Tim Murphy: 00:00 I’m really excited for this topic that we’re going to be talking about new construction, in Edina and southwest Minneapolis. I mean if you live in Edina and southwest Minneapolis and you don’t know about new construction, are you living under a rock or what not?
Carrie Guarrero: 00:12 Living under a rock if you haven’t seen new construction here. It is hoppin’, Tim.
Tim Murphy: 00:16 Yeah, it’s amazing. And you know, I want to start with, you’ve been in the new construction worlds since you were a kid. Literally.
Carrie Guarrero: 00:25 Literally, yeah. Our definitions of kid might be a little bit different, but I started in the mortgage business when I was 20 and one of my very first jobs was to uh, go to model homes and do model home visits and visit the builders reps and get started that way in business as the marketing Gal who was out, uh, seeing and being seen.
Carrie Guarrero: 00:48 Right? So this scene that we’re in today is very, very normal for, doesn’t it smell like new construction? Had loved the smell of fresh cut wood, little bit of mud, a little bit of sheet rock, some paints pretty awesome. Actually brings back memories. Honestly. Uh, I mean I’m actively involved in it today too, but it brings back a lot of memories to be here in the middle of it.
Tim Murphy: 01:14 So I thought it would be awesome to be at a project live, especially because nowadays it’s parade of home time, right?
Carrie Guarrero: 01:22 It is. We’re right in the middle of the parade of homes is spring parade of homes. It’s red Friday today. I’ve got my red Friday shirt on supporting our troops that are deployed but looking outside and the snow is melting. It’s beautiful spring time to think about new construction.
Tim Murphy: 01:39 So tell us back when you were a kid at 20, tell us a little bit about how did you get into the new construction world?
Carrie Guarrero: 01:47 You know, I’m actually, I worked alongside my mother at that point and um, she did a lot of work in new construction with a lot of builders. And so, um, that was just one of my first roles inside the industry was to market to our real estate agents and builders reps that were in the models from there. It certainly grew to me doing my own loans in new construction. I mean we’re, we’re, we’re dating back to 1996 and all through Ah, the boom of new construction where, my goodness, Tim, I would tell you that back then, uh, they couldn’t get signed up in the yard. I mean we’d show up on Monday morning and there would be 10 purchase agreements tend lot hold sitting there, which meant that, you know, 10 people actually said, hey, I wanna buy a house today. A little bit different environment today.
Carrie Guarrero: 02:39 But new construction’s definitely hopping again.
Tim Murphy: 02:42 Well, yeah, back in 96. I mean the market was hot, new construction that everybody knows the market crashed. So new construction, like where did that go? And now today it’s hot and heavy again.
Carrie Guarrero: 03:10 It has been for a couple of years now and it’s definitely something that fits current need of hey, if there’s low inventory and existing housing, new construction is an option here in Edina and a Southwest Minneapolis, we may find that there are a lot of folks that are doing rehabs to write brand new construction rehabs. Like you said, if people are not seeing it then not very much.
Tim Murphy: 03:22 What is it about new construction that just gets you excited, that really motivates you?
Carrie Guarrero: 03:26 You know what, I would tell you that back in the late nineties and early two thousands, it was just my job, right? I mean, it was what I did. Hey, this is what you need to do. You need to go out and you need to do these things. Okay, go out and I’m going to do those things. Uh, we designed and built our own home, our dream home. So you’ve actually been through this process. You went through this process in the early two thousands. My husband and I started from scratch and said, all right, we’re going to do this thing and thank goodness we’re still married.
Carrie Guarrero: 03:59 You’ve been through this process by that point with hundreds of consumers going through buying and building and designing and custom homes and not custom homes and townhomes in a variety of different things that went on during that span. But I tell you, there’s nothing like doing it yourself that really connects you with the dreams that are involved in that. The hopes that are involved in that, the, the whole experience. And the stresses,
Tim Murphy: 04:28 Is it a lot harder to be on the actual building side where you’re the one building the house than it is to be on the lender side where it’s like, oh no, here’s what you can expect and here’s how it’s gonna go, but you don’t really. You’re not living it.
Carrie Guarrero: 04:43 It’s easy as we actually have a flyer in our office right now and it kind of makes me chuckle. I really hate this flyer.
Carrie Guarrero: 04:49 It’s, it’s as simple as one, two, three. And while we do work to make it as seamless as possible, it’s just not as simple as one, two, three. Right? So we really want to make sure that we connect with that reality, that there are hundreds of choices that are being made and you don’t know what it is. You don’t know. When it comes to new construction, it’s so different than just going out and having a real estate agent show you an existing home and saying, okay, I want to make an offer.
Tim Murphy: 05:18 So what did you learn when you built your house? I mean, come on. It didn’t go all peaches and roses, right?
Carrie Guarrero: 05:23 Not all sunshine and roses, you know what, there are a few things that we really want to make sure that everybody pays attention to and I certainly learned them myself. One of them is transition.
Carrie Guarrero: 05:38 Tim. I lived with my husband and our children and live in suites, live in suites suites for a month and so you know what that was the transition that we needed to do in order to make that process work for us. So you got to think through do you have a house? Why didn’t, why did you end up in live in suites? Like what was the situation that made you decide that was the best route in our situation? We had a time frame between when our other house was gone and when our house was going to be done and I would tell you that it’s not necessarily an exact science in certain terms of timing. I mean we live here in the land of the frozen. We’re looking outside today. It’s, you know, the weather’s beautiful, the sun is shining and things are melting, but it doesn’t always happen that way.
Speaker 1: 06:29 There are blizzards here and rainstorms and a variety of other things or things as simple as a subcontractor who gets sick or goes on vacation or you know, there’s a short wondering like, did you try to sell your house quick? So then you didn’t have to worry about having to mortgages. I mean, what was it? Well, mine was uneven, more special situation. That’s, that’s very complicated. It was more complicated. I actually built our new house. We built our new house on the same lot as our old house was on. And so at some point that month that was leftover, um, the, the electricity and the plumbing had to be disconnected from the old house so that they could connect it to the new house. So that’s what that month was about. So I like to take things to extremes. I didn’t just go find a builder and say, Hey, build me a house and I’ll sell mine.
Carrie Guarrero: 07:27 But you know what, the same thing applies to people every day. We deal with clients every single day. I was just dealing with one, uh, last month where, you know, what the builder wasn’t done exactly when they said they thought they would be done right and their house was sold and they needed three weeks between when their house was sold and they had to close and moving into the new one that has, that stuff happens. So we have to talk about it transitions really important. Well, the other big one is like who’s going to finance this thing, right?
Tim Murphy: 08:02 I mean how does that work?
Carrie Guarrero: 08:04 And I would tell you that today it’s different than it was years ago and so a lot of people come to us, tim with, Hey, this is just what I want to do. And they just think it should be simple and they don’t understand that depending on your builder, depending on your qualifying situation, do you have a house to sell?
Speaker 1: 08:22 Where’s your money coming from? And the timing associated with all of that. There are a lot of different financing considerations and finding out which one is right for you. Again, just isn’t the same as, Hey, I’m going to go buy this house and get my 30 year fixed rate mortgage. Right, or my 15 year fixed rate mortgage
Tim Murphy: 08:40 Yeah, but Carrie, doesn’t the builder just always pay for it.
Carrie Guarrero: 08:41 That’s why I’m saying the builder doesn’t just always pay for it. Really. They could very well say, hey, you know what tim, you need to finance this project. I’ll absolutely build your home, but you need to provide the construction financing mortgage on my house and then I’m having to provide construction financing on my new house. Could very well be, but we need to talk about those options and what makes the most sense for the consumer. Right. Every consumer is going to have a different situation and what makes the most sense for them.
Carrie Guarrero: 09:10 Maybe totally different than what makes sense for the next guy. Right. If that’s the case, I mean, what do I have like three, four different options? What? What are the options? I mean, there are a lot of options. Obviously build our financing is something that does exist out there where the builder will say, yeah, I’ll finance this. How often is that? You know, that’s a really great question. Depending on your price point, that answer is going to vary and higher price points generally not, you know, they’re not wanting to provide builder financing or if they do, it may come at a much higher cost to you because guess what, you’re never getting something for nothing. Nothing. So they build it in to the price. One way or another you’re going to pay for it. But um, more often than not today we’re finding that people need to provide their own construction financing and there are a variety of products, right?
Carrie Guarrero: 10:01 You can do a one time closes to time closes and that is a foreign language to anybody who’s listening right now. Right? It is. But that’s why I say the bottom line is that talking to somebody who knows what they’re dealing with with relation to new construction financing and working through what makes sense based on your individual circumstance is what
Tim Murphy: 10:26 do you really think it’s important that you’ve gone through the actual process of building a house?
Carrie Guarrero: 10:31 You know what? I think it makes me far more connected to what they’re going through. I also went through a major remodel, so we built that. We built that new house in the early two thousands and then just two and a half years ago. In fact, I’m still kind of in the midst of recovery. I am. I’m still in recovery actually. I’m still doing it. There’s still work going on at my house and my husband would like for me to stop, but we understand ever stop.
Carrie Guarrero: 10:57 We undertook a major remodel project, have a 1868 built home, a big old four square. This was us, you know, making a move to. We were supposed to be downsizing and happened upon this house and it was like, oh my goodness, we’ve got to do this. So really full fledged major remodel, having gone through both that recently and building a home, designing a home from scratch with a builder and walking through all those steps, I think it really helps me to be able to understand what it is they’re going through emotionally, financially. I mean truly it’s just a different process. One of the other things to be. I mean there are a few other things that I want to talk about in terms of what to look out for Tim. I mean honestly people, people come into the office. I know I encountered it in both of these, so both my remodel and my new construction house.
Carrie Guarrero: 11:58 Do you think that the price ended up being exactly what I set out for it to be at the beginning? Of course. Oh yeah. Right. All the time. All the time. That’s what happens. No,
Tim Murphy: 12:09 but I mean you have a contract, you sign the contract, the contracts for call it $800,000. They have to. It has to be that price. Right?
Carrie Guarrero: 12:18 Well, the thing about new construction is again, that it’s not like you’re knocking on the door and you know you’re going in and you’re buying a house that’s already there, et cetera. We look around here today. There are all sorts of choices to make. What kind of lighting are you going to have? What kind of cabinets are you gonna have kind of finishing do you want, what kind of flooring do you want? And the challenge with that is, and particularly as we get into these higher price points where there’s more and more customization.
Carrie Guarrero: 12:44 So in lower price points, Tim, absolutely you can walk in and they can pretty well have it dialed in. Here’s your few selections. You make the choices and you’ve got five houses. Pick one right now when you get into this level of the game, which is the level I was in, you start off and you think here, here are these allowances and then, but you really want that more plush carpet and you really want that upgraded flooring or the faucets and you don’t think about those things when you’re at beyond that. Right? So I always encourage people to pay attention to the fact that and just plan for overruns, overruns in price and overruns in time because if you plan for those two things, not a whole lot’s going to sting you throughout this process. It’s going to be emotional and they’re going to be ups and downs because that’s just what the new construction or remodeling process is.
Carrie Guarrero: 13:39 But those two things and walking in with your eyes wide open there. Huge difference. Why wouldn’t it happen on time? I mean, I know you said the weather, but don’t they factor all that stuff in? Should they can’t factor everything in? You know what? We just had a situation a few months ago with regard to citing shortage, a particular company, a particular style of siting, right? There was a shortage and they needed to wait for it actually needed to be manufactured. Right? So we’re waiting for siding on a particular project. It could very well be that it’s things you picked out that are unique to your house and it’s not the builder that’s holding it up. It’s the supplier, it’s the manufacturer, it’s a supplier, it’s the subcontractor. I think people automatically think, hey, it’s just this builder and this builders responsibility and it’s just that guy, right?
Carrie Guarrero: 14:33 Or that Gal who’s responsible for this, but there are a lot of people and a lot of layers involved in this process and working with a reputable, reputable builder, a real estate agent, a mortgage lender that understand that process it maybe been through it and get it is your best defense so that you can be armed with the information that you need.
Tim Murphy: 14:57 Okay. Carrie, I think you freaked me out because let me. Why? Why do I want to go through all that? You know, really at the end of the day, why, why do I want to go through all that?
Carrie Guarrero: 15:07 It’s your dream home, Tim, you can’t go into, you know what? My husband sold high end autos for years. Right? And so the constant joke in our household is he doesn’t believe in buying new vehicles and whatever. That’s just a whole conversation for another day.
Carrie Guarrero: 15:22 But we’re looking for cars and whatever. And I said, well, that’s fine, but I wanted to have camel interior and I want a sunroof and I want whatever, and he goes, okay, I’ll just order that from the used car factory for you. And that’s a joke that goes on in our household about cars. Same thing applies for houses to him. I mean you can’t go find that existing house and have it have everything you want here you’ve got a blank slate and you get to design it however you want to do it, however it fits your lifestyle. I know when I was building my house that it was about our kids at that stage and how young they were and where we wanted them to be and how we wanted them to be together. We wanted the girls downstairs and the boys upstairs and we wanted special stuff that fit our family.
Carrie Guarrero: 16:12 You can’t just go search that up and find it in the existing home market. Right? There’s something about doing it yourself,
Tim Murphy: 16:20 but all this stuff makes me feel nervous. So I mean, how do I know I’m working with the right person? How do I find the right person to take care of me?
Carrie Guarrero: 16:29 Well, you’ve found me, right? Twenty two years, 22 years of being involved in this, having done it myself both with new construction and a major remodel. I mean obviously, um, I’d love to help take care of folks that is part of what I do every single day working with professionals, like I said, in mortgage and real estate as a builder who have been through the process and taken many others through [inaudible]. We’re here to help. We want to make sure that we do take as much of that stress out of the process as we can cure,
Tim Murphy: 17:04 Carrie, you know, what, thanks for educating me and I’m guessing all of our audience on what it takes to do new construction. But another thing I want to say is thank you for supporting red Friday. I know that you have a son that is fighting for our country and that means a heck of a lot to me and thanks a lot for supporting the troops and thanks for having your son support our country. I really means a lot to me. Absolutely. Well, we thank them all for their service, sacrificial, and, uh, we want to remember every, every one of them, every day.
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