Permits are needed for almost any kind of residential construction that involves a new structure (home or outbuilding), addition or significant alterations.  The number of permits needed and the time that it takes to get them (as well as the cost) can be quite significant and should be factored into the project.

A simple remodeling project may require only a building permit from the municipality, which may take a week or less to obtain.  A new home on an urban or suburban lot typically also requires a zoning permit from the municipality, which may add a couple of weeks or more.  However, certain factors can require more extensive permitting.  Waterfront properties or properties in flood plains, rural properties, properties in special scenic areas, or sites which require a lot of land disturbance may all require additional permits.   

The project discussed in my last blog post - "Town of Wyoming Family Home" - is requiring an unusually large number of approvals before construction can begin.  Part of the reason is that the homeowners are subdividing and rezoning their rural parcels, which are too small to comply with the current requirements for the zoning category that they are in.  Other factors:  the property is in a municipality which wants to maintain its rural character and is therefore careful about allowing homeowners to change zoning if it will potentially take farmland out of production.  The municipality also aims to reduce the visibility of new construction. Furthermore, the property is within the scenic Lower Wisconsin Riverway.  And finally, the amount of land that is being disturbed in order to build the home and the long driveway requires approval from the Wisconsin Department of Natural Resources.  

Here are the permits and approvals required for this project:

• Approval from the town for land division, rezoning, driveway access, internal driveway design and building siting.  The driveway was required to be designed by an engineer because of the steepness of the site.
• Approval from the county highway department for the location of the private driveway/public road intersection, making certain that it is not too close to neighboring driveways or to major intersecting roads.
• A permit from the Lower Wisconsin Riverway Board:  because the property is within the Lower Wisconsin Riverway, the LWRB had to determine whether the home will be visible from the Wisconsin River (it won't be).
• A sanitary permit from the county:  any home which will have a septic system requires a sanitary permit from the county.  Because this home will have an at-grade system, it also requires approval from the state.
• Approval from the county for the land re-division and re-zoning.
• A zoning permit from the county
• A Wisconsin Department of Natural Resources construction stormwater permit:  this is because of the amount of ground that will be displaced during construction of the road and home
• Finally, a building permit from the town.

If the property had been adjoining a lake or river or if it had been in a floodplain, it would have needed additional approvals as part of the county zoning process.

Some of these permits cannot be obtained until previous ones have been granted.  For example, the county could not grant the re-zoning approval until the town had approved it.  The zoning permit cannot be obtained until a sanitary permit has been granted.  The town will not approve the building permit until the county zoning permit is in place.  

By working to obtain as many permits at the same time as possible, we should have them all in approximately 4 months from the start of the process.  Without the land re-division and re-zoning, it would have taken approximately 2 to 2-1/2 months, assuming that everything went smoothly. Providing inadequate information or not meeting the permit requirements can delay the process if the applicant needs to provide additional information or if parts of the project need to be re-designed. This is particularly true for those permits which are granted by a board which only meets once a month, as the board's decision will be delayed until the following month.  Processing times for permits may increase during particularly busy construction periods, such as in the spring.

If the time for permits is not factored into the process, it could result in an unexpected delay to the project.  Unfortunately, this can mean that construction anticipated to start in the fall may have to be delayed until the following spring, since our climate makes it difficult to start projects in December through March.

So you're going to build a new home - how exciting!  Before you get to work planning that new home, it's important to consider your site and how it will affect the design of the home.  Below are eleven questions to ask yourself as you consider the design of your home and how it will fit on your property.  

These questions apply whether you've already purchased a lot or are just starting to look at properties.  If you already have a property, then these questions should help to determine the location of the home on the site and its layout.  If you're looking for property to buy, use these questions as you evaluate whether a given piece of land would suit your needs, particularly if you already have a floor plan that you would like to use.  

• Where is the sun - in summer and winter? This is especially important if you plan to build a passive solar home or use roof-mounted solar panels but also affects how much sun - good or bad - you'll get in the house throughout the day.
• Which direction do the winter winds come from? The summer breezes?  
• Where are the views you want to enjoy and those you want to exclude? 
• Are your neighbors’ homes visible? 
• What other buildings or features do you plan to build on your site? 
• Which parts of the site are most/least noisy? 
• Are there any features of the site, such as vegetation or rock outcroppings, that you want to preserve?
• How will you access the building site from the road, and what will you see as you drive along your driveway?  
• Are there areas of the site that tend to be wet or carry surface drainage, or that should be avoided for other reasons?  
• Is your site flat or sloping?  If sloping, is it a gentle or steep slope?  A flat site is ideal for slab on grade construction or an unexposed basement, or if you want a home that spreads out horizontally.  A moderately sloping site works well with a walkout basement.  A steeply sloping site works well with multiple levels and calls for a more vertical arrangement of levels and spaces (although keep in mind that there can be additional expenses related to site work that come with a steep site).  
• Does the house size that you’re considering - including driveways, parking areas and outdoor living areas - fit well on your lot?

These questions and others are part of my Home Planning Guide, which is available for free download.

In last month's blog post, I discussed how you can go about finding and choosing a general contractor for your project.  This month will explore the contract for construction itself.  First let's look at how contractors typically get paid.

HOW CONTRACTORS GET PAID
The most common way that contractors bill for their work is with a fixed-price bid which includes the cost for labor, materials, products and markup (the contractor’s 20- to 25- percent fee, which pays his overhead and his salary) for each phase of the job.  

Some contractors prefer to work on a time and materials (T&M) basis.  Instead of a set price, they charge as they go for the cost of labor and supplies, plus a markup.  Working on a time and materials basis, you pay only for the hours worked and the materials used, but it means less certainty about the final cost of the project.

The T&M contract may be especially appropriate for a project where there are a lot of unknowns,  such as a remodeling project where you’re uncertain what the contractor may find once he starts opening up the existing house.  An unscrupulous contractor can use a T&M contract to work slowly and pad his fee, so never sign a T&M contract unless it has a price cap (T&M, not-to-exceed contract).

THE CONTRACT
Once you've selected your general contractor, he or she should present you with a contract.  For the protection of both you and the contractor, always have a written contract. It should be clear and concise and should lay out all of your expectations and understandings about the job.  Do not sign anything until you understand it all. You may want to have your attorney review the contract before you sign it.

The contract should include:

• the contractor’s name, physical address, phone number and license number
• the scope of work, as detailed in the architectural drawings and specifications, including each material used and each product’s model, size and brand.  If some materials will be chosen later, the contract should say who’s responsible for choosing each item and how much money is budgeted for it (allowances)
• the itemized bid (if you are using a fixed-price contract)
• estimated project start and end dates 
• any agreements you’ve made (e.g. when the workday starts, who is responsible for getting necessary permits, or whether the contractor is responsible for trash hauling and clean-up work)
• a statement explaining any warranties on materials, labor or services (be sure you understand any exceptions or limitations)
• the payment schedule for the contractor, subcontractors and suppliers
• how changes orders are handled
• a requirement that the contractor obtain lien releases from all subcontractors and suppliers

In addition you should get a list of subcontractors and proof of insurance.


THE PAYMENT SCHEDULE

A contract for construction should include a payment schedule.   The contractor may ask for an initial down payment.  After that, the contract should call for progress payments - that is, installments made when certain predetermined parts of the job (framing, mechanicals, drywall) have been completed to your satisfaction.  Never let the dollars get ahead of the work, so that you’re not paying out money for work that hasn’t been finished.   The final payment (retainage) should be at least 10 to 15 percent of the total cost.  
Before you sign off and make the final payment, check that:

• all work is complete and meets the standards spelled out in the contract
• the contractor has given you all of the product manuals and warranty certificates
• you have proof that all subcontractors and suppliers have been paid (via lien waivers)
• the job site has been cleaned up and cleared of excess materials, tools and equipment

The general contractor should give you lien waivers each time he is paid, as proof that he has in turn paid his subcontractors and suppliers for their labor and materials. If you pay the general contractor, but he fails to pay his subcontractors or suppliers, the subs or suppliers can put a lien on your home.

KEEP RECORDS

Before, during and after construction, keep all paperwork related to your project in one place.  This includes:

• copies of the contract
• change orders
• any correspondence with your home improvement professionals
• a record of all payments - you may need receipts for tax purposes

Keep a log or journal of all phone calls, conversations and activities.  You may also want to take photographs as the job progresses.  These records are especially important if you have problems with your project - during or after construction.

It takes a team of people to bring a construction project to life, including a lender, architect, homebuilder, material suppliers and government officials. Others may be involved as well, depending on the project.
 
LENDER
 
Many people who build a new home will borrow money from a bank, credit union or mortgage lender to fund their project.  The lender will decide what they can afford to borrow based on their monthly income, existing debt, anticipated home-related expenses, and credit score.  The lender will be interested in the value of the finished home because they don’t want to lend more than what the house can sell for.  They will want floor plans and elevations and will have the design of the prospective home appraised to determine its value. A lender will usually require that the borrower contribute a percentage of the cost of the home in the form of a down payment.
 
For an existing home, equity that has been built up may be borrowed against to fund remodeling or an addition to that home, in the form of a home equity loan.
 
Before approaching an architect or builder, it’s helpful to meet with a lender in order to know how much can be borrowed.
 
ARCHITECT
 
The architect will design your new home, remodel or addition and may also guide their client through the bidding and construction processes. 
 
HOMEBUILDER
 
The builder actually constructs the new home, remodel or addition.  The builder and their crew will likely do some of the work themselves but will also subcontract out parts of the job that they don’t have the in-house expertise to do.  Trades (subcontractors) that are frequently “subbed out” include concrete, cabinets and other millwork, electrical, plumbing and heating/cooling, as well as specialties such as sound or security systems.
 
The builder will have a contract with each of these subs, and the lender will likely require lien waivers from the builder, showing that the subs have been paid for their work. 
 
MATERIAL SUPPLIERS
 
The builder will typically have certain material suppliers that they like to work with. The homeowner will likely have little to no involvement with the supplier of materials such as trusses, lumber and sheathing but may work directly with suppliers of cabinets and counters, floor finishes, and plumbing fixtures, who may have showrooms where homeowners can view their products.
 
MUNICIPALITY, COUNTY AND STATE
 
The local municipality, county and state will also be involved in the project by way of ordinances and code requirements.  The municipality will usually have rules about what and where you can build on your property.  The county may have rules about private sewage systems, and building near flood plains, bodies of water or wetlands.  The state has mandatory building standards in the form of the Uniform Dwelling Code. Depending on the nature of your project, a building inspector may be required to inspect the project at certain stages of construction.
 
 
The project team may also include the following: 
 
INTERIOR DESIGNER
 
An interior designer can help with the selection of cabinets and countertops, flooring, tile, light fixtures, and plumbing fixtures  (although an architect may also help with these selections).  An interior designer can also help select and purchase furniture, window coverings, and paint colors.
 
LANDSCAPE ARCHITECT
 
A landscape architect is a specialist in the grounds surrounding the home.  They can help with the design of patios and other outdoor paving, trees, shrubs and flowers, decorative or retaining walls, outdoor lighting, and water features. 
 
STRUCTURAL ENGINEER
 
Depending on the structural complexity of a project, a structural engineer may be involved. They will usually be a subcontractor of the architect.
 
ENERGY MODELER / CONSULTANT
 
The services of an energy consultant may be included on projects where the client has a strong interest in energy efficiency.  The energy consultant can work with the architect and builder to suggest the best ways to build an energy-efficient home and may do energy modeling to predict the energy performance of a new home, possibly modeling different floor, wall and roof assemblies.
 

Unfortunately, there's no easy answer to that question.  Building costs can vary widely depending on the home design, materials and details used and even location.  Here is a Fine Homebuilding article I've found which does a great job of discussing some of the decisions which can affect the price of a new home.  It appeared in issue #259,  the Spring / Summer 2016 issue of Fine Homebuilding.

​If you're building in the country, don't forget to add the cost of a septic system and well as well as a driveway.
​

If you're planning to borrow money to build an addition or remodel your existing home, it's a good idea to check with your lender early in the process to get an idea of what your options are and how much you can borrow.  

If your equity in your home is greater than the cost of the addition / remodel, you're in luck.  With a home equity loan or home equity line of credit, you may be able to borrow as much as 100% of your equity for your building project, although you will likely pay a higher interest rate if the loan to value is greater than 80%.  

If you don't have enough equity, you will probably need to take out a construction loan.  A construction loan typically has an adjustable rate while the project is being built and will be converted to a permanent mortgage once construction is complete.  During construction, you pay interest on the funds that have been paid out.  

For a construction loan, the lender will want to have a copy of the building plans, as well as your builder's bid to do the work.  An appraisal is the basis for determining how much you can borrow. An appraiser will estimate the value of your home with the planned changes.  Typically a homeowner can borrow up to 80% of the value of the improved home.  Appraisers will judge the home's value based on the sale price of "comparables" - other homes in the area which are similar in size and age and which have sold recently.  It may be difficult to find comparables that are very similar, particularly if the home is highly unique.  

Homeowners may find that they're not able to borrow as much as they had hoped.  Some improvements add very little to the appraised value of a home.  Adding square footage to a home by adding another bedroom will likely increase the value of the home, although not necessarily as much as the cost of the improvement.  By contrast, beautifying the inside of a home might add little, if anything to the appraised value.  Using more expensive finishes or higher quality details may have little effect on the appraised value, because the appraiser has likely never seen the inside of the homes used as comparables, and so he or she is judging value based mostly on size, age and number of rooms rather than construction quality.

Here are some common mistakes to avoid when you're planning an addition:

1.  IGNORING THE SHAPE AND STYLE OF THE EXISTING HOUSE:    An addition should be similar in proportions and style to the home it's being added on to (unless there is a conscious choice to make the addition look clearly different).  Sometimes this requires breaking the addition into smaller parts so that it doesn't overwhelm the house.   Height and rooflines of the existing house need to be considered as well.

2.  NOT CONSIDERING HOW DAYLIGHT WILL BE AFFECTED:  An addition can make adjacent spaces dark.  A room that was once warm and inviting may become dark and cold if an addition blocks existing windows.  

3.  THINKING THAT BIGGER IS BETTER:  There's a temptation to think that as long as you're adding on, you may as well "get your money's worth" by making it big.  It's better to design smart, not big.  Think about how the new space will be used and make it only as big as is necessary to meet your goals.  Consider how existing spaces may be repurposed to work with the addition.

4.  UNDERBUDGETING:  The cost per square foot of an addition is often higher than the cost per square foot of a new house, particularly if it involves structural changes to the existing house.  With any construction project, it's wise to assume that it will cost more than you think.  Decide which things are essential and which can be optional if the budget allows.  Include an additional 15 - 20% contingency for unexpected expenses.

5.  NOT CONSIDERING FLOW:  Think about how people will move from the existing house to the addition.  How open should the new and old spaces be to one another?  Where will furniture be placed?  Avoid chopping up rooms with too many doors, which makes furniture placement difficult.

I've just added a home planning guide to my website.  For most people, a home is the largest investment they'll ever make.  The 6-page Home Planning Guide takes some of the mystery out of designing a new home, addition or remodel.  It covers the following:

• The factors you need consider in the design of your new home, addition or remodel
  
• The characteristics of a successful addition
  
• Contractors and Schedules
  
• Zoning ordinances, building codes and covenants

Here's a link to the guide