Protecting Your Interests with the Remodel Contractor

Hiring a reputable contractor and that you are comfortable working with him is one of the most important aspects of your remodel project. Following are some tips on protecting your interests with the remodel contractor.

images1. Ask your friends or your local gay real estate agent to recommend some contractors that they have had a good experience with on their remodel project. Their suggestions can help steer you to some reliable remodel contractors who do quality work.

2. Obtain an estimate from each contractor. Make sure you understand what the covers and that it contains a complete listing of all of the work that you would like completed on your project.

3. Check to make sure that the contractor is licensed. State licensing laws vary, but many states offer dispute resolution services and may have state funds available to help settle disputes and compensate the homeowner. In addition, licensing is a good indication that the contractor is qualified to do the job.

4. Do not sign the estimate unless it clearly states that it does not constitute a contractual agreement to complete the work. Instead, once you have chosen a contractor, draft a contractor agreement. The contract should cover work to be completed, cost, approximate timelines to complete the job and any other aspects of the remodel that you and the contractor are agreeing to. This will help ensure that there are no misunderstandings during the course of the work.

5. Include a payment plan in the contractor agreement. For example, 10 or 15 percent to begin the project and then payments at each phase as it is completed. Be sure to inspect the work to make sure it has been completed to your satisfaction before making a payment.

6. Payments to the contractor should be made by check. This method will ensure that you have proof of payment in the event that there is a dispute.

7. After the work begins, make sure that you monitor its progress. A good way to do that is to visit the site at the end of each workday. Check to see that progress is being made and that items that have been delivered for installation are the quality of material and the color that you wanted.

8. Subcontractors and material suppliers can put a mechanics lien on your home if they are not paid. Make sure they have all been paid before you release the final payment to the contractor. You can do this by requesting proof from the contractor, or releases from the subcontractors and material suppliers. The releases should list how much is owed and contain a statement that the lien will be released once the listed amount is paid. If the amounts have not been paid once the project is complete, pay them out of the final payment and remit the remainder to the contractor.

9. Do not make a final payment to the contractor until any final inspections required by state laws or county ordinances have been completed satisfactorily.

10. Make sure that you obtain all the paperwork, including warranty cards, from the contractor for the appliances and equipment that have been installed.

Protecting your interest with the remodel contractor will help ensure that the job goes according to plan and that it is completed in a timely manner. It will also make the remodel process less stressful so that you can enjoy watching your project come together.

Remodeling? Review & apply this list to avoid a potential nightmare.

Remember the old saying that ‘Behind every dark cloud lies a silver lining?’ Well you can also say the opposite may be true. Despite the fact that you can find many honest remodeling contractors to work with, there are some who will give you a bundle of nightmares! It’s crazy if you were to listen to some of the things contractors tell their clients. So to help you out, below is a checklist to give you a smart start to your remodeling:

Avoid low bids: People will do anything to have you hire them so you have to be cautious when taking this step. You might find a low bidding contractor that only ends up ruining your expectations. Try to obtain at least 3 different bids from different contractors before making up your mind on whom to choose. Remember, when the deal is too good… think twice.

Go through the references: Checking the past work records for each company (Better Business Bureau /, etc.) and ask past customers who have used the services of a specific contractor/company. Another good place to search for complaints for different contractors would be the state’s attorney general’s office.

Acquire a written contract: The benefit of a written contact is its clear specification of the details of what the remodeling process will entail. This is from the charges that will be incurred to the terms and conditions applied to payment. Never sign any contracts that have unclear amounts for materials and products. Once the project starts rolling, you will be following the terms alone.

Go through the paperwork: It is important to review the paper work which includes up-to-date insurance, license and workers compensation guidelines. A good place to get information on licensing requirements specific to your state is the Contractor’s License Reference Site. You are not the one who is responsible for the acquisition of permits…, it’s the contractors’ job and he/she should issue you a lien waiver once the remodeling job is complete to avoid issues with suppliers and sub contractors complaining of unsettled bills.

Never pay with cash: Don’t pay individuals / sub-contractors directly, instead issue a check to the contracting company. Paying through a credit card is an even more secure means. A good down payment would be something around 30% of the whole project cost, to purchase materials. Only make the final payment when the job is fully done and you are 100% satisfied and all permits are closed.

Homebuilders posed for pullback

Given the recent swift increase in 10-year US Treasury yields, mortgage rates jumped nearly 100 basis points from their April 2013 lows of about 3.5% to around 4.5% in July. This was due mostly to a recent statement by the Federal Reserve that they might consider tapering their bond purchases in the near future due to the economy “starting to show signs of improvement.”

Home ConstructionThis rise in borrowing costs seems to have made investors nervous and caused bond prices to tumble as yields jumped higher. But the real story to watch is the share price of the homebuilders. They are poised to feel the brunt of this market fear.

The author of this article is: HousingWireStaff

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These two homebuilders should have your attention

In a volatile housing market, Toll Brothers Inc (TOL) has a sufficient number of rental apartment projects in the pipeline, suggesting the company is capable of handling the market conditions, according to stock analysts. Last year, the company earned $2.86 billion with a net profit of approximately $4 million in the first quarter of 2013, compared to a loss of $2.8 million a year ago.

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Homebuilders face obstacles despite bright spots

Average selling prices for new homes jumped in the first part of 2013 as a limited supply of homes and a shift towards higher-priced, luxury homes revamped the dynamics of the market, analysts claim.

HurdlesAdditionally, the decline in housing prices from peak levels and historically low mortgage rates have contributed to increased home affordability, boosting buyer demand despite modest economic growth over the past year.

The strong pricing trends are positive for homebuilder fundamentals, but as supply constraints moderate and interest rates begin to rise, a meaningful improvement in underlying economic fundamentals “job and income growth” will be necessary to sustain the housing recovery, according to Standard & Poor’s latest report.

“Over the next 12 to 18 months we expect pricing trends and strong sales volumes will bolster ratings and credit quality of the homebuilders that we rate,” said credit analysts for S&P.

They added, “But we believe better job and income growth are needed to sustain the housing recovery beyond the next 12 to 18 months, since we expect housing supply will increase from current very low levels, and higher mortgage rates and an increase in affordable single-family housing rentals could dampen buyer demand.”

The builder’s S&P Rating Services rates posted an average increase of average selling prices (ASPs) of roughly 10%, with several reporting even higher increases.

Thus, higher ASPs will continue to grow over the next 12 to 18 months, but the growth rate will likely slow as the supply of homes for sale increases, the report said.

“We expect higher ASPs will enable most homebuilders to widen margins and increase operating profits despite our underlying expectations for increases in labor, materials, and land costs,” the analysts stated.

They added, “However, given the relatively modest job and income growth over the past year, improvement in some markets may be more measured, especially if the low mortgage rates that currently underpin home affordability change materially.”

Mortgage rates are a particularly important demand driver for entry-level homes, since buyers are likely to rely more on mortgage finance.

Additionally, the recent emergency of sizable pools of investor-owned single-family housing rentals in markets experiencing the greatest degree of price depreciation during the housing crisis may dampen housing demand and pricing in markets.

Thus, consumers will have more housing choices as the ease and availability of renting single-family homes improves, particularly for lower-priced, entry-level properties.

While the supply of existing single-family homes for sale totaled 53 months in April, up 13% from March, it is still significantly below the average supply level.

The inventory decrease is due to investors buying much of the distressed home inventory, primarily for conversion to rentals.

“As home prices collapsed during the housing downturn, investors bought up significant numbers of foreclosed and distressed homes in the hardest hit markets and are now repositioning them as rentals,” the analysts explained.

They added, “While this development remains in an early stage, we believe it could alter fundamentals for single-family housing in certain markets.”

The supply of new single-family housing is also down significantly from historical levels.

Having hit a trough in 2011 at 431,000, new single-family homes starts improved over the past 18 months, totaling 610,000 on a seasonally adjusted basis in April, S&P noted.

However, this number is low compared with the long-run historical average of 1.2 million new single-family home starts annually between 1987 and 2006.

Overall, home price appreciation has been a positive support for the housing market and will continue to benefit homebuilders over the next year.

However, the addition of a viable rental alternative for consumers may limit demand for single-family home purchases in the long term, particularly at the lower end of the pricing spectrum, weighing on the moderate pace of the housing recovery.

The author of this article is: Christina Mlynski

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Builder confidence reaches positive territory for first time in 7 years

It’s been 7 years since the National Association of Home Builders/Wells Fargo Housing Market Index has hovered above an index score of 50.

Shutter StockBut that feat was finally accomplished on Monday with NAHB noting a new builder confidence index score of 52 for single-family homes  an eight point increase from the previous report.

A reading above 50 is considered a market where more builders view sales conditions as “good” than “poor”.

The last time builders reached an index score above 50 was April 2006 right before the housing bubble popped.

“With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes,” said NAHB Chairman Rick Judson, a home builder and developer.

“The eight-point jump in the index was the biggest one-month gain since August and September of 2002, when the HMI recorded a similar increase of eight points.”

NAHB’s Chief Economist David Crowe says the steep jump is in line with estimates that builders would experience a 29% jump in total housing starts this year, making it potentially the first time since 2007 that starts topped the one-million mark.

All components of the index  the current sales conditions index, the measuring expectations for future sales index and the traffic of prospective buyers index rose.

The index gauging sales grew 8 points to an index score of 56, while the index for future sales expectations soared nine points to 61.

The traffic index for prospective buyers rose seven points to 40, which is still under 50, but an improvement.

The author of this article is: Kerri Ann Panchuk

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New-Home Construction Falls After Reaching 5-Year High

Construction on new homes posted a 16.5 percent drop in April after reaching a nearly five-year high the previous month, the Commerce Department reports.

The National Association of Home Builders called the dip in April a “correction from an unsustainably high level of production on the volatile multifamily side.”

“The big decline in April housing production was mostly on the multifamily side, which recorded a similarly dramatic increase in the previous month,” says NAHB Chief Economist David Crowe.

But Crowe says the dip in building activity will likely be temporary. Housing permits—a gauge of future homebuilding—rose 14.3 percent in April over the previous month. It’s at its highest level since June 2008. Broken out, permits for single-family housing construction rose 3 percent in April, and soared 37.5 percent in the multifamily sector.

Regionally, housing starts for both single-family and multifamily construction in April rose 10.9 percent in the Midwest, but fell 27.9 percent in the South, 12.8 percent in the Northeast, and 6.2 percent in the West. However, the Midwest, South, and West all posted double-digit gains in housing permits for future construction.

“While builders today are considerably more optimistic than they have been at earlier stages of the housing recovery, numerous challenges are slowing their ability to get new projects underway,” says Rick Judson, NAHB chairman. “In particular, limited access to construction credit, tough qualification standards for mortgage borrowers, and rising costs for building materials, developable lots and labor are impacting the pace of construction activity.”

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Builders Raising Prices, Limiting Supply

Those looking to buy new homes will likely start to see price hikes, and possibly a smaller selection. Many of the nation’s builders say they’ve had to increase prices due to the rising costs of land, labor, and materials.

For example, Pulte’s sale price, on average, has increased 10 percent to $287,000 in the first quarter of this year. Meanwhile, the average existing home price was $233,200 in March, according to the National Association of REALTORS®.

“Builders are feeling pinched by rising costs of key building components which is causing home construction costs to rise at a faster pace than appraised values,” says David Crowe, chief economist of the National Association Home Builders.

Some builders are limiting sales in order to keep prices higher.

“We are pricing our homes and limiting the number of lots we’re releasing for sale in some communities to better manage our order volumes relative to our production capacity, and to maximize our profit from those communities,” Meritage CEO Steven J. Hilton wrote in the company’s quarterly earnings report recently.

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Rising Costs Hamper Builders’ Confidence

An index that measures homebuilder confidence dropped in April, largely attributed to the increasing costs of building materials, concerns about the lack of supply of developed lots, and labor shortage, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

The index measures builder perceptions of single-family home sales and sales expectations. In the latest reading for April, builder confidence dropped two points to 42. Any number below 50 indicates that more builders view conditions as poor than good.

“Supply chains for building materials, developed lots, and skilled workers will take some time to re-establish themselves following the recession, and in the meantime builders are feeling squeezed by higher costs and limited availability issues,” says NAHB Chief Economist David Crowe. “That said, builders’ outlook for the next six months has improved due to the low inventory of for-sale homes, rock-bottom mortgage rates, and rising consumer confidence.”

A component in the index that measures builders’ sales expectations in the market for the next six months posted a three-point gain in April, reaching 53 — the highest level since February 2007.

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Builder, land bank partner to revive Cleveland

The housing crisis left Ohio’s Cuyahoga County with numerous vacant and distressed properties, but a builder is now working alongside the region’s land bank to revive the area.

The Cuyahoga Land Bank recently partnered with the St. Clair Superior Development Corp. and Loft Home Builders Inc. to renovate vacant homes in the St. Clair Superior neighborhood in Cleveland via a creative housing rehabilitation program.

Owned by local developer Charles Scaravelli, Loft Home Builders Inc. developed an innovative home renovation model that recreates old space layouts to make older homes more attractive to buyers and more practical for living purposes.

Scaravelli also established a renovation process that barely costs more than what it would cost to demolish a vacant property — roughly between $10,000 and $15,000.

The approach by Loft Home Builders Inc. involves gutting an outdated single-family home in order to create an open floor plan, which means less electrical, heating and duct work in addition to fewer materials used for flooring, walls and other interior needs than a typical renovation.

“The Loft Homes we are working on already have a waiting list,” said SCSDC Executive Director Michael Fleming. “This contradicts the belief that there’s no demand for housing in the neighborhoods of Cleveland’s near east side — we just need to offer the right product.”

Scaravelli came to SCSDC with his Loft Home concept, asking to pilot the idea in St. Clair Superior’s service area. The Cuyahoga Land Bank worked with SCSDC to locate and transfer four homes to SCSDC that were structurally sound and approved.

“The floor plans in Cleveland’s older housing stock often do not reflect what someone today wants out of their living quarters. That adds one more challenge to finding new purpose for some of our older vacant and abandoned housing stock,” said Cuyahoga Land Bank President Gus Frangos, who notes that the Loft Homes model addresses the issue by creating a completely new space at a low cost that has great appeal.

The construction of the homes is partially financed by The Cuyahoga Land Bank, who places a small mortgage on the property payable once the property has been finished and rented or resold. Loft Home Builders Inc., who has up to two years to make a payment once the mortgage is repaid, will take ownership of the properties.

“Part of the reason I find the Loft Homes project so exciting is because it shows the versatility of the Cuyahoga Land Bank and the creative outcomes that are possible for addressing Cleveland’s vacancy issues,” said Fleming.

Recently, the second Loft Home was completed and is currently being rented by tenants.

The author of this article is: Megan Hopkins

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