 91, 269
Title Insurance, 109, 124,
134, 173
Tools, 190
U
Underestimate, 9, 106, 209
Upgrade, 1, 23, 61, 70, 93,
142, 149, 189
Utilities, Temporary, 158
W
Waiver, Lien, 25, 177
Warranty Deed, 168
Wealth-Building, 13
Why Plan?, 33
Why You Need to Be On Site,
200
Work-at-Home, 84
Workmans Compensation,
90, 177, 228
Workmanship, 7, 164, 218
Workshop, 104, 136
Work Schedule, 156
Written Budget, 105, 141,
151, 191
Written Schedule, 151, 163
Z
Zoning, 48, 131, 181
250 Index
Project Notes
Movie 251
Appendix
The movie they made in the Riverbottoms house

I was in my office in the house last summer working on the fourth edition
of The Owner-Builder Book when a young man came to the door with a flyer.
He handed it to me and waited expectantly while I read:

FEATURE FILM TO BE MADE LOCALLY
Dear Homeowner:

The Locations Department for Together Again for the First Time, a
feature film about a family who is reunited at Christmastime has chosen
your home as a possible candidate for the films principal location, the
Frobisher family home. We love the style and design of your home, and
would like to hear back from you if you are interested in participating in this
project. First, let us give you some more details:
What we need:

An American-style home with two bedrooms or more
When we would need the home:
On-Line: OwnerBuilderBook.com
252 Movie

Appendix
Three to four weeks from June 26 July 22

6 days a week (no Sundays)
What we could offer you:

Monetary compensation

An insured production and crew

The owners name in the credits

Parts in the film as extras

Being involved in the process of major motion picture
filmmaking

Opening your home to experienced and professional actors
I felt a flutter of owner-builder pride, but dismissed it upon realizing that this
was a flyer brought to more than one house in the neighborhood. I said, I
doubt you want my house. He said that it actually seemed to fit the criteria
and asked if he could take a look. I asked him what he was looking for, and he
said, A great room with high ceilings, a breakfast nook, a traditional look, and
a grand staircase.
We showed him in, and he took a look around. I said that since we didnt have
a grand staircase, we probably wouldnt fit, but I knew someone who did. So
I walked him two blocks over to the home of Jeff Lewis, our webmaster, and
owner-builder extraordinaire. He thanked me, and I forgot about it within two
quick strides, returning to my office and back into editing.
That night, Jeff Lewis was meeting with me on website development when the
doorbell rang again. This time two women introduced themselves as location
managers for the film, and
wondered if they might take
pictures of the inside of the
house. I let them in, said Have
at it, and returned to my
meeting with Jeff, rehearsing
to him the showing off of his
house to the first visitor. Jeff
just smiled at the compliment
and we were soon lost in the
work again. By the time the two
visitors interrupted us later,
nearly an hour had passed.
Call Toll-Free: 1.888.333.BUILD
Movie 253
We like your house. Would you

consider letting us make a movie
here? We were standing in the entry
brightly illuminated by overhead
lights usually turned on when we
had guests. I guess wed consider it.
Id have to talk to
Elaine. Shes very
fussy about the
house. I couldnt
resist asking who
would be in the
movie. She named
people I recognized
like Patty Duke
and
David
Ogden Stiers. I
recognized
the
name, although
he is more widely
known by the
name
Major
Charles Emerson
Winchester
III
from M.A.S.H. I
had admired him
as the narrator
of my favorite book on tape, a Clancy
novel called The Cardinal of the
Kremlin.
you, she said. I watched her in some

amazement as she went directly to
negotiating with me the terms of an
agreement. Finally I stopped her
and said laughing, You think about
it we wouldnt want to talk specifics
right now.
Jeff and I went back
to work, but now it
seemed to occupy
my thoughts. A
couple of days
later,
working
in the garden, I
had the thought
that it might be
interesting for our
book and website
to
have
the
experience. I also
thought that the
house would need
some sprucing up
if it would be on
display, and got
busy
handling
the long-delayed chore of repainting
the capitals over the front windows.
We had some flowers to plant, and
within a week, the house looked nicer
than usual from the street. I was just
reconditioning the last shutter on the
front when a car drove up on a Friday
morning, and a group of preoccupied
movie people piled out.
She mentioned a hunky actor named

Joey Lawrence, but we call him
Joseph or Joe, according to contract.
I was apparently too old to know
of his extensive work on television
such as a long run on a show called
Blossom where his character Joey They hardly seemed to notice me as
Russo was known for exclamations they studied the house, and talked
of Whoa. Heres what we can offer with each other. They kept using their
Appendix
254 Movie

Appendix
hands as viewers
to frame the house
from
various
perspectives
as they talked.
Two
other
vehicles
pulled
up, and about
a dozen people
talked excitedly.
They presented
themselves at the door, and showed a
great deal of deference and friendliness
to Elaine and me as we invited them in.
This time, the director was with them,
and they spent an hour and a half
studying the house, and discussing
specific scenes in detail. I dispensed
cold cans of soda and stayed out of the
way.
After about an hour, the unit
production manager took us aside
into the parlor and asked what our
concerns would be about the use of the
house. I brought up several issues like
how would the house be treated, how
would it be maintained through the
process? He took notes and listened
respectfully. He said that floors would
be protected with furny (furniture)
pads and sheets of plywood. He said
that in previous projects, no insurance
claims were filed, just a simple
replacement of a bit of carpet burned in
an electrical overload of some camera
cables. That was the worst hed heard
of. He assured me that they would
agree to a deadline for cleanup and
restoration, and that there would be
daily maintenance
cleaning at the
site.
He asked me if
the money offered
would be acceptable.
I
had
already
determined not to
accept money; we
pay enough taxes
as it is. I asked him if they could
offer film editor support on our DVD
development project instead. He had
no problem with that and seemed
flexible and creative.
At the end, the director stopped to talk
with me for a moment and said, I like
your house. It fits our story. I told him
that I was very proud of it, and that
we had built it ourselves. He said
they would get back to us. As they left,
the production manager stepped back
up to the door, and said, Just so you
know, the leaves would have to come
off your maple tree its a Christmas
movie, you know. I exclaimed aloud,
Oh no thats my baby! Youd have to
agree to replace it with an equivalent
if it doesnt survive. He nodded and
smiled. Well talk.
Now Elaine and I talked seriously about
the possibility. She was hesitant, and
I understood completely. We wrote out
our concerns. How would our homebased business be conducted? What
would be the effect on our insurance?
Wed call the agent. Nobody was going
Movie 255
agents company. The homeowners

policy would in no way, shape, or form
cover 100 people on our property for a
month with elaborate equipment and
monster power generators. And the
company didnt want to be named in
any claims that might occur, even if
my coverage was dormant. So they
planned to cancel my policy outright.
They further said that they would not
reinstate it if any claim were made
to any insurer during the course
of filming. They didnt want to be
implicated.
to smoke on site, were they?
The Location Agreement
Within a short time the unit production
manager was back with a location
agreement for us to sign. It was an
interesting read; I found it well-suited
to the interests of the movie company,
but light on homeowner concerns.
Its the same kind of risk an ownerbuilder takes when a contractor
provides him an agreement for work to
be performed. The agreement usually
features the interests of the offering
party. Nothing was said about the
maple tree, for instance. Nor about the
DVD consultation. And there was no
certificate of insurance showing what
their carrier would cover.
I asked them to rework the agreement
on several points and dropped a bomb
on them my insurance would be
canceled when the project started.
Thats what we learned from my
The movie company had never heard

of this one before. They went back
scratching their heads and did a lot of
homework. To their credit, they came
up with creative solutions to each
point I raised. For instance, the next
version of the agreement came back
with the maple tree named, and if in
the judgment of both parties it needed

to be replaced the company would pay
for an appropriate tree to replace it.
I asked for a date for the decision, for
sole discretion as to replacement, and
Appendix
256 Movie

Appendix
an equivalent tree.
One the third version of the agreement,
the
tree
paragraph
read:
Furthermore
and specifically
if the Norway
Maple, located
in the front, or
west yard of
the Property,
is deemed by
April 7, 2007, unhealthy because of
the filming process according to the
sole discretion of the Owner, then the
Producer will replace the tree with an
Owner-approved equivalent tree.
A very can do associate producer
on the project creatively reworked
the agreement to our satisfaction.
He included deadlines for all agreed
film company responsibilities like
restoration of the property and
reimbursement of company-paid bills,
like electrical utilities, in a prompt
manner, with penalties of so many
dollars per day for each day of delay.
They offered some nice benefits like
payment for a hotel and meals at any
time at our discretion to escape the
movie project.
Best of all, they engineered a legal
agreement with my insurance company
that would prevent cancellation of our
coverage. Very impressive. By now,
Elaine had grown comfortable with

the project and the caliber of the movie
to be made, and we both agreed to the
deal.
Why They Chose
Our House
After filming
the director
called our house
the perfect
house for the
movie. It didnt
have the grand
staircase he
wanted, but our
second-story
bridge...
(Continued at
OwnerBuilderBook.
com):
The maple tree fights back
Christmas in July
Patty Duke leaves the
movie
David Ogden Stiers
Kirby Heyborne
Larisa Oleynik
Joe Lawrence
The Governor visits
Mark and Elaine get a part
The damage estimate
Photo Gallery
Special Reports 257
Special Reports
ere are 39 popular construction topics with essential advice from hundreds of owner-builders to supplement The Owner-Builder Book, provided for you in a nifty spiral-bound lay-flat
format. These reports are updated frequently, and custom-printed for you at the time of shipment.
New titles are added in response to reader request. Individual reports are downloadable at OwnerBuilderBook.com. Additional coupon savings for our website bookstore are found on page 274.
The Owner-Builder Book: Special Reports
Special Price: $29.95

aced with several hundred new comments and suggestions by people
actually building, heres a collection that could save you a thousand
times its cost. Several new reports are now included in response to reader
interest. Individual reports are $58 if purchased separately, downloadable at OwnerBuilderBook.com.
House features that

netted us $180,000
you owner-build. The rules have changed know

the rules. (SR-3) $1.49 download.
Here are the features we chose for the

Riverbottoms house on
which we saved $180,000. We worked hard to select
features that had the most impact on house quality
for the lowest cost. Includes eight pages of suggested
features for your project. (SR-1) $1.49 download.
How to save 90% of the cost

of landscaping
100 ideas to make your house

save money or effort
Through forethought you can do
a lot with house design to reduce
operating costs and effort. Some
of the ideas take a little money
initially, and pay for themselves many times over.
Some ideas take no money, only a little effort, and
good timing. (SR-2) $1.49 download.
Ten reasons the U.S.

tax law benefits ownerbuilders
This is the law the U.S. Congress passed for you! Discover the surprisingly little known ins and outs of
earning a huge freebie from Uncle Sam every time
Were not experts on most of the

trades, and you dont need to be
either. But were nuts about our
yard and landscape, and think owning a home is
a license to garden. Our best money-saving ideas.
(SR-4) $1.49 download.
Interviews with plumbers

We think plumbing is the biggest area for runaway costs on
an owner-built project. So we
studied the plumbers up close.
Get into the lead-plated minds of some of the best
we found. (SR-5) $1.49 download.
Interviews with electricians

Todays house designs are dependent on sophisticated electronics
and communication systems. But
you dont want Sparky to overcharge you. Look in on our explorations of their craft. (SR-6) $1.49 download.
Resource Guide
258 Special Reports
Special Reports
Interviews with HVAC
contractors
The third mechanical
trade offers a place for
you to save money while
getting a better house. Look in on the secrets of cutting costs on the heating and cooling systems you
must invest in. (SR-7) $1.49 download.
Interviews with foundation

contractors
This is the part of your project that everything else rests
on. You cant afford to have it
off by even one inch. But the guys who do quality
work vary in their pricing by a wide margin. How
to find good workmanship and what to pay for it.
Resource Guide
Interviews with
siding contractors
What the tradesmen
say it takes to give your
house a beautiful exterior. We are proud of our
distinctive colonial-look siding, but we had to talk
with the experts at length to be able to make the
right choices. (SR-9) $1.49 download.
Interviews with framers

Here is an area where we found
amazing differences in cost.
Whats up with these guys? We
got into the sawdusted craniums of some of the sharpies in the field and one of
the best framers on the planet. (SR-10) $1.49 download.
Interviews with insulation

contractors
We found ways to greatly
increase
our
comfort,
decrease energy costs in a
big way, and still save money on installation. The
experts discuss popular insulation materials, application techniques and performance. (SR-11) $1.49
download.
Interviews with drywall

contractors
We got the feeling these
guys drove Cadillacs and
owned homes bordering
the country club. Turns out one of them did. How
we found a reasonable price on drywall. (SR-12)
$1.49 download.
How to save on your

property taxes
When we started to research
the tax rolls we discovered
that some of the most lavish homes had the best rates
on their taxes. The story of an eye-popping experience and how we ended up saving lots of money that
others waste. (SR-13) $1.49 download.
Staying on schedule
Real pros do it easily automatically but many ownerbuilders lose it right here. The
source of untold anguish can
be the area of proud accomplishment, if you follow the steps outlined here.
Includes oversized schedule forms. (SR-14) $1.49
download.
Staying on budget
A friend with a million dollar project came to us for a chat and we
saved him $50,000 on wood windows alone. He seems determined
to go over budget by 50%...We
know of another million dollar home that went to
$1.8 million. Big or small, your house doesnt need
to go over by even $1,000 if you follow the moneysaving rules of budget fanatics like us. (SR-15) $1.49
download.
Special Reports 259
Special Reports
Owner-builders are universally nervous about

getting their construction loans. Industry insiders tell you how, and how to get them the way you
want them. Lots of good tips from the folks that
have observed countless O-B projects. (SR-16) $1.49
download.
Owner-builders offer
savings suggestions
After hundreds of interviews, we still find at
least one more moneysaving idea from each owner-builder we talk to. Let
yourself in on ideas that will repay your investment
thousands of times over. (SR-17) $1.49 download.
Owner-builders on staying
organized
Some people have a native genius
for staying organized. Because
many prospective owner-builders cant imagine going about the
complexities of managing a project, they never try.
Here people who have made it look easy tell how.
Owner-builders on quality
Some of the best homes in
America are not built by the
great architects of our times,
but by owner-builders like you
and me. Ingenious ideas for a
far longer-lasting and more comfortable home from
people who care more than anyone about the house
they live in. (SR-19) $1.49 download.
Owner-builders on the best

and worst things they did
Dangerous pitfalls and pleasant discoveries from

people who have been there. Benefit from the experience of some savvy O-Bs whove done it more than
once. (SR-20) $1.49 download.
Architect interviews
Even if you dont use an architect, gain the advantage of
their advice to owner-builders
and their experience on home
design. One or two of them provide a flash of genius
that reminds us why owner-building is the creative
act of a lifetime. (SR-21) $1.49 download.
Designer interviews
Loaded with practical
advice, these interviews
provide you with the nuts
and bolts of building a
better house for less. The
men and women included are field-seasoned veterans who steer you around some of the games played
in the industry. (SR-22) $1.49 download.
Interviews with independent inspectors

Talking to this group is
like talking to reformed
smokers. They are on a
crusade for quality construction and savvy project management. They beat the drum for building
it right the first time. Dont miss this one. (SR-23)
$1.49 download.
Planning steps that save

you countless hours and
aggravation
Adapted from The OwnerBuilder Book, these are the
steps we recommend to plan a smooth, moneysaving project. How to have fun before, during, and
after construction. (SR-24) $1.49 download.
Resource Guide
Lenders offer their

suggestions
260 Special Reports
Special Reports
Construction bargain
strategies for the commando shopper
Why pay more than
you need to for any part
of your house project?
Sometimes amazing savings can be found. Just one
of these strategies may save you thousands of dollars. This compendium of strategies is excerpted
from our Bargain Strategies book. This triple-length
report is priced at $2. (SR-25) $2 download.
Owner-builders on desirable house features
Resource Guide
Here are the hot features ownerbuilders around the country recommend. Youll find the features that
distinguish a custom home from a
mere step-up house. Some of these
features are a bargain that can add
appreciably to your house value.
How to paint your house like a professional

We saved $8,000 painting the inside of our
house, but we learned
the hard way that it can
take a great deal of time.
Here are the steps to
follow, and the materials and tools to buy to do it efficiently. (SR-27) $1.49
download.
How to sell by owner

After we moved into the Riverbottoms house we
sold our old home. A Realtor
told us our price was much
too high, but that he would
sell it for a lower one and
take his commission. Heres
how we sold it at our original price and kept the commission. (SR-28) $1.49
download.
How to pre-wire
One of the easiest things
an owner can do to
future-proof a home is
to pre-wire for sophisticated entertainment
and computer needs. We show you how to add a lot
of value to your house for very little. (SR-29) $1.49
download.
How to build a log

home for $60 a square
foot
One of our readers has
done it. Read the story of this familys approach
and just why most custom log homes have gotten so
expensive. (SR-30) $1.49 download.
How to buy furniture at

factory prices
When it comes time to
furnish your new home or
addition, we hope youll
continue to beat the system
by filling it with beautiful furnishings that you got
for incredibly small dollars. We travel to the furniture capital of the world in North Carolina and
show you how to buy professionally. (SR-31) $1.49
download.
Ideas if you use a general contractor

Features contract advice if
you decide to use a general
contractor. Especially valuable are many reader
experiences and comments included that could save
you money and heartache. (SR-32) $1.49 download.
How to buy land

This report develops a
subject not covered in
The Owner-Builder Book,
getting the land on which
Special Reports 261
Special Reports
Making your addition or

remodel easy
New report about the most
common type of ownerbuilder project, the remodel
or addition. Theres incredible money to save for the wise. Check out the profuse reader advice in the sidebars. (SR-34) $1.49
download.
Green building for ownerbuilders

This bonus report is twice the
length of our average piece, and
guest authored by design genius Dale Booth of
Tucson, AZ. A coauthor of a recent self-contracting book, he has also published a newsletter on
renewable development and designed many brilliant environmentally friendly homes. (SR-35) $1.49
download.
Alternative building
materials for the ownerbuilder
A hundred years ago most
houses were constructed by
either lumber or masonry. Today, there is a growing
multitude of building formats with more added each
year. Common alternative materials include: foam

insulation/concrete (ICFs), insulation/sheathing
(SIPs), compacted earth, steel and a variety of recycled materials. (SR-36) $1.49 download.
Steps to better home

design
A professional designer
brings your ideas together
in a harmonious way
that meets your needs. Designer Dale Booth offers
advice to get the most from the design that you will
live with. (SR-37) $1.49 download.
Healthy house features and materials

Many people have reactions to common building materials. This
report shows you how
to select materials and technologies that make a
healthy environment for you and yours. (SR-38)
$1.49 download.
New building codes and

the owner-builder
Starting in 2002, a new
universal building code
began to spread all over the
U.S. It will eventually be
adopted by every municipality. The new code will
enforce many standards that used to be optional.
Know the code! (SR-39) $1.49 download.
Resource Guide
to build. Not easy to do if its scarce or expensive

or both. We show you how. Includes many reader
comments and suggestions from those whove been
there. (SR-33) $1.49 download.
262 Bookstore
Bookstore
The Owner-Builder Book Series
The Owner-Builder Book: How You Can Save More Than $100,000 in the Construction of
Your Custom Home 4th Edition by Mark A. Smith and Elaine M. Smith
The Owner-Builder Book: Special Reports How Owner-Builders Build More for Less 4th
Edition by Mark A. Smith and Elaine M. Smith
Resource Guide
See page 257 for a synopsis of our 39 sections addressing topics essential to owner-builders. Gorgeous four-color print-on-demand collection of subcontractor interviews and hundreds of O-B
suggestions for building a better house for less.
The Owner-Builder Book: Construction Bargain Strategies How Owner-Builders Save

35% 1st Edition by Mark A. Smith and Elaine M. Smith
See page 131 for excerpts from our collection of over 400 ways to save money on your project.
Almost any aspect of construction has been done by some bright O-B for a lot less than youre thinking. Some ideas could save you a years pay on your house. How many will you be able to use?
The Owner-Builder Book Series Electronic Books (Adobe PDFs)

List Price: $19.95 & 29.95
Your Price: $9.95 & 14.95
Now you can download the entire Owner-Builder Book Series for viewing on computer. This electronic versions are a fully searchable PDFs. You can search on a concept, a word or a fragment of a
word to find what you need in the books. You can click through to hundreds of Forum threads
to join in the conversation and get the information you need. You can also print pages or cut and
paste charts, tables, lists, etc. into your own computer files. A great asset to the reader.
Downloadable
Downloadable
Downloadable
PDF
PDF
PDF
Bookstore 263
Bookstore
Be your own Home Renovation Contractor:
Save 30% without Lifting a Hammer Revised and Updated

Author: Carl Heldmann

Pages: 165 (with 106 pages of text and the rest Appendices)
Cover Price: $16.95 Your Price: $9.95
Good information about how to find and evaluate an older

structure to determine if it is economically feasible to renovate.
Discusses why an ordinary person is as qualified as anyone to manage a remodel.
Good section on how to evaluate a structure to determine if it is a steal or a money
pit. Uses an interesting system for getting a ballpark figure for remodel costs.
Appendix J is good information when defining trade specifications.
Be Your Own House Contractor: Save 25% without Lifting a Hammer

Author: Carl Heldmann

Pages: 137
Cover Price: $14.95 Your
Price: $8.95
Better Houses, Better Living: What to look for when buying, building or
remodeling

Author: Myron E. Ferguson

Pages: 337
Cover Price: $24.95 Your
Price: $14.95
Heres another nice guys book that has made it big. Myron Ferguson maintained
category bestseller status for years with his book Build It Right!, and now has
replaced the title with Better Houses, Better Living. And it is indeed better. He lays
out for you all the subtle things that go into making a quality house. Not necessarily expensive, but thoughtful, and what a difference it makes! So many things
that most of us dont see at first that make a house sound and satisfying.
The Complete Idiots Guide to Building Your Own Home

Author: Dan Ramsey

Pages: 288
Cover Price: $19.95
Your Price: $11.95
Dan Ramsey is the distinguished past president of the National Association of

Home and Workshop Writers which honored The Owner-Builder Book with
a Silver Hammer Award. He is possibly the dean of the Home Improvement
writers and has 85 books to his credit. This is a neat book with moneysaving tips, called Ka-Chings and Cautions, called Code Reds. Dan has tons of
experience and has assembled much to fascinate, inform and guide you as an
owner-builder. The book is attractive and fun to read.
Resource Guide
Carl Heldmann, a construction loan consultant in Grand Rapids, Michigan

presents a can-do attitude in this book. Heldmanns background is that of
contractor, but he presents the information in a non-technical, non-intimidating style. Strong on financing because he has a consulting business with
loan institutions. Good info on subcontractors and suppliers. Common
sense information about building and scheduling.
264 Bookstore
Bookstore
Build Your Dream Home

For Less
Author: R. Dodge Woodson
Pages: 185
Cover Price: $18.99
Your Price: $11.39
Resource Guide
Its refreshing to read a book

on self-contracting written
by a professional in the field
of construction that reveals
some trade secrets that help
those who want to ownerbuild. Like most professionals he gives a detailed list of
definitions, e.g. pine siding,
cedar, hardboard, vinyl, T111 siding, etc.
Habitat for Humanity How

to Build a House
Author: Larry Haun et al
Pages: 288
Cover Price: $24.95
Your Price: $14.95

A beautiful, easy to read book
that gives you all the basics of
the construction process. Being
Habitat people, they know how
to build economically, theyve
done it a million times. Of
course, they have a contractor bias, but leave the option
of being your own contractor
open. Lots of practical advice
with an orientation toward selfwork.
Everything You Need To

Know About Building the
Custom Home: How To Be
Your Own General Contractor
Authors: John Folds and Roy
Hoopes
Pages: 226
Cover Price: $15.95
Your Price: $9.95

A real estate attorney gives
owner-builders advice and
direction on what you need
to know to build your own
home. The book provides a
legal point of view on financing, contracts, zoning laws,
appraisals and liens. Provides
the elements of an effective
contract between ownerbuilder and subcontractor.
Offers a detailed section on
land selection and all the
legalities involved.
Make Your House do the Housework
Author: Don Aslett

Pages: 190
Cover Price: $14.99 Your Price: $8.95
Good advice for making the design of your project compatible
with reduced clutter, easy cleaning, and low maintenance. Weve
read several of Don Asletts books and couldnt resist offering
this one which has the potential of making your life as a homeowner much easier for years to come.
Bookstore 265
Bookstore
The Complete Guide to Contracting Your Home: A stepby-step method for managing home construction
Authors:
Dave McGuerty & Kent Lester
Pages: 316
Cover Price: $18.95
Your Price: $11.38
Your Price: $9.59

We normally dont carry books written by
general contractors because of the industry bias, but we have to make an exception
here. Jim tells the story of how a house
is built, step by step, and explains the
proper way to do each step. He has an
impeccable sense of quality construction technique. This is the easiest to read basics of construction book weve seen, with abundant
wisdom on building to last.
Your New House: The alert consumers guide to buying and building
a quality home.
Authors: Alan & Denise Fields
Pages: 356
Cover Price: $15.95
Your Price: $9.53

A wonderful grounding in all new
home issues. This book will save
you all kinds of money and problems when you build. Lots of eye
catching graphics and juicy stories, sidebars, and illustrations.
The entire book is a testament to
why you should owner-build, with
plenty of advice that will help you.
We defy you to read the table of
contents without constantly flipping to sections of the book to get
the scoop on pertinent subjects.
Houses are Designed by Geniuses & Built by Gorillas

Author: Bob Johnson Pages: 240 Cover Price: $18.95 Your Price: $11.38
Weve always loved the Gorilla Book. Bob is a peripatetic contractor, manager, and industry consultant. The man knows how to write and applies his
genius skills to make this book enjoyable, and we feel, a classic. Our readers
have always enjoyed this book. It teaches you what you are in for as a manager of your own construction project, and gives plenty of wisdom on how to
finesse it. Bobs War Stories of construction advice that sidebar many pages
are fun to read and help you learn how to stay out of trouble.
Resource Guide
This book lays out each step of a

construction project and gives
sample specifications for the
category. It then gives inspection items for that category and
a checklist for preparation prior
to starting the category. Loaded
with tips and ideas to make the
work go smoothly, was the best-selling book in the self-contracting category before The Owner-Builder Book surpassed it in 2004.
Includes a valuable master plan and project schedule that lays out
all the steps of building in an understandable sequence. A good
background in construction for anyone and a must-have reference.
The Well-Built House: Everything you
need to know before building a new house or
remodeling an old one
Author: Jim Locke
Pages: 302
Cover Price: $16
266 Bookstore
Bookstore
Double Combination 1:
The Owner-Builder Book: Special Reports with The Owner-Builder
Book: Construction Bargain Strategies
List Price: $59.90
Your Price: $49.95
If youve read The Owner-Builder Book, the next two most important
books to read are right here. All three are based on owner-builder
experience and intelligence, a far cry from the contractor-based
books that populate our market segment. Youll learn quality and
savings techniques that will change your house and your life. Fourcolor print-on-demand books you will treasure.
The Well-Built House with Better Houses, Better Living
List Price: $40.95
Your Price: $23.95
Resource Guide
We call this the quality combination. These two authors are a

little nutty like owner-builders invariably are insisting on a
better or the best way to implement their design for long life, for
comfort, and for value. Read these guys and get a feel for how much
better you can make you home work well for you.
The Complete Guide to Contracting Your Home with The OwnerBuilder Book: Special Reports
List Price: $48.90
Your Price: $34.95
These two are a good combination for developing specifications or features for your house project. Both books go through each major trade
or specialty and tell you what to think about to improve it. In The Complete Guide, sample specifications are shown. In Special Reports, interviews with tradesmen are shown along with hundreds of bright ideas
and cautions from concerned owner-builders.
Your New House with The Owner-Builder Book: Construction Bargain Strategies
List Price: $45.90
Your Price: $34.95
We think Your New House is a valuable, enjoyable read. With our Bargain Strategies
book, it makes a good combination for ingenious savings, sensible design, and construction confidence. These two books lay out the financial ins and outs better than
any others in the field.
More product combinations available in our Bookstore.
Bookstore 267
Bookstore
Super Readers Library:
Further discounts on the most popular self-contracting books
List Price: $144.73
Your Price: $99.95
We think the Special Reports and Bargain Strategies books contain more practical wisdom and money-saving ideas than anything else in print. Combined with the best owner-building
books available, it will give you a very solid background in both
money saving and quality construction before you build.
The Whole Enchilada:

List Price: $424.13
Your Price: $229.95 (Price changes as new products are included.)
Resource Guide
The Whole Enchilada is the complete set of all the books and DVDs we produce and recommend. Why
not absorb it all before you build? The stakes are high, and you could profit now from the knowledge youll gain. Weve found many new ideas in every one of these publications that help you build
better, smarter, and at greater savings EACH time weve reviewed one of the titles in our collection; i.e.,
you miss things when you go through only once. If you plan to build again youve got the library of the
most useful self-contracting books and materials in print. If you only build once, you are the resource for
friends and family. Or, whats to stop you from donating the whole collection to your public library when
you finish and claiming a tax deduction for the retail value of the materials?
Bonus: All of the PDFs
in The Owner-Builder
Book Series included
free, along with The
Owner-Builder Book
Downloadable MP3s
and The Owner-Builder
Workshop Downloadable MP3s. (A $117.75
value.)
III. SpreadIII. SpreadV. Three Bids
I. 1,000
VI. Signed
VIII. How to
IV. Written
II. WritWorkshop
IV. Written
s on DVD
Video
268 DVDs
DVDs
Introducing:
The Ten Commandments of Owner-Builders How-To series on 12 DVDs!
s of Planning
I. 1,000 Hour
Brand
New!
Complete 12-DVD Ten Commandments

of Owner-Builders How-To Series
Cover Price: $175.50
Your Price: $99.95 (When complete)
The complete set covers all ten of the most crucial skills and activities for
success in owner-building. Each DVD contains tours, interviews, tutorials and at least one $1,000 Idea, which you can actually use to save more
than $1,000. Special features include: factory visits, book reviews, internet
highlights, computer and spreadsheet demonstrations. Also available in
MP3 and MP4 formats for portable replay devices and computers. (Series
not complete at time of publication.)
I. 1,000 Hours of Planning (3 DVD Set!):

List Price: $31.95
Your Price: $21.95
urs of Planning
I. 1,000 HI.o1,0
00 Hou
of Planning
I. 1,000 Hours
of rsPlanning
Disc 1 of 3 Disc 2 of 3
Resource Guide
Nearly 100 planning steps to make your project a success are covered in
this set of three DVDs. Youll find out how to get a construction loan,
develop specs for each trade, lay out a preliminary budget, interview subs
and vendors, and find all kinds of bargains for your projects with live
tutorials, tours, and interviews. Youll meet two families that pulled off
huge savings building beautiful homes, and one working through the
process of planning. Shows you with cool DVD technology how to plan to
make your project easy. Several $1,000 Ideas included. See highlights.
II. How to Make a Written List of Features

List Price: $15.95
Your Price: $10.95
II. Written List of Features
The right features make a house that works and one that sells more
quickly than others when its time to move on. Meet one family that
worked through a remodel and addition adding features that increased
value and livability. Meet another who decided to sell after two years and
got asking price when other houses were not selling at all. What features
work, and how to plan for them at a savings. Visit a Parade of Homes
with a look at mandatory features that pop up in each price range. See
highlights.
DVDs 269
DVDs
III. How to Create Your Spreadsheet Budget
List Price: $15.95
Your Price: $10.95
III. Spreadsheet Budget and

Expense Tracking
The biggest bugaboo of owner-builders can be really easy and satisfying

building a spreadsheet budget to control your project. Here we show
you how to do your spreadsheet in detail. Starting with the budget template from the Free Download Gallery, you will gain confidence using a
spreadsheet to plan and control your project. Your cost to build doesnt
have to be a mystery! Meet a couple who got good at it and who used creative bartering to save a ton on their home. See highlights.
IV. How to Create Your Written Schedule

List Price: $15.95
Your Price: $10.95
After written features and budget, the third principal task of an ownerbuilder is a written schedule. Meet a couple of owner-builders who broke
the code and built faster than the average general contractor. How to
use our software template to build a computer schedule. How successful owner-builders get cooperation from subs and vendors to make the
schedule come true. Practical and money saving ideas from a 25 year old
owner-builder and a tour of the amazing custom home that brought him
a quarter million dollars in equity. See highlights.
V. How to Get Three Bids from Subs and Suppliers

List Price: $15.95
Your Price: $10.95
V. Three Bids on All Sub and

Supplier Items
Visit a seven-time owner-builder couple from Tennessee who made $100,000

on their last house. Learn their system to make it enjoyable and profitable
every time. How to get and negotiate good bids from both subs and vendors.
How to find qualified bidders. How to get enough bids even in a busy market.
How to handle the paperwork of bidding in a timely way. Also meet first-time
owner-builders who managed to build an outstanding starter home for less
than $30 a square foot. (Not released at time of publication. Check our bookstore for
availability.)
Resource Guide
IV. Written Schedule
270 DVDs
DVDs
VI. Signed Agreements and

Lien Releases
VI. How to Make Good Contracts and Lien

Releases
List Price: $15.95
Your Price: $10.95
When you sign on your chosen subs, what written agreements and forms
do you need to protect yourself and facilitate a smooth process? How do
successful O-Bs go about it? Meet one from Arizona who has ownerbuilt several times and is approaching the tax-free limit of a half-million dollars of tax-free gain in a single project. Youve gotta see this house.
How to manage the paper and the money and get what you expect. (Not
released at time of publication. Check our bookstore for availability.)
VII. How to Buy Materials Directly

List Price: $15.95
Your Price: $10.95
VII. Buy Materials Directly
Resource Guide
Heres where we meet a vendor turned owner-builder from Idaho who

knows a lot about procuring the products and services youll need to
build at a big savings. Husband and wife have a flair for self-work too,
and demonstrate for us their tile and electrical work. How to buy materials direct and arrange the labor-only services that make for smooth
construction and a quality home. Visit another family who saved money
building a custom home with Structural Insulated Panels. (Not released at
time of publication. Check our bookstore for availability.)
VIII. How to Communicate with Subcontractors

List Price: $15.95
Your Price: $10.95
VIII. How to Communicate

with Subcontractors
John and Jessica Norton, owner-builders who kept a job diary with
photos on our website, show us their completed home and describe their
ingenious strategies for getting the right subs and keeping them on task.
Communication via email, fax, telephone and internet brought them
very good job control for first-time owner-builders. How they settled a
potential subcontractor disaster. How to set up a program to keep the
subs happy and get you a better house for less. (Not released at time of publication. Check our bookstore for availability.)
DVDs 271
DVDs
IX. Why You Need to Be On Site
List Price: $15.95
Your Price: $10.95
III. Spreadsheet Budget and

Expense Tracking
Elaine and Mark Smith tell the story and show footage from the building
of the Riverbottoms house. How to get involved in construction to build
it right. Opportunities for savings that you miss as an absentee manager. How to keep your job and still build your house on schedule and on
budget. How to enhance your house behind the walls for added function and value at little cost. Also tour a log home under construction and
learn from a hands-on woman owner-builder. (Not released at time of publication. Check our bookstore for availability.)
X. How to Run a Clean, Organized Job

List Price: $15.95
Your Price: $10.95
Gary and Linda Ziser tell how they built their lakefront home in under
four months with impeccable quality and serious savings. How veteran
owner-builders do it smoothly and sanely. Your daily duties as general
contractor. How to keep costs in check. How to check each aspect of
the work for quality. How to keep the subs showing up on time. Special
Bonus: How to sell by owner for huge gains, even in a down market. (Not
released at time of publication. Check our bookstore for availability.)
The Owner-Builder Workshop Videos on MP4

Cover Price: $32.85
Your Price: $12.95
deos on DV
Workshop Vi
Our original DVD series doesnt have all the bells and whistles that our newer
DVD titles have, so we are phasing them out but keeping this product as MP4,
viewable on your computer or portable viewing device. You can even burn DVDs
from it if you like. The class is loaded with 6 hours of entertaining instruction.
Mark and Elaine instruct a lively group of 81 owner-builders, half of whom had
previously owner-built. The workshop teaches how to do a budget, how to develop
a schedule and how to make it all work. See highlights. Also available on MP3 for
portable listening devices or your computer.
Resource Guide
IV. Written Schedule
272 OwnerBuilderBook.com

We put together a website because ownerbuilders need a place to share enthusiasm and blow
off steam. Come to our site to find the ideas of many
other O-Bs. Let us know where you find bargains,
how you solve problems, and what youd never do
the same way again.
Reader Forums

Readers have contributed thousands of pages
of commentary of interest to all owner-builders.
Owner-Builder Connections

Through this editor-moderated addressblind utility, you can safely contact other ownerbuilders in your own Postal Code or near you.
Just click on your state or province, and choose a
registered user by location and send a message.
Search Command

A search on even an obscure construction
terms can yield dozens of threads where you can
learn more. The advanced search gives you lots of
fine tuning research options.
Resource Guide
Free Newsletter

Use our website to register for our electronic
newsletter. The newsletter will be sent to you via
email two or three times a year.
Construction Journals

Hundreds of reader blogs give you a good
feel for the experience of owner-building in all parts
of North America. Consider placing your notes on
the site from an early point in the process.
Free Download Gallery 273
Free Download Gallery

Download Gallery

All of the forms, legal documents and
spreadsheet templates used in this book, along with
many more are available for free download in our
bookstore. Choose from a list or contribute one of
your own.

The document is downloaded to your desktop. Name it and save it to your hard drive. Customize it to your project any way you like.

After using the downloads, comment on
their usefulness for the benefit of other readers.
User Links

Sign in to download. This requires only
your name, location, and email address.

Thousands of links recommended by our
users are displayed in table form with popup windows to give you a peek at the referenced site. You
can also click through to the forum thread description of the link.
Resource Guide

Click through to a sample screenshot of the
template and decide if its what you want.
274 Paperless Coupons
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The Owner-Builder Book

Reader Comments iii

The Owner-Builder Book

The Owner-Builder Book

vi Letter To The Reader

Letter to the Reader

We decided to write a book that would tell you yes.

Dont let anybody tell you you cant do this.

The Owner-Builder Book

Table of Contents vii

Chapter 1: You Can Save $100,000...................................................... 1

Chapter 2: Learn the Wealth-Building Secret..................................... 13

Chapter 3: General Contractors Arent What You Think They Are... 21

Chapter 4: You Can Manage Better Than a Contractor.................... 31

viii Table of Contents

Chapter 5: You Will Profit By Building a True Custom Home............ 51

Chapter 6: Conquer Details Room By Room and Save 20%............. 69

Chapter 7: How to Get the Subs on Your Side.................................... 85

Chapter 8: How to Build a Budget That Is a Powerful Miracle Tool 95

The Owner-Builder Book

Chapter 9: Commando Shopping Techniques.................................. 119

Chapter 10: How to Schedule the Work at a Savings.............. 151

Chapter 11: How to Make Your Lender Swoon................................ 165

Chapter 12: Paperwork Before You Begin........................................ 175

The Owner-Builder Book

Chapter 13: Six Months to Victory.................................................... 185

Chapter 14: Smooth Execution Saves Money & Improves Quality....197

Chapter 16: If You Decide to Use a Contractor................................227

Afterword: Once Youre In.................................................................237

Minimize Punch List........................................................................................................................................ 237

The Owner-Builder Book

Chapter 1: You Can Save $100,000

We just signed the

I live in Minneapolis greater metro

The Owner-Builder Book

 Chapter 1: You Can Save $100,000

Best Tax-free Way to Make Money

The Owner-Builder Book

Chapter 1: You Can Save $100,000 

Cold Sweat Equity

 Chapter 1: You Can Save $100,000

Lowering The Threshold

Chapter 1: You Can Save $100,000 

also are looking

Myths and Propaganda

Just got the call

 Chapter 1: You Can Save $100,000

magazines, no propagandist. As a result, many of the following attitudes have come

You Cant Save Any Money

The Professional Builder Passes Inspections With Flying Colors

Contractors Get Better Prices Than the Public

Chapter 1: You Can Save $100,000 

Contractors Can Get Better Quality Materials Than You Can

The Contractor is There to Protect Your Interests

Owner-Builders Build Shoddy, Cheap Houses

Owner-Building Isnt Legal

 Chapter 1: You Can Save $100,000

You Have to Have a License

Banks Wont Lend to You Unless You Have a Contractor

You Cant Possibly Get It Done on Schedule

Chapter 1: You Can Save $100,000

Chapter 1: You Can Save $100,000

Chapter 1: You Can Save $100,000

Chapter 1: You Can Save $100,000

Chapter 1: You Can Save $100,000

Chapter 1: You Can Save $100,000

Chapter 1: You Can Save $100,000

Chapter 1: You Can Save $100,000