A cost-plus contract is a common inclusion in contractor agreements. This term means the contractor agrees to supply labor and materials for “x” amount of dollars, plus any extras on top of that. This type of agreement leaves the price open to circumstances encountered by the builder. For example, an excavator may quote $9,000 to grade your building lot, but what happens if there is a large tree which requires extra digging to be removed. He will charge you the base price of $9,000 plus the cost of removing the stump and roots. The cost of removing the tree may be minimal, but coupled with any other surprises (such as rock, importing or exporting of dirt, etc.), the $9,000 bill can quickly double. The good part of a contract like this is that you pay for exactly what you get.

Some Minnesota general contractors prefer this type of bidding because it relieves them of sticking to a set price. Obviously, hauling away dirt, stumps, and other debris is going to cost the contractor more money. However, he passes this cost along to you, the homeowner. This also means he does not have to be as accurate in his initial bid because any extras will be passed directly to you.

A cost-plus contract can be a risky type of contract to sign. You may be handed a bill twice the cost of what you agreed to initially. When working with a fixed budget, this can mean disaster. If you sign this type of agreement, you have to hope that no unforeseen circumstances are encountered by the contractor. However, in construction, surprises are a part of the business. Construction would not be construction without surprises!

The more favorable contract is one with a fixed cost. This means the contractor will supply all labor and materials for “x” amount of dollars. If he missed something on the plans and it ends up costing more, he has to absorb the cost. This puts responsibility on the contractor to be thorough in his bidding, because after all, he is in business to make money. This type of agreement protects you from contractors looking to take advantage of homeowners. They will not be able to charge you thousands of dollars more because “something was missed” on the home plans.

Do not be surprised if you find a price variance between fixed and cost-plus contracts. A cost-plus contract will typically be lower than a fixed cost bid. The contractor wants to protect his profit, time and energy, so he will typically bid a fixed contract higher (to guard against mistakes). With a cost-plus contract, he may be more apt to bid low, knowing he can charge more if unforeseen circumstances arise. Homeowners often settle on the lowest bid as a way of saving money. But in the long run, a cost-plus contract may cost you more than a fixed price.

In all fairness to contractors, they encounter homeowners who constantly change their minds. This often results in increased labor and materials needed to complete the job. It is not fair to have a Minnesota contractor provide a quote on one idea, and completely change your mind and expect him to hold the same price. Decide early what you want from the builder and have him quote a fixed price for the work. This will save you time, headaches, and a lot of frustration during your project. If you would like to talk more about the pros and cons of the different types of contracts, please feel free to contact us.

Successfully piloted in 2008, the Minneapolis Advantage program has already assisted fifty families in buying a home in the city. Funded by the City of Minneapolis and the Federal Home Loan Bank of Des Moines, the program requires potential homebuyers to complete a counseling workshop. The workshop prepares home buyers for the responsibility of home ownership.

Criteria for the Minneapolis Advantage program are as follows:

• Property must be the buyer’s primary residence.

• Buyer must have income of less than 120% of the area’s median income, which is $97,080.

• Buyer must obtain a traditional prime or A-rated, fixed-rate, first home loan or pay with cash.

• A $10,000 loan at 0% interest is forgiven if buyer occupies the home as the primary residence for five years.

• The $10,000 loan may be used for closing costs, down payment and home repairs.

• Property must be either a single-family dwelling or duplex and be located within an eligible neighborhood.

• Depending on income, two options are available. Both are relative to the homebuyer’s income – below 80% area median or below $120% area median. See the Minneapolis Advantage homepage for more details.

Last year, nine percent of the loans were used to purchase boarded up and vacant homes, and 62 percent were used to purchase foreclosed homes. Prior to purchase, 62 percent of the properties were registered as non-homestead. After purchase, however, those homes now have homestead designation.

That’s what this program is doing for the City of Minneapolis. It is not only helping buyers purchase a home, but it’s helping to fill vacant, distressed real estate. It’s a win-win situation for the city’s neighborhoods and home buyers.

How do you apply for a Minneapolis Advantage loan? It doesn’t matter which lender you use, as long as your loan falls within the requirements for the program. Better do it quick, though. Loans are approved on a first-come, first-served basis.

For more information about purchasing through the program, call the Greater Metropolitan Housing Corp. as follows:

• North Minneapolis – (612) 588-3033

• Northeast and South Minneapolis – (612) 378-7985

According to the Census Bureau, the number of new homes sold in June leapt by 11 percent from May new home sales. It stands as the biggest one-month jump in 8 years.

A “new home sale” is when a home in any stage of construction, not yet started, under construction, or already completed — goes under contract, with a builder. It’s the opposite of an “existing home sale”.

In addition to surging sales, the monthly supply of new homes fell to its lowest level in 11 years.

Because home values are based on the relative supply and demand for a particular home in a particular area, anytime that demand for homes grows faster than supply, we would expect prices to rise, which is exactly what we’ve been seeing.

The combination of low interest rates, seller-paid incentives and a first-time home buyer tax credit is bringing buyers into the market faster than new supply can come online, which is one reason why home prices have stopped falling in many parts of the country.

It’s also why home buyers may find it tougher to get a good deal in real estate later this year and into 2010. If demand continues to stay high and supplies fall further, sellers should regain the upper hand in contract negotiations.

6 Myths of Green Consumers
New study shatters stereotypes of what motivates buyers.

By:
Jennifer Goodman

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A new national study of green consumers contradicts several long-held stereotypes about them: The environment is not their top concern, their kids are not influencing them to be green, and while many know what they should do to save the planet, they often don’t do it.

As a result, marketing messages aimed at this group often fall on deaf ears, says Suzanne Shelton, whose Knoxville, Tenn., firm, Shelton Group, conducted the study.

“Most green advertising is created as if there’s one pool of green consumers and they’re all motivated by ‘Save the planet!’ messaging,” Shelton says. “We need a revolution in this thinking. Not all green consumers are the same, they’re not all motivated by the same messages, and they’re not all inclined to buy only green products.”

Released Aug. 21, the Green Living Pulse study polled 1,007 U.S. consumers who at least occasionally buy green products (77% of the population) and found there is no typical “green consumer.”

The study discovered six myths about this group:

Myth 1: Green consumers’ top concern is the environment.
When asked to identify their top concern, the economy, by far, is No. 1 (with 59% calling it their top concern) and the environment falls far behind (8%).

Myth 2: Green consumers’ main motivation when reducing their energy use is to save the planet.
When asked the most important reason to reduce energy consumption, 73% chose “to reduce my bills/control costs” and only 26% chose “to lessen my impact on the environment.”

Myth 3: Green consumers are all-knowledgeable about environmental issues.
For example, the survey asked, “From what you have read or heard about CO2 (carbon dioxide), please place a check beside any of the following statements you think are true.” Almost half (49%) chose the incorrect answer, “It depletes the ozone layer.”

Myth 4: Green consumers fall into a simple demographic profile.
While the study detected some demographic tendencies, it found that green consumers aren’t easily defined by their age, income, or ethnicity.

Myth 5: Children play a big part in influencing their parents to be green.
Only 20% of respondents with children said their kids encouraged them to be greener by, for example, promoting recycling and turning off lights.

Myth 6: If buyers just knew the facts they’d make greener choices.
The study showed that knowledge does not always lead to eco-conscious behavior. Individuals who answered all of the science-related questions correctly did report participating in a significantly higher average number of green activities, such as driving a fuel-efficient car or lowering their thermostat during the winter; however, the 25- to 34-year-old age group consistently answered the questions correctly, yet, on average, this group’s green activity levels were lower than those of older respondents.

“Because green consumers are being stereotyped, and these myths we tested are embraced by marketers as facts, many green messages are falling on deaf ears,” Shelton says. “If these messages were better targeted, more people would be buying green products, conserving electricity, and doing more to save the planet.”

Jennifer Goodman is Senior Editor Online for EcoHome.

New construction houses, such as new real estate in Chanhassen, Minnesota, tend to be far more energy efficient than older existing houses . Energy efficiency simply was not part of the design in older homes. With new technology and all of the focus on saving energy today, new home buyers are much more conscious of the amount of energy that their new Minnesota home will consume.

When you look for a new Minnesota home, you should look for a builder that builds with energy efficiency in mind when they make all of their design decisions . This energy efficiency will keep you warmer in the winter, cooler in the summer and save you money every month on your utilities.

Many of the energy efficient features are designed by the builder during the construction phase. High quality insulation, for example, keeps out drafts and helps your home hold heat in the winter time and out in the summer time. Paying attention to all of the details during construction can make a tremendous difference. A gap of just 1/4 inch to the outside can cause your Minnesota home to leak an incredible amount of air.

In addition to the construction of the new Minnesota home, appliance choices will have a direct effect on your electric bills. You should find Energy Star rated appliances. Some appliances use a lot more energy that others, so the amount of time that it takes to see real savings is sooner with some appliances than others. Working with a knowledgeable Minnesota builder will help you with the selection process.

Other features that will also aid in the efficiency of your new Minnesota house include digital thermostats with timers, outdoor lighting with timers or light sensors, room switches with motion sensors and similar choices to aid ensure that you are not wasting electricity. Of course, you could try to remember to turn off the lights, but having technology help you in case you forget will save you money in the long run and decrease waste.

When it is time to resell your home, energy-efficient homes are a great selling point. Many of today’s Minnesota new home buyers have moved energy efficiency much on their list of must haves.

A performance by environmental advocate and nine-time Grammy winner Sheryl Crow will help open the Greenbuild 2009 Conference, which will be held Nov. 11 to 13 in Phoenix.

More than 25,000 people attend Greenbuild every year, and its increasing profile and size led the U.S. Green Building Council to open this year’s event at Chase Field, home to the Arizona Diamondbacks. The Nov. 11 opening evening will feature presentations and a keynote address, in addition to Crow’s performance.

“Performing at Greenbuild is like being on the international stage of the green movement, celebrating with you the progress we’re making on this important issue,” Crow said.

A graduate of the University of Missouri, Crow also holds honorary degrees from Temple University and Southeast Missouri University. Crow has been on the leading edge in urging the adoption of efficient technologies like CFLs and biofuels, and has effectively harnessed the grassroots, the media, Fortune 500 companies, and government to build support for environmental protection. Before finding success as a musician, Crow was an elementary school teacher; she recently worked alongside First Lady Michelle Obama in an effort to encourage public school students to achieve.

Greenbuild is the largest gathering of representatives from all sectors of the green building movement. Three days of educational programming, workshops, an exhibition floor and networking events provide opportunities to learn about the latest technological innovations, explore new products, and exchange ideas with other professionals. Greenbuild is the three time recipient of IMEX Green Meetings Award.

Greenbuild 2009 will also feature more than 100 educational sessions, LEED workshops, off-site educational sessions, a two day Residential Summit, and tours of local green building sites throughout the Arizona area. More than 1,700 exhibitors will showcase some of the leading technologies and products in green design, construction and operations.

Last year’s Greenbuild, held in Boston, drew more than 28,000 attendees and featured more than 800 exhibit booths. Past Greenbuild keynote speakers have included President Bill Clinton, Archbishop Desmond Tutu, E.O. Wilson, Van Jones, William McDonough and Paul Hawken.

If you have any questions on any of these issues, please feel free to contact us through email or at 612-840-4306.

By: * From: BUILDER 2009
* Posted on: June 10, 2009 4:54:00 PM

HUD and CDC Push Healthy Homes Agenda
HUD deputy secretary Sims: “Our homes ought to be a place where we can raise our children without fear of making them sick.”

By:
Jenny Sullivan

Healthier homes can produce healthier Americans and a healthier U.S. economy.

That was the message in Washington Tuesday, where officials from the Centers for Disease Control and the U.S. Department of Housing and Urban Development (HUD) laid out some of the ways housing can affect public health, challenging the nation’s builders, healthcare providers, community organizers, and citizens to play a more proactive role in reducing preventable diseases and accidents in the home.

Acting Surgeon General Steven K. Galson issued an official call to action to promote healthy homes, asserting that poorly constructed and ill-maintained residences can contribute to endemic health problems such as asthma and lead poisoning. It’s a stance similar to former surgeon general C. Everett Koop’s 1982 battle cry publicizing the link between smoking and cancer.

“In the United States today, the leading preventable causes of death, disease, and disability are asthma, lead poisoning, deaths in house fires, falls on stairs and from windows, burns and scald injuries, and drowning in bathtubs and pools,” Galson said during a press conference at the National Building Museum.

During that same event, HUD Deputy Secretary Ron Sims unveiled HUD’s new Healthy Homes Strategic Plan, a blueprint for housing reform stressing the need to keep homes dry, clean, well-ventilated, pest- and contaminant-free, safe, and well maintained. The document places particular emphasis on protecting the health of children and other sensitive populations in low-income households through improved construction practices and home safety precautions.

“Our homes ought to be a place where we can raise our children without fear of making them sick,” said Sims. “As a nation, we must think smarter about how we design, build, renovate and maintain our homes in a way that protects the health and safety of those who ultimately live in them.”

In 2007, asthma took a toll on the U.S. economy, representing $19.7 billion in direct medical costs and indirect costs associated with lost work and school days, according to estimates by the National Heart, Blood and Lung Institute. One in five cases of asthma are linked to mold and moisture in the home.

Radon, another common hazard at home–including newly constructed residences–is the leading cause of lung cancer among nonsmokers.

“We must continue to work together across communities and the nation to ensure our homes are sited, designed, built, renovated and maintained in ways that support the health of residents,” Sims said, noting that green construction and rehabilitation practices are integral to the ambitious agenda that has been set forth by both agencies.

HUD’s strategic plan lays out four main goals: to build a national framework for implementing the healthy homes agenda; to support research on links between housing and health; to mainstream healthy homes practices and programs through grants, stricter regulations, and other measures; and to empower communities to build sustainable, local healthy homes programs.

During the event, officials stressed that negative issues linking substandard housing and public health problems must be addressed holistically. “For example, dealing with uncontrolled moisture can alleviate conditions associated with allergies and asthma (mold and pests), unintentional injuries (structural safety) and poisoning (lead paint deterioration),” authors noted in the executive summary of HUD’s strategic plan.

The surgeon general’s call to action seeks to mobilize the country on several levels. Citizens are urged to make their homes safer through simple measures such as installing radon and carbon monoxide detectors, setting hot water heaters at 120 degrees to prevent burns, installing handrails and non-slip mats to prevent falls, and proper use of other safety devices and household products.

At the same time, the call to action recommends specific actions for lenders, developers, home builders and inspectors. Those include:

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Training and implementation of healthy home and green building practices. (Click here for rankings of various green building certification programs by the National Center for Healthy Housing.)
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Consideration of health and safety issues in the selection of building sites, construction materials and building systems.
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The application of smart growth principals at the neighborhood or community development level.
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Lending instruments that consider the financial benefits of healthy homes.
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Dedicating funds from the Community Reinvestment Act to support the development of safe and healthy homes.
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Training of home inspectors to identify and report on safety and health hazards.

Proposed government actions include using housing subsidies to promote mixed-income neighborhoods, enforcing healthy home code requirements, and modeling incentives for healthy homes on existing incentives for energy efficient products.

Many of the recommended actions could mean new business and new jobs for the home building and remodeling industries, notes Rebecca Morley, executive director of the National Center for Healthy Housing (NCHH), one of several nonprofit advocacy organizations supporting the surgeon general’s entreaty. Some 5.7 million U.S. homes are in need of professional repairs, and roughly 24 million homes have lead-based paint hazards that need to be remedied, according to NCHH figures.

But health and safety problems aren’t limited to older housing stock. New homes can also harbor health hazards, Morley warns. “New construction is equally prone (sometimes more so) to high radon levels, ventilation problems, and moisture issues,” she said. “A new home is typically sealed more tightly than an older home. This is great for increasing energy efficiency, keeping out pests, and reducing drafts. However, if the design of the home does not provide for a way to replace existing air with fresh air, it creates an environment where airborne toxins and irritants, moisture, and radioactive radon gas seeping in through the home’s foundation can all build up.”

Jenny Sullivan is senior editor, design, at BUILDER magazine.

How to Build a Healthier Home

The National Center for Healthy Housing recommends the following practices for builders who want to construct healthier homes.

Make sure homes meet the American Society of Heating, Refrigerating, and Air-Conditioning Engineers standard 62.2 (ASHRAE 62.2, 2007). This is an industry standard for ventilation for buildings of four stories or less. Mechanical ventilation helps ensure contaminants and humidity are exhausted to the outside and that the home receives clean, fresh air. Additionally, it can benefit occupant health by increasing comfort and reducing unplanned airflows which can result in moisture problems.

Install proper smoke and CO2 alarms in all new homes. Carbon monoxide causes 450 deaths and 15,000 emergency room visits per year, and death in a house fire is 50% more likely in homes without smoke alarms. Carbon monoxide and smoke alarms often cost less than $25, a small price to pay for safety.

Add ducting for an active sub-slab soil depressurization radon reduction (fan-powered) system. If tests determine that radon is a problem, the fans for the system can be added and activated. Radon is a tasteless, colorless, and odorless gas that is a decay product of uranium and occurs naturally in soil and rock. The main source of high-level radon pollution in buildings is surrounding uranium-containing soil such as granite, shale, phosphate, and pitchblende. Radon enters a home through cracks in walls, basement floors, foundations, and other openings.

Americans love getting a deal, which might begin to explain why so many consumers flock to shopping malls on Black Friday. Of course, they aren’t always ending up with a real bargain, but sometimes this doesn’t matter. As long as an item or service has a high perceived value to people, there’s a good chance they’ll choose to buy it.

This concept can be applied to selling homes. Create high perceived value, and you stand a better chance of closing the deal with buyers. One way to do this is to offer high value at a low cost. If your cool-looking kitchen was inexpensive to build, but it looks like it cost tons of money to do, you’ve hit a home run for your business and your buyers.
With that in mind, here are 10 items to put in your next home to create real and perceived value for your buyers.

Radiant-heated bathroom floors. Forget fancy water-filled tubes embedded in concrete. You can now buy simple mesh-and-wire mats that install fast and easy under ceramic tiles. They cost as low as $10 a square foot and come with a variety of thermostats. Put a toasty floor in your homes’ bathrooms and watch your buyers melt.

Butcher block countertopsWood is the original solid surface. Used as an island or a bar, it holds nostalgic memories for older buyers and offers a fresh natural look for younger customers. It traditionally comes in maple, but butcher block is available in other species such as cherry and birch. An 8-foot-long top measuring 1.5 inches thick and 25 inches wide can be had for as little as $189.

Glass tilesYes, glass is cool. And yes, it’s pricey. But used sparingly as a kitchen or bath backsplash, glass can’t be beat. It reflects light, shimmers with color, and is virtually maintenance-free. If you shop carefully, you can buy it for as little as $7 a square foot.

Dual flush toiletOne can only imagine the perceived value of a dual-flush toilet installed in a powder room, which will cost about $250. That is about $100 more than a standard toilet, but it can save a family of four up to 6,000 gallons of water per year.

Low-flow showerheadsThere’s a chance you’ve used a new low-flow showerhead and don’t even know it. And that’s the point. These units use air to deliver the same robust performance as a traditional showerhead, but with a flow rate of 1 gallon per minute as opposed to 3.5 gallons a minute.

On-demand water heaterDepending on your climate, an on-demand (or tankless) water heater is an excellent choice. It does cost more, but instead of heating water at a constant temperature 24 hours a day, the energy-saving unit only activates when there is a need. Plus, it installs on a wall (inside or outside) and frees up space, which is especially important in the smaller, lower-priced homes that buyers appear to prefer in the current economy.

Water re-circulatorIf a tankless water heater is a little too edgy (and costly), you can still give your home buyers instant hot water by using a high-efficiency conventional heater and a water re-circulator. With the push of a button, the device circulates ambient-temperature water from the line so hot water is instant and nothing is wasted down the drain.

Folding patio-doorIn 2007, four out of the most popular 10 products among BUILDER readers were folding patio-door systems. Here’s why: When closed, these doors look like any other, but they fold up like an accordion to provide access to the great outdoors. Full-wall installations are pricey, but you can reduce cost with a two-panel system.

Central vacuum. A central vacuum cleaner is a built-in system consisting of a power unit, collection canister, and hose. Connected by special pipes installed within interior walls, the system collects dust and deposits it in the centrally located canister. Five times more powerful than an upright, it’s quiet and efficient. Plus, an entry-level system can cost as little as $800.

Excellent insulation Insulation isn’t sexy, but when it’s 95 degrees in the summer or the mercury dips below freezing in the winter, your buyers will thank you for this, even if they didn’t see the perceived or real value when they first signed the sales contract. Forget the entry-level insulation, and go for something that will really stuff the wall and the roof. While you’re at it, don’t forget the attic.

Nigel Maynard is senior editor, products, at BUILDER magazine.