Growing up, my father Tom Becker built new construction homes from the ground up, and largely by himself. Having built close to 10 homes over the years, I remember visiting my dad on the job sites, the late nights that he and my mom would spend planning a home and endless trips to the home improvement stores to pick out finishing components. (And this was in a day before Lowes and Home Depot existed and they largely depended on Hechinger's and Lumber Yards.) While I was young (from birth till 12 years old or so), I still picked up a few skills and learned what to do and not do and what to look for with regards to a lot, home, design, and finishes.
Fast forward till 2015 when my wife Carin and I became Realtors in the Palmyra area. Carin and I have helped over 20 families build new homes throughout the Palmyra, Hummelstown, Hershey and Lebanon areas, including our very own home in the South Londonderry subdivision of Carriage Park in Palmyra school district. Nowadays there are a couple large builders that service our area including Keystone Custom Homes, Landmark Homes, Charter Homes as well as a few smaller builders. The big guys tend to have a more automated process, can charge less, and build the home faster, but you are often not necessarily getting a completely custom home. The small guys are often the opposite; involving the buyer in more granular processes, charging more, and taking longer to build the home. I will detail the experiences of two different builds.
- The Becker Home at 201 Fox Road in Palmyra.
- When Carin and I built our home in 2016, we needed to stay in the Palmyra school district and the choices were extremely limited; namely one - Keystone Custom Homes in Carriage Park. When we first learned they were adding a third phase to the subdivision, we came over and toured the neighborhood. For us, it was important to have a nice lot without easements and one that would allow us the future potential of an in-ground pool. There were really only two lots available that met our needs, and the one was spoken for. We ended up choosing lot 91 in Carriage park and the process was relatively simple, albeit not pain free. We gave a $1,000 lot reservation process and had a certain amount of time to get pre-approved for the mortgage. To fully commit to the build process, we ended up needing to put up another $9,000 for a total of$10k, but we literally did not pay another penny for anything till settlement day - making it a very easy process especially if you are short on funds or have a house to sell to gather your proceeds. We did that and then three meetings with Keystone followed, with the first two being at the Carriage Park model home in Palmyra. During the first meeting, our salesperson Fred helped us choose the model of the home we wanted to build as well as the major structural changes we wanted. We ultimately chose the August model as it had a first floor model and we found that we really liked the layout after seeing it live as the model home in another Keystone neighborhood. During the second meeting, we had to lock in major blueprint related changes such as the addition of windows, movement of walls and doors, etc. Then, the third and final meeting was at the builder's design center in Lancaster. We spent 5 hours there in one visit picking out all of our finishes including colors, fixtures, flooring, cabinets, counters, and more. After this, the waiting game became as the builder had to get permits and plan the construction of the home. This took several weeks if not a month or more and then finally one day we visited the lot and saw white flags in place to mark where the foundation would be built by the backhoe operator. We were fortunate to live just a mile away and would walk over every evening to check on the new house, even having special shoes we each wore as the clay from the soil made our white shoes turn orange! While the experience wasn't perfect, we ultimately ended up with a nice home, at a decent price, that was finished on time. We purchased the home in June of 2016 and moved in shortly thereafter. The pros of building with Keystone would include the ease of the process and the speed of the build - I believe it was 56 working days from breaking ground to settlement day! Impressive, but almost possibly too fast!
- The other side of the spectrum would be our experience helping clients build a custom home with S. Gerald Musser builders here in the Palmrya (Campbelltown) small subdivision of Lyndel Court. This neighborhood only had 13 lots I believe, and they were going fast when we came across buyers who had been searching for a home for over a year. We showed them a couple resale homes and realized it would be tough to find what they were looking for in that space, so we had them meet us at Lyndel Court and they could pretty quickly see the vision of building a home there. We expressed interest to the builder's agent and set up a meeting at their model home in Lebanon. I believe it took a week or so for the buyers to commit as they were diligent in speaking with their future neighbors about their experience and even some of the builder's references. Ulimtately they designed to pull the trigger and move forward. Being that Musser is a smaller builder (building approximately 50 homes a year vs Keystone's 500), they required either cash purchases or construction loans. With a cash purchase, these smaller builders generally require buyers to purchase and settle on the lot before construction begins. Then, there is normally a series of 5 to 7 "draws" over the home building period where a chunk of money is due, culminating with the final payment upon completion of the home. As an example, say it costs $500,000 to build a brand new Palmyra home with one of these builders and the lot costs $100,000 of that money. The lot would be purchased for the $100,000 up front, then the remaining $400,000 would be divided up over the draws. If the draws were all equal and there were 5 of them, the home buyer would owe an additional $80,000 at the completion of each draw period. These periods are linked to milestones like the foundation being completed, the roof being finished, the drywall being installed, etc. For more information on new construction and draws, check out this article.With cash, you are basically paying for what has been delivered to you, in installments. With a construction loan, its similar but a bit different as well. The buyer will solicit a lender such as Member's first to loan the money for potentially the lot and the home, less the buyer's down payment amount. The lender then does an appraisal on the completed vision of the home off of the blueprints. Ultimately the lot is purchase with a combination of cash from the buyer and the lender and the buyer starts paying interest on the lot from the time of its settlement. Then as the draws incur, the principle balance on the loan increases by the draw amount. These mortgages are "interest only" while the home is being built, but then ultimately convert to a normal mortgage in the end. If the buyer put down a total of $50,000 to build the home, that means they would start paying on the $50,000 difference (lot price of $100,000 less the $50,000 down payment) initially, and then add an additional $80,000 with each draw, based on the above example. So, as the home is being built, the first payment or two would be based on the $50,000, then $130,000, then $210,000, then $290,000 then $370,000, then lastly $450,000 and then when the home is finished their loan would be restructured into a typical mortgage - likely a 30 year conventional product.
Having been through both scenarios, I am confident that Carin and I would enjoy building with a smaller builder such as S. Gerald Musser better and are also quite certain we would end up with a better quality home and higher end finishes for a similar price. We would have to endure the construction loan process, which isn't ideal - but a small "price to pay" for a well built home that we may live in for decades.
I hope you find this article helpful. As I am writing this blog, Landmark homes is building two new large neighborhoods in the North Londonderry subdivisions of Winding Creek and Summer Layne, within the Palmrya school district. Lot reservations on Winding Creek start in July 2022. This is a 55+ age specific neighborhood of mostly single level living layouts. Then, shortly after Landmark will launch Summer Layne, adjacent to Winding Creek and this will be for clients of all ages. Then S. Gerald Musser has purchased the farm adjacent to Summer Layne and will built ~95 homes in the next few years. Landmark will continue to offer end loans, meaning they will finance almost the entire purchase while the home is built, but Musser will likely require the construction loan.
If you would like more details on the new construction processes, dont hesitate to ask. And surely, if you are interested in building a new home in the Palmrya or neighboring areas - look us up first as you will definitely want and experienced agent(s) on your side.
Thanks for reaching,
David Becker
717-685-6885
