Wednesday, October 21, 2009

Why Builders Shouldn't Cut Their Prices

In a previous post, I discussed why now is a good time to renovate. I pointed out that builders are not as busy and can devote more time to their projects, the economy has weeded out a number of "fly by night" contractors who were not truly dedicated to the profession and there have been sales on supplies and materials. One advantage that I did not mention, however, was the opportunity to ask builders to cut their prices. That's because I do not believe it's reasonable for owners to try to negotiate lower prices, and it's not good for the profession for builders to do so.

Professional builders are usually quite realistic when preparing proposals for projects. I have met many contractors who proudly tell me that their jobs do not go over budget (barring unforeseen circumstances). They are usually quite clear about their markups and profit margins and accurate when determining allowances. They exemplify the adage that "you get what you pay for."

Consider for a moment the bid that comes in that is significantly lower than the others. Owners may be happy to seize the opportunity to get a job done for a bargain price. However, I have frequently seen the rest of the story in my practice. The project begins and then the owner is hit with a series of change orders that jack the price up to those of the other bids, or once the work is finished, the owner receives a final bill for "extras" that achieves the same result. Or, the contractor cuts corners and substitutes inferior materials or does work that is not up to a reasonable standard. At that point, a huge dispute arises and the parties end up in costly litigation.

Although this post may be filled with cliches, if something seems "too good to be true," it is. Choose a contractor based on references and experience. Do not try to bargain and take advantage because construction is slow right now. It is better to change the scope of your project and pay a fair price. This benefits all of the parties in the end.

33 Comments:

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At 10:50 AM, Anonymous Nyc mold removal said...

That is a good suggestion not to lower the prices....it is best to keep the valid price for the market independent of the falling markets.

 
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At 1:09 AM, Anonymous maryland home contractors said...

Nice suggestion i guess many people i will like that suggestion and also me. I'm wondering if that affects the crisis right now because the more expensive the more the quality materials they should bring and most especially a really good provider that they will handle it in good time and no time.

 
At 1:41 PM, Anonymous Roof Repair said...

Quality workmanship "Doesn't Cost, It Pays" so Builders don't lower your prices!

 
At 1:34 PM, Anonymous Debra said...

Great article ! Everyone knows how difficult the economy is right now, but homeowners need to realize that contractors can't give the work away. You are right, if the estimate sounds to good to be true - it is!
Homeowners need to be careful when hiring a contractor and use care with construction leads.

 
At 1:34 PM, Anonymous Debra said...

Great article ! Everyone knows how difficult the economy is right now, but homeowners need to realize that contractors can't give the work away. You are right, if the estimate sounds to good to be true - it is!
Homeowners need to be careful when hiring a contractor and use care with construction leads.

 
At 5:53 PM, Anonymous contractor advertising said...

I think that given the current economic trend, contractors and builders should take a look at their businesses and see if they could afford to lower their prices and still be competitive and all that. I don't think that now is the time to be inflexible...

 
At 3:09 AM, Anonymous contractor project bidding said...

I can't say about things around there, but builders around here are making deals on already built homes. The homes that are being contracted to built have had their prices already adjusted.

 
At 11:47 AM, Anonymous Wall Ties said...

problem is if some undercut you are forced to match it and eventually it reduces the profits. alot of foreign builders im finding will squeeze the profits as mucha s they can

 
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At 10:49 PM, Anonymous Marvin Mills said...

In a related note, people who would be considering DIY building a house should also make it a habit to choose contractors based on reputation and experience. I myself was referred to a contractor that presented me a great portfolio.

I opted to do DIY-build-your-own-home because I wanted to be in full-control of building my house from the ground up.

 
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At 4:35 AM, Blogger Muhammad Osama Mazhar said...

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At 1:44 PM, Anonymous PENNY STOCK INVESTMENTS said...

Lowerprices are cool.Nice post.

 
At 5:41 PM, Anonymous exterior painting Edmonton said...

Outstanding, indeed, lowering prices can significantly reduce the quality of the home contractor's work. Although, this is not always the case, depending on the contractor's stability and availability of tools, materials and resources. Like the quote says, if it's too good to be true, they you should be skeptical.

 
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