Armchair Builder

Negotiating for Your Dream Home

Maui Dream Home


Building your dream home can be an expensive endeavor.  From the gorgeous lot with the view to the sparkly quartz countertops, each item that will make your new home “yours” comes with a price.  But just like everything else we buy, there are deals to be had on building materials and labor to build your new home.  Here is some professional builder advice for getting the absolute best price from contractors and suppliers.

Shop Around

My sister might be the best shopper on earth.  Give her a hundred bucks and tell her you need a completely new outfit for a special event and she can make it happen and then some.  How does she do it?  She knows her pricing and shops until she finds the best deal.  Building or remodeling a home is no different.  Every activity involved in the project, from electric to drywall should have a minimum of three bids from trade contractors.  Even as a seasoned professional builder, I always get a minimum of three bids for each type of work just to keep contractors honest.

In fact, don’t stop at just three bids if you have the time.  Do you really think my sister looks at only three shirts before purchasing?  But why would you need so many bids for a single activity like plumbing?  Isn’t plumbing the same no matter who does it?  Here are some reasons for major differences in pricing from one contractor to another…

  • Cost of Living – Some companies come from outside the city and have a lower cost of living.  Maybe they live on a farm and derive income from other sources as well.
  • Overhead Structure – A big company might have a retail location, warehouse, employee benefits, company trucks…etc.  In some cases these companies are extremely efficient and can make it work.  In other cases, the high overhead costs make their bids way too high.
  • Schedule – Most trade contractors need to fill days in the workweek in order to keep employees busy.  They can’t keep good employees if they don’t get to work a full week…they just can’t pay the bills otherwise.  So, sometimes you will get a contractor that just needs to fill a few days up in the schedule and they may be willing to accept a lower profit margin to do so.
  • Efficiency – Have you come across someone in your industry that is cutting edge?  You know, the guy or gal that is always testing new boundaries for getting things done more efficiently and with better results?  These are the companies you want to try and find to help build your home.  For example, I’ve seen painters that can paint out a home after drywall in just a few hours.  How? They have the right spray equipment and manpower to cover a whole lot of wall space in a short period of time.

Know What You Want

Imagine how frustrating it would be if your boss kept changing the requirements for a project you were working on?  This kind of change really hurts efficiency and is very time consuming.  The same goes for building and remodeling.  In fact, some less than perfect contractors make a living off of changes made by customers after the start of a project.  So don’t get caught in the trap and make sure you know what you want before the initial pricing is completed.

Ask for Bids to Be Broken Down

For something as simple as purchasing a sweater, the price is all you need.  But when you are evaluating trade contractors to perform complicated wiring, framing or plumbing, it’s important to get the details in the bid.  Never, ever, ever except a bid that only includes a dollar amount (and no other details).  How do you know everything was included that you wanted if the painter just gives you a piece of paper with a dollar amount?  Trust me when I say it does you know good to hire this person just because the price is low.  When they get started and see the job is more than they thought, they will walk away leaving you in a difficult situation.

So what do we mean when we say “break down the pricing”?  For example, you would want to have your electrician break the costs down for each recessed light fixture, outlet, switch, installed ceiling fan…etc.  That way, you can add and subtract items as needed and not have to call them for a price each time you make a simple change.  Also, you want to be able to compare each electrician to see how their prices stack up.  You may find one electrician is very affordable on a standard house layout but once you add in all the optional items they may be very expensive.  Check out the Armchair Builder bid sheets for an easy way to compare trade contractors for when remodeling or building your home.

Ideas for Negotiating Price Down

Any good contractor appreciates when a customer wants to help them expand their business.  So once you’ve negotiated your best price for the exact home you want, there are some things you can still offer to get a better price.  Here are a few ideas…

  • Sign in Your Yard – You’ve probably seen contractors signs in yards…ask if your contractor has one and if so, maybe you could place it in the yard to help get him/her more business.  Of course, you would want a discount for doing this.
  • Recommendation Letter – As a professional builder, I always ask for references when hiring new trade contractors.  Tell your contractor of choice you will take the time to write a recommendation letter if you are happy with the service.  Lots of customers say they will do this but most don’t so make it part of the agreement.
  • Online Reviews – Do you use online reviews when evaluating purchases?  I know I do.  Ask potential contractors if they would like a review if you are satisfied with the work they do.  You’re not asking to be compensated for the review, you’re just saying you will give one.  Whether it’s good or bad, you can include this requirement in the contract.  And this will give the contractor more incentive to do a good job.  Some good review sites for contractors include Angie’s List, Home Advisor, and Yelp.
  • Video Interview – Ask if the contractor needs an interview for a commercial or for their website.  You could give your time to do the interview in exchange for a better price.
These are just a few of the ideas for negotiating with contractors for the best price.  Be sure to watch the Armchair Builder video, Bidding Out Work, to find more ideas for negotiating.

RSS Feed