Another fun anecdotal story from my local custom home market.
A really close friend of mine had his custom home build in 2020 before all of the building material and building labor inflation. The builder he used is not a the run of the mill "paper contractor" but actually has tools, shows up to his job sites and supervises his own very small amount of builds going on at any given moment (between 3 to 5 a year)
My friend, in 2020, paid ~$700,000 for the build and the builder was cost + 10%. No supervisor fee. No insurance pass through fee. My friend paid this hands on builder $70,000. Not too shabby given the builder does 3 to 5 homes a year and has zero employees. This builder does a good job and makes a good living. Well done.
My friend told me to check him out and so I did and this builder knows I am really good friends with one of his clients and would certainly know that I know how much he was paid just a few short years ago. My home, being a bit larger and with post covid material/labor was going to cost around $2 million. I felt $200k for what he would do was going to be steep given my house isn't 3 times more complicated and will not take 3 times more time. Well he didn't come in at 10%, he came in at 20% so $400,000 GC fee (no supervisor fee or insurance pass through). I said "You did my friend's house for 10% and the budget was a third of my budget using pre-covid material/labor costs" and he said "I'm too busy right now and people are paying it." In other words, he was happy to make $70,000 a few years ago on a single house and now he is totally willing to pass on a job if he doesn't make $400,000. Completely outrageous.
End of story. This is a supply and demand issue. This is not an exclusive sub-contarctor list, or best pricing or any of that marketing/sales nonsense.
I know of several custom home builders in my market that have dozens of formal state contractor registry complaints against them and yet people are still signing contracts with them. There are a lot of people building custom homes right now and even the worst of GCs are taking full and total advantage of the situation. Just a few short years prior this solid builder would have been thrilled to land a $2 million job at 10%, probably his biggest yet, but because of all of the demand he is only going to do it if he can make $400k on it. Outrageous and I'm glad I didn't pay to play.
A really close friend of mine had his custom home build in 2020 before all of the building material and building labor inflation. The builder he used is not a the run of the mill "paper contractor" but actually has tools, shows up to his job sites and supervises his own very small amount of builds going on at any given moment (between 3 to 5 a year)
My friend, in 2020, paid ~$700,000 for the build and the builder was cost + 10%. No supervisor fee. No insurance pass through fee. My friend paid this hands on builder $70,000. Not too shabby given the builder does 3 to 5 homes a year and has zero employees. This builder does a good job and makes a good living. Well done.
My friend told me to check him out and so I did and this builder knows I am really good friends with one of his clients and would certainly know that I know how much he was paid just a few short years ago. My home, being a bit larger and with post covid material/labor was going to cost around $2 million. I felt $200k for what he would do was going to be steep given my house isn't 3 times more complicated and will not take 3 times more time. Well he didn't come in at 10%, he came in at 20% so $400,000 GC fee (no supervisor fee or insurance pass through). I said "You did my friend's house for 10% and the budget was a third of my budget using pre-covid material/labor costs" and he said "I'm too busy right now and people are paying it." In other words, he was happy to make $70,000 a few years ago on a single house and now he is totally willing to pass on a job if he doesn't make $400,000. Completely outrageous.
End of story. This is a supply and demand issue. This is not an exclusive sub-contarctor list, or best pricing or any of that marketing/sales nonsense.
I know of several custom home builders in my market that have dozens of formal state contractor registry complaints against them and yet people are still signing contracts with them. There are a lot of people building custom homes right now and even the worst of GCs are taking full and total advantage of the situation. Just a few short years prior this solid builder would have been thrilled to land a $2 million job at 10%, probably his biggest yet, but because of all of the demand he is only going to do it if he can make $400k on it. Outrageous and I'm glad I didn't pay to play.
Statistics: Posted by bogleviewer — Tue Apr 09, 2024 2:38 pm — Replies 35 — Views 2917