To give you a quick update on our schedule, we’d like to wrap up design this spring, start the permit process late spring/early summer and start building next spring. And hopefully be in the house by Christmas 2015! That means that we really need to get started on interviewing builders. We also want to get input from a builder on the preliminary design and constructability before we close out that phase of the design. So, here we begin on a new journey – interviewing builders.
I recently posted a list of questions that I compiled to ask builders from a bunch of different sources. Those were our jumping off point and really gave us a frame of mind to be asking builder’s questions. We decided to take a day off of work to interview builders. We thought that at least fitting in a couple of builders on the same day would be a good way to tackle the task. But before we even got to interviewing builders we first made calls to a handful of builders in our area. I asked really general questions about pricing, availability and background. From there we narrowed it down to just a few that we were interested in talking with further.
Builder A
We met Builder A in his home office, which of course the home was custom made and right on the lake – gorgeous views. The home was impeccable. You can definitely see the quality of work that he performs. We were pretty ‘green’ when we interviewed Builder A…being our first one and all, but I’d say that we did a pretty good job getting all of the pertinent questions answered. The interview lasted about 1 ½ hours and in that time we learned that he had been in business for the past 30 years, and all in the northwest. His company typically takes on about two custom home projects at a time and he and a coworker really are the only two people managing the job on site. Back in the office he has help from a bookkeeper and scheduler/estimator. He subs out pretty much all of the work, but is there to manage the project. Earlier in his business career he did a lot of the work himself, but over time found it to be cost prohibitive to keep up with the changing technologies and the variety of tools. Hiring the best, most qualified subcontractors is now what he does.
Schedule
One pretty cool thing about Builder A is that he has a separate log-in on his website for clients. This is where he keeps current schedules, material selections and field reports. Everything is supposedly kept up to date and readily available any time that we would want to look at it.
Builder A said that it would take approximately 13 months to complete the construction of our home. We were shocked to find that out! That seems insane that it would actually take over a year to build our home. I’m really not even sure how it’s possible to take that long. From what I had read and gathered from others in the industry, 9 months seemed like the longest that it should take and more only if something went wrong. I should have asked more questions about that, but we were running out of time.
Contract & Cost
Builder A’s contract is a fixed price + allowances contract. This means that he would give us a ‘hard’ bid for what it would cost to build the home. Before our budget would be set, we would sit down and go through all of our selections with him (or what we think our selections would be) and he would come up with his ‘fixed price’. This would be in the form of a proposal and include documentation on what those selections are. Budgeted allowances would be included in the contract for all of the finish materials – such as windows, doors, hardware, countertops, flooring, etc. If we went over our allowanced amount, then we would be required to pay more to Builder A to cover the difference. What’s great about a fixed price contract is that it puts a lot of the risk on cost onto Builder A and off of us. That said, he’s definitely beefed up his price to cover the risk. Meaning that he’s making a hefty amount off of us if everything goes as planned. If things end up costing more, due to his poor estimating/planning then it starts cutting into his built-in profit. It’s doubtable that he’d ever lose money on building a home though. This means that the estimate is closed books and we will never see how much the materials truly costs to build the home. . At this time, just briefly looking at the plans, Builder A’s cost is approximately $200 per square foot. We knew going into the interview that Builder A was going to be our most expensive builder that we would look at, and now knowing that he does a fixed price contract, $200 seems right.
Deposit
If we were to hire Builder A now, he doesn’t require a deposit for us to work with him next spring when we would like construction to begin. And as small questions arise he would answer those during the design phase. But, if we wanted a lot of help from him with the site plan layout/permitting/etc then we could hire him to do preconstruction services for a nominal fee.
Builder B
We met up with Builder B at a nearby Starbucks. We actually have known Builder B for a while – he’s a friend of a friend and helped install molding in our house about 6 years ago and have been following his building his own custom home on facebook. Builder B grew up in the industry as his dad is a custom home builder. Since being a teenager, he’s helped his dad build homes. Following in those footsteps, he majored in Construction Management at UW and has been working either with his dad or home builders for the past 10 years. Although he preferred to work for his dad’s company, due to the recession, he has worked for other builders in the area. He currently works for a builder as a Senior Project Manager and oversees 20 homes being built concurrently. His passion is custom home building though and would love to continue his father’s business. For our home, he would come back to work with his dad and ours would be the first that he would be the point person on while working in his dad’s business. Between him and his dad, they would oversee everything on the job site. He would perform a bit of the work himself, but would sub most of it out to qualified subcontractors.
Schedule
Builder B does all of the scheduling using MS Project – something we’re both familiar with. We’d meet weekly onsite with him to discuss the schedule, budget, and the construction progress. The time he estimates it will take to build our house is about 8 months. That’s much more realistic with what we were thinking as compared with Builder A.
Contract & Cost
Builder B’s contract is different than Builder A’s. His contract is set up to be cost plus percentage. This means that we would add up everything it would cost to build the house for materials and labor and then the builder would add his profit in as a percentage on top of it. Builder’s B profit percentage is 12%. The thing with this type of contract is that the risk is really put on the owners. If the builder underestimates what it will cost to build the home and the cost is more than originally anticipated, the owners are stuck paying for it. So you really have to have confidence in the builder and his bid to make this work. Something else that sort of erks me, is that if we choose more expensive finishes, then he gets paid more. For example, if we chose solid wood doors (which are more expensive) instead of hollow core doors, then he gets paid a higher amount because he makes 12% on top of whatever the costs are. Is it really fair that he is paid more even though the act of installing a door (no matter if it’s solid or hollow) is the same? That said, Builder B said that we could build a nice house for approximately $125 per square foot (his profit included). That’s quite a bit different than Builder A…a savings of $75 per square foot. In talking briefly with him, it is apparent that he assumed lower quality materials than Builder A though…so we’d likely end up higher than his $125 per square foot…but probably not $75 higher!
Deposit
If we wanted to work with Builder B, he would require us to put down a deposit. He didn’t quote what this would be, but did say that at the time of building, it would go towards his first payment. So really it ends up being more of a retainage to ensure that we’re serious owners and want him to be the one to build. Sort of ‘holds our spot’ if you will, and makes him available for us to ask questions and work with him prior to us breaking ground.
Coastal Hues 