Client for whom I was expecting to build an expensive custom new home, makes a deal with me on package and price, asks me to give him my contract for review and signature.
Client’s from out of state, hires a local attorney to review my contract, attorney tells my client he thinks the price is out of line for the size of home, refers client to the schlock builder who just completed his (the attorney’s) new home.
Why is this builder a schlock? Here’s an example. Friend of mine lives in one this guy did not too long ago. Had to have the whole roof rebuilt, from the outside in, at great expense (the owner’s), because it is mostly cathedral ceiling within, and it was built without proper insulating and venting. Ruined a whole lotta inside finish. Furthermore, it’s built into a hillside, and all the front side retaining wall and steps, a lot of work, all had to get torn out and replaced, because of having been built with reclaimed railroad ties and bricks. It was all caving in. No battering, no drainage, no deep ties, etc., etc.
Schlock builder and attorney are water-skiing buddies. Schlock builder shoots my client a square foot price and tells client all the goodies are included as spelled out in my contract.
Schlock builder hasn’t seen the drawings. But I have a feeling he has seen my contract.
Client says, “sorry, but a $43K difference is too much to ignore.”
Replies
I do hope you were skipping away as you received the news.
I like to keep an ear and an eye to those jobs as they progress down the road. Sometimes ammusing to "watch".
Touched base, via a follow up, about a year down the road on a similar situation....had the would be client appologizing profusely for not going with me. Actually ended up getting a recomendation, which led to a job, for a neighbors remodel through him.
Sometimes the ones you don`t get make you more money than the ones you do.
J. D. Reynolds
Home Improvements
"DO IT RIGHT, DO IT ONCE"
Meet the Fokkers, meet the Schlockers, either way you got screwed. Sorry guy. Maybe the guy will open his eyes before the ink is put to paper. And what is with the lawyer, is that ethical? Oh yeah, he's a lawyer...
That stuff happens everywhere. Here,too.
I think you probably lucked out not getting the contract or you'd then have to deal with the Fokker's shlock attorney somewhere down the construction trail.
There's definitely better fish to cast bait toward in life's vast ocean.
PS- Sorry you had so much time in it and then got burned. BTDT. No fun. But it's better to get a finger cut now than to loose an arm later.
Knowledge is power, but only if applied in a timely fashion.
Edited 1/3/2005 10:39 pm ET by GOLDHILLER
BTW, Therma-tru 9-lite FG door I installed about 1-2 months ago. HO called, said it was warped. Brosco rep came out (had to loan him my 6' level) sure enough, door was bowed about 3/16". Brosco ordered a new slab, which when installed, was true. Hoping it stays that way. I asked about compensation for installing the new slab, but they said they were only responsible for providing the slab. So I swapped it out gratis.
Now, why would you tell me a Therma-Tru story, in this thread about Fockers?
So why don't you just give your friend as a reference for the schlocker?
Gean,
Sorry you got the shaft! But Every Dog has his Day, I sure both will get what they deserve. Bet you get a call in about 6-8 months to Mop-up!
gene .. been there , done that...
guess what... if you had charged him for preparing the Proposal, he'd be yours..
now you're out the prep. time ( what 40 - 100 hours ?).. and you're outta the job...
if you presell the job.. he makes an investment in you.. and it usually takes the shyster lawyer outta the loop
sorry, buddy
Wouldn't have been possible to charge for the bid workup, Mike.
'Twas a bid based on a complete set of plans and specs, with a 28-page planset. Room finishes, trim details, all cabinetry and buit-ins, structural, everything spec'd down to the hardware, lighting, plumbingware, etc.
From having talked to the owners of the prototype home in Stowe, VT, the client knew that the archy managed the RFQ process from qualified builders, and that the three qualified were on a level playing field, each bidding hard money against a very complete bid package. No one charged then. That job was completed with three dinky change orders, the largest of which was for the addition of roof gutters.
Charging for design-build bids, IMHO, is the only way to go, but this was not a design-build job.
No one, absolutely no one, in my market, can ask to get paid for a bid workup on a hard-spec'd job like this one. The client paid $2,500 for the plans, and if I had told him I needed another 4 grand for the proposal workup, he'd have walked down the street to my neighbor's house, dropped 'em off, and gotten a quote for free.
gene... here's the bottom line..
do you think you can win a competitive bid ?
bidding against the people in your area ?
i can't.. so .... i don't
if you had sold them the idea of paying for your Proposal.. even if you have to go so far as giving them a "credit" if it turns into a Contract... tehn you would have that job right now..
if they didn't buy into the way you do business.. then you would have the 40 - 100 hours you GAVE them , to devote to something else.. even if it's just reading a good book..
hey.. times are good... if you can't do it when times are good.. what are you gonna do when times are bad.. and the competition is scared..
and don't take it personal.. i'm not picking on you.. i'm really giving myself my own pep talk.. so i won't be tempted to give it awayMike Smith Rhode Island : Design / Build / Repair / Restore
Nice pep talk, Mike.
It's unlikely it'll happen to me again, but if it does, I'll insist on that "credit toward sale" deal.
It might not have helped me retain the job in this case, though. Client thinks that this yo-yo that shot him a number after yo-yo's lawyer buddy tipped him, and client thinks the number is real, and the savings is maybe ten times the amount I might have charged for the proposal. He may have been willing to walk on 4K to save 40.
Who knows. Maybe it's good the job is gone. My wife really doesn't want me working . . . prefers I stay home more like a retired guy should. Problem is, I cannot seem to give it up.
We're off to Mexico's gold coast, down below Puerta Vallarta and Mismaloya, leaving in a couple weeks. Maybe we'll stay for a couple extra months.
Or, maybe I'll do what I was thinking of doing when in Naples, FL, last November, and take the testing prep and tests for my GC-res license there. There is some killer money to be made in specs down there, and the houses, at least up to maybe $5MM in cost, aren't as complicated as up here.
Talk to Sonny about Naples.There really is some serious bucks there.After you get over this disappointment, you'll have more time to shoot the bull with us.While you are in Mexico, tell my customers down theer to give me a ring. I've got a question for them...LOL
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Guess what job came back, after today's phone conversation?
I'll not be able to spend as much time in Mexico as I might have thought.
Next time, though, if there is one, I'll be thinking of "up front Mike."
" dos cervasa, por favor".....
ummm , wait.. i'll put my spanish phrase book down..
great news ! ... i guess
so ... you can hop over to calvin's and give us a blow -by-blow in August , huh ?
Mike Smith Rhode Island : Design / Build / Repair / Restore
Gene
Another liar , I mean lawyer story . You can bet he's getting something done for nothing at his house or at least getting a cut of the cash . Watch the job and see how it goes . Sometimes the grass is not as green on the other side .
Mike - Foxboro, Mass.
Sorry you lost the job, that s*cks.
There is something else that bugs me about this type of thing. People say they want good value and even high quality, but wouldn't know if it bit them on the nose. It's a tragedy, really. Unfortunately, the shlocks will take advantage of this... "it's the same thing for less". It's not "the same thing". You know, I know, but all the customer sees is the $$ difference. People let dollars talk to them louder than anything, then hope against hope that "it's the same thing".
Two things come to mind. First, it's in your best interest to educate the customer to recognize quality. Charging for your estimate isn't a bad thing either.
If it were me, I'd shoot pictures of the shoddy stuff this and other area schlock builders in the area are doing and build a comparison portfolio. No names, but educate the customer, and let them know that it's partially up to them to get good value...you give them the tools for comparison. If this schlock builder is consistantly building the same junk, target it. Again, don't name names, but be certain that the customer could see the fault if he were to look at a jobsite. Load the gun, let him do the shooting. What you're selling is yourself..your desire and ability to "do it right"
The conversation (show and tell book in hand) might go like this: "Mrs. Customer, here are some things I've noticed in houses built in this area that are difficient. When someone cuts a big hole in a I-joist like this, it not only voids the manufacturers' warranty but is sure to fail. A floor could collapse, or become a trampoline. I know of one instance where someone's freezer caused the floor to sag 2". Of course, that was discovered long after the house warranty had expired, and cost $10,000 to fix. Insurance didn't cover it, builder didn't cover it, it came out of the owners kid's college fund." Besides, even if the builder covered it, would you want the same person wh let it slide in the first place doing the repair?"
This is when you shut up and let them respond.
"Gosh no, I don't want that...sounds awful!"
" You'd think that someone would be watching out for you, so this kind of thing doesn't happen, but it really is up to you and the contractor you've put your trust in. Code inspectors are not guaranteeing quality, only minimal safety. I build to a higher standard and here are references and pictures from past happy clients. I do most of my work on referral, and will work hard to insure that you are happy with our work. We'll take good care of you and your hard-earned money. I believe you want the best value for you dollars...am I right?"
Shut up
"Yes, that's what I want."
"Here's how it would work. Once you have given me the go ahead, I will prepare a detailed proposal for you, this usually takes about 40 hours. Because of the time involved, we do charge for $2000 this service. After I've prepared that for you, and we have agreed on all the details so nothing is left to chance, a 20% deposit on the entire job cost will get the ball rolling." Does that sound reasonable?"
Shut up.
"Yes"
"Great, where's your checkbook?"
Ok, I'm kidding on the last line. But people want to be taken care of and trust those doing it. They could benefit from a few (real) horror stories about the "other builders". Word pictures are powerful. " Remember that freezer I told you about? Well the floor sagging caused some stress on a water pipe and leaked all over an Italian Silk sofa that they had just purchased for their dream home...bummer huh?"
You can compete with schlocks... target their weaknesses, play up your strengths. Win customer's trust.
PJ
Whatever you can do or dream you can,
Begin it
Boldness has genius, power, and magic in it. Goethe
Great post, PJ!The only thing better than your example is when your reputation precedes you so that they already know most of this from their trusted friend(s) and are just meeting you to establish if the chemistry is right.Like you said, high quality and integrity are your best assets, and you have to not be shy about selling them to the prospect. Great post.Bill
And here is something of interest re the house itself, the one I quoted to replicate in exact detail.
It's a Sarah Susanka design, and its interior features and details were all shown in a Fine Homebuilding article, in 2003. Lotsa great photos and drawings.
Maybe he should just keep his lawyer on retainer...
regards
Oh man, that's a shame! Was that you I remember you posting about it and some of the construction details?
The Not So Big, Not So Well Made House. What a travesty.
There oughta be a law...
PJ
Whatever you can do or dream you can, Begin it Boldness has genius, power, and magic in it. Goethe
Here is the prototype house I took the clients to see. My quote, as you see it, complete, on their lot, was in the vicinity of $230 per sq ft.
Mr Schlock builder, having no plans to quote from, ballparks them a figure of $216 per.
http://www.healthyhomedesigns.com/home_plans/photo_detail.php?plan_id=110
You got off lucky.Cheap tuition. As for no one but no one charging for the estimate buildup...Be the first.Yes. You COULD have charged for that bid workup. You only can't because you think you can't. Just because everyone else is giving the work away, doesn't mean you have to. Charge less for bid workup, if you wish. But stop giving that kind of work away. You know mr shlock is going to use the workup that you did. You gave away a portion of that difference that he is charging. You gave it to mr shlock...If your work is better than the others in your area, then get yourself out of the mindset that you have to compete on equal grounds.Charge for your bid workups. And charge for the better quality work. If you were doing a basement remodel, or adding on a porch, etc... Ok, so who cares about the bid workup...But this was no evening's work while watching television...You worked for mr shlock for a week to two weeks, for free... (Based on Mike Smith's 40-100 hours.)
The person you offend today, may have been your best friend tomorrow
It just strikes me that they think they are comparing apples to apples, with the only difference being the price. Your challenge is to educate them so they can tell the difference.
Bill W really hit the nail on the head (and he's not even a builder!).
People today think that a good negotiator can always knock 10% or so from a proposed price. In your case, going from $230 to $216 is only a six percent reduction.
Like others have said, you need to educate the clients. Explain why your bid is six percent higher, and explain why it is necessary. Use it as an opportunity to highlight your good work, and contrast it to the work of shoddy builders. If they are left to assume that they are going to receive an identical product for six percent less, why shouldn't they go with the other guy?
Even if you successfuly "educate" them, there's no guarantee that you will win the bid. The clients may decide that they are unwilling to pay the extra money to have things done to "grade A". Maybe "grade B" is fine with them. I've lost bids before in these situations. But I had to remind myself that I choose to do "grade A" work, and that it's not my place to command people's decisions.
Ultimately, the clients are the the ones paying for the project, and they have the right to choose the builder, for better or for worse!
Finally, remember that the clients may be completely in the dark about the low-ball bidder's history of poor work. I think the chances are that the lawyer has given glowing praise about the low-baller, either with or without an ulterior motive (maybe the lawyer is ignorant of the quality issues, too). If you decide to pursue this, just try to keep your calm, don't take things personally, and just present the facts.
Give the clients as much factual information as possible, and then allow them to make the decision.
To quote a radio host I like, "Clarity is more important than agreement."
Good luck!
Edited 1/4/2005 3:50 pm ET by ragnar
wait a second..Mr.Micro, Bob Dylan..ring any bells yet?
Spheramid Enterprises Architectural Woodworks
I'll just do it>
Your post went into my sales tips folder. Hope you don't mind. Great post.
I agree Mike, that was a great post by Peter J! I didn't even read it until you mentioned that you were putting it in your sales folder.
Peter is artfully letting the client sell himself by asking questions that he knows the answer to.
Asking questions is the key to sales. Ask...listen...ask...listen...ask...listen.
I especially liked his "shut ups!"
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
"The conversation (show and tell book in hand) might go like this: "Mrs. Customer, here are some things I've noticed in houses built in this area that are difficient. When someone cuts a big hole in a I-joist like this, it not only voids the manufacturers' warranty but is sure to fail. A floor could collapse, or become a trampoline. I know of one instance where someone's freezer caused the floor to sag 2". Of course, that was discovered long after the house warranty had expired, and cost $10,000 to fix. Insurance didn't cover it, builder didn't cover it, it came out of the owners kid's college fund." Besides, even if the builder covered it, would you want the same person wh let it slide in the first place doing the repair?""I would be careful about some of this.As a HO, but one with some technical background and someone tried a scare tactic like this they would be out of my hosue is 30 seconds. Followed up with a complaint to the AG's office.It sounds way too much like the scam artist that get called on a furnace problem and the only thing wrong is a bad pilot, but the "technican" says that the furnace is going to blow up any minute and it will take $7500 is cash to replace it immedately or they will call the city inspector to have it red tagged.
Bill, he's showing actual pictures from the surrounding area. That isn't scare tactix...that's reality.
blueWarning! Be cautious when taking any framing advice from me. Although I have a lifetime of framing experience, all of it is considered bottom of the barrel by Gabe. I am not to be counted amongst the worst of the worst. If you want real framing information...don't listen to me..just ask Gabe!
I agree that you would have to be careful to avoid scare tactics. For myself, doing mainly finish work and design, I try to subtly point out things I do a bit above the other guy. Good joinery, top quality hardware and materials, pleasing details and proportions. For design, I can sell that I know how things go together. Less bashing the other guy, more just implying that my work is a better value.
On the other hand, Peter's example of someone cutting a big hole in an I-joist is not out of line. It happens all the time, it IS dangerous, it does void the warrantee. Pointing out to a homeowner that you are educated on the finer points of building technology, so they can put their trust in you, sounds like a good salesmanship to me.
Perhaps my way of describing the supposed coversation seemed cavalier. I admit to thinking a lot faster than I type, which makes for a condensed version. It was intended for the audience at hand and I would expect someone to inject their own personal integrity.
I'm not suggesting that one should fabricate stories or tell half truths. That certainly kills the credibility that I'd be trying to establish. Any kind of education should be memorable, wouldn't you agree?
Most service based industries have a spectrum of workmanship than covers a range from crap to pearls. Assuming one wants to be in the pearl eschelon, you have lots of fodder for the story mill just looking at competitors work. Remember, I'm not naming names, letting the customer figure out for themselves who the schlocks are. I'd want to know that if it were my money.
I'm also a fan of relaying real stories that customers have told me. In the last month, I've had two customers tell me that people whom they've hired walked off the jobs unexpectedly, never to return. No explanation, no nothing. Who wants that, Mrs. customer?
Shut up
"I don't."
That It gives me another opportunity to assure the potential client that we'll complete the job we're proposing. It really boils down to is a trust issue. If the customer has to have the cheap seats, I'm not gonna sell her on the front row, but I owe it to her and me to offer. Maybe share my experience, or that of someone else, about what it's like to see the show from those seats. She might not know, and she may change her tune. If not, I compliment her on her choice.
It's not about becoming slick and deceptive, I hate that stereotype. It's about being honest, providing one's premium skill and expertise, and sharing information in an effort to educate so the customer can make an informed decision. You'd want that opportunity, right?
I'm shutting up now :-) PJ
Whatever you can do or dream you can, Begin it Boldness has genius, power, and magic in it. Goethe
Sorry things turned out that way. But: Watch the progress. With a lawyer supposedly representing the homowner while pitching for a buddy/builder things could get interesting. I bet in a few months you'll be singing that country western tune, "Some Times I Thank God for Unanswered Prayers".
oldfred
I'm not a builder, but for what it's worth here's my perspective as a consumer:
$43K represents what, maybe 10% of the cost of this 'expensive' home? It seems to me that the buyer is giving you an opportunity to justify the price differential. If you can't articulate why your 'product' is worth 10% more than the competition, then you shouldn't expect to win the bid.
Most consumers, esp at the high end, understand that they have to pay for quality - do they drive a Lexus or a Kia?
If the deal isn't done, I wouldn't give up - ask them, as a courtesy for all the work you've done so far, to allow you to walk them through your friend's home (built by Mr. Schlock) and point out ALL of the things that you would do differently / better. Then take them to your latest / best project and show off the difference.
It just strikes me that they think they are comparing apples to apples, with the only difference being the price. Your challenge is to educate them so they can tell the difference.
Good luck ... Bill.
I think you have outlined the exactly right approach in this situation.
He shouldn't just roll over.............if he feels that the HO is worth working with.
It goes both ways.
"I will never surrender or retreat. " Col. Wm. B. Travis, The Alamo, Feb. 1835
... I guess that's why I'm in sales ... often the first 'no' is when the process starts ... there's a ton of work that follows to turn it into a 'yes' ...
Relationships / references / etc. count for a lot, but if you can't convince someone that you are offering the most value for the money, you're gonna lose the deal.
In this case, if Gene can't articulate that there is a difference, then they will go with the other guy - but more importantly, if the customer (or their #$% lawyer) CAN demonstrate that there really is no difference, the Gene should be re-thinking his pricing strategy. (and I'm confused - was that web site an example of your work Gene? because if it was, then WOW, it's beautiful!)
And with all respect to Mike Smith, I can't imagine paying for a quote, or least paying what it's worth (40-100 hours times $100/hr) UNLESS I already knew that this was the most coveted builder around. If you have that reputation, then I'll pay the money to get on your waiting list.
Bill.
thanks , bill... what cha got in mind ?Mike Smith Rhode Island : Design / Build / Repair / Restore
Your post is right on the money.
A lttle off the topic here, Bill W, what do you peddle? I'm also in sales. PJ
Whatever you can do or dream you can, Begin it Boldness has genius, power, and magic in it. Goethe
Peter - I sell computer chips & design services .... how about you?
Bill.
Peter - I sell computer chips & design services .... how about you?
Recently out of the RV and boat industry. Company I worked for had an integrity sale and I lost interest in working for them. Working my way back into housing. Currently selling wood restoration services and semi-custom cabinets. Small company... I like that. PJ
Whatever you can do or dream you can, Begin it Boldness has genius, power, and magic in it. Goethe
>> Company I worked for had an integrity sale ...How much did they get for it?
New owners actually paid someone to destroy it. A pity, I worked for prior owner for 13 years.PJ
Whatever you can do or dream you can, Begin it Boldness has genius, power, and magic in it. Goethe
Aaaah. Ethics. I assume this client has carefully considered the ethics of the lawyer, who is taking a contract review and turning it into a chance to push business to a buddy. If my lawyer had done that, my response would be: "and how much is he paying YOU to give him business? I didn't ask you to evaluate the price. I think I'll just take my legal work elsewhere, since I can't trust you. Don't bother sending me a bill, send it to your buddy."