Home Builder Negotiation Questions

   / Home Builder Negotiation Questions #11  
I just started a house in Arkansas without a GC. Without a GC I have bids on every part of the house. I expect to complete the house for less than $90 a sqaure foot including low E windows, SIP panels, brick, granite countertops, custom cabinets, hardwood floors, builders risk insurance, etc.

Even building for myself, I can't come close to those prices on our island. I recently renovated our guest cottage, 1,550 sq.ft. and did it on a budget using subs. only where I couldn't do the work myself. I didn't have to pay for any scaffolding or hire tools. Cost to me was in the $120k range and I didn't factor in any of my own time. New build would've been a good deal more.
 
   / Home Builder Negotiation Questions #12  
For $135 a ft, I could build you a VERY NICE house around here. Price for foot is only a working number for the area you are building. I have a friend from FL and from what he's told me about some of the requirements that go into a home, it could be very expensive compared to what it takes to build a house here.

Rule of thumb is to know what you want. Being unsure can be expensive. A house is a box. Building the box is easy, it's in finishing it off and making it pretty that you spend all the money.

Have it all in writing. You are in charge, not the contractor. It's your money and you are the one who has to live in it. Too often, I run into clients who fall into the trap that the builder wanted to do it this way, not their way. Sometimes it's a structural issue, but a lot of the time, it's not. The structural part of it should be figured out from the begining and not up for change once you get started.

Most General Contractors sub everything out. You go over the plan with them, break down the budget and then it's his job to make sure it gets done and that it's done right. A good GC can save you money and turn it into a fun process. A bad one will cost you money and ruin your life.

Finding a good one is where it becomes challenging. In every case that I've come across a bad contractor, it's because he was a friend, or they really liked him when they met him. While word of mouth and recomendations are the best, you have to realize that some people recomened their friend or family member because they want them to get some work and make money. They don't know what their abilities are, or understand that the reason he's not working is that nobody wants to hire him. Be very careful of an out of work contractor. There is plenty of work out there, and the good ones are busy. Never be in a rush to start, especially if you find a really good GC and he's busy on other jobs. There is a reason he's busy and the other guy isn't. All the talk about the economy just means that the so so guys can't get away with the way they have been doing things.

No matter what, talk to at least five General Contractors. Get bids from all of them and check out their refrences. NEVER hire anybody until you have done this. Some wont come back with a bid, some wont have any current refrences and some will come up with a vague bid that is open to all sorts of issues once you get started. The one you want will have current refrences, jobs going on that you can go to, and a bid that includes a breakdown of what he will do and what it will cost.

A good bid will break down each part of the house and require you to decide on what you want. Flooring is a good example. The bid should have flooring mentioned and a price for you to use as a budget for flooring. Lets say it's $5 a sq ft and you have 2,000 square foot. Your bid will have a budget of $10,000 for flooring. You can then decide that you don't want that nice of a floor all over the house and are perfectly happy with carpet in some rooms for $2 a square foot. Or you might decide that you want something special in the family room that costs $10 a square foot, and you will increase the budget for that special feature.

The contract will include what will be done and when payment is due. Be sure to understand this to avoid confusion. Put it in writing and from day one, refer to it so that everyone involved understands that you are taking it seriously. NEVER pay for something until it is done to the point agreed upon in the contract. NEVER EVER advance anybody money for ANY reason. Some of these guys have serious addictions and lying is very easy for them. In my experience, the gamblers are the worse. Keep them hungry and they will do a great job for you. Give them a buck and they disapear until they need money again.

Most importantly, keep a portion of the final payment back until you are 100% done with the job. I can't even tell you how many jobs I've been to that they paid the contractor the final payment with a promise that they will come back and finish off the little things that needed to be done. They never show up and the home owner has to hire somebody like me to come in and get it done for them.

Good luck,
Eddie
 
   / Home Builder Negotiation Questions #13  
Trust but verify. One responder said to keep ahead of the builder with payments. DO NOT DO THIS. At the end of the job, even the "good ones" will do a walk through and if they are only owed 5 grand and there is 20 grand left to do - guess what, they walk out or do a crappy job. It happens - even with the "good builders" - you are the customer from H*** is how it will go down with them. Besides, the bank came out everytime I wanted to do a payment and took pictures. They would only release what was paid for. I know this made it difficult for the builder to get supplies, but that is what the down payment is for once the deal is sealed. Get the contract reviewed by a lawyer and make sure there is a timetable for completion and the consequences for it not getting completed on time - like subtracting all or part of the interest payments that you have to pay after the signed completion date. Good luck.
 
   / Home Builder Negotiation Questions #14  
Builders,
If I am looking to start building spring 2011, how soon should I be meeting with you???
Thanks Dave
 
   / Home Builder Negotiation Questions #15  
Builders,
If I am looking to start building spring 2011, how soon should I be meeting with you???
Thanks Dave

I'd suggest you should already have met. The poorer builders are the ones with clear diaries. Most good builders here are at least a season ahead, maybe two.
 
   / Home Builder Negotiation Questions #16  
Thanks for the info, got to get cracking on this,
Thanks Dave
 
   / Home Builder Negotiation Questions #17  
Builders,
If I am looking to start building spring 2011, how soon should I be meeting with you???
Thanks Dave

About three months ago

Eddie
 
   / Home Builder Negotiation Questions #18  
I would guess the time from when we found our builder and started building was at least two years. Might have been three.

I did the design and he built the design. I would not recommend this approach but I knew/know enough to do it and our builder was a PE to keep me out of trouble. But our house was not doing anything different structurally so it really was no big deal.

I would work up a design, at first detailed sketches and he would ball park guestimate the price. Once we figured out a price for the type of home we wanted I was able to discard ideas that made no money sense and finalize a design. That took time. But the builder was booked up so it worked out just fine.

We found our builder when looking at an energy efficient house kit. He was building the house from the kit. We went to the house site to meet the kit builder and look at the home. I pretty much knew going in that the kit did not make money sense and walking through the house and talking with the kit builder confirmed my decision. That walk through took less than an hour. We then spent a good two hours with the builder. And I went back to see him the next week for another talk. :D

When the wifey and I left that house site we looked at each other and knew we had found a builder. :D We became friends with him and is family. Not many people will say that about your builder. :laughing:

We did ask around about him and we talked to people who had worked with our builder. We were very comfortable with him. And trusted him. I think that is VERY important.

There were GC's I have talked to over the years that were very good and I trusted them. Others I would not let build a chicken coop out of found materials. Trust your gut on this.

Also know the personality of your GC. Our builder was cheap. :laughing: I do not mean this in a negative sense. But what he found acceptable in a house was not something we wanted. For instance he was ok with cheap base board that would be painted while we wanted a different look which of course was more money. He was ok with having contractor grade faucets but we were were not. His house was built this way and he and his wife were happy. This is not to say we have an expense house with gold plated faucets but I want something that I do not have to turn with a pair of pliers to shut off the water. :laughing:

Our build gave us allowances on things such as trim, painting, kitchen stuff, bath stuff, windows, doors, etc. We knew his allowance was going to be a lot less than the cost of the materials we wanted. We picked and bought much of the materials in the house which kept him out of having to buy the materials and we got what we wanted. But we had to have his budget and our add on budget to get a final price. Not a big deal and it worked out well.

He also would not add on charges to the extra allowances. I cannot remember the percentage he had to build the house 15% maybe. Since our material were adding to the cost of the house he did not charge us on the extra. Which he should not have done in any case. Putting in cheap toilet is not more expense than putting in one that cost $100 more.

Buying the materials you want in the house is very time consuming. We had worked out a deal with HD such that we got 10% off what we bought from them. We spent hours and hours and house in HD buying house materials. The staff knew us. :D Which is bad since it shows how much time we spent in the place. But it was worth the money savings and getting what we wanted.

Whatever you do, try to avoid making time your enemy. Having time as an enemy is going to cause problems. Take your time with this and do not rush. Do not put yourself into a position where you have to rush.

Later,
Dan
 
   / Home Builder Negotiation Questions #19  
I hope these guys at $10/hour don't have families to feed or any necessities like rent, insurance, vehicles, gasoline, etc.
Was my son working evenings after his regular job. Should have added I built most of this house by myself. Always wondered why it took so many people. :confused2:
 
   / Home Builder Negotiation Questions #20  
We finished our house a year ago. We started by looking at plans on the Internet. We decided on what we wanted and hired a designer to draw up the plans. Spent 3 months going back and forth till we got what we wanted. Took those plans, had copies made, and started meeting with contractors. We ended up using the same contractor that built our first house and were very happy with the results.

Two ways to hire a contractor. First is he will give you a price based on allowances for things like lighting, flooring, etc. If you want to spend more than the allowance to upgrade you pay the difference. If he estimated a part of the project high and it comes in cheaper he makes more profit.

Second is cost plus commission. You get an estimate of what it costs for each part of construction. You pay the actual cost plus a percentage, usually between 10% - 15%. Nice part about this is if the price is below the estimate you save money.

Here is what we ended up with. 3200 square feet heated and cooled, 5200 square feet under roof.
 

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