Bridging the Concept and Construction phases, the Contract phase encompasses the actual written contract for construction between Builder and Client along with several other important pre-construction steps.
THE BUILDING CONSTRUCTION CONTRACT
The design is complete. The specifications are dialed in. Alternate pricing options have been carefully considered with an understanding of which options to include and exclude. The total price is in budget and has been accepted. The next step is the formal written agreement with all of those pleasant legalities meant to protect each party to the transaction. Beyond this, the Building Construction Contract also explains the terms of the warranty, how insurance and utilities are handled, lien rights, financing, and many other construction-specific conditions. Bay Lakes Builders offers fixed-price contracts as a means to simplify the financial aspects of the project to allow each client to focus their attention on the more fun aspects of building, such as making material selections.
Once house plans are finalized and construction is underway, Change Orders are a written form amending the building contract for any changes to the plan, specifications, price, or construction timelines. Another benefit seldom advertised by other Builders: with the exception of extreme cases, Bay Lakes doesn't charge an additional arbitrary percentage for change orders over and above the cost of the change order. Many other builders charge an administration fee of 10% or more for change orders, but Bay Lakes understands that change orders are an inherent part of the building process. Even so - due to the great care taken in preparing the plan, specifications, and contract upfront - excessive change orders are uncommon for most Bay Lakes projects. Fewer change orders due to better upfront planning will result in a more enjoyable process for all involved.
Within the fixed-price contract itself, there are variable portions of the contract called Allowances for those areas in which Bay Lakes' customers will be making cosmetic selections for items like cabinetry, countertops, fixtures, flooring, and appliances. Support documents are provided for many of these areas by way of detailed proposals from Bay Lakes' trade partners to substantiate exactly how the dollar allowance was arrived at. With the finishes being such a focal point of each project, a great deal of attention is given to allowances during the pre-construction process to ensure each allowance isn't just wishful thinking, but a realistic and ample dollar value that will enable each customer to select the finishes they desire - within budget. Other contract allowances such as plumbing, HVAC, electrical wiring, and home automation are also backed up by detailed proposals from Bay Lakes' trade partners to allow greater transparency and customization of equipment and features directly with each of these highly-specialized contractors.
As is commonplace with custom home building in our area, Bay Lakes customers will procure and hold title to a building site independent of the new home building contract. The building contract itself then covers the improvements to the building site (i.e. the home itself and all pertinent site improvements). As such, customers electing to finance the build through a lending institution will commonly obtain a construction loan. The construction loan is based on the value of both the land and the home and typically only requires interest-only payments during construction. The interest-only payments are made monthly and based on the progressive value of work completed through each month of the construction process. Once the construction is complete, the construction loan is then converted to an "end-out loan product" such as a fixed-rate mortgage. Bay Lakes has partnerships with several experienced lenders from local banks offering highly competitive rates and loan programs. Please visit our Trade Partners page for details. Researching the lender and loan program that is the best fit, along with obtaining a financing pre-approval, is a prudent first step before more seriously pursuing any construction project.
FINAL STEPS BEFORE CONSTRUCTION
Once the plans, specifications, and contract are in place, it is time to submit these items to the lender to begin underwriting the loan. The underwriting process, including ordering appraisal, commonly takes around 4 weeks to complete. At the same time this process plays out, Bay Lakes will work concurrently on their own pre-construction process which consists of the following:
- Completion of final structural construction plans (if not already complete)
- Site clearing (if applicable)
- Wall bracing plan and/or engineering
- Preparation of whole-house energy modeling by energy rater
- Submission of all permit applications
- Obtain permits
It is not uncommon for this process to also take 3-4 weeks so that once the loan commitment is in hand, the permits for construction are also in hand.
CONCEPT + CONTRACT PHASE TIMELINES
The chart below provides more insight on what to expect for total duration of time spent in the Concept and Contract phases until the permits are in hand and Construction can begin.
As you can see, even a more basic project (starter homes, additions, garages, remodels, fewer pricing options, etc.) can take up to 9 weeks from that first design meeting until building permits are in hand. A typical or average project may still take 13 weeks and something more complex (challenging site, atypical construction, unusual materials, many pricing options, etc.) could take 18 weeks or longer.
You might be thinking, “wow, this is quite a process” and you would be right. Between the Bay Lakes team and their trade partners, there can easily be up to 200 hours invested on planning and pricing for a new home before construction even begins! Bay Lakes Builders offers a Pre-Construction Services Agreement outlining the scope of the builder's role in the Concept phase and any associative costs to help their clients understand this level of builder engagement.
Please click the "next page" button below to keep reading about the Coordination process.
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