Hiring builder to build on your lot?

kotenaJune 27, 2012

hello, We are thinking to build on our lot. In our area there are a lot of small houses being demolished and new ones built. Most of the houses are built by company builders - they basically do the whole house for you for a set price, you just select one of their model homes that fits your needs, make options selection and upgardes and that's it. Reading this forum, it seems that most people actually create their own plans, then draw it with architects, then hire subs per each trade? How do you estimate your loans and how you manage all this construction process? What would be savings doing it this way?

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auroraborelis

The savings of hiring out your own subs and GC'ing the job yourself can be as high as 25%, however it isn't for the faint of heart, and it is also isn't the most typical arrangement you will see on GW.

Many people design a plan with an architect/designer/draftsman or purchase a plan online and then bid out the job to several builders to find the right price. This allows for more flexibility in upgrades and floor plan needs.

In my area the markups for large builders upgrade is crazy, most items cost much more than doing it yourself. We almost bought a house from a national builder but then realized we could get a lot more for our money if we hired a private builder.

    Bookmark   June 27, 2012 at 11:21AM
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kotena

Laura12, how do you find private builders? On craigs list? When you say private builder, do you mean they work with YOUR plan, not plan from their library?
Also, they bid it to last penny and guarantee the price, or they may go up during the construction process?
Also, when you do your plan with an architectural firm, do they guarantee that the plans have all structurals and will pass all required inspections (given builder builds it right)?
I mean going with whole package builder seems much easier as they do from start to finish, however knowing that I can save and knowing some of construction (I actually work for a national top 10 builder, but we build on lots that we buy in bulk, i.e. we build communities)going with private builder etc make sense. However it brings a lot of questions as the ones abpve. I would GREATLY appreciate your help with clearing the process for me.

    Bookmark   June 27, 2012 at 9:35PM
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auroraborelis

I'm more familiar with national builders building communities than company builders building on a lot you own, so hopefully someone else can chime in there. Though, from reading other peoples posts here it seems that those types of builders tend to have the same sorts of over exaggerated markup costs.

I can only speak to my experience. Most private builders use your own plan, but some may have a library of plans as well. There was a recent post on here regarding the costs of architectural and/or design/drafting firms which may help you with ideas there.

Regarding biding, it depends on the builder. Some do a fixed fee, some do cost plus a markup (often 10%). Personally I found the cost plus to offer a better price, but you'll need to talk to builders in your area for ideas.

Finally, my own experience was that I started with Cragslist and Yelp talking to contractors about my plans, and looking into drafters/designers. In the end I had a referral through family for the builder we are using, and he suggested the designer we are using.

A private builder that is building your plan is doing everything from start to finish as well, however instead of getting to choose between 3 cabinets you can pick out whatever you want, giving you room to overspend, or save depending on your choices.

Some builders will deal with the county and permitting for you, however in my case it is the designer that is handling it.

    Bookmark   June 27, 2012 at 11:17PM
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nini804

We are fortunate to live in an area with a large of amount of custom homes, hence there are a lot of custom home builders. We have had friends build with several of the different builders and so have great insider knowledge of what is good and bad about each. In fact the top 5 custom builders in our town actually live here...very comforting!

Our builder is one of the larger ones and they actually bought some land and developed some lots. They have an architectural firm they suggest if a client doesn't have one already.

    Bookmark   June 28, 2012 at 7:58AM
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kotena

When you say "private builder" what exactly this means? That the company is not a publicly traded? I am looking at this plan and this company, would that be considered private builder? Or there are ways to go lower costs? http://www.newdimensionsinc.com/Web_Products.asp?ProductID=508&;

    Bookmark   June 28, 2012 at 11:29AM
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auroraborelis

I'm not the best one to answer that question as builders such as the one you posted don't exist in my area.

In my area "private" builders are usually individuals who owns a small company and manage projects themselves, or slightly larger companies who may employ a handful of GCs. None of them offer a selection of home plans, you either work with their architect/designer or bring your plans to them.

If you go that route it is often best to first get plans, and then get bids from multiple builders.

The first thing you need to do is start making calls to other builders and architect/designers in your area and just get some rough estimates on costs and options. If you don't have any referrals just start with yelp or angie's list. You don't have to hire the first person you talk to, however it should give you a better idea of what your options are.

    Bookmark   June 28, 2012 at 11:54AM
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theballs

Many times a builder can get better prices for the sub-contractors than you can, simply because they have a good relationship with the subs and send them a lot of work. Although you may be paying the GC 25%, you might also be saving 10%-20% on sub contract labor costs, compared to DIY.

    Bookmark   June 28, 2012 at 12:52PM
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auroraborelis

theballs - That is not true about many aspects of the build in my area. There are parts that my GC has suggested I sub out on my own to save money!

    Bookmark   June 28, 2012 at 2:12PM
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theballs

I guess it varies. A good friend of mine builds ridiculously nice houses, and he told me that his subs will automatically add 10-20% to an individual DIY GC'ing. Much like anything else, I would imagine there is no set rule, just kinda depends on the situation.

    Bookmark   June 28, 2012 at 5:09PM
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motherof3sons

We live in a rural area with no 'developers'. All builders are small business, mostly sole proprietors. Our house is the combination of three house plans married together by an 85 year-old draftsman. He has been building homes and commercial buildings for 60+ years. We met with him several times last summer to develop the plan. Only a couple of blips with the "old" way v. the "new" way in the construction.

    Bookmark   June 29, 2012 at 12:04AM
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allison0704

We owned our lot, worked with an architect on our plans, then found our builder. We own commercial real estate, so asked our subs (we trust and have do work for us for 30+ years) who they would recommend. Then we called our local Association of Home Builder's and asked DH cousin for a couple of names.

We had meetings with two local builders. The first we had walked through houses he was building and liked the quality. He was 150K over what we thought it should be (we build our own commercial buildings so have a clue about costs). They had a large office, staff, etc. = high overhead. The second builder was the one with the best word-of-mouth references from our subs. Did not hear one negative word about him before, during or after. He works out of his home, and it's just him = no overhead.

We got the exact same house, finishes, etc. I would use him again in a heartbeat. As a small company, he only works on one house at a time (was finishing up one, then started ours. At end of our build, he was starting ground work on next house.) He was there almost every single day. We were very involved. He watched out for our bottom dollar and we did not go over budget. He charged 10% and there were no change orders/fees during construction... that said, very little was changed during construction (only a wall in the bathroom). A major change (room addition, for example) would have added to his fee.

Any friends or acquaintances (schools, church, work, etc) that have built within the last few years that you could ask about their builds? Any plumbing or electrical company you use on a regular basis to ask? Subs are quick to tell you who is good to work for/with and who they would stay away from.

    Bookmark   June 30, 2012 at 11:27AM
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