How do you negotiate with a builder?

[GeorgeG.]

We finally closed on our lot and are ready to start meeting with builders. I wish we had met with builders a few months ago to save time but it just didn't happen.

This will be a complete learning experience so I'd like to go in "armed" with knowledge so I can at least smell any bs brewing, know when I can cut costs, and basically just be aware of how/where my $$$ is being spent.

We met with one builder so far, Our Country Homes. We liked the models we saw. They said we can change anything and everything if necessary. Two design levels were in the $115/sq ft and $125/sq ft....and that's just for the house. We already own the lot. My first thought was that's insane since I 'thought' that was the going builder rate...including the lot. How does one negotiate that $ amount?

When speaking with the guy, who happens to be the one that does a visual lot inspection, he also mentioned a few things.

1) Lot prep costs - unknown until an inspection is done to determine how much prep work is needed. I checked out the lot again and it slopes to the back so I'm assuming it will need dirt added...hopefully no piers, retaining walls, etc. The visual inspection is free. We're meeting next week.

2) The soils test is roughly $1,600. If/when we get to the soils test, my first thought is to order it through an independent so I get a copy of the test results...in case we decide on a different builder. Or just let them know I expect my own copy of the results.

2) He mentioned the fire hydrant is on the other side of the road so boring under the road may be needed (even though there are houses on both sides of us). That cost is unknown at this time.

Lastly, he said the septic system is $5,700. Should I have the option to use someone else for that if I can find it cheaper?

In typical George fashion, I'm probably over complicating the whole process. But I will squeeze blood from a turnip every chance I get. I know they have to make money, but I also know (or assume) they have some play room in there.

[03mustangdude]

Ask about warranties offered they vary builder by builder.

Those prices seem normal for a live in house. You can get a barebones for low 90 a foot but not worth it.

Write a list of your must have's and would be nice to have and give it to the builder for a complete total.

[BMCSean]

Have you tried hitting them?

[Sean88gt]

How do you negotiate with anyone else?

[GeorgeG.]

lol, I guess my question is about timing...maybe?...no?

[mk5.0]

Get a CMA and make an offer. Or get a realtor if you don't know what you are doing. As a buyer you don't pay the realtor anything.

[fordracing19]

$115-$125 sounds high but it all depends on finish out. 15ft ceilings with all built ins ,Viking appliances, solid core doors, ect really go up. Septic sounds about right. My soil test and foundation engineering were done by Whitworth Engineering 4200 N. Main St. #150 Fort Worth, TX 76106.
$1440 soil test
$1620 engineering

[Gasser64]

What made you decide to build, vs buying?

[GeorgeG.]

What made you decide to build, vs buying?

We didn't see anything we liked. Actually, there was one house but our contingency offer was kicked out. Everything else was two story homes and didn't really suit our wants.

[8mpg]

Keep me updated with pricing... Building may be in my near future as well.

Negotiating with people like Our Country Homes is harder as they have set plans and they know their costs and plan accordingly. Going with a full custom builder could be another possibility. There are different kinds of contracts that you need to research and talk with builders and what they are willing to do.

Cost plus - Cost of the building materials (some builders do materials only) and a percentage on top of that. 10% seems to be the norm to build a house. So $200k house - $20k builders fee

Fixed price - They set a total price and that is what you pay (unless you decide to go over). They send you to their suppliers and have to be within their budgets for each area such as flooring, plumbing fixtures, etc.

Cost plus fixed fee - They charge a set amount of money to contract out the house. You pay for all building materials and labor.

Cost plus % but not to exceed - I think this is the way to go. The builder sets a percentage (say 10%) like above for his work. He guarantees the build not to go over $xxx,xxx. You both split the savings. His job is to try and save money where he can. For every $1 he saves, you split it say 70/30 where he make an extra 30% on money saved. If he can save $10k in the build, he gets $3k but you save $7k. Lots of incentive to save you and him money.

Oh, and if you go with someone like Our Country Homes...make sure you figure out overages. Most people say to budget 10-15% for overages.

[ceyko]

I'd be hesitant to take on responsibility for any part of the build/development process of a home. I'd want one stop for all warranty needs. The exception would be if I wanted something the builder could not or work not do. i.e. a safe room

[GeorgeG.]

$115-$125 sounds high but it all depends on finish out. 15ft ceilings with all built ins ,Viking appliances, solid core doors, ect really go up. Septic sounds about right. My soil test and foundation engineering were done by Whitworth Engineering 4200 N. Main St. #150 Fort Worth, TX 76106.
$1440 soil test
$1620 engineering

Their $125 model was a little more than we really need. It did include 15ft ceilings, a bunch of trim and panels, and some cathedral type ceiling above the study. We'll probably go with the next level down or remove some of those features if we like the floor plan. My last house had 10ft ceilings and I thought that was plenty.

Keep me updated with pricing... Building may be in my near future as well.

Negotiating with people like Our Country Homes is harder as they have set plans and they know their costs and plan accordingly. Going with a full custom builder could be another possibility. There are different kinds of contracts that you need to research and talk with builders and what they are willing to do.

Cost plus - Cost of the building materials (some builders do materials only) and a percentage on top of that. 10% seems to be the norm to build a house. So $200k house - $20k builders fee

Fixed price - They set a total price and that is what you pay (unless you decide to go over). They send you to their suppliers and have to be within their budgets for each area such as flooring, plumbing fixtures, etc.
This is what Our Country Homes is doing. We'd get in contact with their design team and have a list of options to choose from.

Cost plus fixed fee - They charge a set amount of money to contract out the house. You pay for all building materials and labor.

Cost plus % but not to exceed - I think this is the way to go. The builder sets a percentage (say 10%) like above for his work. He guarantees the build not to go over $xxx,xxx. You both split the savings. His job is to try and save money where he can. For every $1 he saves, you split it say 70/30 where he make an extra 30% on money saved. If he can save $10k in the build, he gets $3k but you save $7k. Lots of incentive to save you and him money.

Oh, and if you go with someone like Our Country Homes...make sure you figure out overages. Most people say to budget 10-15% for overages.

Thanks for the heads up.

I'd be hesitant to take on responsibility for any part of the build/development process of a home. I'd want one stop for all warranty needs. The exception would be if I wanted something the builder could not or work not do. i.e. a safe room

all good points. I think the savings I could get for something such as finding my own septic company will probably be minimal. Plus it would eliminate getting the run-around should something go wrong.

On another note, after the visual inspection, they are saying I will need 40 loads(+/-) of dirt @ $145/load, so an additional $5800 bucks. (1 load = 10 yards). He said I could save that money if I brought in my own dirt. (yes, my wheels are turning). Then another $2000 to prep that dirt, $1600 for a soil test, then hope the test doesn't call for piers.

Who here has a truck?...I'll supply the shovels.

[8mpg]

On another note, after the visual inspection, they are saying I will need 40 loads(+/-) of dirt @ $145/load, so an additional $5800 bucks. (1 load = 10 yards). He said I could save that money if I brought in my own dirt. (yes, my wheels are turning). Then another $2000 to prep that dirt, $1600 for a soil test, then hope the test doesn't call for piers.

Who here has a truck?...I'll supply the shovels.

This is one of those things if you have time, post up looking for "free dirt" on craigslist. Put up a sign on the property. Lots of people are looking for dirt or looking to get rid of dirt. When my parents built their house 15 years ago, they got around the same amount of dirt for $10 a load which was for fuel. There was a big construction site starting about 5 miles away and they were looking to get rid of dirt.

Other option... if you have land and want a pond or a pool, it all adds up. We have 2.5 acres and plan on a 1/2-3/4 acre pond. We need 3 feet of dirt x 6000sqft (not house sqft) = 18000cuft / 27ft/yd = 667yds = about the same as you.

[GeorgeG.]

Is there a preferred type of dirt? should I try to find the same type of dirt from the area?

[Denny]

If you sit on your lot and wait a year, I bet you'll get better pricing.