There is nothing more exciting than the idea of building your own custom home. This project can be both very fulfilling and also an excellent investment of your time and money.
BENEFITS OF BUILDING
In prime Silicon Valley neighborhoods like West Atherton, buyers can potentially save $5 million by building a large home themselves versus buying one from a speculation builder seeking a large profit. The money saved on the purchase translates into perpetual savings because the county taxes property based on the total cost of the land plus construction costs, not the much higher market value of the finished home. So, in addition to the $5 million of initial savings, savvy buyer-builders could have their annual property tax bills reduced by $57,500 (based upon the average annual property tax rate of 1.15 percent) for the entire duration of their ownership.
POTENTIAL FOR DISASTER
However, while building your own dream home may be good in theory, the process can go terribly wrong. I have seen frustrated clients double both their construction cost and completion time by making seemingly “small” changes once the process had begun. When building a custom home for the first time, missteps and redirection can unfortunately become the norm. To help my clients enjoy the financial and emotional benefits that come from efficiently building their family dream homes, I provide step-by-step guidance throughout the process to avoid innocent yet costly mistakes.
THE BIGGEST CULPRITS
The most notorious of these errors are floorplan flaws. These are often some of the most expensive missteps and the hardest to repair. However, we can easily address them if caught early.
A custom home is typically of higher quality than homes built for speculation since the owner’s mindset is focused on quality instead of resale. Sadly, custom homes often sell for prices far below what they should because of highly personal choices that should have been evaluated during the design and preconstruction phase.
For example, I had new clients who used the DeLeon Team to list and sell their home, but DeLeon Realty didn’t represent them when they first purchased the lot to build their home. Regrettably, their past agent did not provide any resale or new construction guidance. The stunning craftsmanship of the project wasn’t enough to help the home sell for top dollar. Instead, it lingered on the market and sold for less than the original asking price.
The sellers only had one child and designed their home around their specific needs, which included only a master suite and one child’s room on the upper floor. This layout greatly limited the buyer pool. The majority of buyers looking in their neighborhood had larger families and were not interested in this otherwise very spacious and exceptional home on a large lot. The decision not to have at least three bedrooms upstairs literally cost them several hundred thousand dollars.
When my clients approach me for guidance on how to optimize their home, I am completely focused on maximizing their home’s value and resale profit. The amount of additional time involved is small, yet the financial impact can be significant.
If space and budgets allow, here is a quick checklist of key floorplan features I recommend.
ON THE GROUND FLOOR
Include a junior master suite for grandparents or guests. This simple feature is increasingly important as Silicon Valley becomes a global market. Many international buyers have elderly parents visiting for extended periods. Due to international flights of 12+ hours, extended family and friends often stay for several weeks or months. A nice ground-floor bedroom suite can both provide a quiet retreat while they adjust to the change in time zones and allow them to avoid constantly going up and down stairs.
Include a “great room” composed of an expansive kitchen and family room leading to the backyard. Today’s young families desire an expansive communal space, and formal public spaces such as separate living and dining rooms are often eliminated or reduced and combined. In a great room, an expansive kitchen island should be the focal point. When designed with features like a gleaming slab of Calacatta marble, top-of-the-line appliances, and a broad breakfast bar, family and friends will always gravitate here.
Ideally, this incomparable room has dramatic 15’ vaulted ceilings and a wall of accordion doors that fully opens to the backyard. Moreover, the great room should be angled in a way that maximizes natural light and makes the backyard feel the most expansive, which is of particular importance on uniquely shaped lots.
Include a combined living/dining room configuration. As previously mentioned, separate living and dining spaces are now rarely used, and square footage that was previously directed to these rooms should be reallocated to the great room. However, these rooms are still desirable, and the most optimal resale configuration involves combining these two spaces. By doing so, the relative smallness of each room is perceptually mitigated and the combined space provides greater flexibility. Possible needs for future buyers may include wanting to feature an heirloom dining room set, needing a separate space for a piano, or plans to entertain on a grand scale. The combined space allows for any of these while optimizing other spaces on the ground floor.
ON THE TOP FLOOR
Four bedrooms and three bathrooms are ideal, either upstairs or in a separate wing of the house. For most Silicon Valley communities, if the lot size is greater than 9,000 square feet, then you can optimize the top floor for resale. This ideal upstairs plan has a nice master suite, a junior suite (likely for the eldest child), and two additional bedrooms that share a Jack-and-Jill bathroom. If future buyers don’t have an immediate need for the fourth bedroom, then it is easily used as a private office. If four bedrooms are not feasible, then a layout with three bedrooms and two bathrooms is the second best option.
If the future home will only have one level, then family bedrooms should be incorporated in a separate private wing with vaulted ceilings throughout. While discussion about whether or not to include a basement, and how bedrooms should be laid out in that instance, are beyond the scope of this article, the general presumption is the same. Younger families place a priority on having family bedrooms close to the master bedroom, while all buyers value a ground-floor bedroom suite either for extended family or to extend the time when they can live in their dream home.
Add a large skylight above the stairway. Stairways don’t have to be dark tunnels that gloomily transport residents between two levels of a home. Instead, they can be beacons of warm light, beckoning residents from one level to the next. A sizable skylight above a staircase will help illuminate an otherwise dark area while adding both quality of life and resale value as all cultures cherish natural light in the home.
BUILD FOR THE FUTURE
First and foremost, your custom home should appeal to you and your family. However, keeping an eye on resale is both prudent and potentially very rewarding. Nobody anticipated the exponential growth that has occurred in the Silicon Valley housing market over the past 50 years. However, the ability to resell your dream home for a handsome profit provides a degree of financial freedom that many will appreciate.
In the next newsletter, I will continue this series with an article on how future buyers can avoid floorplan flaws. I plan to also touch upon incorporating principles of home design, like feng shui and vastu shastra. Many of these principles have their roots in simple common sense.
In our frenzied market, where many newer homes sell for well over $5 million, prudent buyers should design and build their homes with an eye to the needs of both their families and the next owners.
News & Events
- DeLeon Realty to Showcase the Best of Silicon Valley Real Estate at LPS Shanghai 2018April 12, 2018 - 4:55 pm
- Tax Topics—Deductions for Pass-Through EntitiesApril 5, 2018 - 2:41 pm
- Lakewood Village may be the next BirdlandMarch 29, 2018 - 3:47 pm
- Eight Listing Traps to AvoidMarch 24, 2018 - 11:49 am
- Construction Techniques – Insulated Concrete Forms (“ICF”)March 21, 2018 - 3:08 pm