A couple move to the Sequim area from California and plan to build their retirement home.  They’re excited about it, but it proves to be stressful just finding the right architect and the right builder.  How do they select their builder?  (Be careful of architects who try to lock you into “their” builder.  That’s another story for another time.)

They meet with three builders and get bids from all three.  The first builder they go to is Rick Anderson of Anderson Homes, LLC.  Rick has built over 400 homes here since 1981, and has a solid reputation for honesty and the highest quality of homes, but he also has extremely competitive rates when you compare apples with apples.  Rick plays no games and doesn’t boast.  He shows them exactly what he will do for them and gives them the honest-to-God truth about the true cost per square foot, and he is willing to guarantee that price in a written contract.

The second builder they go to looks at Rick Anderson’s bid, because the owners share that information with him.  He says, “Oh yea, I can beat that bid.”  Of course he can.  Shave here, shave there.  Use lesser material, don’t install this or that, cut this out.  That was easy.  But the nice clients don’t realize how this works, and they think, “Oh, good he beat Rick’s price.  Rick must have given us a high bid.”  (Not true.)

The third builder they go to looks at Rick Anderson’s bid and at the second bid.  He says, “Oh yea, I can beat both those bids.”  Of course, he can.  He just takes the second bid with those lesser specifications, and since he works out of the back of his pickup truck and plans to do ALL the work himself at what will work out to minimum wage, his bid is lower than the cost of the other two builders.

They select the builder who gave them the lowest bid.  He seems like a nice guy.

So what happens?  Let’s play this out with two possibilities.  First, what could happen if they choose the lowest bidder?  Well, he may not be able to finish the house as a one-man show who is struggling financially to survive and cutting every possible corner to get the cheapest materials.  He may not have the experience of a more experienced and financially stable builder, so this is also the kind of scenario you may have read about where the house only gets partially built and the builder bails.  Can you say, “nightmare scenario.”  That was the lowest bidder.  Do you really want to the lowest bidder?  I know.  Seemed good at the time.  How much stress would you like to add to your life when a different decision could have saved you a lot of money, stress, and time?

So what happens if you are wise enough to avoid the one-man lowest bidder?  You hire the middle bidder.  Okay.  Here’s how that plays out many many times. When the house is completed, three months past its completion date, you calculate that you have paid more than the original guaranteed bid that Rick Anderson gave you.  There were extras, change orders, and surprises during the entire construction process, starting with the excavation and concrete and all the way through to the end.  You’re tired of fighting with the builder.  You feel like he has misrepresented the construction process and costs from the get go, but once you had signed the contract and work began, you felt you were in too deep to go back.

You talk to your neighbors who had their house built by Rick Anderson.  You ask them how it went, and they start smiling and chatting enthusiastically about how much they love their home, about how enjoyable it was working with Rick, and how their home was finished on time and at the original guaratneed contract price.  You look at the quality of their home inside, and you can’t help comparing the trim and the cabinets and the flooring, and the doors and hardware to your own home.  You end up saying what a lot of people say, but they hate to admit it.  “We should have hired Rick Anderson.”

I kid you not.  This is an honest and real scenario.  This happens all the time.  This is not sales hype or exaggeration.  I’ve written this bold honest article to try to break through to good people moving here from California and Arizona who make the two mistakes above.  Do you know the biggest mistake these folks made?  They never brought those two lower bids back to Rick Anderson to have him do a honest apples verses apples comparison.  He would have been absolutely honest about the comparison, and he never pressures anyone to sign a contract.  Anyone who wants to make fully informed and wise decisions about building their retirement home ought to do a true comparison.  They could have and should have brought those bids back for another meeting with Rick Anderson.  Then they could have made intelligent and fully informed decisions.  Now they know that.  Now you know this.

So, what are you going to do?

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Building a home today is challenging enough working through the complex credit and loan issues, finding the right lot in the right area, and negotiating a good price, and then finding a good builder who can build your dream home at a price within your budget. It can get real complicated if your builder is a discount builder who doesn’t tell you all you need to know before you sign the contract. Watch this short video on the subject.

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Building a new home or a custom home?  What a buyer’s market this is for you, both the lot and in hiring a home builder.  But there are discount home builders out there who are sharing less than the whole truth in their advertising.  In fact, many home builders are leading with what I believe is unquestionably deceptive advertisting or what you could call fraudulent advertising.  Here’s a short video intended to help you avoid a nightmare.

Be so careful who you hire for your next home builder. You’ll be glad you were.

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Homes and Land are still selling, albeit at a slower pace.  The northwest region of the U.S. has been one of the strongest real estate markets nationwide.  In Pierce County, for example, the median price of homes appreciated from $151,900 in 2000 to $254,221 in 2008.  In 2008 those sames homes are worth only 8% less than they were in 2007.  This is pretty darn good, all things considered.

Home builders are hurting across the country right now as the demand for homes has decreased, and the devastated mortgage market has not helped.  But there is good news in the silver lining here for people who have been planning to build their next home.

The good news is that the cost of building materials are down, and subcontractors have been shaving their bids down, too.  On top of that, the price of lots has been dramatically effected by the slow down, more so than existing homes.  Interest rates are low, and combined with the low cost of land and building, there has not been a better time to build a home in many years.

Some builders are offering incentives.  For example, Rick Anderson of Anderson Homes in Port Angeles, Washington, is offering referral fees of up to $2,500 to those who send him business.  Builders are also very competitive with their bids and the services they offer.

So what are you waiting for?  The bottom?  By the time the bottom of the market is officially recognized, interest rates will already be climbing above where they are now, and builders will be getting orders, and material costs will find a new, higher, equilibrium.

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A Port Angeles or Sequim custom home might be built with the highest quality materials and workmanship . . .  or NOT. Here’s the challenge. The average person does not have the trained eye to be able to distinguish the two.

I wish they could.  I wish we all could.  Take the room in the photo to the left.  Was this home built with the highest quality materials and the skilled hands of framers, finish carpenters, electricians, plumbers, sheetrockers, and painters, none of whom took short cuts or skimped on materials and labor?

I realize it’s hard to tell anything from a two dimensional photograph, but if we were walking through this room could you tell?  Few could.

What a difference it will make when you live in your home for many years, or the rest of your life.  I hear this testimony again and again from many people.  Perhaps a real life example will make the point best.

(more…)

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You’re going to hire a home builder to build your next home.  Should you hire a small builder or a large builder?  There’s much more to this question than meets the eye, and this short article addresses assumptions that good people often make.  By the way, for purposes of Sequim and Port Angeles, I’m considering a small builder as most people do, a contractor who builds one to six or seven (plus or minus) houses per year.  There are a number of contractors who build one to four houses each year.

Can a small builder provide greater personal service or quality?  Not necessarily.  The reality is that many small builders:

1. do not have the skills offered by specialized subcontractors hired by a larger builder;
2. do not have a good bookkeeping system and good financial management;
3. do not have the financial strength or security of a larger builder;
4. do not have good project management;
5. do not get the substantial quantity discounts of larger builders on materials; and
6. do not have well oiled systems in place to handle construction from beginning to end.

Having practiced real estate law for 20 years, I repeatedly saw these issues come up with small builders.   These are real issues that are true more often than not.  Consider each of these important issues, and you can imagine how much they can impact the quality of your home, the cost per square foot and the timeline.

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Are you building a new home or a custom home in Sequim or Port Angeles? If you’ve decided to build your next home, this article answers the question, “What is the next step.”

(This article written by Rick Anderson and posted by Marketing Consultant Chuck Marunde.)

The Series:
Read Building a New Home or Custom Home (Part 1 of 6)
Read Building a New Home or Custom Home (Part 2 of 6)
Read Building a New Home or Custom Home (Part 3 of 6)
Read Building a New Home or Custom Home (Part 4 of 6)
Read Building a New Home or Custom Home (Part 5 of 6)
Read Building a New Home or Custom Home (Part 6 of 6)

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