1. Managing Your Customer Through New Home Construction 462 9/13/2015 Managing Your Customer Through New Home Construction 1

2. 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

3. 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

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

5. 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

6. 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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8. 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

9. 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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11. 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 9/13/201511 Managing Your Customer Through New Home Construction

12. 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 9/13/201512 Managing Your Customer Through New Home Construction

13. 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 9/13/201513 Managing Your Customer Through New Home Construction

14. 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 9/13/201514 Managing Your Customer Through New Home Construction

15. 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! 9/13/201515 Managing Your Customer Through New Home Construction

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17. 2 - The Contract 2.1 New Construction Contract vs “Standard” – Possible Additional Paragraphs – Possible Removed Paragraphs 2.2 Addenda 2.3 Changes 9/13/201517 Managing Your Customer Through New Home Construction

18. 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 9/13/201518 Managing Your Customer Through New Home Construction

19. 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 9/13/201519 Managing Your Customer Through New Home Construction

20. The Contract 2.2 Addenda – Covenants, etc. – Pricing – Specific Builder Process Provisions – Others – Warranty 9/13/201520 Managing Your Customer Through New Home Construction

21. The Contract 2.3 Changes – “Change Orders” or Something Similar – Additions – Alterations – Anything Different from Original Contract – Charges for Changes – Others 9/13/201521 Managing Your Customer Through New Home Construction

22. 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 9/13/201522 Managing Your Customer Through New Home Construction

23. 3 - Before Construction Starts 3.1 Do Your Homework! 3.2 Plans – “Structural Revisions” – Other Plan Updates 3.3 Selections – Exterior – Interior 9/13/201523 Managing Your Customer Through New Home Construction

24. Before Construction Starts 3.1 Do Your Homework – Builder Assigned – Assigned by You or Customer – Enough to Make Customer Comfortable 9/13/201524 Managing Your Customer Through New Home Construction

25. 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 9/13/201525 Managing Your Customer Through New Home Construction

26. 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 9/13/201526 Managing Your Customer Through New Home Construction

27. 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 9/13/201527 Managing Your Customer Through New Home Construction

28. 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 9/13/201528 Managing Your Customer Through New Home Construction

29. 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 9/13/201529 Managing Your Customer Through New Home Construction

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31. 4 - During Construction 4.1 “On-Your-Own” Visits 4.2 Builder Planned Meetings 4.3 Communicating 9/13/201531 Managing Your Customer Through New Home Construction

32. 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 9/13/201532 Managing Your Customer Through New Home Construction

33. During Construction 4.2A Spec Builder Planned Meetings – Spec Builder, Probably None “Planned” 4.2B Custom & Production Builders – Before Sheetrock – Orientation 9/13/201533 Managing Your Customer Through New Home Construction

34. During Construction 4.3 Communicating – Responsibility for EACH Party – Each Side Must Understand, Don’t Assume – Get It In Writing – Follow Up 9/13/201534 Managing Your Customer Through New Home Construction

35. 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 9/13/201535 Managing Your Customer Through New Home Construction

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37. 5 - Preparing for Closing 5.1 30 Days After Contract 5.2 60 Days Out 5.3 45 Days Out 5.4 30 Days Out 5.5 Finalizing the Close Date 9/13/201537 Managing Your Customer Through New Home Construction

38. 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 9/13/201538 Managing Your Customer Through New Home Construction

39. Preparing for Closing 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 9/13/201539 Managing Your Customer Through New Home Construction

40. Preparing for Closing 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 9/13/201540 Managing Your Customer Through New Home Construction

41. Preparing for Closing 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” 9/13/201541 Managing Your Customer Through New Home Construction

42. 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 9/13/201542 Managing Your Customer Through New Home Construction

43. 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 9/13/201543 Managing Your Customer Through New Home Construction

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45. 6 - Final Walk(s) 6.1 “Punching” 6.2 Orientation 9/13/201545 Managing Your Customer Through New Home Construction

46. 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 9/13/201546 Managing Your Customer Through New Home Construction

47. 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 9/13/201547 Managing Your Customer Through New Home Construction

48. 6 - Final Walk(s) 6.0 Customer Summary – Ensure Home is Finished to Contracted Performance Standards – Become Familiar with Home – Be Really Happy! 9/13/201548 Managing Your Customer Through New Home Construction

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50. 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 9/13/201550 Managing Your Customer Through New Home Construction

51. 7 - Close Date 7.0 Customer Summary – Be Prepared – Be Happy – Knowledge and Preparation are the Key 9/13/201551 Managing Your Customer Through New Home Construction

52. 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 9/13/201552 Managing Your Customer Through New Home Construction

53. 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! 9/13/201553 Managing Your Customer Through New Home Construction

54. 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 9/13/201554 Managing Your Customer Through New Home Construction

55. 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 9/13/201555 Managing Your Customer Through New Home Construction

56. 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 9/13/201556 Managing Your Customer Through New Home Construction

57. 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 9/13/201557 Managing Your Customer Through New Home Construction

58. 6 - Final Walk(s) 6.0 Customer Summary – Ensure Home is Finished to Contracted Performance Standards – Become Familiar with Home – Be Really Happy! 9/13/201558 Managing Your Customer Through New Home Construction

59. 7 - Close Date 7.0 Customer Summary – Be Prepared – Be Happy – Knowledge and Preparation are the Key 9/13/201559 Managing Your Customer Through New Home Construction

60. Summary Understand Process Do Your Duties Stay Informed Become Comfortable with Ambiguity Contractual Expectations 9/13/201560 Managing Your Customer Through New Home Construction