Building a Home? What is the biggest mistake made?

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?

Last Updated on March 28, 2010 by Chuck Marunde