By: Ken DeLeon, ESQ | Founder
The demand to purchase a lot and build a custom home in Silicon Valley is higher than ever before. The three main reasons for this, in declining order, are:
- The lack of new homes being offered by speculation builders,
- The large profits these builders make when they do build homes for speculation, &
- The general obsolescence of the existing housing stock in Silicon Valley.
Should you choose to build your dream home, DeLeon Realty can lead you in understanding this segment of the market and avoid pitfalls that can occur when taking on this project.
Proper Planning and Assistance
While reasons abound for why you may want to build your own home, so too do potential obstacles. First-time builders are often plagued with problems and time delays, and cost overruns can become the norm. Proper planning and assistance will help you achieve your goals within the time and budget you planned.
Buy the Right Lot in the Right City
If Dickens were considering building a home in Silicon Valley, he would look at the various building departments in each of the cities and likely say, “It was the best of towns, it was the worst of towns….” Even areas that may seem similar at first blush have very different attitudes towards redevelopment.
For example, take the small but very affluent towns of Atherton and Woodside. Atherton is the easiest of the elite towns to build a home in; there is not even a design review process. If you simply stay within the planning setbacks, quick approval is almost guaranteed. The generous floor area formula allows building a home of over 10,000 square feet, including the basement, on an acre. This ease and expedience of building was illustrated by one of my clients who bought a lot, submitted plans for approval, and completed construction on a home of over 10,000 square feet all in less than 18 months. Conversely, in Woodside, it can sometimes take nearly 18 months just to get a permit fully approved. The town has a very restrictive and thorough design review process to ensure that new homes fit in with the rural, equine atmosphere beloved by town residents.
There are advantages and disadvantages to each town’s building process, but make sure your real estate agent provides you with an informed analysis on how long it will take and how much it will cost to build in any area you are considering.
Once you finalize the area in which you wish to build, make sure you purchase a prime lot. Given the high costs of building, I recommend that clients pay the premium for an excellent location because once the home is complete, the value of that premium will double. Conversely, a poor location or busy street can negate the value of quality construction.
Additionally, you want to be certain that there are no issues with the lot that will impair the ability to build your home. The most common issue is a heritage tree, such as an oak or redwood, which often requires that the home be built around it at greater expense. Ideally, pick a site that has these beautiful trees on the perimeter and not in the center of the lot. Other issues to focus on are the lot size and dimensions, for it is desirable to have enough frontage for impressive curb appeal as well as a large enough backyard after the setbacks to have a nice place for playing or entertaining. At DeLeon Realty, we have our construction consultant or a highly reputable builder preview any lots our clients are considering to ensure there are no issues that would prevent our client from having a smooth building process.
Assemble the Right Team
Finding an architect and a contractor who share your vision and maintain clear lines of communication is essential to an enjoyable building process. In the strong economy of Silicon Valley, the best architects and contractors often have wait times, sometimes exceeding six months. You will want to work with a successful real estate agent with the connections and clout necessary to ensure your project is at the top of the list.
When choosing an architect, two of your top considerations should be the architect’s expertise in the city you are building in and your trust in that ability to draft your plans to reflect the home you desire. First, you should ensure that any architect you select has experience with the building department in your chosen city. While there are many famous architects in San Francisco and Los Angeles, I recommend that clients choose a local architect who has worked closely with the city of choice. I have heard of individuals losing months, even a year, as their architects battled the city in fights that could have been avoided with in-depth knowledge of the building codes of the city.
Second, architects often self-select to build unique dream homes, while others provide functional floorplans borrowed from past designs that will be more expeditious to design and build and are better for resale.
I frequently consult with clients who are having plans drawn to ensure that their dream homes will also be good investments with strong resale value. One floorplan feature required to maximize resale potential is building at least three bedrooms and two bathrooms upstairs. I had owners who bought a lot with another agent and then built a stunning custom home with only two bedrooms on the second floor, which worked perfectly for them since they only had one child. However, they did not get top dollar when we resold their home as they had narrowed the buyer pool. Buyers with two children generally do not want one of their children on a separate floor.
Other floorplan elements excellent for resale include:
- A junior master suite downstairs for aging parents to stay in;
- A very open great room combining the kitchen with the family room and leading to the backyard; and
- High ceilings, if a basement is built, to avoid the subterranean feeling of a basement with low ceilings and dark finishes.
To aid in the planning process, our construction consultant assembles several good builders for our clients to meet with and interview. He also evaluates the builders and shares costs from past experiences. Generally, when constructing a custom built home, costs can range from $200 to $500 per square foot depending upon the quality of construction. We provide good builders at each price-point so that the client can make a fully-informed decision. The architectural style of a home can dictate pricing as well. Contemporary homes are the most expensive to build because of the steel required to support the open floor plan and showcase the glass walls.
Craftsman homes are moderately expensive because of their crown molding, wood trim, and built-in storage. Mediterranean homes are the least expensive to build, as stucco is inexpensive and the trim-work can hide construction flaws; however, this architectural style is becoming passé and may not age well from a resale perspective.
Even after assembling the team, our construction consultant provides our clients with continued advice, helps negotiate the costs of the bid as low as possible, and works to have the construction stay on track. What he enjoys most is when clients ask how much his time will cost, and he gets to say with a smile, “This is all part of the package.”
From a timing perspective, you should budget six months to complete your plans and permits, and 12 to possibly 18 months for construction, if building a basement. Whether the lower cost when building your own home is worth the time it will take you is an individual choice. Should you choose to build, you will want a real estate team that can help you successfully navigate this path as you embark upon the process of obtaining your dream home.