Managing Your Customer Through New Home Construction 462 9/13/2015 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? 9/13/2015 Managing Your Customer Through New Home Construction 2

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. 9/13/2015 Managing Your Customer Through New Home Construction 3

Because we want to be their … 9/13/20154 Managing Your Customer Through New Home Construction

Overview 1.Shopping for a New Home 2.The Contract 3.Before Construction Starts 4.During Construction 5.Preparing for Closing 6.Final Walk(s) 7.Close Date 8.Customer Service/Warranty 9/13/20155 Managing Your Customer Through New Home Construction

1 - New Home Shopping 1.1 Location, Location, Location 1.2 The Community 1.3 The Builder Custom Production Spec Only 1.4 The Time Frame 9/13/20156 Managing Your Customer Through New Home Construction

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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 9/13/20158 Managing Your Customer Through New Home Construction

New Home Shopping 1.2 The Community – Amenities – Price Points – Builder(s) – Build Out Time Frame – HOA Dues – HOA Documents 9/13/20159 Managing Your Customer Through New Home Construction

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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 9/13/ Managing Your Customer Through New Home Construction

New Home Shopping 1.3 The Builder 1.3A 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 9/13/ Managing Your Customer Through New Home Construction

New Home Shopping 1.3 The Builder 1.3B 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 9/13/ Managing Your Customer Through New Home Construction

New Home Shopping 1.3 The Builder 1.3C Spec Least Attention from Builder Costs Generally Set Completed Product Contract Structure More Like Re-Sale Changes Less Likely and More Costly 9/13/ Managing Your Customer Through New Home Construction

1 - New Home Shopping 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! 9/13/ Managing Your Customer Through New Home Construction

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2 - The Contract 2.1 New Construction Contract vs “Standard” – Possible Additional Paragraphs – Possible Removed Paragraphs 2.2 Addenda 2.3 Changes 9/13/ Managing Your Customer Through New Home Construction

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 9/13/ Managing Your Customer Through New Home Construction

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 9/13/ Managing Your Customer Through New Home Construction

The Contract 2.2 Addenda – Covenants, etc. – Pricing – Specific Builder Process Provisions – Others – Warranty 9/13/ Managing Your Customer Through New Home Construction

The Contract 2.3 Changes – “Change Orders” or Something Similar – Additions – Alterations – Anything Different from Original Contract – Charges for Changes – Others 9/13/ Managing Your Customer Through New Home Construction

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 9/13/ Managing Your Customer Through New Home Construction

3 - Before Construction Starts 3.1 Do Your Homework! 3.2 Plans – “Structural Revisions” – Other Plan Updates 3.3 Selections – Exterior – Interior 9/13/ Managing Your Customer Through New Home Construction

Before Construction Starts 3.1 Do Your Homework – Builder Assigned – Assigned by You or Customer – Enough to Make Customer Comfortable 9/13/ Managing Your Customer Through New Home Construction

Before Construction Starts 3.2 Plans 3.2A “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 9/13/ Managing Your Customer Through New Home Construction

Before Construction Starts 3.2 Plans 3.2B 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 9/13/ Managing Your Customer Through New Home Construction

Before Construction Starts 3.3 Selections 3.3A 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 9/13/ Managing Your Customer Through New Home Construction

Before Construction Starts 3.2 Selections 3.3B 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 9/13/ Managing Your Customer Through New Home Construction

3 - Before Construction Starts 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 9/13/ Managing Your Customer Through New Home Construction

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4 - During Construction 4.1 “On-Your-Own” Visits 4.2 Builder Planned Meetings 4.3 Communicating 9/13/ Managing Your Customer Through New Home Construction

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 9/13/ Managing Your Customer Through New Home Construction

During Construction 4.2A Spec Builder Planned Meetings – Spec Builder, Probably None “Planned” 4.2B Custom & Production Builders – Before Sheetrock – Orientation 9/13/ Managing Your Customer Through New Home Construction

During Construction 4.3 Communicating – Responsibility for EACH Party – Each Side Must Understand, Don’t Assume – Get It In Writing – Follow Up 9/13/ Managing Your Customer Through New Home Construction

4 - During Construction 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 9/13/ Managing Your Customer Through New Home Construction

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5 - Preparing for Closing Days After Contract Days Out Days Out Days Out 5.5 Finalizing the Close Date 9/13/ Managing Your Customer Through New Home Construction

Preparing for Closing 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 9/13/ Managing Your Customer Through New Home Construction

Preparing for Closing Days Out – Verify Total Sales Amount – Verify Mortgage Approval – Contact Moving Company – Counter Tops Should Be In – Start Getting Excited – Confirm the Contract Amount 9/13/ Managing Your Customer Through New Home Construction

Preparing for Closing 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 9/13/ Managing Your Customer Through New Home Construction

Preparing for Closing 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” 9/13/ Managing Your Customer Through New Home Construction

Preparing for Closing 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 9/13/ Managing Your Customer Through New Home Construction

5 - Preparing for Closing 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 9/13/ Managing Your Customer Through New Home Construction

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6 - Final Walk(s) 6.1 “Punching” 6.2 Orientation 9/13/ Managing Your Customer Through New Home Construction

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 9/13/ Managing Your Customer Through New Home Construction

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 9/13/ Managing Your Customer Through New Home Construction

6 - Final Walk(s) 6.0 Customer Summary – Ensure Home is Finished to Contracted Performance Standards – Become Familiar with Home – Be Really Happy! 9/13/ Managing Your Customer Through New Home Construction

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7 - Close Date 7.1 Time and Location 7.2 Checks and IDs 7.3 Confirm Everything the Week & Day Before 7.4 Builder May Not Attend, a Representative 7.5 Document Any Agreements 7.6 Acceptance Document 7.7 Have a Checklist for What to Receive at Close 9/13/ Managing Your Customer Through New Home Construction

7 - Close Date 7.0 Customer Summary – Be Prepared – Be Happy – Knowledge and Preparation are the Key 9/13/ Managing Your Customer Through New Home Construction

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 9/13/ Managing Your Customer Through New Home Construction

1 - New Home Shopping 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! 9/13/ Managing Your Customer Through New Home Construction

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 9/13/ Managing Your Customer Through New Home Construction

3 - Before Construction Starts 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 9/13/ Managing Your Customer Through New Home Construction

4 - During Construction 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 9/13/ Managing Your Customer Through New Home Construction

5 - Preparing for Closing 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 9/13/ Managing Your Customer Through New Home Construction

6 - Final Walk(s) 6.0 Customer Summary – Ensure Home is Finished to Contracted Performance Standards – Become Familiar with Home – Be Really Happy! 9/13/ Managing Your Customer Through New Home Construction

7 - Close Date 7.0 Customer Summary – Be Prepared – Be Happy – Knowledge and Preparation are the Key 9/13/ Managing Your Customer Through New Home Construction

Summary Understand Process Do Your Duties Stay Informed Become Comfortable with Ambiguity Contractual Expectations 9/13/ Managing Your Customer Through New Home Construction