The DW and I are meeting with various local builders to get estimates on adding about 1500 additional feet to out 700 sq ft “cabin”. This is out near Wimberley, in the Tx hill country.
Here’s the question… is it reasonable to ask what he pays for 2×4’s, 2×6’s, decking, etc,
and what his markup is on materials?
Or should we just assume that he’s making a reasonable markup on materials, and go with trusting that?
Thanks,
Bill
Replies
bill,
I'll offer a contractor's perspective;
Your questioning the material costs as well as my markup would raise a red flag. It would suggest to me that price is your primary concern, and that usually does not involve a good working relationship. I would decline to provide you that information and probably decline to pursue your project any further.
What are your motivations for wanting this information and how do you feel it will be useful? If I tell you I pay $3.65 for a 2x4 but you know contractor X only pays $1.95, what does that tell you? Am I more expensive???
IMO you should interview the prospects and ask them about projects they have done that are similar to yours, ask how they would approach your project.
Express your concerns about your project and ask how they would deal with them.
Ask to see past work or talk to previous clients. Be realistic about your budget and share that information with the contractor, when they ask.
Look for someone who is interested in your project and asks you questions. Then hire the contractor you are most comfortable with.
Starting out a relationship based solely on price is a race to the bottom and nobody wins.
my two cents.
Bill, it certainly is reasonable to ask what he pays for 2x4's etc. You'll quickly find that he pays the same that you would pay at any lumber yard.
There is a misconception that builders get huge discounts. That might be true with the multinational builders who are negotiating huge contracts but most local builders are simply selecting their lumber suppliers based on service, not price.
Some builders won't discuss their markups if they only work on fixed bid basis. It becomes a non-issue because there is no need to discuss a number like this when the bottom line is the only number that matters. If you are contemplating entering into a cost plus contract, then the markup certainly matters but most builders don't work on cost plus for a variety of reasons. The biggest reason is that only a very small percentage of building and remodeling contracts are done this way. The builder/homeowner relationship is usually not strong enough to develop the level of trust and most homeowners simply want a fixed price.
Incidently, I sent you an email because I'm within your geographical range, so I might be considered "local". I was surprised to see that you've been registered here since 2004 and this is your FIRST post! Anyways, welcome! I hope you find the answers you seek.
Bob's next test date: 12/10/07
Wimberley is a nice place, but unfortunately you a bit of a drive from having a good selection of contractors. We used to go there for the monthly flea market. Was it called First Monday?
There's no reason you can't ask about specific material prices, but why would you want to? Are you goign to nit pick the contracotr, go behind him and count the number of wasted boards? Better to define the project well and let him buy the material as needed. If he gives you a price that seems too high, ask what's driving it. Maybe you asked for expensive materials that could be substituted. Or unusual construction methods.
Blue, I thought you were on the north side of Austin.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
I am personally on the north end but my workforce is scattered. Bob's next test date: 12/10/07
Hi Bill,
Another contractor perspective here. You don't ask your dentist what he pays for the filling agent for your teeth or ask your doctor how much he pays for the tongue depressor he uses. You know he is making some money on them (OK maybe a penny on the tongue depressor but you get my drift).
I would worry less about how much he is going to make on materials and worry more about the work he is going to DO with those materials! Maybe your line of thought was to buy the materials yourself to save some money but trust me, it won't save you anything. I have done that with homeowners before by giving them a materials list and by the time they went and picked them out at the store, loaded them and unloaded them at the job, they were beat and said they would have paid me EXTRA to pick them up had they known how much work it is.
I would be more concerned about his track record for his projects and his attention to detail and his ability to work with local building depts. than his markup on materials.
Mike
Hello
I hope this is related enough to ask a related question - at what point is it reasonable to ask about the cost of materials vs. work. Having done renovations on my own home myself, I really value the skill and expertise of professionals. I do think the cost of the labor in getting materials to a site should be charged as a legitimate labor cost, and not put in with the cost of materials.Now I am having an extensive basement finishing with a remodeling company including new windows in the basement through stud wall in a walkout. The remodeler only offered one choice of window that did not come in the color to match the other windows. We asked about the extra cost of upgrading the line to get the exterior color we wanted.Because there was a significant delay in getting back to us about upgrading to get the desired color so we investigated this possibility with a supplier of identical windows. When the remodeler did get back to me, there was a reticence to tell me the portion of the quote that was the cost of the window although they finally gave me a figure that was $290 (an increase of 66%) more than the other supplier. The remodeler also told me that he priced the equivalent windows at their supplier and the supplier I went to and they were the same, which is not what I was quoted on two different occasions. All features were the same.I dealt with another contractor who up front separated out the costs of a fireplace from the cost of installation so there was no question.So what would be the accepted practice from a contractor’s point of view? For something like windows, doors, tile when do you separate out the cost of material. This information is very helpful as a consumer since then we can upfront know how much the cost changes with different materials (e.g. going to cheaper tile or more expensive windows).
"So what would be the accepted practice from a contractor?s point of view? For something like windows, doors, tile when do you separate out the cost of material. This information is very helpful as a consumer since then we can upfront know how much the cost changes with different materials (e.g. going to cheaper tile or more expensive windows)."Your desire to get the best value makes sense. Unfortunately, the cost to figure out multiple scenarios is not cheap. Pricing one installation takes time and time is money. Therein lies the dilemma. Are you willing to reimburse the estimator/designer for their time efforts for you to get the best value? Or, do you expect the contractor to work endless hours, without a consultation fee and often without a commitment on the job? I'm not justifying your contractors behavior or pricing on the windows. I'm only pointing out that it takes time away from the job to chase the details down and someone should be paying for that effort. In your case, the remodelor probably built his time effort into the markup and you see it as excessive profit when in fact the guy probably lost money because he wasn't on the job producing. Your frustration with this process is shared on both sides of the equation and it is a very similar complaint all over the industry. I'd like you to do one last thing. Think about the time you spent chasing down the information. Then, multiply the amount that your employer charges per man hour against that time factor. Add that amount to the cost of the windows and then look to see what the dollar difference is. I'm going to guess that the difference between the $290 and your raw cost difference will shrink considerably and maybe disappear and become a non-issue. The greater issue is the lack of timely response by the contractor. That occurs because everyone is forced into wearing too many hats in the industry. Imagine the quality of your health care if the doctor had to sign you in, do the surgery and mop all the floors. That's what you are normally dealing with in the construction industry. Bob's next test date: 12/10/07
Edited 4/25/2008 12:04 pm by Jim_Allen
Hi
Thanks for the input. The situation is that I have signed on with this contractor and they were given a check for 30% of the cost of the basement remodel (not including windows) . I had also committed to them for the windows so this isn't for an initial bid. I guess I would have expected that an experienced contractor would have been able to tell me the extra cost without much effort since it is the difference between standard colors available in two different lines.From my perspective though, what is wrong with telling the customer upfront what the cost of materials vs installation? If they told me what price of the tile they had figured, then I know that if I wanted a different tile what I would be paying (presuming that installation was the same and had no additional costs). In the case of the windows, I would know up front and could choose to take the time to find a better price if I thought I could or accept the price the contractor gave. The other issue of just offering a cost for a window that doesn't even match the others in the house is another issue.
"I guess I would have expected that an experienced contractor would have been able to tell me the extra cost without much effort since it is the difference between standard colors available in two different lines."I'd expect the same thing. A ten minute call would confirm that with the supplier. "From my perspective though, what is wrong with telling the customer upfront what the cost of materials vs installation? "What type of bid/proposal did you start with? Were the materials and labor broke out or did you want a fixed bid? Did you pay for the design and proposal or did the contractor do all that and hope that he'd get the job? "The other issue of just offering a cost for a window that doesn't even match the others in the house is another issue."Sounds like you chose the wrong contractor LOL! Bob's next test date: 12/10/07
So what would be the accepted practice from a contractor’s point of view? (quote)Mine would be to let you pick out the windows you want......this contractor offering one this or that is BS IMO......you're paying for it you should get what you want. I always let the guy go (wherever) pick out and pay for the windows and have them delivered. I put them in at a price. If I have to get them you pay more, but you still get to pick them out.All this arrogant crappola is soon to go down the tubes as the times get rougher. Shoulda waited a bit longer cause soon that same contractor (salesman) will be kissing you #### up and down the street just to have a job.
i can tell you are in the US by your saying that soon the sales people and contractors will be kissing the guys a**
here in ontario i have never been busier in 10 years with people calling daily to be put on my schedule ( booked up 3 months in 2 weeks )
i do not advertize and my incorperated business is not listed in the phone book
i excplain to all my customers what i charge and how i expect to be paid
currently i am working in the wealthiest area within 30 miles bar none & i interviewed them whether i would book them
one thing i have learned is women usually control the money even when they claim not to
as i tell customers you dont need to know anythin about construction if yiu have someone on your side who is looking out for your best intrests and you feel comfortable with them and their advice and you can explain it to them in terms they understand
book them as i always do
most of my clients are women which others seem to find unusual in this business
i learned women seem to control the money even though they often claim their husbands control the money
here in ontario i have never been busier in 10 years (quote)There is still plenty of money around here also and the reputable builders are still in the game, though not to the degree they were a few years ago.......and things are slipping a bit more for them every day. The fly-by-nighters have all by now pretty much bought the farm. If I were you I'd be thanking the gods for smiling on me.....while at the same time keeping a wary eye on the US market because if we go down can you guys be far behind?
To all who responded to my posting...
thanks, guys. I think ya'll saved us from a bit of embarrassment
and have us pointed in the right direction now.
thanks again,
Bill
billh,In addition to seconding all the great replies you have,,,,,,Think of it this way,,,,, when everything is working right, there's a great lumberyard that wants to stay in business by selling quality product to solid contractors that want to install quality products in a satisfied customers home. Everybody is a winner. The lumberyard finds good suppliers, the contractor finds a good lumberyard, and you find a good contractor.Best of luck with your project.I drove thru Texas once, man what a big state!!Harry
the deletes were me.
posted before I read thru.
sounds like it's all covered.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Bill,
You've been given a good perspective of how contracting works and how to find the most suitable builder so I'll just add one story about the other side of the coin.
I was relatively new to contracting and the rural area where I lived was experiencing a slow economic period. Coming home one day, I saw a nice car parked near an old deserted farmhouse in my neighborhood so I stopped to introduce myself and see if my services might be needed.
The new owner of the place was from the city, the proprietor of a small business who said he wanted to fix the old place up "a little" as a weekend home for his family. He was very budget conscious, someone who wanted to have a hand in every decision, see and pay every bill.
That kind of arrangement, time and materials, is quite workable on renovation jobs as long as both the HO and the builder/supervisor have a particular result in mind and a plan on how to achieve it.
With this man that was not the case. He wanted to play it very close to the vest, take one aspect of the job at a time, talk about options and costs, then make his decision.
I told him that he'd be better served if we discussed his full intentions for the place but he said that the success of his small business would determine how much could be done, week to week. That was acceptable to me though I didn't think it would produce the best result.
Long story shortened to save us from boredom; I worked on that old house for about six months...much longer than I'd expected when he said that he just wanted to fix it up a little. He kept adding projects and changes, partly due to his wife's concerns.
In the end, because of his desire for control over the cash flow and his step by step decision making, he ended up spending as much or more than he would have if we had torn the old house down and built him a new one.
And it was still an old farm house with floors out of level, rooms that were too small, low ceiling in a dark cellar...a make-do place which looks OK but doesn't function particularly well.
That's why it's better to respect and follow accepted practices in most new ventures.
Unless you have a clear idea of what you want and can make a list of major materials, it's better to talk with an architect or design firm first to understand your options and get a firm plan established. Then you can interview builders and receive bids which will be directly comparable.
Edited 4/25/2008 4:05 pm by Hudson Valley Carpenter
on a small job like this one I sat down with the HO and asked myself:
Do I like these people?
Can we work together?.........this before anything else.
If so I work with them on everything.....holding their hand through the process...explaining the costs....my profit margin.....everything.
I have never in over 30 years been in a court room nor had a HO really upset with me or my work.......always had arguments/disappointments, etc
Worked them out
Always got paid.......and usually got made a friend or at least got fed.
I spec something like a house.......nobody gets nothing but the price.
I think right now i'm paying about 1.95 for a 2x4.
Plus driving ten miles to pick it up,
trying to find one thats not in the shape of a pretzel,
waiting in line for a checker that doesnt know what side of the register to put the money in,
getting the thing out to the truck and trying to load when some yo-yo has parked his Yugo in the loading area (cause he was just gonna run in for a minute),
then coming back to your house to have you bust my balls cause you saw it cheaper.
I think that would total about $10/ board.
I dont mean to seem bitter, but i've spent the week talking to people that literally believe i'm going to renovate two bathrooms, a kitchen, and do basement waterproofing for $20 grand.
Then I meet another lady that wants a whole basement done including adding a bathroom and thinks the "guys at the bowling alley" were all wrong thinking it would cost $20k.
Edited 4/25/2008 9:30 pm ET by MSA1
Look at the man's work not just pictures. Take or make the time to go to a finished project.