ᐅ How to Plan the Process for Building Your Own Single-Family Home?
Created on: 15 May 2011 16:27
B
Bubb
Hello everyone,
As a complete beginner, I need your help with a rough outline of the process for building a single-family house.
Until about three weeks ago, I hadn’t even considered building a house in my wildest dreams, until my wife, during a business trip one evening in her hotel room, was browsing “Immoscout” again.
This had happened quite often over the years, but until now, there had been a natural barrier in and around Munich that kept me from such adventures as buying real estate: THE PRICE LEVEL.
What was new this time was that my wife was looking for plots of land – and, strangely enough, a plot was offered just one town over from us, right in a quiet, pleasant residential area.
It was part of the garden area of an older single-family house. The land was split due to generational reasons and put up for sale.
Building permission (building permit / planning permission) was already granted, fully serviced, etc. Before I even realized what was happening, I found myself standing with my wife and the real estate agent on a meadow that somehow had the ability to pull my savings out of my pocket.
I never intended to go into debt for a house or limit myself for 30 years like my parents did.
My condition was that we could pay for the plot “in cash,” and when the seller learned that we didn’t need financing for the land, he reduced the price by almost €25,000, and just like that, I lost – the plot was bought a few days later.
The seller was interested in a very quick closing.
The current status: money gone (a little over €300,000), plot secured.
I have since become convinced that, in our case, ownership is better than renting, especially since our rent is almost €1,900 per month including utilities.
The very next day, I went to a house exhibition to gather information.
My first impressions were rather unpleasant. As soon as some salespeople found out that we already had a plot, the hard-selling tactics started: appointments, intensive talks, and I felt extremely pressured, which I made very clear to them.
Everyone claimed to be the best, everyone had the best product, everything was individual, and so on.
With other providers, I encountered a lot of arrogance because I was dressed in jeans and a polo shirt. Four days later, when I came straight from the office in a suit, they were suddenly very polite, offering drinks and snacks (same salespeople).
What is clear for us is that we need a general contractor (builder).
The house should be built with solid construction and a basement (about 160 sqm (1,722 sq ft) excluding basement area) and must be completed with as little personal contribution as possible since we lack experience in construction work.
For us, one option would be to have the basement and ground floor fully finished, with the upper floor left for later completion.
Now, our questions are: How should one proceed?
Should we secure financing first (about €350,000) and then look for a general contractor?
(Problem: banks require information about the house, which doesn’t even exist in planning yet, e.g., gross volume, sqm according to “DIN something” etc.)
Or should we plan the house first and then arrange financing?
We already have quite specific ideas regarding the house, floor plan, and room layout (pitched roof 35° - 38°, knee wall height 70 cm (28 inches), and building envelope legally fixed).
How should one approach general contractors? Do they already design a complete house without any contractual basis? (All plans, development plans, etc., are available.)
Are the salespeople specialists or just “salespeople”?
Does one take a single plan and present it to several general contractors, or does each one create their own plan/layout?
Will you receive the floor plans?
Can you take the construction specification documents before signing and compare them?
(Selection of materials before signing — I want to know in advance what we are buying.)
How many meetings are typical? How transparent are the cost breakdowns for individual items? (Basement, architectural services, plumbing, electrical, etc.)
What is usual and what is not? (Receiving plans, cost transparency, which subcontractors are used, etc.)
What should you agree to and what absolutely not?
When should alarm bells ring, or what are signs that you should end a conversation and walk away? (For example, “sign first, you can cancel later free of charge” — *shaking head)
Most providers mention a price per square meter, e.g., €1,700 (about $1,900) with everything included, but I find that too general, even if it’s just an average.
I am very grateful for your advice.
Best regards,
Bubb
As a complete beginner, I need your help with a rough outline of the process for building a single-family house.
Until about three weeks ago, I hadn’t even considered building a house in my wildest dreams, until my wife, during a business trip one evening in her hotel room, was browsing “Immoscout” again.
This had happened quite often over the years, but until now, there had been a natural barrier in and around Munich that kept me from such adventures as buying real estate: THE PRICE LEVEL.
What was new this time was that my wife was looking for plots of land – and, strangely enough, a plot was offered just one town over from us, right in a quiet, pleasant residential area.
It was part of the garden area of an older single-family house. The land was split due to generational reasons and put up for sale.
Building permission (building permit / planning permission) was already granted, fully serviced, etc. Before I even realized what was happening, I found myself standing with my wife and the real estate agent on a meadow that somehow had the ability to pull my savings out of my pocket.
I never intended to go into debt for a house or limit myself for 30 years like my parents did.
My condition was that we could pay for the plot “in cash,” and when the seller learned that we didn’t need financing for the land, he reduced the price by almost €25,000, and just like that, I lost – the plot was bought a few days later.
The seller was interested in a very quick closing.
The current status: money gone (a little over €300,000), plot secured.
I have since become convinced that, in our case, ownership is better than renting, especially since our rent is almost €1,900 per month including utilities.
The very next day, I went to a house exhibition to gather information.
My first impressions were rather unpleasant. As soon as some salespeople found out that we already had a plot, the hard-selling tactics started: appointments, intensive talks, and I felt extremely pressured, which I made very clear to them.
Everyone claimed to be the best, everyone had the best product, everything was individual, and so on.
With other providers, I encountered a lot of arrogance because I was dressed in jeans and a polo shirt. Four days later, when I came straight from the office in a suit, they were suddenly very polite, offering drinks and snacks (same salespeople).
What is clear for us is that we need a general contractor (builder).
The house should be built with solid construction and a basement (about 160 sqm (1,722 sq ft) excluding basement area) and must be completed with as little personal contribution as possible since we lack experience in construction work.
For us, one option would be to have the basement and ground floor fully finished, with the upper floor left for later completion.
Now, our questions are: How should one proceed?
Should we secure financing first (about €350,000) and then look for a general contractor?
(Problem: banks require information about the house, which doesn’t even exist in planning yet, e.g., gross volume, sqm according to “DIN something” etc.)
Or should we plan the house first and then arrange financing?
We already have quite specific ideas regarding the house, floor plan, and room layout (pitched roof 35° - 38°, knee wall height 70 cm (28 inches), and building envelope legally fixed).
How should one approach general contractors? Do they already design a complete house without any contractual basis? (All plans, development plans, etc., are available.)
Are the salespeople specialists or just “salespeople”?
Does one take a single plan and present it to several general contractors, or does each one create their own plan/layout?
Will you receive the floor plans?
Can you take the construction specification documents before signing and compare them?
(Selection of materials before signing — I want to know in advance what we are buying.)
How many meetings are typical? How transparent are the cost breakdowns for individual items? (Basement, architectural services, plumbing, electrical, etc.)
What is usual and what is not? (Receiving plans, cost transparency, which subcontractors are used, etc.)
What should you agree to and what absolutely not?
When should alarm bells ring, or what are signs that you should end a conversation and walk away? (For example, “sign first, you can cancel later free of charge” — *shaking head)
Most providers mention a price per square meter, e.g., €1,700 (about $1,900) with everything included, but I find that too general, even if it’s just an average.
I am very grateful for your advice.
Best regards,
Bubb
P
perlenmann17 May 2011 10:01Bonnat schrieb:
Because it doesn’t always make sense to pay for the land in full and then finance the house separately – or is the house also being paid in cash? That won’t save you any trouble or money since the amount to be financed stays the same.
Regards
PeterWhat do you mean by “not always”? Please explain.
In the end, it’s all one big financing anyway. Whether I finance $100,000 for the house and $50,000 for the land, or $150,000 just for the house, what’s the difference???
And it does save trouble and money because the notary doesn’t also have to register a mortgage on the land seller’s behalf.
Besides, you need the land first. If it’s included in the financing, I start paying interest right after the purchase. I paid for it in cash, so I only start paying interest after the foundation slab is built!
Hello,
I don’t have time to explain in detail right now. But it should be clear that a complex financing decision like buying a property should be considered as holistically as possible.
This starts with personal factors ("Until about 3 weeks ago, I never even dreamed of building a house" – "surfing the internet" – "now all the money is gone" – and what happens if...? Liquidity?), continues with fundamental misunderstandings (paying cash for the land brings a discount), and extends to disadvantages in financing, such as additional fees, start dates for government loans like KfW loans, and so on.
My advice is to consult a truly independent financial advisor beforehand and run through several scenarios.
Taken in isolation, that certainly makes sense – but the isolated perspective doesn’t really work here. Usually, the money is not simply sitting around.
Best regards,
Peter
Perlenmann schrieb:
What do you mean by not always? Please explain.
I don’t have time to explain in detail right now. But it should be clear that a complex financing decision like buying a property should be considered as holistically as possible.
This starts with personal factors ("Until about 3 weeks ago, I never even dreamed of building a house" – "surfing the internet" – "now all the money is gone" – and what happens if...? Liquidity?), continues with fundamental misunderstandings (paying cash for the land brings a discount), and extends to disadvantages in financing, such as additional fees, start dates for government loans like KfW loans, and so on.
My advice is to consult a truly independent financial advisor beforehand and run through several scenarios.
And it saves trouble/money because the notary doesn’t have to register a mortgage in favor of the land seller as well. Also, you need the land first; if it’s part of the financing, you start paying interest from the purchase onward. I paid cash, so interest starts only from the foundation slab!
Taken in isolation, that certainly makes sense – but the isolated perspective doesn’t really work here. Usually, the money is not simply sitting around.
Best regards,
Peter
P
perlenmann18 May 2011 12:22If explaining it is too complicated for you, then I simply won’t understand it.
S
Schneemann218 May 2011 15:56I would like to understand it too, but even with these brief explanations, I can’t make sense of it.
When does it actually make sense to pay for a plot of land in cash beforehand, and when does it not?
When does it actually make sense to pay for a plot of land in cash beforehand, and when does it not?
P
perlenmann18 May 2011 16:05I'm a bit upset. You may be right, but I just can't understand it. That's why I'd like to know.
I didn't just casually browse the internet and then plan to buy a house. I don't have and won't get a KfW loan. I had an independent financial advisor, and he was quite "cool" when he heard about 50% equity. And the money was basically just sitting there. So I don't need bridging finance either.
So please, was it wrong to pay "in cash" (of course I transferred it)?
I didn't just casually browse the internet and then plan to buy a house. I don't have and won't get a KfW loan. I had an independent financial advisor, and he was quite "cool" when he heard about 50% equity. And the money was basically just sitting there. So I don't need bridging finance either.
So please, was it wrong to pay "in cash" (of course I transferred it)?