If you’ve built a custom home or are just thinking about building, you’ve probably heard the word ‘allowances’ thrown around. Typically, the term is used to describe one of the most confusing and overwhelming parts of the building process, but that shouldn’t be the case. I’m here to explain how allowances work and how to best capitalize on them with your builder.
So, what is an allowance? Well, just think of it as CASH!! What’s better than cash? When a custom builder prices out a home, there are several items that can’t be defined or selected up front. An example could be the cabinets or countertops. Since you can select virtual any item under the sun, a builder gives you a cash value that you can utilize to pick out items for your home.
Here’s an example: A builder offers you a $7,000 allowance for countertops. This could go towards whatever you pick: granite, quartz, cultured marble, soapstone…you name it! You’d head to a granite or countertop supplier, typically one the builder recommends (they tend to have preferred vendors), and make a few selections for them to price out.
A few items in the home that are often allowance based are:
Flooring (Carpet, Hardwood, etc)
IMPORTANT NOTE: When reviewing if an allowance is adequate, try to do some research! You can hop online, but more importantly, go to the vendors and suppliers. They can provide accurate estimates that include labor, materials, design, etc. You can also compare builders to one another keeping in mind that it’s VERY difficult to compare apples to apples unless you’re looking at the exact same plan, spec and allowances!
The good news is allowances are often traded amongst each other. Think of all of your allowances as separate buckets of cash. You can take money from one to help pay for another. If you’d rather spend your money on a high end appliance package because you’re a gourmet chef, then take a little bit off a few other less important items like landscaping or lighting.
Tips for managing your allowances:
If you know an allowance isn’t adequate, increase it! This can be through negotiating or adding cost to the contract. If you go over your allowances, you often have to pay cash at the end of the build. Why not increase it slightly and finance that amount. You always have the option of putting more cash down at the end, but at least you’re not backed into a corner!
Ask your builder for a list of suppliers and vendors. Go and meet with them briefly to discuss what things cost. A few meetings can give you peace of mind in knowing where you stand.
Tour Homes! Chances are your builder has a few recent homes that you can tour. Ask them what they spent on the kitchen cabinets, bath fixtures, etc. If it was built within the past year, those numbers should be relatively close.
Watch out for the internet! Chances are most items are cheaper online. You can buy everything on Amazon, but do you really want to outfit your house on there? Local Suppliers and Vendors might be a bit more expensive, but your builder uses them because they more reliable, they include installation (most often), and you know you can call them if there’s an issue. Builders always dread the statement, “I found this cheaper online!” so beware!
ALTERNATIVES: If you’re not comfortable with Allowances, there are alternatives that builders can occasionally offer. They’re not as common in custom building and often a little more restricting, but some builders might offer packages of selection items. This is common in production or semi-production builders. They offer lighting packages, countertop packages, or potentially option A,B,C packages that you can choose from. This is easier to manage and keeps you for over-spending, but are limiting because you can’t select anything under the sun! There is a time and place for this type of selection process so try to know yourself before jumping into this type of situation.
If you’re still with me now, that means you’re an allowance expert and you have nothing to worry about! Chances are you’ve selected (or will select) a great builder and will do the necessary research to feel comfortable. If you’re still a little weary, reach out to a new construction specialist/agent in your area! They can save you TONS of money!
Over the past 10 years, we’ve been building the framework of what is now evolving into the Build Collective. It’s been an exciting ride to say the least! A ride that’s been built on the trust and camaraderie of our clients and friends and on the hard work of each member of our firm. And we’re just getting started!
To kick off the new year, we’re proud to announce that Build Cincinnati is now Build Collective!
As you can see, our new name and brand isn’t a huge departure from what we’ve been as you can see. In fact, it’s still all about you. Our logo will NEVER be the prominent thing you see. Our business has always and will always be about your property not us as the Realtors.
So, why are we changing our name, you might ask?
Well, it’s less of a change and more of an evolution of our company. Given that each of us have specialized expertises in different areas, we wanted a name that would encompass that. Also, it’s not just about us. We work with incredible builders, developers, buyers, sellers, home owners, engineers, architects, and municipalities everyday that each play a role in our success.
Essentially, we are now, more than ever, a collective of individuals and companies that are as much partners as they are clients. We work together as a team to provide the best suite of services possible. We all know that each sale and transaction takes a village!
At Build Collective, we are different things to different clients: We are Realtors. We are a Marketing Agency. We are Developers. We are Communicators. And, most important, we are advocates for you! Collective was a word that described that best and didn’t limit us base on geography…Sorry Kentucky!
And, another announcement… Did we mention this new name needs a new office! At the end of January, we’ll be moving to the heart of Montgomery (not far from where we are now) to 9361 Montgomery Rd Suite D.
Over the next several weeks, we’ll slowly be rolling out our new name on our website, signage, brochures, and other marketing materials. But, just as it’s been since out start, it won’t be all about us. It’s about you. So, as we set out to tackle the 2019 real estate market, we set out with a new name, new office and tremendous excitement, but the same mission: to provide unparalleled, specialized service for each of our clients!
Thanks as always for your support and cheers to 2019! Mike Hines & the Build Collective Team 9361 Montgomery Rd Suite D, Cincinnati, Ohio 45242
So you’ve put a contract in on a homes and now It is time for inspections. You may think that the most important thing when negotiating the contract is the purchase price, but in our opinion it is the inspection process!
Hiring a certified home inspector is one of the best decisions you can make when buying a home. They are over 1,200 items that home inspectors look at during the inspection on your new home. Some of the biggest items are: structure, foundation, roof, plumbing, mechanicals and appliances. There are also other inspections that you can have done usually for an extra cost that include radon, termite, sewer and mold testing.
Buying a home is normally the largest investment that you make in your life so it is very important to have all of these items checked so you make a wise financial decision.
Can you imagine buying a house and not having an inspection done? Imagine a year later finding out you have major structural issues or that you need a new roof. Having an inspection done before purchasing a home can protect you for years to come on your new purchase! If issues are found during the inspection, you as a buyer can negotiate items to be repaired or replaced by the seller. The Seller is not obligated to fix any item, but it allows the buyer the option to reconsider the purchase or fix things before they move in.
This is why we feel the home inspection process is one of the most important steps when going through the home buying process. Don’t make the mistake of buying a new home without having an inspection performed!
If you’ve driven through Madeira over the past few months or even few years, I’m sure you’ve noticed all of the new construction popping up. It comes as no surprise to residents in the community since they know that Madeira is such an attractive place to live with it’s walkability, downtown district and proximity to Downtown as a suburb. And, of course, we can’t forget to mention the highly rated school district – one of the top in the State!
But, how do you sift through and compare all of the new construction opportunities? This is a request of our clients all the time and it’s simple to breakdown. You just have to break Madeira up into sections and understand the key players….
So, let’s take a closer look:
In Madeira, there are quite a few great builders: Ashford Homes, Legendary Homes, Buckhead Homes, & John Henry Homes to name a few. These builders each have their own strengths that draw clients in their own way. We’ve had the opportunity to work with virtually every builder in the area and know how great they are.
Let’s dive into one builder in particular so we can explain Madeira and it’s opportunities. John Henry Homes is one of Madeira’s most active builders with almost a dozen lots and half a dozen homes under construction. Before you ask, yes, we represent John Henry in Madeira, so of course we’re biased.
If you don’t know, John Henry is not a person. It’s two people. Josh (Henry) Blatt and John Blatt are brothers that have been building for 25 years. They have built all around the Cincinnati area for hundreds of happy customers and pride themselves on offering a quality home with as little frustration as possible.
As you review John Henry’s lot inventory, you’ll see that they have homes ranging in the low end (for Madeira) at $550,000 to up over $700,000. These price point differences come from size of home to lot type and location. Jumping into a few examples we can break Madeira up into two sections:
East of Miami and West of Miami:
On the WEST SIDE of Miami, you’ll find larger lots in Madeira. Larger is relative, but this means they’re anywhere from 70′-80′ wide and homes start around $700,000 because the lots and teardown homes are more expensive.
Example: 7431 North Mingo by John Henry Homes. Although this home as not been set, it would most likely feature a 3 car front entry garage with 2800 ft. plus above grade for around $729,000.
List of lots available on the WEST side of Miami:
7431 North Mingo – 80′ lot
7210 Fowler – 80′ lot
7128 Mayfield – Smaller 60′ lot, exception to the larger lot
On the EAST SIDE of Miami, lots tend to be a bit cheaper and smaller. They range from 50-60′ wide and around 140′ deep. This allows for 2 car front entry homes at anywhere from 2400-2600 ft (sometimes more) and homes priced from $550,000. Historically, the further east you go the lesser expensive the lots, but this is NOT always true.
List of lots and homes available on the EAST side of Miami:
Keep in mind there are exceptions, like Southside, Summit, Fowler, Mayfield as I mentioned above. This section is south of Euclid on the west side of Miami.
That said, the above breakdown is a good basis to follow so you can know where to focus your search based on your price point. Of course, there plenty of great builders and we encourage you to meet with a few, but select your favorite lot! You can always change things in the house, but you CAN’T change the location or lot.
Did you realize that the Fall market is already here! It snuck up on us. It might not feel like it with these 90 degree days, but now that Labor Day has come and gone, we’re in the heat of the Fall market. Literally.
Over the years, we’ve seen an incredibly strong market in September and October because of lack of inventory and increasing demand. This year is no different, but there are some trends in the market that you’ll want to keep an eye on so you can see how they might effect your selling and buying plans.
To understand the market though, we first to explain how we view and track the local real estate market. We’ve all heard that real estate is all about location and that’s never been more true. We like to use the term “Hyper Local”. What does this mean? Well, each neighborhood has it’s own ecosystem if you will. Demand and supply can be different from one neighbor or another…heck, from one street to another. Monthly, our Build Cincinnati team reviews the sales, listings and trends for each area we focus to understand the health of that market. We even go as far as breaking each area up by price point.
An example would be looking at Montgomery and Hyde Park. Below, you’ll find a quick breakdown of home sales and listings at different price points and their average days on market. By going hyper local, we can best advise our clients on how to position their homes or buying plans.
Less Than $400,000 – 10 Listings
$401,000 – $700,000 – 26 Listings (2 New Construction)
$700,000+ – 40 Listings (18 Resale or Completed Homes & 22 New Construction)
Less Than $400,000 – 28 Listings
$401,000 – $700,000 – 18 Listings
$700,000+ – 25 Listings
Most people are under the impression that each of these areas are Seller Markets, meaning the lack of inventory gives Seller’s the edge. That might be true some cases, but in many, there is actually a growing amount of inventory. Before you worry though, Cincinnati in general only has 2.1 month absorption rate. This means that if there were no new listings, all of the homes would be sold in 2.1 months (theoretically, of course). A balanced market in Cincinnati is 4.5-5 Months, so we’re still well below that.
Here’s what this means to you:
For Sellers: the market is strong! Home prices are up 7.4% across Ohio. However, Sellers and Agents need to be care not to become over confident in a home’s ability to sell at any price. When pricing your home to sell, we need to be ever vigilant in finding that sweet spot on pricing. The first two weeks after listing are the most important and you only have one chance to do it right. We always arm our clients with list price range and of course, a suggested list price. When reviewing the competition and sales, be sure that you’re being objective.
For Buyers: Inventory is low in most cases, but there are great properties that come on the market (or we find through back channels) routinely! Our team is hungry to find new homes, lots and opportunities for our Buyers, but we all have to work harder than ever to find them. This means making yourself available as much as you can to see homes the moment they hit the market and being pre-approvaled! We’ll be sure to take care of you on this front!!
Building Buyers: Cost is going up so get it now before it gets even more expensive to build! Over the past 12 months, the cost to build has gone up 8-10%. That’s purely the cost of materials and contractor work. Lumber, hardwood, labor, roofing, you name it! The longer you wait to build, the higher likelihood that the cost will go up even more. Land and lot opportunities are more difficult and more expensive to find too. If you’ve considered building, now might be the time to explore it a little more seriously.
With that, we’ll leave you with an interesting statement that sums up what many are seeing out there and to calm any of those that are throwing the term bubble around…
“We’re seeing the first indications that price appreciation may be slowing, but the underlying fundamental housing market conditions support a natural moderation of house prices rather than a sharp decline.” -Mark Fleming Chief Economist at First American