When something sounds too good to be true, it often is. Our team recently helped someone analyze price and quality difference among different builders, and we wanted to share it with others who might like to do the same. In this case, there were really a number of builders quoting very similar numbers for the cost of the home. However, there was one builder who gave him really great, unbelievable numbers, and that was the one that drew his attention. After all, a really great bargain is what we are all after, right?
How to Compare Builders
This individual wanted to cap his budget for the home at $1.7M. The “cheap” builder stated that he could build the home they wanted for $50/sf less than any other builder in town. So just to use round numbers, every other builder was quoting, say, a price of $300/sf, and this builder was quoting $250/sf. So what’s the difference?
You want to start out by looking at some other homes that a builder has built. It turns out that there’s a lot of publicly available information about previous homes built by a builder, and that’s what you need. Anyone can say anything! So what you want is publicly available data. After searching a bit, you can sometimes find a home for sale with a very similar price range in a similar subdivision built by the “cheap” builder to use as a price comparison. This is what we found.
Putting one we recently built side by side gave us a point of comparison. This begins to illuminate where the “cheap” builder is cutting corners and whether or not that would be okay with you for your price point.
Know Thy Numbers
The moral of the story? The “devil is in the details”. Everyone wants to believe they will compromise, and most everyone does make some concessions. It’s just that almost 3 decades of designing and building homes gives us a sense of WHERE someone is willing to compromise and where they are NOT. The reason some builders quote really low numbers is because they know that clients aren’t willing to accept the less expensive alternatives that they will offer them, certainly not in a $1M+ home. So, every time a client says, “I’d like a sink in my outdoor kitchen, please”, that adds to the cost. Also, there are some out-of-pocket costs that can easily be left out. Things like architect fees, engineering, pool, landscaping, tap fees and permitting fees, can easily add up to $50/sq ft. So just be aware that you need an apples to apples comparison to really know your numbers.