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25 Oct 2012
Who should I hire first, architect or builder? That is the question I address in this article. This article has been one of the hottest articles I’ve ever written if the comments are any indication. So I’ve republished this important issue for those who have not gone back in time to find it. I am neither an architect nor a home builder, but in all my work I have always had a sincere desire to seek the truth, wherever that may lead. As a real estate attorney for 20 years I saw repeating patterns in which consumers kept getting the short stick in their relationships with other professionals (lawyers, accountants, financial advisers, architects, contractors, real estate agents, auto mechanics, and the list goes on). After years of recognizing the pattern that was far from consumer-centric, I learned to ask new questions. I learned that it was not wise to assume, but much wiser to do one’s due diligence and to carefully reconsider conventional wisdom. So the question of who should be hired first, architect or builder, is a relevant question for any consumer who intends to build a home today.
It is conventional wisdom that if you are planning to have your next home built, you should first hire an architect. Because of my experience with a large number of clients over 20 years who had nightmare experiences with both architects and builders, I learned to question conventional assumptions and to review the entire process and experiences of many who have gone before.
So the question is, “Who do you hire first–the architect or the home builder?” Most would assume the answer is the architect. But is that true, and what are the implications of hiring the architect first? Let’s play this out by running parallel experiences–one where the client hires the architect first, and the other where the client hires the home builder first.
Hire the Architect First. A California couple had been reading about Sequim for five years and decided to purchase an incredible 10 acre parcel overlooking the Strait of Juan de Fuca. Once they purchased their property, they contacted a Seattle architect, because an architect they knew of in Santa Barbara had recommended him. After some meetings, telephone calls, and emails, they signed a contract with their Seattle architect. A standard fee for a Seattle architect is 8% to 10% of the cost of the house. Since the house was estimated to cost $1 million, their architect’s fee would be about $80,000.
The architect immediately began the detailed architectural plans, which would take many weeks. The architect had a good friend who was a custom home builder (also in the Seattle Metro area), and he strongly urged his clients to hire that builder. He did mention a couple of other builders, but his voice and facial expressions gave him away, and clearly the only builder he trusted was “the one.” He did not mention to his clients that he refers all the business he can to that builder who is a good friend. In the real world, it is common for referrals for expensive projects to be richly rewarded under the table. I will assume that did not happen in this case, but let’s not be naive to conflicts of interest that may cost consumers a lot of money without them ever knowing.
The clients accept their architect’s recommendation to the Seattle builder who is willing to build a home in Sequim. When the architect finishes his work, he gives the plans to the builder. There hasn’t been a lot of communication between the two. The architect is an artist, and all he really wants to see is that his masterpiece is built within his vision. The architect is not a builder, never has been, and is not good at estimating the actual cost of materials and labor to implement his vision. Therefore, the architect has many expensive features in the design that the clients would not want if they knew it would add greatly to the cost for a pretty but not especially functional purpose. Understanding this is one of the reasons one begins to ask, architect or builder first?
On the other hand, the custom home builder is concerned about cost, and he recognizes those features that add excessive costs, but he has a great relationship with the architect, who referred these clients to him, and so the builder does not spend a lot of time educating his clients about ways to reduce the cost while achieving their personal dream within their original design concept. The clients trust their architect and their builder. Both are at the top of their profession, and they are not cheap. They must be the best since they charge so much.
As the builder begins building the home, he finds a number of small but not inexpensive nuances in the architectural plans. They are actually mistakes or features the architect literally did not address. For example, the architect did not include drainage spouts on the house, which also did not address the need for curtain drains and the additional drainage needed around the house. The plans had to be sent back to the architect, edited, and then the builder would implement the edited plans. This change alone added almost $12,000 to the total cost. But there were half a dozen other changes the builder recommended were essential to avoid other problems in the future. Some builders take advantage of add-ons or extras, and this is where they can make a lot of profit. Whereas the profit margin on a total contract may be 15%, the profit on an extra can be 100%.
What did not happen here that should have was a good line of communication between the architect and the home builder from the very beginning. When cost is not a factor for the professionals involved, communication is less important, and educating the clients to more efficient ways to complete the design they have in their minds is also less important. Trusting someone who has their own agenda on cost and profit can play against the consumer’s best interests, but most consumers have never thought about this dichotomy: architect or builder first.
In this case, the completed cost of the home, not counting the price of the land, was about $1.2 million. The architect charged $85,000. The clients got their home, but there were numerous features they paid for that they did not need and would not have paid for if they had known how much those features added to the total cost of the contract.
One of the lessons here is that architects are not motivated to keep costs down. They are motivated to see their vision completed by a builder. This is the way the profession works. A builder who has a lock with a Seattle architect is most likely a very expensive builder who is also not motivated to reduce the cost to the client. The higher the price of the home, the more the builder makes. Most builders are paid on a cost-plus contract.
Hire the Home Builder First. Home builders are not all the same, just like Realtors are not all the same. It is critical to do your due diligence to find a truly competent and honest home builder who will give you straight estimates and be honest with you throughout the project planning and construction. You can literally discuss your design plans with this kind of home builder and talk about how he works with an architect to make sure that your home is built the way you want it built.
But there is another huge factor that is vitally important to you, and that is your home builder must understand your budget and your priorities. This means your home builder must work to help you achieve your goal without wasting a single dollar on features you don’t really care about. That cupola is cute, but would you really want it if you knew it would cost you $7,000? Probably not. That ceiling dome in the dining room the architect designed is beautiful, but would you pay for it if you knew that a first class ceiling dome was made of fiberglass, gypsum or polyurethane, and would add $18,000 to the cost of your home? Maybe not.
Hiring a builder who is on your side means he is not motivated to inflate the cost of your home, or to accept an architect’s design that will cost you a lot more. A good builder can suggest ways to the architect that will actually reduce the cost of your home. Remember, the architect is not trained in estimating costs or motivated to keep costs down. But a conscientious builder can work with you and an honest architect as a team to achieve your goals within your budget. By the way, be sure your home builder is not using a cost-plus contract, but a guaranteed contract price. That’s honesty and integrity.
In this second scenario, the builder and the architect communicated from the very beginning. In fact, the builder and the architect sat down together before anything was put to paper, and they discussed the clients’ goals and desires and budget. The architectural plans were designed with all that in mind, and the architect charged $9,000, not $100,000. It gets better. The home builder was able to build the client’s dream home for $800,000, not $1.25 million.
These two scenarios are based on true stories, although I have not revealed any names or specifics in order to protect the guilty. The real point of this exercise is to share real life information with you so that you can make wise decisions for you and your family. One of my life’s passions is protecting consumers from those who pretend to work in consumers’ best interests but don’t.
You’ll read many articles on the Internet insisting that your best approach is to hire an architect first, but it’s simply not in your best interests, at least not in the real world. I have a simple statement that answers a lot of questions when you are trying to find out the truth of someone’s motivation. I like to say that the answer is often revealed if you just “follow the money.”
Would I take a referral fee for referring someone to a builder or to an architect? I would, but only if the builder or the architect were truly working in the client’s best interests, and the fee they paid me did not in any way compromise their dream or the cost to achieve their dream. In any event, I would discuss that with my client, because I believe in full disclosure. Most of all, I believe that consumers deserve the whole truth and unconditional honesty and loyalty from the professionals they hire. The issue of who to hire first, the architect or builder, is a relevant issue today. There is no right and wrong answer, but there are issues and questions to be answered. Let me know what your experience has been. Who did you hire first, the architect or builder?
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