Managing Your Customer Through New Home Construction 462 9/13/2015 Managing Your Customer Through...

Managing Your Customer Through New Home Construction

462

04/19/23 Managing Your Customer Through New Home Construction 1

BUT FIRST …Philosophically …

What Role Will I Play As a Realtor with THIS Customer in THIS

Transaction?


Managing Your Customer Through New Home Construction

Purpose: help us (agents) to help our customers to: (1) understand processes; (2) perform their duties; (3) stay informed; (4) become comfortable with ambiguity; (5) understand contractual expectations.


Because we want to be their …

04/19/23 4Managing Your Customer Through New Home Construction

Overview

1. Shopping for a New Home2. The Contract3. Before Construction Starts4. During Construction5. Preparing for Closing6. Final Walk(s)7. Close Date8. Customer Service/Warranty


1 - New Home Shopping

1.1 Location, Location, Location1.2 The Community1.3 The Builder

CustomProductionSpec Only

1.4 The Time Frame


New Home Shopping

1.1 Location, Location, Location– Normal Customer Needs Identified– Surroundings Micro View– Surroundings Macro View– Short Term View– Long Term View– Any Other Considerations, i.e. Market Research


New Home Shopping

1.2 The Community– Amenities– Price Points– Builder(s)– Build Out Time Frame– HOA Dues– HOA Documents


New Home Shopping

1.3 The Builder– Custom: Will Build What You Desire– Production: Usually Builds from Plans Owned by

Builder with Possibility for Some Changes, Desire is to Build Continually

– Spec: Usually Builds a Complete Home to Sell, Not Generally Interested in Any Customization


New Home Shopping

1.3 The Builder1.3A Custom• More Attention• Typically More Costly• Typically Longer Build Time• Contract Structure Different• Many More Decisions• Typically More Change Orders• Typically More Non-Refundable Money


New Home Shopping

1.3 The Builder1.3B Production• Some Attention• Typically Least Costly• Typically Mid Range Build Time• Contract Oriented Toward Production• Considerable Decisions• Relatively Few Unplanned Change Orders• May Have Non-Refundable Money


New Home Shopping

1.3 The Builder1.3C Spec• Least Attention from Builder• Costs Generally Set• Completed Product• Contract Structure More Like Re-Sale• Changes Less Likely and More Costly



1.0 Summary for the Customer– Normal “Agent” or “Agency” Duties– Identify and Agree on Needs and Wants– Understand the Considerations– Knowledge is Power– Knowledge is Comfort– Have Fun Finding What You Want!


2 - The Contract

2.1 New Construction Contract vs “Standard”– Possible Additional Paragraphs– Possible Removed Paragraphs

2.2 Addenda2.3 Changes


The Contract

2.1 New Construction Contract vs “Standard”– Possible Additional Paragraphs• Survey by Builder; Set Closing Attorney; Home

Warranty; Rock Clause; Financing Delays; Work Supervision; Arbitration; Schedule; Utilities; Job Site Access; Inspector “Rules”; Mortgage Schedule & Notices; Existing Home Sale; Home Guide; Plans Ownership; Other Disclaimers; Changes Schedule of Pricing; Agreement to Pay Commission; Specifications; and Other Provisions


The Contract

2.1 New Construction Contract vs “Standard”– Possible Removed Paragraphs• No Provisions for Independent Inspectors; Lender

Required Repairs; Closing Costs and Pre-Paid Items; Duty to Inspect; Lead Based Paint; Fire, Smoke, and Gas Detectors; and Quite Possible Others


The Contract

2.2 Addenda– Covenants, etc.– Pricing– Specific Builder Process Provisions– Others– Warranty


The Contract

2.3 Changes– “Change Orders” or Something Similar– Additions– Alterations– Anything Different from Original Contract– Charges for Changes– Others


2 - The Contract

2.0 Summary for the Customer– Understand Risks and Expectations– Make the Process Enjoyable by Knowledge– Understand Builder’s Position– Negotiate from Strength & Knowledge– If You Can’t Live with Contract Provisions, then

Maybe Another Builder is Best Option


3 - Before Construction Starts

3.1 Do Your Homework!3.2 Plans– “Structural Revisions”– Other Plan Updates

3.3 Selections– Exterior– Interior


Before Construction Starts

3.1 Do Your Homework– Builder Assigned– Assigned by You or Customer– Enough to Make Customer Comfortable



3.2 Plans3.2A “Structural Revisions”• Custom Builder Likely to Consider with Time and

Money Considerations• Production Builder Less Likely to Consider with

Probably Higher Money and Time Considerations• Spec Builder Least Likely to Consider and Highest

Money and Time Considerations



3.2 Plans3.2B Other Plan Updates• Custom & Production Likely to Consider Such As: Hose

Bib Location, Outside Gas Lines, Added Duplexes, Added TV or Data, and Other Minor Plan Revisions• Spec Builder Less Likely – Desire A Finished Product to

Sell



3.3 Selections3.3A Exterior• Brick, Siding, Paint, Gutters, Shutters, Landscaping, etc.

etc.• Custom Builder – Part of the Process to Make These

Selections• Production Builder – Most Offer These Selections to

Customer, Depends on Status of Home• Spec Builder – Selections Generally Made by Builder



3.2 Selections3.3B Interior• Paint, Flooring, Counter Tops, Cabinets, Appliances,

Trim, Window Coverings, Stair Treads, etc. etc.• Custom Builder – Part of the Process to Make These

Selections• Production Builder – Generally Part of the Process to

Make These Selections from Pre-Selected Items• Spec Builder – Generally Not a Part of the Process



3.0 Customer Summary– Understand the Specific Builder’s Process– Be Prepared to Make Decisions– Make Decisions Timely– Understand How to Handle Remorse Over

Decisions Already Made That May Be Questionable

– Have Fun with Whatever Builder and Process Selected


4 - During Construction

4.1 “On-Your-Own” Visits4.2 Builder Planned Meetings4.3 Communicating


During Construction

4.1 “On-Your-Own” Visits– Who owns the land? Who owns the construction?

What does the contract say?– Time of Day– Personal Safety and Safety of Others– Speaking to Subcontractors/Directing Work– LIABILITY– OSHA


During Construction

4.2A Spec Builder Planned Meetings– Spec Builder, Probably None “Planned”

4.2B Custom & Production Builders– Before Sheetrock– Orientation


During Construction

4.3 Communicating– Responsibility for EACH Party– Each Side Must Understand, Don’t Assume– Get It In Writing– Follow Up



4.0 Customer Summary– Purchaser & Builder Have Vested Interests– Knowledge Helps to Avoid Anxiety– Communicate Clearly– Do Your Tasks Timely– Respect Position of Agent & Builder– Reasonable Expectations– PUT IT IN WRITING


5 - Preparing for Closing

5.1 30 Days After Contract5.2 60 Days Out5.3 45 Days Out5.4 30 Days Out5.5 Finalizing the Close Date


Preparing for Closing

5.1 30 Days After Contract– “Customize” Decisions Should Be Finished– Mortgage Should Be Approved– Mark Events on Your Calendar– Long Term Estimated Completion Date– Confirm the Contract Amount



5.2 60 Days Out– Verify Total Sales Amount– Verify Mortgage Approval– Contact Moving Company– Counter Tops Should Be In– Start Getting Excited– Confirm the Contract Amount



5.3 45 Days Out– Verify Total Sales Amount– Verify Mortgage is OK– Lock Mortgage Rates?– Final Finishes and Set Outs Under Way– Preliminary Completion Date– “Clear” Your Schedule As Much As Possible– Confirm the Contract Amount



5.4 30 Days Out– Verify Total Sales Amount (Contract Amount)– Verify Mortgage is OK– Preliminary “Final” Close Date– Set Outs and Finishes Almost Complete– Ask About Certificate of Occupancy– Ask Enough Questions to be Comfortable About

“Preliminary Final Close Date”



5.5 Finalizing the Close Date– When is Builder Comfortable?– Nothing’s Firm Until CO is Issued– Deal with Ambiguity Until Close Can Be Confirmed– Once Close Date is Set, Confirm Everything You

Can As Soon As You Can: Attorney, Mover, etc. etc.

– Confirm the Contract Amount



5.0 Customer Summary– Be Prepared– Be Knowledgeable of Process– Don’t Assume Anything – Verify and Follow Up– Handling Ambiguity is Essential– Be Informed Enough to Not Depend on Others for

You Being Prepared


6 - Final Walk(s)

6.1 “Punching”6.2 Orientation


Final Walk(s)

6.1 “Punching”– Understand Builder’s Process Expectations– Convey Your Process Expectations– Agree on What Will Take Place– Residential Construction Performance Guidelines

Are Available– Punch Versus Orientation


Final Walk(s)

6.2 Orientation– Orients You to the Home, Not Punch– Ask Questions Especially About Anything You

Might Not Understand – You May Not Get Another Chance!

– Obtain User Manuals on Appliances, Equipment, etc.

– Review Warranty Procedures


6 - Final Walk(s)

6.0 Customer Summary– Ensure Home is Finished to Contracted

Performance Standards– Become Familiar with Home– Be Really Happy!


7 - Close Date

7.1 Time and Location7.2 Checks and IDs7.3 Confirm Everything the Week & Day Before7.4 Builder May Not Attend, a Representative7.5 Document Any Agreements7.6 Acceptance Document7.7 Have a Checklist for What to Receive at Close


7 - Close Date

7.0 Customer Summary– Be Prepared– Be Happy– Knowledge and Preparation are the Key


8 - Customer Service/Warranty

• Odds Are It Will Be Needed• Builder Versus Manufacturer• Understand Process• Be Patient but Persistent• Confirm Schedules• Builder’s Process is Key
