Custom Home Contractor Nightmares: Why choosing the lowest bidder can send the wrong signals

How long should we plan for the build to take on our custom home? The answer may be much longer than you think.
July 26, 2016
Dawnwood - 04
Understanding the Remodeling Scheduling Process
April 8, 2017
.

Custom Home Contractor Nightmares: Why choosing the lowest bidder can send the wrong signals

Most people in the United States will not undertake more than one major home remodel, or get a custom home built for them, in their lifetime. Most of us upgrade our phone every one or two years. We buy a new car every five years, and we may even move locations every seven to 10 years. But the odds are good that most of us won’t sign a contract for a major remodel or a custom home build more than once.

This is significant, because when we get bids for a custom home, at least one party present at the negotiating table is doing it for the first time and, more likely than not, it’s you, the buyer, who’s doing it for the first time because the contractor you’re talking with does it for a living. This is not their first rodeo. But in all likelihood, it is probably yours.

Now, in the commoditized world we live in, we are conditioned as consumers to look at price first. In addition to the total cost, we look at how much someone charges per hour – and for a lot of things that are apples-to-apples comparisons, the price is a good thing to look at. However, when contracting for a custom home, every home, and every builder is different.

So, for example, if I’m renting a car for an upcoming trip, I can make a fairly easy comparison based on the rental company’s daily rate or the hourly rate. But when it comes to getting a custom home built, an hourly rate is not always beneficial. I’ll prove to you that looking at cost alone is not always the best indicator of the quality you’ll get – and also, more importantly, what type of experience you’ll get.

So let’s say that you had some dental work done. Most people don’t consider that to be a leisure or recreational activity. When I got my wisdom teeth out, the dentist gave me a consultation. He gave me the approximate cost, and I asked him how long he thought it would take, as I’ve had a bad experience in the past and was nervous about the process. The dentist said it would be a fairly straightforward job. The teeth were easy to access, and he estimated that extracting them would take less than a minute and a half each. I looked at the dentist and chuckled. I just wanted to get it over with at this point. I jokingly remarked that it would cost me a couple of hundred dollars for three minutes of work, and he just looked at me and said, “You know, I could always make it last longer if you want me to.”
This story highlights what we’re conditioned to focus on – especially in the US and in the western world. We’re focused on price, as opposed to other factors that can sometimes weigh more heavily than price.

But you know what?

I wouldn’t have hired a dentist who wasn’t nearly as good. Let’s say I found a dentist who charged half the price but would have taken a half-hour to extract those teeth. It wouldn’t have been worth it to get it done for 90% less if it also took a half-hour compared to the 2 to 3 minutes total that it took for the first dentist to get both of my teeth out.

This same point applies when it comes to choosing a custom home builder. All the first-time custom home buyers who consult with us – one hundred percent of them – say the price is one of their primary considerations in their remodel, and we understand completely that they (and you) have a budget. We know you can put only so much money into this home or remodel. What we would like to educate you about is what might happen down the road.

For instance, when we consult with custom homebuyers who are on their second custom home or major remodel, the price is always second or third on the priority list. Here’s why. We’ve learned that 99% of the disagreement within a family falls into one of these categories: design (arguments about color, arguments about fixtures, what’s going to go where, etc.); construction timelines that are not met; materials and fabrication that are not up to specifications; and having to get contractors back into the house to fix things that weren’t done right in the first place.

Having your house opened up for 4 to 6 months so contractors can work on the house, and not having your house for that amount of time, is a huge concern for families undertaking their second or third major remodel or custom home. These seasoned consumers know it’s risky to choose a contractor based on price alone.

Why?

Because this is how the industry works. The general contractor goes out and finds a group of subcontractors to work with – somebody to do the tile, somebody to do the floor, somebody to do the electric, etc. Now, what happens if you tell your general contractor or custom home builder that price is most important and that you want the absolute bottom dollar? That person will now seek out subcontractors who will do that work for the lowest bid. Let me tell you, those are not necessarily the people who do that work because they love it.

Generally, the people who work for $12 an hour are doing so because they can’t find anything else to do with the level of skill that they have, or because something else is preventing them from getting higher-paid employment. This means they may not always be available for work, which can push project timelines back. They may not have the social skills you’re used to, or they may not be pleasant to be around. There’s a reason for that. As a client, when you send a signal based primarily on price, the contractor will find the cheapest labor that meets the specifications.

Contrast that with a custom home builder who understands that building a custom home involves you having the most private and intimate spaces of your home opened up for 4 to 6 months. That’s stressful.

We’ve had major work done on our house as well, and it really gave us an idea of what’s important. We focus on your timeline and budget, and we really, really focus on your experience. For example, we work with the same subcontractors all the time. We have a relationship with them. We know them on a first-name basis. We know their backgrounds, their history, and we know that these subcontractors don’t pay their team the lowest wage they can get away with.

These craftsmen do this work because they love to do it. They are extremely skilled, and they know they are invited into these homes not only because of their skills but also because they understand how important this custom home building is to the client. What that means for you is that courteous and professional contractors will be present in your home. They will understand that things might get a bit stressful for you, and they’ll do their best to work around that. They understand that timelines need to be met to ensure you avoid additional conflicts with your family. It’s important stuff.

Is this something you really want to bid out to the lowest bidder?

So the questions that really need to be asked are: is this something you really want to bid out to the lowest bidder? Is this a true commodity, or something you’re going to be excited to wake up to each morning? If you’re looking for the absolute lowest bidder, we can recommend who to get a bid from. But if you want to shortcut the learning curve and focus on the factors that first-time custom homebuyers wished they had focused on, give us a call. We’ll provide a consultation where you can describe the dreams and goals you have for your custom home.