Is it the agony of defeat?

I've put off this post, hoping for better news, but so far it's not to be.  As Builder David predicted, the bank's as-built appraisal came in very low. By the time the bank applies the 80% factor, they would be able to lend me less than half what it would cost to pay off the lot mortgage and build the house.


This is worse than I ever expected, and Banker Steve was surprised and disappointed as well.  All along he has been very optimistic, assuring me after the credit check was completed that we could get this project underway. It's a huge disappointment.  The real estate market in St. Marys is just dismal: an over-large inventory of lots at depressed values, and the comparables they used were from a golf course community that's a big step down from CH. Clearly, no one in CH can hope to sell their homes even if they wanted to, or even refinance.


My options are to find a pile of cash to make up the difference (not going to happen); sit tight; buy a house somewhere else and renovate (not my dream, for sure); or take my project to another location where the appraisal will support the building cost. 


In August I took a trip south and looked at communities in Beaufort, SC, where Jane lives, then spent a couple of days in St. Simons Island, where Steve urged me to focus. We spent a few hours driving through various communities, looking at marsh-front lots and getting a feel for the different areas.  He feels that if I can find a well-priced piece of land (maybe bank-owned), we should be able to generate an appraisal at the level I need it to be.


I left with the name of a real estate broker, whom I contacted when I got home. He's keeping an eye out for lots, and I told him I'd like to rent a house for maybe a month after the first of the year and spend the time looking at virtually everything that's available, getting a feel for island living, and meeting a bunch of people (with help from my friends Russell and Cindy).


This is a setback, for sure, but I'm not giving up.  I have put my heart into this beautiful home that Jane has designed, and am not ready to relegate the plans to an expensive coffee table artifact representing what might have been.  In the meantime, nothing's going to happen for a good while.

The fun begins

Shortly after my last post, Jane sent me her proposed finishes for the master bath, signaling the beginning of the detailed decision-making phase of the project.  Once again, she nailed it on the first try.  The shower enclosure and countertop are white marble, and the floor is stunning: a tile that looks like unpolished sea glass pebbles in varied shades of green and blue.  Very beachy and just the right hues. There will be horizontal watery-green glass tile accents on the walls.


It's amazing to me how well she has captured what I like.  I think my Houzz ideabook has been helpful to her, and she is a very good listener. I don't feel the need to go research more options, as this look captures the feeling I'm trying to achieve, and I can't imagine getting tired of it. 


Meanwhile, we're still trying to finalize windows.


I have also settled on a banker.  Steve has been very encouraging and committed to helping me make this happen, and I think he'll be a good partner. The next hurdle is the as-built appraisal.

The Next Big Hurdle

Over the past couple of months, David and Jane have been refining the estimates, changing specs to get the price down.  In the meantime, I've been using my valuable resources to find bankers I might speak to about the project.  My theory is that if I'm introduced by a mutual friend/colleague I can a) get to the right person and b) be more than a financial statement.


The week before Easter, Katherine and I made a trip to St. Marys for my meetings.  My friend Charlie connected me with two couples who live in Cumberland Harbour, and they were kind enough to invite us to cocktails and dinner.  We both really liked these folks, and had a fun evening.  Katherine admitted that she's less worried now about me going down there and being all by myself.


Rita and Susan told me about the Friday Neighborhood Nights at the Spring House. People bring a dish to share and whatever they want to drink.  Sometimes four people show up, other times there's a bigger crowd. They encouraged me to plan my next trip to include a Friday night, and now I'm on Rita's email list for notices of upcoming events.  These are fun people, and they were genuinely anxious for me to get this house built and join them!


Both couples gave enthusiastic endorsements of David, since he built both their homes, which have been virtually trouble-free for the 4-5 years they've lived in them.


I met with three bankers introduced to me by my friend Russell.  I had been in touch with all three by phone to establish our mutual connection, and all of them were warm and positive about possibilities. I learned so much about the process, which works generally as follows:


Once I submit my financial profile and an application, they'll run numbers to see how much they're comfortable lending me. Once I surmount that first hurdle, which of course includes a credit check, they examine the project specs and architectural drawings and commission an appraiser to conduct an as-built appraisal.  Essentially, this is what the house would fetch on the market once it's completed, and of course includes the value of the land.  They will then generally loan 80% of the appraised value.


Here's the sticky part: because home prices are so depressed at present, David warned that banks' appraisals often are less than what it will cost to build the home.  Compounding the situation is the value the appraiser will put on the lot.  There's a sizable inventory of foreclosed lots on the market at fire sale prices -- 10% of what I paid for mine. The perfect storm created by these two factors could mean that I will need substantially more cash upfront than I ever dreamed.


I also learned about jumbo loans vs. conventional ones for the permanent financing.   One of the bankers told me that any loan over $417000 is considered jumbo and these are backed by private investors. They are reluctant to lock in long-term interest rates, so the rates on jumbos tend to be higher, and the loan-to-value ratio lower. Mortgages under 417 are backed by Fannie Mae and Freddie Mac, are easier to get, and carry interest rates right now of under 5%.


One of the banks has a one-time close, where you secure the construction loan and permanent mortgage at the same time, which saves some money on fees. However, they only loan 75% of appraised value, and there's a time limit of 12 months for construction.


Needless to say, my head was spinning by the time we made our way back home, and in the intervening weeks I have been trying to tamp down my expectations.  I don't know if I can swallow what I think I might have to surrender in cash, especially since retirement is looming. I'm beginning to wonder if this is a pipe dream. But, ever the optimist, I just feel that this will somehow work out.

Sticker Shock

The weather here is dreadful: 80 inches of snow so far this winter, and we have another 6 weeks to go.  It weighs one down -- so hard to go anywhere, worry about the vast accumulation of snow and ice on the roof, having to walk so carefully to avoid upending oneself.


By contrast, the weather in St. Marys last week was mild, in the low 60s, and I was thrilled to see bare ground, since that won't probably appear here till May.  Jane and I met with three contractors, who had worked up bids from her preliminary specs.  All three estimates were in the same ballpark, but I confess that when I saw the first one it took my breath away...and not in a good way.  Jane assured me that it's not unusual to see very high estimates at this early stage, and that once we decide which contractor to hire, her job will be to work with him to see how we can bring the cost within my budget.


After chatting with them individually, I concluded that I probably cannot make a wrong decision here.  One firm is two brothers with whom Jane has worked before, located in Savannah.  The fact that Jane knows them and trusts them is a plus.  On the con side, they aren't familiar with St. Marys or Cumberland Harbour...yet.


Both of the other builders live in Cumberland Harbour, which I believe is a huge advantage, as they understand the idiosyncrasies of working with the town, they understand and are committed to the vision for the community, and they have a vested interest in leaving me a satisfied customer.  In addition, they will be there if I have any issues with the house once I move in.  The major difference in the two is age and experience: Ed has almost 40 years in building, David 10.


We spent some time discussing various ways to bring the cost in line with my budget.  Looks like the coquina shell chimney will have to go.  By far the biggest item we discussed is the impact windows.  Dropping down a notch to so-called DP 50 cuts the cost in half.  According to my very limited research, impact windows protect from flying debris, while DP rated windows protect from hurricane-force winds.  Another way to save is to make some of the windows fixed. 


I could also defer finishing the over-garage guest suite; though that's just an expense delayed, not eliminated, and it would cost more to do it later than to do it now. There are opportunities to reduce the cost of the siding by doing regular instead of reverse board and batten.  Reverse is more complex, so the labor cost is higher.


Jane offered that reducing the square footage is the most obvious way to lower the cost.  As I've thought about this over the past few days, however, I'm concluding that that should be my last resort.  It's not something I can change once it's done!


Time-to-build estimates range from 7 months to a year.


I've spoken with some of the references I was given, and I believe I've come to a decision to use David Spencer as my builder.  All those with whom I spoke gave him an unqualified recommendation.  Just as important is the endorsement of my friend Charlie Smith, who knows David and is also very plugged in to everything going on in town.  So before the weekend is out I'll email Jane and let her know, so she can begin working with him.


This Connecticut weather is the best sign yet that it's time to think about getting outta here!!

The long wait

It's been 3 months since I posted an update, because there's not been a lot to report.  Jane has been working on ever-more detailed plans, and I admit I had to ask her to slow down a bit so I could manage the financial drain in a more predictable way.  We have agreed to a project plan that will culminate in applying for building permits in May.


Meanwhile, the sheaf of documents she sent me in late October included, among other details, a schedule of windows: 61 of them!!  They also included the dimensions of all the spaces, so I can begin to imagine how the rooms will look and I can actually see myself in them. 


I've been thinking about colors, which will be very different from my Glastonbury house. Yellows, reds and greens predominate in my present space, inspired by the colors in Provence and Tuscany, two of my favorite places in the world.  The new space suggests marsh colors: sage green, sand, touches of rusty red and blue-green water. I envision the exterior in dusty green, white trim, subtle dark red accents, much like the double matting and filets to which I gravitate when framing a piece of art -- which is what this house is, after all.


Coquina shell cladding on the chimney? I hope my budget can take it.


Jane's meeting with the review board again in early January so they can approve the exterior lighting fixtures, driveway treatment and revised garage door design.  I believe that's the final time she'll have to meet with them.


In late January we'll meet with two or three contractors to bid on the project and hopefully select one shortly thereafter.  We agreed that getting the builder onboard early will help us manage the budget and make him a true partner as we move forward with detailed design.


A wise longtime friend who lives in Tampa just read my blog and has given me a thumbs-up on my approach -- and loves the look of the house.  He shared sage advice about stairs, ceiling fans and heating systems in the south.  Thanks, Bob!

The design is taking shape

This will be a short post with some new exterior views. From the street:

And from the back:

From the outside in

What I love most about this process so far is knowing that this house will be custom-designed for me.  Throughout my adult life I have lived in "second-hand" homes, redesigning them within the constraints of my budget and the structural footprint.  To date my most ambitious project has been a kitchen-family room redo, but since no walls were punched out or additions constructed, it was a fairly easy process.  In this new home, every doorknob, cabinet, floor surface, window and fixture will be of my own choosing.


Jane has designed the main floor as virtually one big space that can accommodate entertaining and daily living.  The entry, from the porch that runs along the east side, leads to the kitchen.  To the right are a half bath and walk-in pantry positioned at the street side. The kitchen morphs into dining space, then living space beyond, with a screened porch on the south end.  Hopefully the porch will have a modest outdoor kitchen.


From the kitchen, several steps down lead to the terrace, anchored by a fireplace.


The courtyard area will not be a fussy yard; rather, I hope simply to use native plants that require minimal maintenance.


The entire second floor is the "owner's suite," with a studio room for my creative activities on the north end, with a library/study facing east. A short hall leads to the master bedroom, and centered between the studio space and the master are a big walk-in closet and the laundry room.

I love the deck cantilevered over the terrace, wrapping around the fireplace.  The plan above also shows the guest suite above the garage, with its balcony and marsh view.


My goal is to incorporate a lot of built-in cabinetry to minimize furnishings: so the walk-in closet will have drawers and shelves so I won't need a dresser.  In the living/dining area, built-ins will eliminate the need for a separate hutch or buffet and make the space flexible for entertaining.  All I'll need to do is make some friends who like to eat.....