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How To Bid A Custom Home.

 
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Old 10-16-2014, 09:25 PM   #1
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How To Bid A Custom Home.


I have never done a bid for a custom home as I have only built spec houses while on my own. I want to start trying to build customs but when talking with clients, don't really know where specific allowances need to be placed. Some may have specific specs to bid off of but I know a lot would not.

I know how to do a cost estimate, take offs and all of the steps/phases to add into the estimate, but u sure where to add allowances and how much. I mean you could have a $50k kitchen in a $150k house
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Old 10-16-2014, 09:33 PM   #2
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Re: How To Bid A Custom Home.


Jaws had a good list of stuff in another thread last weekend

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Old 10-16-2014, 10:07 PM   #3
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Re: How To Bid A Custom Home.


Yah, I seen that, which is detailed, but doesn't specifically state what will be allowances and what won't be. When I do an estimate for a spec, I will include most of that list as it applies, but I already know what I have in mind for specs and assign a price or budget to different finishes based upon my estimates selling price.


What I don't know is how to estimate allowances. Tile can be $2 sf on the cheap but nice end all the way up to $10+. If I give an allowance for $5 sf and they go with $10, I would need to add more for labor to cover my risks even though it doesn't take more time
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Old 10-17-2014, 08:52 AM   #4
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Re: How To Bid A Custom Home.


I thought that was the purpose of a change order? You speced it for 5$ tile, now you want $10, here is the change order with new cost?
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Old 10-17-2014, 09:04 AM   #5
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Re: How To Bid A Custom Home.


Pick allowances and state them in your scope of work. AND TALK ABOUT THEM WITH OWNER!

For things that aren't allowances, list what you have included. Example:

All ceramic tile included as $3/sf material allowance (including tax).

All paint to be Sherwin Williams Promar series.
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Old 10-17-2014, 09:52 AM   #6
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Re: How To Bid A Custom Home.


This is why I had owners complete their own spec book.

I would provide them guidelines and they would select items prior to bid
to eliminate confusion and delays while decisions were being made.

On jobs that went to competitive bid it leveled the playing field and eliminated lowballing.
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Old 10-17-2014, 10:13 AM   #7
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Re: How To Bid A Custom Home.


I do percentage on certain things, 2- 3% for electical fixtures, 2-3% for plumbing fixtures. Sq ft numbers for flooring and trim packages. My contract consists of four documents and is stated in the contract: scope, contract, drawings, and Table of Allowances. The table explains what an allowance is and what the numbers for all allowances in the table. It also explains what is included in each allowance I.e.:

An allowance of $45.00. a yard is included in this bid to carpet all bedrooms and Den as identified on the Construction Drawings. Allowance for carpet includes, pad, tack strip, carpet, installation, freight and taxes associated with the carpet.

Or something to that extent.

Each client and project is different. I am in a whole house remodel on a regular 3 bedroom ranch right now, house probably cost 285,000 not including the remodel. They chose 15 a sq ft tile for the WHOLE house, and 2% was not quite enough to cover the lights and fans. I use an honest assessment of the propertys value and explain the allowance and why I am using that number to the clients. Then they cant say I lowballed anything because I figured 6k on lights and they spent 9k. I also explain that them spending the extra 3k doesnt benifit me as it is an allowance.

Most of my allowances are high enough that they dont go over. If you add all allowances together and plug in what they actually spent it is almost never more than I allowed for as a whole. I lose jobs for it I am sure, but the reputation of being an honest and diligent estimator brings us a lot of work on referals.
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Old 10-18-2014, 10:47 AM   #8
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Re: How To Bid A Custom Home.


I have always wondered if there could be level 1,2,3,4 custom houses. Just whip out the next level of allowances.

Certain people who want a stone front on their house will certainly want a bazillion little extra doodads so give them the appropriate allowance list. People who want vinyl and just granite counters fit into a lower level.

If that makes any sense.
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Old 10-18-2014, 07:38 PM   #9
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Re: How To Bid A Custom Home.


Quote:
Originally Posted by JBM View Post
I have always wondered if there could be level 1,2,3,4 custom houses. Just whip out the next level of allowances.

Certain people who want a stone front on their house will certainly want a bazillion little extra doodads so give them the appropriate allowance list. People who want vinyl and just granite counters fit into a lower level.

If that makes any sense.
That is similar to how most large tract builders work. The houses have levels of upgrades.
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Old 10-18-2014, 08:14 PM   #10
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Re: How To Bid A Custom Home.


If its one of my spec plans I note to built exactly like that address and then list any changes or upgrades in the contract. If its a custom build I usually build it on paper and submit the budgets with my fee as a line item. If they want to move forward I get them to do some selections and help me firm up the budgets and attach it as part of the contract. I have built a good many 7000 to 10,000 sq ft homes this way. Owners are a part of generating the budgets and keeps you out of the blame game. I generate budgets for the super structure ie site prep, slab, framing, roofing and such they can work on cabinets, windows, tile, plumbing fixtures and such. I cant really create those budgets without their help anyway. They are paying me a fee to help THEM create the budgets, manage the day to day scheduling and management of the subs. If I screw something up due to my negligence them they take it out of my fee. It rarely happens. This keeps my liability down, keeps everything an open book. They get exactly what they are willing to pay for. Subs turn in draws to me and I submit to owner for payment. They write the checks directly to the subs and pay my fee in draws. Its my responsibility to make sure the subs don't over draw and complete the job. If a sub walks I need to make sure I have enough money to get that portion finished within budget or I pay for allowing the sub to over draw. I've been working the same subs for 20+ years so it never happens. I demand they use my subs and that I don't work with cheap crack heads. Pay them good and expect the best.
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Old 10-27-2014, 09:01 PM   #11
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Re: How To Bid A Custom Home.


Allowances should be used ONLY where a cost CANNOT be determined. Flooring for example is a bad excuse for an allowance. Spec in a standard. For example- spec in a specific, mid grade quality hardwood that comes with a number of different finish options. This way, the client knows they can get something for the price you quoted. There's nothing worse than looking incompetent because you called out an allowance that is either too high, or too low. They cannot argue specifics.

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