Lowpete Construction, Inc.

Q.  Why should I buy new over used?

A.  The simple answer is that a similar sized new home is only slightly more expensive to purchase than a used home and the cost of heating and repair costs of the average used home will cost about $500 more per month making the used home more expensive to live in.  Also, most used homes in Juneau have a life expectancy of less than 50 years while the new homes have a life expectancy of over 100 years.  This is mainly due to a better understanding of ventilation within the home learned over the last couple of decades.

Q.  What is the first step in building a new home?

A.  The first stop would be to determine what your finances will allow you to purchase.  Most people do not have cash to build a new home and should first contact a bank or mortgage company to determine the amount of financing they qualify for.  Once it is determined what you qualify for and have set yourself a budget that meets your finances and needs, you can begin searching for that new home.   Many people spend a lot of time looking for and making plans for a new home only to later find out they cannot afford the home.  It is also recommended that a local bank or mortgage company be used as it has been our experience that the out of town financiers are difficult to work with and the paperwork required can cause long delays.

Q.  Should I use a Realtor or go directly to the builder?

A.  This would be your choice, but a good realtor will be your advocate with the builder and should understand the construction business and if you do not understand the business or trust the builder a realtor may be more than worth  their commission.  Besides the commission is usually built into the price and is paid by the builder.

Q.  What type of builder should I look for?

A. The best builder would be a local builder that has a long history in the local economy.  References should be checked with the local banks, realtors and the builder's customers.Beware of builders that are new to the area that do not understand the high cost of building in Juneau and give you a bid that is too good to be true or you may get a half finished home and a builder that disappears after his first good draw.  This has happened a number of times in the Juneau area.

Q.  How is the financing handled for new home construction?

A.  Generally you will need to get a construction loan and a separate long term loan when the home is complete.  The construction loan usually needs to be with a local bank and does not have to be the same bank or mortgage company as your long term loan.

Q.  How much cash do I need on hand for new construction?

A.  This is one of the drawbacks to new home construction.  Due to recent problems in the financial markets the amount of cash needed to build new has risen from 15% of the project to 20-25%.  This means that a typical $350K home in Juneau needs about $88K cash on hand to build.  We recognize that this is more that most home buyers have on hand and so on a case by case basis we are willing to put up approximately half of the cash needed as your final loan will only require 5-10% down to close.  Conditions apply and it is always less expensive if you can cover your own financing.  We are currently working with the local banks to try and find a way around this high cash requirement when doing new construction as the requirement for cash is much less once the home is  built.  Please note that if you have your own lot, the money you have put into that lot including site work will count as part of the cash needed to close a construction loan.

Q.  Do I need my own lot first?

A.  You can have your own lot or we can use one of ours or help you find a lot.  It is advised that you do not go out and purchase a lot without talking to a contractor such as us to find what site costs are for that lot.  Some lots have site costs as little as $10K while others can exceed $100K.  That cheap lot may be far too expensive when you include the site costs.

Q.  If I own my own lot, do I need to find another contractor to do the site work?

A.  No.  Lowpete Construction, Inc. prefers to do all the site work when building a new home.  However, we are willing to work with another contractor if you would prefer to hire your own site contractor.

Q.  What is the process for getting a signed contract to build a new home?

A.  The first step is to meet with us and determine the plan that fits your needs and finances.  We will then work with you to determine any changes you want in the plans and how that affects the total cost.  Once all changes and costs are agreed to, we will have a contract typed up for signing.  This can take 1-4 meetings depending on your needs.  A typical contract contains 20-30 pages and included our one year warranty agreement.  Usually at signing a small deposit is made to make the contract legal and to start the permitting process.

Q.  What is the next step after signing a contract?

A.  The next step would be to go to your bank or mortgage company and get the construction loan started.  If we are helping you with the up front cash needed to build , we will be the one getting the construction loan.  It is typical when starting a construction loan for the bank to ask for about $900 up front to start the loan process and get an appraisal on the new home.  Your next step will be to start picking your options such as colors, cabinets, flooring, etc.

Q.  How soon after the contract is signed can construction begin and how long does it take?

A.  Generally it takes about a month for a construction loan to be approved and closed.  All homes are started in order of contract signing and work can usually begin as soon as the construction loan is closed, but may be delayed a month or so in starting depending on the current schedule.  Once a home is started it usually takes about 3-5 months to complete depending on the size of the home and the time of year it is built.  This will all be addressed in the contract.  For those with extra cash it is also possible to jump-start the construction with a deposit to start work as soon as possible.

Q. What if the home is not finished by the contracted deadline?

A.  We have only been 2 weeks late due to poor weather etc., on only two occasions during the construction of almost 200 homes.  In the unlikely event we are late, the contract calls for us making your loan payments until we are finished with construction.  Terms and conditions apply.

Q.  What about building my own plans?

A. We would be more than happy to build from  a set of plans that you have, however it should be noted that our home plans have been purposely drawn to keep construction  costs down and most of the plans that are brought to us were not designed with any consideration for the cost to construct and so your plans typically will cost more to construct.  We can often modify your plans to keep costs down or modify one of our plans to meet your needs.

Q.  How do change orders and upgrades work during construction?

A.  A change order form is included with the contract.  Usually any changes are agreed to in writing with an agreed to price.  Some minor changes are based on an hourly rate plus materials.  Change orders are usually paid for at the signing of the change order unless other arrangements are made with your lending institution.  Upgrades are also addressed in the contract and treated similar to change orders.

Q.  Can I do some of the work on the new home to reduce costs?

A.  Yes, as long as your bank approves.  We have typically had new owners do simple jobs such as painting, insulation, etc.  Your bank may want proof that you have the skills needed to do jobs that require more skill.

Q.  What type of heat do you use in you homes?

A.  It would be your choice.  We usually use hot water boilers with base board registers for our larger homes.  On some of the medium to smaller homes it is less expensive to use a hybrid oil/electrical heat, using a Toyo heater with electrical back-up.  Oil has become expensive enough that electrical is currently only slightly more to use.  The savings of the lower installed cost of electrical heat easily pays for the higher cost of electric cost over oil.  Having a duel heat source will be a big advantage if oil spikes in price.  Electricity in Juneau is from hydro power and is non-polluting.  Electrical heat is also much cheaper to maintain over the years.  We can also install in-floor heating, but it is a bit expensive.

Q.  What is the energy rating of the homes you build?

A.  All our homes are built to meet or exceed 5 Star Energy Rating.  We can build to a higher rating if requested.  Some homes require little more to reach 5 Star Plus Rating and some require notable expenses to reach that rating.  Generally, we have found that it does not pay to take a home past 5 Star Rating in the Juneau area as the costs are more that the savings.

Q.  Are there savings for getting a higher energy rating?

A.  Yes.  Besides the obvious savings in energy costs, if you finance through Alaska Housing Finance Corporation you can get discounts on your interest rate depending on how many points your home receives.

Q.  How does the Contractor get paid?

A.  The construction loan will have a draw schedule, usually 10 draws that are paid to the builder as different phases of the construction are completed.  If the construction loan is in your name, you will be signing off each phase before a draw is paid.  The bank will always visit the job to determine if the work is done before making draw payments.   For those lucky enough to be able to pay cash for their new home a custom draw schedule will be included in the contract.

Q.  What is the process when the home is complete?

A.  At completion, we will get a final inspection form the city and obtain a certificate of occupancy.  If a bank is involved, they will have a final inspection as well, including an inspection from the appraiser to determine if the home was built according to the plans and is worth the original appraisal.  If the homes need an energy rating for financing, that inspection will also take place.  The homeowner will also do a final inspection and make a list of anything they are not happy with.  We will also get a final survey done on the new home to determine if it is located within the setbacks.  When that list is satisfied and all inspections are approved the final loan will be closed and the home turned over to the new owner.  This can all take place in a matter of a few days with some pre-planning.

Q.  What about the warranty after moving in?

A.  We provide a one year full warranty included in the contract for all defects during the first year.  Limited warranties exist on many materials and appliances after that time and it would be the home owner's responsibility to contact the manufacturer for those warranty claims.