Why Settle for So-So When You Can Build-to-Suit?

Oct 21, 2015

Stephen Cutting-Miller and his husband Rick found the perfect place to settle down: a six-acre plot of land in Saratoga, NY. The plot was situated in the Empire State’s horse country with a clear view of the foothills of the Adirondack Mountains.

There was just one small and unavoidable problem: There was no home on this land. So the couple decided to build their own.

“It was a very unique piece of property,” Cutting-Miller says, “and we wanted to design a home that was meant specifically for it.”

Enlisting Saratoga-area contractor Witt Construction, the couple brought their vision into being, commissioning a 4,700-square-foot modern farmhouse nestled in a hillside with 180-degree north to south views. The sunsets, Cutting-Miller says, are spectacular.

Of course, the custom route comes with certain challenges. For instance, to the uninitiated, the process can be a bit Byzantine, says Jim Work, owner of Chicago-area contracting firm Silverthorne Homebuilders.

“I’ve had what I would say are some really smart customers, and they’ve been confused by the process — why is there this rule, why is there that rule?” he says.

Finding Financing

Additionally, he notes, securing a loan to fund construction is often trickier than lining up a traditional mortgage. While buyers can get conventional home loans with as little as 3 to 10 percent down, “without having 20 to 30 percent down, a bank usually won’t finance construction,” he says.

One thing that can ease things on the financing front is working with a local lender, says John Witt, principal of Witt Construction.

“We work mostly with local banks because they tend to be a little more flexible…they know the local markets,” he says.

And, Work says, the potential complications can be worth it to buyers, like the Cutting-Millers, who find themselves in love with a particular plot of land.

Professionals Who Can Start From Scratch

Having experienced professionals on the job can help with navigating the ins and outs of the process, Cutting-Miller says, noting that in addition to Witt the couple employed an architect and a lighting designer to help with the project.

“We had a very strong sense of what it was we were looking for, but it was very important to us to have a professional there who really understood scale and dimensions and could take on the whole positioning of the house exactly so on the property so that you maximize the exposure to the sun,” he says.

The lighting designer, he adds, “was integral in making sure the light in the inside of the house complemented the beautiful architecture and lines of the home.”

I’ve always dabbled in interior design myself,” Cutting-Miller says. “But there is no way I could have pulled off what we pulled off if I had done it on my own.”

In terms of price, Work says, in the current market new homes typically cost a slight premium compared to resales. In weaker housing markets, though, resales can sometimes be had for considerably less than it would cost to build a new home.

That equation can change, however, if a resale requires significant investment to bring it up to snuff, Witt says, noting that a dollar put into renovating an older home doesn’t always provide a full dollar back in resale value.

For instance, “one of the highest returns is a minor kitchen investment, where you might get 73 cents back on your dollar,” he says. A major addition to the kitchen, on the other hand, might net just 60 cents back on the dollar.

“So the value [of building new] can actually outweigh the value of dumping money into an old home,” Witt says.

Above all, building from scratch lets buyers get exactly what they want, he says. “You have the choice of your location, and at the same time you get a product that is built and designed for your lifestyle.”

One thing homeowners going the custom route definitely need, though, is patience.

“The downside is the time that it takes,” Cutting-Miller says, noting that he and his husband’s house took two years to take from planning through to completion.

“In this day and age people want instant gratification,” he says. “But [in exchange] for those two years we committed to this effort, we have what we feel to be the exact home that lives the way that we want to live.”


The post Why Settle for So-So When You Can Build-to-Suit? appeared first on Fannie Mae - The Home Story.

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