We are closing on our construction loan tomorrow! As with everything else – getting to closing came with hiccups, but not as many as there could have been. The biggest roadblock would have been if our appraisal didn’t come in around the same value as the cost of the house. The bank will finance 80% of new construction on whichever is lower – the appraised future value or the cost. As in, they will not finance a $5M home that is in the middle of a neighborhood that averages $150k houses. Smart I guess. Anyway, our appraisal is doubly difficult because we are building a green home, which in its nature is more expensive. And to triple the complexity – we are on a city lot with a bunch of special conditions and added costs. So, we had low hopes.
Kudos to our builder on this one. He’s been through this process before and knows his way around it. Some extra data sent to the bank and the request of a special appraiser with green building knowledge did the trick. Our appraisal came back $4k under our build costs. Whew!
The two places where slight hiccups came into place.
- Our builder asked us to close on Monday morning because we needed to start the dig on Tuesday otherwise, the schedule would be ruined and all hell would break loose. Dave was scheduled to be out of town until Monday afternoon. I got Power of Attorney so that I could close without Dave, but so much information is exchanged in this process that we both wanted him to be there. He was able to move his flight and had a crazy 48-hour travel schedule through a myriad of airlines with multiple surprises and flights rebooked. Ethiopia Airways has no record of his bag (not that they lost them – just no record of them at all). Anyway, he made it home, sans his bag. On Thursday (too late to change this chain of events), I learned the work wasn’t scheduled to start until Wednesday, hence, we could have moved the closing to Tuesday morning. But – I learned this too late. You’ll see a trend where communication continues to be a struggle for Dave and I and the consequences of these little missed messages can sometimes ruin our day/week completely.
- We also had a slight hiccup with the bank re: amount of cash required for closing. I was off on the amount we needed to get to 20% because I had thought the 20% we already put down on the lot would count when we transitioned from the lot loan to the construction loan. It did not count, which left Dave and I scratching our heads with what we needed to liquidate to get to the down payment. (and here’s where we give public kudos to our army) Jesse Bergland, a childhood friend of my mine and our financial adviser for years, had an account for Dave and I that was about what we needed to make up the difference. An emergency email on Thursday morning to Jesse sent his team into a work frenzy – the money was in our account by 4pm on Friday, not an easy feat to complete. Jesse continues to amaze me with how much he understands Dave and my priorities and is open to helping us through our life journey – even when it’s not a direct benefit to him. Anyway… enough gushing… Let me know if you need a guy and I’ll make the introduction. Irony on this hiccup: getting a call from the bank at 4:30pm on Friday that we could have come in with the lower amount I was originally expecting. At least this new information came with an apology for the miscommunication. We are struggling here with what we want to do. Higher amount = more comfortable loan amount and we already have the money liquidated; lower amount = some extra contingency cash for surprises during the build phase. We’ll make a call one way or the other tonight, but are leaning towards the higher amount.
It is worth noting that although the down payment miscommunication happened with the bank, I’m extremely pleased with their construction loan processes and policies. There have been a few instances where they have provided “checks and balances” between us and the builder’s normal way of doing things. I like having this check built into our process with a 3rd party. You’ll continue to notice Dave and I assembling a team to build this house. This remains a top priority for us.
We also had a pre-construction meeting with all of the sub-contractors around one big table to discuss the project this week. I was really impressed with the communication, troubleshooting, and alignment that happened at that meeting. There were a few moments where the collaboration was being shut down and the tone was poor (e.g. comments like “everyone worry about your thing and just do it to plan and don’t be concerned with everyone else.”). I laughed – because that seems exactly opposed to why you’d have this great cross-sub meeting. Most of the meeting, however, was great. The team talked through the plan details to align on who was doing what, and how and when it would be done. Our architect reiterated the need for everyone to “keep their brains working” on this project, not to just blindly do their task. It was exactly the message I’d hope we’d send to these guys (I say guys not in a sexist way – in a way that tells you I was the only woman at the meeting – shocking, I know). We have hired a good team and I have the confidence they can do the job. The architect caught me on the way out and reiterated this fact – stating he doesn’t see meetings like this often and is confident we made a good choice with our builder. With the premium we are paying for this team, it was nice to hear that…
So now what? Well, things get real.
Week 1 – Sewer & Water; The Dig; The Stairs; Trick or Treating & Appliance Selection
Sewer & Water
We have a crew showing up on Wednesday to hook-up sewer and water. Because we must preserve the historic retaining wall at the front of our lot, we need to directional bore the utilities under the wall. There are three connections going under the wall; one for water and two for sewer. Because we eventually plan to use our detached garage for an office space, and because code doesn’t allow you to connect two buildings to the same sewer line, we’ll have the hook-ups all ready to go… We can, however, connect the water to the garage through the house, which is great.
On Friday, the excavators show up. With the only access being the alley, they’ll need to start the dig at the front of the lot and work their way to the back of the lot. Because of this, we are only working on the house first and crews will need to return in the spring to build the garage. We’ve heard two instances in our neighborhood where a dig led to finding an old underground garage basement (think model-Ts on platform elevators, sent down to a spinning platform – super cool!). If we find something like this perfectly over our house location (not likely) – we win the jackpot. Lots less dirt to move and store. If we find a surprise like this not perfectly situated on our lot – then that cash contingency becomes a thing we may need.
This is really the last cost hurdle we need to get through before everyone has confidence in their estimates. Cross your fingers for no surprises on the dig.
And finally, the mason shows up on Friday. You’ll see on the picture (way far to the left) one set of stairs in the retaining wall – these are on the neighbor’s property. We need to cut our own stairs into the historic wall. We’ll be doing that immediately as we want to avoid our sub-contractors trespassing on the neighbor’s property trying to gain access to our lot.
Trick or Treating & Appliance Selection
Dave and I have two priorities this week.
First, we want to trick or treat in our neighborhood. I wrote a letter that we’ll be able to hand out to our neighbors to introduce ourselves. We want to make sure everyone has our information in case any issues arise during the build and also hopefully meet a few families to start our way to new friendships after we move in.
And second, for some reason the crew asked us to have appliances selected before framing. Because framing is scheduled to start right when baby is coming, we are hoping to have this done by the end of next weekend. This is one of two allowance items we have open; the other being the back splash where we hope to use a local tile company.