My main business is as a framing subcontractor but I am also a licensed builder. With things slowing down, I am getting back into GCing projects, mainly additions and renovations. I got a job building a nice addition ($90K) for my next door neighbor. I told them how I operate ( cost plus fee with weekly payments to subs and small down payment for incidentals ) up front and they said they had the money and that was fine. Now, because of the low interest rates, they decided to get a construction loan from a large national bank instead of using the money they supposedly had. I guess all of this banking mess has changed the way this is done from the last time I did it (several years ago).
The problems are numerous:
1.) Having to work on the banks draw schedule instead of my normal way makes me the bank – I didn’t bid it that way and I don’t really want to do it that way even if I do get paid more.
2.) The bank sent me a packet asking me for more information than I provided for my own mortgage. Evidently Bank of America underwrites the builder as well as the owner – personal and corporation. They even sent me a blanket form that I am supposed to sign authorizing anyone they send it to to give them any info they ask for ( I am not exaggerating –this is almost exactly what it says!) I don’t have a problem giving trade references, license #, years in business, bond info etc., but they don’t need my personal info. Also, if they reject me as a builder, I have to sign a form authorizing them to tell my customer why they rejected me.
3.) I really need the work right now – Bad!
4.) Did I mention that this is for my next door neighbors?
Like I said, I have been out of dealing with homeowners for a while, so maybe this is common now. I’ve thought of recommending my banker to them ( local bank – easy to work with) but I don’t know if that is too forward. Any thoughts or comments would be appreciated.
Replies
Tell your neighbor that the bank's request is overly complicated and requires you to provide private information beyond professional business requirements.
Tell them that you assume that the bank is asking them for some significant stuff as well and that the bank may be over-complicating the process.
Let them know you called your local bank (make sure you call your bank and discuss first to make sure it will be easier) and that your bank would love the business and can make it work for them and you sucessfully.
They might be fed up with the bank with what they have to provide too. (they might also be related to a VP at the bank so you never know unless you ask)
I'd be prepared to tell client what the local bank would charge in fees and % with good credit and that they would set up a draw schedule that will protect them as the client and also make sure you can be successful as the builder. (Remind the client that a win-win environment is important for the success of the overall project.
We all need the work but the work has to be worthwhile!
Work with the client to make it a better situ