This is a very preliminary question, but one that I thought would be good to start thinking about. My wife and I are considering buying a lot from a general contractor who also wants to do a “build to suit†as part of the deal. The “build to suit†idea is fine by me, but I would like to do some of the finishing of the house myself, i.e. paint, flooring, fixtures, etc.
Questions:
- Do generals frown upon this type of arrangement, or is this acceptable if all parameters are clearly spelled out for both parties.
- How do I make sure that I won’t end up paying more than I should? What I mean is, how do I ensure that I am receiving a discount for the jobs that I complete?
I realize that there a million variables in this process and every builder does things differently, but any information that I can get to use when discussing ideas with the potential builder would be greatly appreciated.
Replies
Ask him what "build to suit" means.
If it means he is a custom builder, you can probably work out your trade involvement with him. His biggest concern will be if you can keep up with his schedule and quality of work, so that you don't cost him or his subs lost time or call backs.
If his "build to suit" means chossing from a list of plans he has, you may find it more difficult to break into his supply and subcontractor chain to achive any substantial savings.
Just from the question, it sounds as if you don't trust the "general" to start with. I allways follow my gut and get a bunch of references when those bells go off.
Dave
I have no reason not to trust him. In fact I've barely spoken to him yet. I really just want as much info as I can get BEFORE we start getting serious about this thing.
Thanks for the respose
Todd,
#1: Yes. Uh, no. Well, really it depends on the contractor. All contracts are individual and depend on the meeting of minds between the parties.
#2: Is the only reason you w ant to DIY to save money? Work up a detailed proposal for the things you want to DIY and break out exactly who is responsible for each detail (supplies, work, damages to preexisting work, and warantees) and submit it to the contractor with your house plans. Ask him to give you bids with and without your DIYing.
The contractor probably buys wholesale and buys jobber quality. He can buy better quality products as cheap as you can buy the lessor type (same brand and, seemingly, unless you look closely at model#s, same model) at the big box store.
You can buy at the jobbers warehouse, but you will pay a premium over what he pays.
The two bids he gives you are exactly what you should pay for each. That said, all prices are negotiatable until the contract is signed. That said, He may decide that you are too much trouble to work with.
IMHO, Let him complete all mechanical, plumbing, and electrical, including said items trim, and all paint prep and prime, and you do trim, finish painting, and floors.
You should not do any work that is neccessary for you recieve the occupancy certificate and the contrator is paid off. This will insure that you do not get in his way, costing you money and him headaches and that there is a definate demarkation between his work and your work.
SamT
One conversation you might want to have is with your local building inspector. Find out what state of completion a new house needs to be in for a certificate of occupancy to be issued. That C.O. is what your builder and lender may need for the paperwork to ensue that preceeds the builder's final payment. Bare walls, rough floors, lightbulbs hanging down, all might be OK in your jurisdiction.
I presume from what you posted that you might want to do some painting, trim carpentry, wallpapering, a little finish flooring work here and there, and installation of some or all of the lighting fixtures. That's OK, it probably doesn't affect getting a C.O. But a fixture like a toilet might.
When you know this, and if it about like I thought, you can try to approach your builder and ask that his quote for the design-build package itemize these finish items. Tell him you need to have them itemized in order to be able to change or upgrade. If he is like most good builders he is already prepared to tell you his specs and show these items as allowances.
Then, once you are happy with all the numbers, and have decided on which finish items you want him to do and which you will do, then tell him what's on your mind, and negotiate from there. But, be prepared to have a final walkthrough for final payment before these "finish" items even start. They should get handled as a separate piece of billing.
I am not a custom builder--I only do spec houses in Massachusetts. But I know all of the good custom builders in my area, and I think I can safely say that none of them would allow you to do what you wish to do. Even if one of the custom builders did, he would somehow, some some way make up for the lost profit in ways you would never be able to detect. Just remember--there WILL be change orders long after the contrcat is signed, and change orders can simply be made non-negotiable. If you want that wall moved 6 inches, it's $900, or $825 or $200, whatever the builder picks. If you don't want to pay the price quoted, fine. The wall does not move, and you cannot move it--the GC, not the owner or prospective buyer, owns the job according to the plans and specs incorporated in the original contract. No change order, then no change in plans and spec, no change in price and no change in wall location.
Bottom line--You simply will NOT save money by doing things yourself when the job is done. The builder has too many opportunities to make what he wants as change orders come up. It does not matter what he quotes you in the beginning for paint by GC, or paint by you, or primer by GC, final paint by you alone. Let the builder build the house. You should worry about the magnitude of the allowances for lighting cabinetry, etc. If they are too low (ususally are--more room for added profit), then you'll simply pay more.
By th way, in Massachusetts most inspectors will not grant a CO without final paint, regardless of what the code says. All fixtures must be installed. In any event, the bank will NEVER issue mortgage proceeds unless all walls are painted and all fixtures are in. The bank must be able to sell the home if you do not pay, and the bank wants a home that is painted with all fixtures installed. If your contract even mentions that you, and not the GC, are doing some of such work, then you can bet that the loan application will be denied or the funds will not flow for the work.
"Even if one of the custom builders did, he would somehow, some some way make up for the lost profit in ways you would never be able to detect."
My thoughts exactly. I figured any person doing this for a living would want to maximize profits in any way possible and It seems that there is a lot of profit in the "finish".
Thanks for the info
"I figured any person doing this for a living would want to maximize profits in any way possible "
Any way possible covers a lot of ground including illegal and unethical ways. We have worked in owner involved projects many times and always with mutual satisfaction. Does this mean that the owner saved as much money as he had hoped? Not yet. But the appreciation for his house and for the work that we have done is always much greater.
As for the financial part of the deal, we provide allowances for the items in question which do not include our profit and the owner works against this allowance.
What would worry me about your project is that you are choosing this contractor based on his possession of a property you want. The odds of his being a contractor you would want to build your house and allow you to do some of the work are very long.
we often allow Owners to get some sweat equity.. especially if it means the difference between doing the project or not doing the project..
we try to make sure the owner is actually capable of holding their part of the bargain...
some of the things in the past have been.. landscaping... finish lawns... painting..
preparatory demo work...
and , yes , it means we do forego some of our profit.. and we do incur some additional overhead because the homeowner usually needs some handholding..
we evaluate each project one at a time..Mike Smith Rhode Island : Design / Build / Repair / Restore
I've gotten burned a couple of times letting HO take on part of the work; once was with plumbing, the worst was with tile. In both cases, particularly with the tile, the extra time consumed threw the completion schedule all to hell.
Mike Smith is right, as usual. The tasks he mentioned are less likely to interfere with the project schedule, although painting is often done more cost-effectively and efficiently by a pro.
Most of the new construction I do is bank financed and time over-runs can result in penalties for the HO.
That being said, I have worked with HO's who were good help, particularly with remodels...but I've had to learn to assess their skills and motivation before agreeing to let them become part of the process.
On new construction, I've become pretty wary of letting the owner get too involved. I have a good crew and some good subs and, when the work is defined and agreed upon, it's best to just stand back and watch, or better yet, go on a long cruise :-).
Supposing that I were a builder who had opportunity to lay my name on a prime piece of buildable, saleable property for the purpose of generating a profit,
And supposing further, that I knew my time frame and the profit I planned to make on the sale and on the house,
What reason could you offer me to allow you to do part of the work?
The one that would get my attention, is that I would still make my full profit, and you would only make the wages for the task you undertook
Excellence is its own reward!
Todd: I'm not a builder but, I'm building my own house and this I can tell you.It takes longer than you think (way longer)to do the work.Especaily if you haven't done it before,or you are doing it alone(unknowledgeable beer buddy's doesn't count) .Make sure if you do elect to do the work you described (and the builder agree's to it) that you give yourself more than enough time to complete your end( so you are not in the builders way to complete his work).If you work an 8-5 job it's going to be a lot of late night's.If you decide to give it a go,read,read and read ahead of time what you need to know.Tautens books and this website have been great.
In my home I have done most of the electrical,plumbing,some heating,central,alarm vac,helped on the septic,and site work and I will do the painting,and flooring and I'm sure a hole bunch more than I can think of right now. and I wont even tell you how long its taken. And that's with a 24 on 72 off work schedule.
As for the pros: there are hacks,be careful/ but the good ones are worth there weight in GOLD!!
Good Luck Greg
Itemize
My life is my practice!
http://CLIFFORDRENOVATIONS.COM
I don't know if this is the best way, only seen it done once.
Have the contractor to bid the job as normal. Find out what he expects to pay for the subs you are replacing. Have him pay you for your work.
You get your money back, and he still gets his profit.
All you have to do is compete your tasks in a timely manner and everything is peachy :-{