Has anyone broke their contract with their builder midstream
mom2samlibby
10 years ago
Featured Answer
Sort by:Oldest
Comments (21)
MFatt16
10 years agolast modified: 9 years agomom2samlibby
10 years agolast modified: 9 years agoRelated Discussions
Vague Builder's Contract - Please Help.
Comments (37)Sorry about your loss. If you want to see the full version of the contract I outlined, you can buy a paper copy of AIA A105 at the link below for $8.00. There is nothing wrong with crossing out what you don't want and adding supplemental provisions or clarifications on attached sheets as long as they are dated and referenced in the main Agreement. Be sure all parties initial in the margin where changes were made and make three signed copies. All standard contract forms provide a space for an interest rate to be entered for late payments to the contractor and that should be sufficient for any builder. Adding 10% to the entire bill after 5 days is obviously an onerous penalty and since the builder doesn't get a discount on most of the cost of construction he can't truthfully say it is due to lost supplier discounts. Window suppliers generally require half at the order time and the rest upon delivery. A 10% penalty is a huge red flag and a deal breaker. Be thankful the guy showed his stripes early. All AIA contracts naturally provide for an architect but that can be modified. I hope you will have someone advising you during the construction phase since even good contractors make mistakes and it is not realistic to ask anyone to put your interests above theirs and building inspectors have no obligation to you to find errors in the work contrary to popular opinion. An Allowance is like a small Cost Plus contract inside a Fixed Price contract so avoid Allowances if at all possible and make the builder bid as much as possible up front. When you must use them, determine the quantity and general location of the items now (even if in narrative/list form) so the labor/installation price can be included in the base bid and the Allowance will only be for the cost of materials. Listing Unit Costs (like a per s.f. cost for flooring installation) can help too. This is the only time the builder will be motivated to keep the prices down so don't waste that advantage. The buy-out of an Allowance item should be resolved by Change Order whether it is higher or lower than the Allowance amount since it changes the contract price. I like to add a third option where a full credit is given and the Owner can supply the material. Sometimes this is the only way out of a difficult negotiation with a Sub. If he knows you can walk away he will try harder to please you. In my opinion a Fixed Price contract with lots of Allowances that include labor is the most lucrative contract type for a builder assuming he can get kick backs from his subs. I even had a contractor ask me for a kick back because he recommended me for the project. Good luck. Here is a link that might be useful: AIA A105...See MoreBuilders, pricing, contracts - what do you all think?
Comments (28)Mightyanvil, Thank you for the contract breakdowns, I really appreciate that. That is definately part of what I was looking for, ways to create a win/win for us and our eventual builder. We have someone we are interested in using but have not talked specific contracts yet. There seems to be some perception that 1. I am not interested in quality and 2. that I don't realize the potential costs of quality and the unforseen. I appreciate that you are trying to warn me -thanks. I do understand these things and am trying to be prepared for them. What I was trying to get at is that somewhere out there there is a good contractor who will look at a project and take into account our site, our materials choices, our plan, etc. and come up with a bid or projected budget and a price to build our home based on all those things plus whatever he/she needs to make it work, do the job and continue to run a business successfully. Fine with that. There is also someone out there who will do all the same things and will take opportunities to increase the profit he/she takes from the job without offering any additional quality or service to the owners. My whole point is that from my point of view the second scenario is not okay with me and I was wondering what others had done and how they felt about their experiences. I would like to guard against scenario #2 if I possibly can. I know if I choose more expensive materials I will also have to increase the labor portion because it will take more skill from the tradesperson required to do the job. We do want a well built home and know that we will have to make choices and potentially sacrifices to get the things that matter most to us. When I was projecting our budget I took the averages from about 5 different sources of information and then depending on my ability to verify how that would apply to the home we are building I would either use the highest number if I didn't know or the amount that seemed to fit best with our project. There were some items that I was able to verify by actually going out and getting real numbers others by saying 'we are building a home next year it will be (description)if I am looking for 'x' and I budget 'y' is that reasonable? In the 'unknown' areas I spoke to a friend who owns his own concrete flatwork company, he has built several of his own homes. One of his sites was in our neighborhood and similar to ours, so in my basic labor and materials budget I took the amount he paid for excavation and tripled it for safety. I compared that to the prices others have paid in 'hairy situations' and my number was always the highest. We have already dug some on the property as we put in the septic and the excavator at that time did not feel we would have a problem *from what he could see and had experienced on our site* digging the hole for the house. I took the highest foundation cost and added 50%. We have city water, septic is in and we have electrical ready to go. This home will replace a manufactured home so our permits are inexpensive-about 1/3 of what it would be otherwise. When I got my budget together I looked at the overall total and added 10% to the entire thing. I did find that some numbers varied more than others and were harder to pin down. Other times the same number kept popping up so I felt I must be close and the 10% on top of that should cover it. I actually showed this budget and the plan to the builder we are considering and she gave me the feedback that most of my numbers are 'conservative'- in her terms which meant 'high' and we should be fine. Even if our budget goes over another 10% from that we are ok -including the fee amounts she quoted us for her services. At the time the plan we had been considering was built as a spec house nearby and we had gone through it several times. When I contacted the builder I explained that we really liked his house and were considering building that home ourselves. We shared with him information about our property and our time frame and we talked about the finishes in the house and the different things he was including. When he gave me the price for the home as built but on our site it was about 16% higher than our highest number and it did not include everything. Based on comments some have made, maybe it was still a 'fair' number but then again maybe not...in our county you can look up valuations on permits and the price he quoted for house only was $100k over that amount and it was $200k over what he told the county his cost was. In talking with my concrete contractor friend who has built his own homes he told me that builders usually underestimate their expenses for the county but that the county gets very close and they include approximately a 10% 'contractor markup' in their valuation. Enter builder #3, nice guy, only builds turnkey, fixed price. Not sure why he was interested in us as we were very up front that we did not think we would go that way. He was trying to convince us why we should I think. He was very helpful and actually wanted to see our site. He has just finished carving half a hillside out for a huge custom home which we toured so he knows about 'hairy excavation' and he looked at our site and said it was about average for our area and he didn't see a problem. Famous last words I know... anyway he ballparked a price about 10% less than the higher guy and about 9% above our 'cost plus' budget. This makes sense as he does need that 'coverage' in there, but...we had already added that to our numbers so...either we are still way off or...make of it all what you will. The highest number is out of our budget, the middle number is doable and the low number means new furniture, nice landscape etc. Guess which one I am planning on? Guess which one I am HOPING for?! :) So perhaps some will say this all bears no relevance to an actual project and maybe it doesn't. I am not trying to control every aspect, just educate myself and be prepard so that hopefully we make a good choice when we do finally sign that contract. I just wanted to know what everyone else was thinking about builders, pricing and contracts and how to best go about building a home for a 'fair' price. We are committed to building a house, it will be interesting to see what it will actually cost. Thanks all....See MoreHas anyone fired their builder?
Comments (12)Our builder would not give us a set time either zorro. He used our house as an ad to get bigger and better business... which he has now about a block away from us. Rumor has it that he is in trouble with that build- timeline, ability to provide the labor needed for the magnitude of the project, etc. The difference with that house and ours is that those people are young, socially connected individuals who are going to let everyone know what's up with this guy. He bled us incessantly by mismanaging our build and as a result he gave us back part of his fee. That was the only reason we did not fire him. These guys really unfortunately have the upper hand in the middling stages. If it gets bad enough though, I would "go shopping" at least, and see where you stand. People stop in front of our house and say how beautiful it is, and isn't so- and-so a wonderful builder, yada yada... We just wish we could let people know just how inept the guy was, but that is not going to happen in a front yard conversation through a rolled down car window. Nobody likes being taken advantage of, or admitting it- but we do not endorse this guy, and karma is coming like a big, slow train around the bend (literally) for him....See MoreNervous about unusual contract terms with production builder
Comments (26)The first home we built was a tract home like this...I completely understand not wanting to build this way, but I am also aware that sometimes that's the only way you can get in the area you want. That was the situation we were in at the time. I had done a complete gut/remodel/addition on a 100 yr old farm house with a local small builder and loved it...we were moving to an area where small builders weren't an option as there was no land not owned by production builders and there was NOTHING on the market that met our needs our could be rehabbed to meet our needs within the budget....so production build is what we did. I agree with everyone that the contracts are 100% in favor of the builder and it depends on the builder (I'm assuming it's really how much they get from the lender) on what they're willing to allow you to negotiate. I was able to change nothing in my contract yet my cousin building at the same time with a different builder was able to make adjustments... BUT what I will tell you in hindsight...I wouldn't do ANY upgrades. I did the ones that we thought made sense...wood flooring throughout, cabinets...the things that seemed wasteful or very intrusive to do later. I regretted it. With the flooring, we paid a ridiculous amount to upgrade to was still crappy. It was still builder grade. Same with cabinets. We would have been money ahead to build basic and add the upgrades after possession. Had I done that I would have gotten better flooring for 1/2 the price. I did rip out my counters and used the original ones in the garage. I got a higher level granite for the same price they were offering level 1. I wish I'd done that with the floors and cabinets! Just something to think about....could save you some money upfront and heartache in the end. Good luck!...See MoreUser
10 years agolast modified: 9 years agomom2samlibby
10 years agolast modified: 9 years agoUser
10 years agolast modified: 9 years agoUser
10 years agolast modified: 9 years agoJRRR
10 years agolast modified: 9 years agomom2samlibby
10 years agolast modified: 9 years agomotherof3sons
10 years agolast modified: 9 years agohouses14
10 years agolast modified: 9 years agomom2samlibby
10 years agolast modified: 9 years agomom2samlibby
10 years agolast modified: 9 years agobevangel_i_h8_h0uzz
10 years agolast modified: 9 years agomom2samlibby
10 years agolast modified: 9 years agoWilliam222
10 years agolast modified: 9 years agomom2samlibby
10 years agolast modified: 9 years agoAlexis Surrey
8 years agogerard g
2 years agogerard g
2 years agoMark Bischak, Architect
2 years agolast modified: 2 years ago
Related Stories
LAUNDRY ROOMSThe Cure for Houzz Envy: Laundry Room Touches Anyone Can Do
Make fluffing and folding more enjoyable by borrowing these ideas from beautifully designed laundry rooms
Full StoryCONTRACTOR TIPSWhat to Look for in a Contractor's Contract
10 basic ingredients for a contract will help pave the way to remodel happiness
Full StoryBUDGETING YOUR PROJECTConstruction Contracts: What to Know About Estimates vs. Bids
Understanding how contractors bill for services can help you keep costs down and your project on track
Full StoryBUDGETING YOUR PROJECTConstruction Contracts: What Are General Conditions?
Here’s what you should know about these behind-the-scenes costs and why your contractor bills for them
Full StoryDESIGN PRACTICEContracting Practice: Marketing Your Business
To keep those projects rolling in, combine old-school techniques with the latest in high-tech networking
Full StoryREMODELING GUIDES10 Tips for Choosing and Working With a Builder
Make your construction experience a happy one by following these steps
Full StoryTILEWhy Bathroom Floors Need to Move
Want to prevent popped-up tiles and unsightly cracks? Get a grip on the principles of expansion and contraction
Full StoryWORKING WITH PROSHow Long Is Your Contractor on the Hook?
Understand how a warranty protects homeowners from shoddy work — and builders from being liable for their work for forever and a day
Full StoryDECORATING GUIDESCalifornia Law: License to Practice Interior Design?
A proposed bill that would require a license to practice interior design in California has Houzzers talking. Where do you stand?
Full StoryLIFETrue Confessions of a House Stalker
Letting go when a new owner dares to change a beloved house's look can be downright difficult. Has this ever happened to you?
Full Story
bevangel_i_h8_h0uzz