When the building of a new house or a major remodeling project comes in over budget, many homeowners conclude that they can get the bottom line back to where they want it if they purchase some of the big ticket items themselves and avoid paying the builder's mark-up.
From the owners' perspective, this looks like a sound strategy. They won't have to make some hard choices and reconsider those longed for but pricey features such as the skylights that open and close by remote control.
But most new home builders hate it when owners supply materials. Besides the fact that they make less money, such an arrangement creates headaches for all parties, causes delays and rarely saves owners as much money as they assume.
Can You Really Save Anything?
If owners insist on supplying some of the big ticket items "to save a buck," most builders are very reluctant to take on the job. From their perspective, such a cost-cutting tactic reflects a fundamental misunderstanding of what the builder's mark-up covers: A professional builder expects profit and reward for his efforts and, more critically, from his time and overhead to do a very complicated job correctly.
The builder orchestrates the construction process. He arranges for the purchase and delivery of several hundred items in a precisely ordered sequence. He schedules as many as thirty subcontracting trades to work with the materials as they are delivered, and he supervises the subcontractors to insure that their work is done correctly.
Each delivery of material must be coordinated with many other ones; it has to arrive at the right time, intact, and with all required parts so that the subcontractor can do his job. This can be a time consuming process. A contractor can spend half his time getting all the stuff to the site.
Though purchasing a plumbing fixture or kitchen cabinets seems easy enough, most owners don't know what's required.
With plumbing fixtures, for example, they buy the plumbing fixture, but they don't get the accessory parts needed to install it, such as a waste and overflow for the bathtub.
Then the headaches begin. "If a part for something that an owner purchased is missing, who will run out to get it? If the plumber goes to get the part, he will charge for this. If builder gets it, he won't get paid for his time--that's part of what the mark-up covers.
Even such seemingly straightforward purchases as bathroom tile can become headaches because owners don't know what trim and accent pieces are required. "It's time consuming for an owner. After the second or third trip to the tile guy, owners begin to appreciate the know-how of the general contractor and his network of subcontractors that the mark up pays for.
Besides covering the time spent in trips back and forth to suppliers, the builder's mark-up provides him with some margin to cover losses when materials are damaged at the job site.
If an owner purchases kitchen cabinets and the builder installs them, what happens if one is dropped and damaged?
Besides the likelihood of slowing down the job and irritating the builder, clients don't save as much money as they think they will when they purchase things themselves, The client says, 'I can get a designer discount,' but how well is the person connected? The average person doesn't have access to a professional discount.
Besides, the discounts are like used cars--there's no standard discount. The client won't get as good a discount as the builder will get unless their uncle owns the store.
Besides purchasing materials themselves, some owners try to save money by using subcontractors who are friends, but an owner-supplied sub can be worse than owner-supplied items. For example, the friend may be moonlighting and only do extra work on the weekends, which slows down the job.
The friend can also be less competent or experienced than the homeowner realizes.
Besides this, most subs will pick the easiest way to get a job done and this can make it difficult for the next trades person. A homeowner won't know this, but a builder will.
"That $15-an-hour electrician roughs in outlet boxes but places them too close to the doors and windows. The trim carpenter can't trim or must cut the trim to fit around the box. Another example, the bathroom cabinets are ordered and installed but they are too close to the toilet joist and the plumber says, 'no way I can put the toilet in there!'"
Our advice: at the outset of the job, owners have to accept that "certain things cost. The plumber will get $45 to $50 per hour; the owner pays twenty per cent more for me to get the guy there on time and to do the job right."
After the job is finished and the house is built, owners may discover yet another reason that purchasing items themselves doesn't pay in the long run. A home builder will warrant and repair items that he purchases; part of his mark-up also covers his time for this. But if the owner-supplied skylights that are supposed to open and close with a switch won't work properly, the builder can say with some justification, "that's not my problem."
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