Bidding Process: Get a Ring on the Finger First
A visitor to my website recently asked: how does the bidding process work? I figure if one person is asking, many more probably need to know.
There are many ways a builder can bid on a project. There are no regulations for the practice so it has organically evolved differently in different areas of the country. Because it is such a personal endeavor, many homeowners make mistakes. Here are some common ones.
Picking the Builder First
Many people choose a builder, design a plan through this builder and ask him to develop a price. Unfortunately this is the most common approach in my area. This is also the worst position for the homeowner.
Choosing the builder first makes no sense to me. It is similar to walking into a car dealership and stating, “Ok, I’ve been looking at a lot of cars. I have narrowed it down and decided to buy a car from you. What will you charge me?”
You see how all of your bargaining power is immediately gone? Up until you have a set of construction documents that will be a part of your construction contract, anything can change for any reason. Numbers, materials, finishes – and the costs of all of these things – are not defined. Don’t make this commitment at this point. It’s not good for you.
Stock Plans or Partial Services
Other people will go through the design development phase with an architect or buy a plan online. Then they sit down with a couple builders to discuss finishes and allowances. Builders bid the project based on many assumptions.
This too is common, and bad for the homeowner. You are getting a little closer to the right way to do it, but in this instance you are asking builders to bid against each other without clearly defining finishes and materials. This is difficult on good builders that are dedicated to best building practices and quality materials. And there is too much leeway for the cheaters.
Design a House with an Architect
In this process, you send complete construction document sets to three builders and expect them to prepare a competitive bid based on all the details spelled out by you. Obviously I have been leading you to this option as the best choice. Because it is!
I counsel my clients that your primary goal in choosing a builder and getting the best price is to maintain control until you sign that contract. You own the drawings, you decide your allowances, and you get multiple bids from highly qualified builders.
Consider it a warning sign when builders want you to commit to them too early. Of course it is best for them to get your commitment early, but if they are a quality builder they will not be offended or use high pressure tactics to tie you down early.
I know it is tempting to latch on to the builder you connect with personally. This is a long process, it’s true that it is like a marriage for the time you are together, and yes, personality plays a huge part of who you choose to build your house. But my advice is this: Keep the personal stuff out of it until you get the bid. Once you have the numbers on paper, then you can jump into bed. It's kind of like waiting to get the ring on the finger.
This is simply a guideline of how to get to the bidding process. Next I will discuss actually working through the bid process. It’s kind of complicated, I will do my best to break it down for you. It is so important.
As Founder and Principal Architect of Springhouse Architects, Sheri’s mission is to lead Clients through the building process with the Clients in control and Springhouse as their guide, advocate and ally. With over twenty years experience in Residential Architecture, Sheri brings knowledge and confidence to your custom home project.