1 00:00:09,960 --> 00:00:17,620 Hey, y'all the duo here, Brian and Steven, we're back again 2 00:00:17,820 --> 00:00:19,620 for. I don't know what episode this 3 00:00:19,620 --> 00:00:21,220 is anymore. At some point we're probably 4 00:00:21,220 --> 00:00:23,860 just going to stop counting, right, Steven? 5 00:00:26,780 --> 00:00:30,400 But I'm sure we'll we'll keep track one way or another. 6 00:00:31,560 --> 00:00:35,360 We're back today to talk about price tricks. 7 00:00:35,480 --> 00:00:41,720 So what we'd like to jump into is several different ways that 8 00:00:42,600 --> 00:00:49,640 builders can, for lack of better terms, finagle the, the initial 9 00:00:49,640 --> 00:00:53,960 estimates or or numbers that are thrown out early on in the 10 00:00:53,960 --> 00:01:01,480 process when you are still interviewing builders, learning 11 00:01:01,480 --> 00:01:05,319 who they are, hopefully gaining their trust to, to move forward. 12 00:01:05,319 --> 00:01:12,200 And so there's more than we can cover in in any one episode, but 13 00:01:12,200 --> 00:01:15,160 we just wanted to touch on a few here because we hear about it 14 00:01:15,160 --> 00:01:19,600 every single day of builders that have done something that 15 00:01:19,600 --> 00:01:23,960 unfortunately set the homeowners or or potential homeowners 16 00:01:24,400 --> 00:01:29,240 expectations in the wrong way. And it's something that we try 17 00:01:29,240 --> 00:01:34,200 very hard all the time to make sure that we never misguide our 18 00:01:34,200 --> 00:01:37,760 homeowners expectations, which by the way is not easy at all. 19 00:01:37,800 --> 00:01:42,400 It's it's a constant challenge. It's something that we're always 20 00:01:42,960 --> 00:01:48,520 up for the challenge, but it's it's hard when we have to set 21 00:01:48,520 --> 00:01:51,320 expectations on things that maybe we don't even have 100% 22 00:01:51,320 --> 00:01:53,480 clarity on. So that's what we want to jump 23 00:01:53,480 --> 00:01:57,840 into today. Steven, you want to kick it off? 24 00:01:58,920 --> 00:02:03,400 Yeah, yeah, absolutely. Great introduction there for 25 00:02:03,400 --> 00:02:06,360 episode. Yeah, 15 I guess, right. 26 00:02:06,920 --> 00:02:11,360 But yeah, no, I think you you said it well and. 27 00:02:12,080 --> 00:02:15,520 You know whether it's builders doing it intentionally or 28 00:02:15,520 --> 00:02:19,160 unintentionally, you know it's just something that we want to 29 00:02:19,280 --> 00:02:23,000 open all these listeners ears to and just something that they can 30 00:02:23,000 --> 00:02:28,560 be aware of as they are price shopping their new to be built 31 00:02:28,560 --> 00:02:32,720 home. Being aware of these price 32 00:02:32,720 --> 00:02:37,960 tricks as we're calling them is going to really help them to go 33 00:02:37,960 --> 00:02:40,160 into this with more detail and more clarity, so. 34 00:02:41,080 --> 00:02:43,560 With that being said, yeah, we'll jump right into it, but 35 00:02:44,880 --> 00:02:48,520 the first price trick that we want people to be aware of is 36 00:02:49,200 --> 00:02:54,040 builders coming in with low allowances for selection items. 37 00:02:54,560 --> 00:03:00,480 So in more detail there any selections that go into your 38 00:03:00,480 --> 00:03:02,600 home. So let's give some examples 39 00:03:02,600 --> 00:03:04,120 there. Appliances. 40 00:03:04,680 --> 00:03:08,440 Tile flooring. Anything along those lines, 41 00:03:08,440 --> 00:03:13,200 countertops, anything that could range in level of finish out 42 00:03:13,640 --> 00:03:16,160 basically would fall under those allowance buckets. 43 00:03:16,160 --> 00:03:19,200 And most builders try to get a good idea of. 44 00:03:19,640 --> 00:03:23,200 Most reputable builders, let me say that, try to get a good idea 45 00:03:23,200 --> 00:03:28,240 of what their clients want to see in their finished home on a 46 00:03:28,240 --> 00:03:34,160 scale of say one to 1010 being a very nice top of the line, high 47 00:03:34,160 --> 00:03:36,440 end finish out, one being a very. 48 00:03:36,800 --> 00:03:41,080 You know, low end budget, friendly cost saving finish out. 49 00:03:41,080 --> 00:03:46,720 So with that spectrum one price trick that we want everybody to 50 00:03:46,720 --> 00:03:51,480 be aware of is a builder that either knows or does not know 51 00:03:51,640 --> 00:03:56,160 your expected finish outs and severely under quotes those 52 00:03:56,160 --> 00:04:00,440 allowances on that estimate or whatever price they're showing 53 00:04:00,440 --> 00:04:05,320 you at the very beginning. That's a great point and one 54 00:04:05,320 --> 00:04:10,640 that comes to mind Steven is appliances, appliances range in 55 00:04:10,640 --> 00:04:15,800 price like many things but very significantly we can see 56 00:04:16,240 --> 00:04:21,160 appliance packages in the in the range of 1520 thousand up to 57 00:04:21,320 --> 00:04:24,280 over 100,000. If you're going to build in some 58 00:04:24,280 --> 00:04:28,120 cases a multi $1,000,000 house that that wants an appliance 59 00:04:28,120 --> 00:04:34,160 package like that and and how many refrigerators, multiple 60 00:04:34,160 --> 00:04:36,440 washers and dryers. And then there's there's 61 00:04:36,440 --> 00:04:39,080 obviously big brand names that that demand a premium. 62 00:04:39,080 --> 00:04:44,520 So to to your point just to just to bring it home a little closer 63 00:04:44,520 --> 00:04:51,800 to an example, you have to share those details with your builder 64 00:04:52,120 --> 00:04:55,400 sooner rather than later and just to get a more accurate 65 00:04:56,120 --> 00:04:58,000 picture on the allowances, right. 66 00:04:58,000 --> 00:05:02,400 And so I ideally you get your selections done as as early as 67 00:05:02,400 --> 00:05:09,000 possible, but we understand you need to under you have to select 68 00:05:09,000 --> 00:05:11,760 a builder in most cases or you do have to select a builder 69 00:05:11,760 --> 00:05:15,600 before you're going to have all your selections made, right. 70 00:05:15,600 --> 00:05:17,280 That's typically the order it goes. 71 00:05:17,280 --> 00:05:21,120 So you have to be very confident and comfortable with the the 72 00:05:21,120 --> 00:05:23,480 budgets that are in the allowances for all those 73 00:05:23,480 --> 00:05:26,600 selections. For sure, and I I think that's a 74 00:05:26,600 --> 00:05:31,600 a. Little bit of uncharted waters 75 00:05:31,600 --> 00:05:36,720 or territory for probably a lot of listeners that, you know, a 76 00:05:36,720 --> 00:05:40,240 lot of listeners don't know what a reasonable budget is for 77 00:05:42,320 --> 00:05:47,280 countertops or, you know, tile or flooring or whatever, right. 78 00:05:47,280 --> 00:05:50,200 They can go and look at some of those prices of things that they 79 00:05:50,200 --> 00:05:54,200 like, but it's really hard to put all that together. 80 00:05:54,480 --> 00:05:57,320 And that's where you really comes back to what we always 81 00:05:57,320 --> 00:05:59,360 say, right, Brian? But finding a builder that you 82 00:05:59,360 --> 00:06:02,520 can trust that you tell them, you show them inspiration 83 00:06:02,520 --> 00:06:05,680 pictures, you clearly communicate what you want to see 84 00:06:05,680 --> 00:06:09,560 in your finished home and and then it really falls on the 85 00:06:09,560 --> 00:06:11,280 builder to quote that accurately, right? 86 00:06:11,280 --> 00:06:13,440 The worst thing they can do is under quote it. 87 00:06:14,000 --> 00:06:16,560 And you get towards the end of the build like we always talk 88 00:06:16,560 --> 00:06:20,120 about and they've misguided your expectations severely. 89 00:06:20,120 --> 00:06:23,560 And you have to go over your budget on the home and on your 90 00:06:23,560 --> 00:06:25,360 countertops and on your appliances. 91 00:06:25,360 --> 00:06:27,760 And every which way you feel like you're just getting hit 92 00:06:27,760 --> 00:06:32,040 with overages. And you know the cheaper builder 93 00:06:32,040 --> 00:06:35,520 one out, they underbid the job, they underbid their allowances 94 00:06:35,520 --> 00:06:38,200 and they got the job. But you know, it's not a 95 00:06:38,200 --> 00:06:41,880 pleasurable experience for you as you fell for one of those 96 00:06:42,040 --> 00:06:45,680 price tricks, so. Something to be aware of and I 97 00:06:45,680 --> 00:06:48,200 like your example of the appliances because that's a 98 00:06:48,200 --> 00:06:53,400 perfect example And yeah, making those selections early on can 99 00:06:53,400 --> 00:06:56,880 clear some of this up, you know. And the other thing too that we 100 00:06:56,880 --> 00:07:00,440 like to do really early on before we get a designer and 101 00:07:00,440 --> 00:07:04,120 selections involved is just like I said, that scale of 1 to 10 102 00:07:04,120 --> 00:07:06,600 finish outs. Where do you guys see this 103 00:07:06,720 --> 00:07:09,840 homecoming in, you know, what's your desired finish out level? 104 00:07:09,840 --> 00:07:12,920 Is it a two, is it an 8? Is it a nine? 105 00:07:13,360 --> 00:07:15,440 Those are completely different pictures and completely 106 00:07:15,440 --> 00:07:19,560 different budget allowances that need to be put in there. 107 00:07:19,560 --> 00:07:22,480 So yeah, something to be aware of for sure. 108 00:07:23,000 --> 00:07:25,240 Yeah. As you'll see, the whole theme 109 00:07:25,240 --> 00:07:29,080 of this and we'll say it again before we wrap up, is just 110 00:07:29,080 --> 00:07:33,920 because it appears a builder has a line item or the total price 111 00:07:33,920 --> 00:07:38,280 appears to be lower than another, it doesn't mean that 112 00:07:38,320 --> 00:07:41,440 it's going to come in lower when everything's all said and done 113 00:07:41,480 --> 00:07:43,800 right. And and we've said it before, 114 00:07:43,800 --> 00:07:47,200 we're going to keep saying it again in the future that you 115 00:07:47,200 --> 00:07:49,520 just, you have to be very careful that the cheapest on 116 00:07:49,520 --> 00:07:54,080 paper probably isn't going to be the cheapest at the end. 117 00:07:55,080 --> 00:08:00,120 Yep, Yep. So along those same lines, we 118 00:08:00,120 --> 00:08:04,680 talk about cost plus contracts for a second, Steven. 119 00:08:04,680 --> 00:08:08,440 So what we have seen time and time again is for those builders 120 00:08:08,440 --> 00:08:12,760 that do cost plus agreements that they will intentionally 121 00:08:13,400 --> 00:08:18,920 estimate low and and maybe not just on select on selections and 122 00:08:18,920 --> 00:08:21,360 allowances which is the easier place to do that. 123 00:08:21,800 --> 00:08:26,000 But we'll see it even on items that do. 124 00:08:26,000 --> 00:08:29,600 I just say there's really no excuse for some of the the the 125 00:08:29,600 --> 00:08:32,679 estimates that are just blatantly low. 126 00:08:33,039 --> 00:08:35,640 Steven. We're aware of a situation we 127 00:08:35,640 --> 00:08:41,039 did not build this, we were not a part of this this build or 128 00:08:42,840 --> 00:08:46,600 with the homeowner. But we did hear through actually 129 00:08:46,600 --> 00:08:50,480 Mike, our father who was helping these homeowners with their, 130 00:08:50,880 --> 00:08:55,440 with their basically overseeing their build with their builder 131 00:08:56,320 --> 00:09:00,840 they had, they had about what was it Stephen, 10 or $11,000 in 132 00:09:00,840 --> 00:09:04,960 the budget for a septic system which is not even close to what 133 00:09:05,280 --> 00:09:08,720 even the most basic smallest system would cost anywhere in 134 00:09:09,480 --> 00:09:13,160 Central Texas. So you know it was on paper and 135 00:09:13,160 --> 00:09:18,320 and of course they didn't know any better to ask and and they 136 00:09:18,400 --> 00:09:21,640 they shouldn't have to, right. I mean they're not expected to 137 00:09:21,640 --> 00:09:25,120 be experts in septic systems. They're not expected to know 138 00:09:25,120 --> 00:09:27,880 these costs. Like you said a minute ago I got 139 00:09:27,880 --> 00:09:30,080 $25,000 in the budget for countertops. 140 00:09:30,080 --> 00:09:32,720 That sounds like a lot. Well, it's really not right. 141 00:09:32,760 --> 00:09:36,680 It goes quickly when you start to look at all the cost for 142 00:09:36,680 --> 00:09:41,680 countertops or septic. So unfortunately, these poor 143 00:09:41,680 --> 00:09:46,320 homeowners got stuck with a number that wasn't even 144 00:09:46,320 --> 00:09:48,800 realistic from day one on a cost plus contract. 145 00:09:50,680 --> 00:09:52,760 Yeah. And I think you said it well in 146 00:09:52,760 --> 00:09:55,160 there that. You know these poor homeowners 147 00:09:55,280 --> 00:09:58,800 and most people don't know a reasonable price for a septic on 148 00:09:58,800 --> 00:10:02,560 their home or a reasonable price for trim labor. 149 00:10:02,600 --> 00:10:05,560 You know, those aren't things that normal consumers of a 150 00:10:05,560 --> 00:10:11,120 custom home are in the know on and once again goes back to 151 00:10:11,120 --> 00:10:14,840 trusting your builder and making sure that all those prices are 152 00:10:14,840 --> 00:10:18,040 talked through so that. If you are doing a cost plus 153 00:10:18,040 --> 00:10:21,560 contract, you feel really good about where all those costs are 154 00:10:21,560 --> 00:10:24,680 coming from and you're not going to be blindsided by a septic 155 00:10:24,680 --> 00:10:28,720 system that comes in double what everybody thought it was going 156 00:10:28,720 --> 00:10:32,360 to. So yeah, good take away there 157 00:10:32,360 --> 00:10:37,840 for sure, you know. And I think that leads us to our 158 00:10:37,840 --> 00:10:42,320 next point too, which is inaccurate bits, you know, and 159 00:10:42,320 --> 00:10:44,720 and that can happen in a multitude of different ways. 160 00:10:44,720 --> 00:10:50,520 And one of those is. If I maybe just miscommunication 161 00:10:50,520 --> 00:10:57,040 or misguided expectations or failure to look into all the 162 00:10:57,040 --> 00:10:59,360 details. Sometimes architectural plans 163 00:10:59,360 --> 00:11:03,360 aren't super detailed on, say, cabinet drawings, and a lot of 164 00:11:03,360 --> 00:11:07,480 them don't include landscaping. So you know, there's a lot more 165 00:11:07,480 --> 00:11:10,480 left to the imagination on some of these things that once you 166 00:11:10,600 --> 00:11:13,280 come to a builder and say, hey, I've got my final plan set, 167 00:11:13,280 --> 00:11:17,360 let's rock'n'roll. There is a lot more detail that 168 00:11:17,360 --> 00:11:20,440 still needs to be figured out even when you think you have 169 00:11:20,520 --> 00:11:24,440 your full plan set. So you know, that's where a lot 170 00:11:24,440 --> 00:11:27,840 of heartache can come about whenever you're working with a 171 00:11:27,840 --> 00:11:32,320 builder and they have inaccurately bid something, 172 00:11:32,760 --> 00:11:35,520 whether it was, you know, malicious or not. 173 00:11:37,880 --> 00:11:41,560 It it can cause some heartache like I was saying whenever they 174 00:11:41,560 --> 00:11:44,120 didn't have all the details or they didn't ask for all the 175 00:11:44,120 --> 00:11:47,400 details and they quoted exactly what was on the plans, but 176 00:11:47,400 --> 00:11:51,560 that's not what the homeowners wanted in the end, right? 177 00:11:51,680 --> 00:11:56,480 Very basic cabinet drawing from a a standard architect might not 178 00:11:56,480 --> 00:11:59,680 be what you were anticipating in your multi $1,000,000 custom 179 00:11:59,680 --> 00:12:02,200 home where you wanted to pick all the last details of your 180 00:12:02,200 --> 00:12:03,000 cabinet. So. 181 00:12:03,600 --> 00:12:06,320 Just an example there, but you know every builder is going to 182 00:12:06,320 --> 00:12:09,520 have to work through that different ways and inaccurate 183 00:12:09,520 --> 00:12:12,520 bids when they're going even if they are showing real numbers. 184 00:12:12,520 --> 00:12:15,040 Say this is what came back from the the cabinet company. 185 00:12:16,480 --> 00:12:21,400 OK, well you know that's great, but that was based off of basic 186 00:12:21,400 --> 00:12:25,080 cabinet drawings from the basic plans that came from our 187 00:12:25,080 --> 00:12:26,840 architect. That's not what we wanted. 188 00:12:28,160 --> 00:12:32,760 So anyways, not to to beat that example to pulp, but. 189 00:12:34,040 --> 00:12:35,400 Yeah. Hopefully that makes some sense 190 00:12:35,400 --> 00:12:37,120 there. Yeah. 191 00:12:39,680 --> 00:12:43,200 Those are really good points. So what you're saying to sum it 192 00:12:43,200 --> 00:12:46,320 up is just communication, communication, communication. 193 00:12:46,320 --> 00:12:56,120 And I think a good take away from this is that the plan, 194 00:12:56,120 --> 00:12:59,760 every last detail on that plan from the architect is what we're 195 00:12:59,760 --> 00:13:05,760 going to be looking at. And many homeowners or or 196 00:13:05,800 --> 00:13:12,000 hopefully future clients of ours or others I think believe that 197 00:13:12,000 --> 00:13:15,240 they've looked at their architects plans in detail, but 198 00:13:15,840 --> 00:13:19,760 they probably haven't gone even as as low as they can with that, 199 00:13:19,760 --> 00:13:22,960 right, even down to your point, Steven, on which way does the 200 00:13:22,960 --> 00:13:25,160 cabinet door swing open, What do you want? 201 00:13:25,840 --> 00:13:30,160 What kind of design do you want inside that cabinet drawer that 202 00:13:30,160 --> 00:13:33,880 pulls out? Do you want storage for pans or 203 00:13:33,880 --> 00:13:36,000 or cookie sheets in a certain way, right. 204 00:13:36,000 --> 00:13:39,720 And that's typically not on most of the architect plans that that 205 00:13:39,720 --> 00:13:44,640 we see when people bring us their, their plan set when we 206 00:13:44,640 --> 00:13:46,840 haven't worked with them from the beginning, right. 207 00:13:46,840 --> 00:13:52,040 So another reminder that what we recommend obviously whether 208 00:13:52,040 --> 00:13:55,440 you're considering building with us or not is that you pull in 209 00:13:55,440 --> 00:13:58,920 that builder during that design phase because if we get the plan 210 00:13:58,920 --> 00:14:04,440 set after all of this, then there are still are so many 211 00:14:04,440 --> 00:14:07,680 assumptions even though there's there's a lot to look at on the 212 00:14:07,680 --> 00:14:10,200 architect's plans, there's there's still a whole lot that's 213 00:14:10,200 --> 00:14:13,680 missing. So I'm just saying saying it in 214 00:14:13,680 --> 00:14:15,840 a little different way than you did, but really good point. 215 00:14:16,600 --> 00:14:18,960 Yeah, absolutely. And one thing to add to that is 216 00:14:19,200 --> 00:14:22,680 you know it. It's if it's almost essential to 217 00:14:23,200 --> 00:14:26,480 loop your builder in during the architectural design phase, but 218 00:14:26,800 --> 00:14:31,160 almost just as essential. Is to loop in a designer. 219 00:14:31,160 --> 00:14:34,400 If you're a person that's that particular about the details of 220 00:14:34,400 --> 00:14:38,760 your home and the cabinet swings and the cookie sheet storage and 221 00:14:38,760 --> 00:14:42,960 all that stuff, that's where a designer would really, really be 222 00:14:42,960 --> 00:14:46,120 able to connect the dots and organize everything based on 223 00:14:46,440 --> 00:14:50,920 inspiration, pictures and colors and really paint that picture 224 00:14:50,920 --> 00:14:54,040 more fully from just what the architect is is throwing out 225 00:14:54,040 --> 00:14:54,600 there. So. 226 00:14:55,000 --> 00:14:57,960 To have that whole team come together at the design phase is 227 00:14:57,960 --> 00:15:00,920 really, really crucial that you've got your builder, got 228 00:15:00,920 --> 00:15:04,120 your architect and you've got your designer and of course the 229 00:15:04,120 --> 00:15:08,320 clients to really bring all those pieces of the puzzle 230 00:15:08,320 --> 00:15:11,400 together. So yeah, definitely important 231 00:15:11,400 --> 00:15:17,360 points there. We we have for for the budget 232 00:15:17,600 --> 00:15:22,200 conscious listeners out there that say I want to be very smart 233 00:15:22,240 --> 00:15:25,240 with my, my money and where it goes that there are a lot of 234 00:15:25,240 --> 00:15:29,120 interior designers out there that don't have to cost 20, 235 00:15:29,120 --> 00:15:31,600 thirty $40,000. I mean you'll hear that some are 236 00:15:31,600 --> 00:15:34,520 out there and and they charge that because that's that's the 237 00:15:34,520 --> 00:15:38,080 work that they do. But you know, we have some 238 00:15:38,080 --> 00:15:41,880 interior designers that we work with and some are obviously much 239 00:15:41,880 --> 00:15:45,680 more expensive than others. But there there is a way to do 240 00:15:45,680 --> 00:15:49,960 this and get their input because it is their full time job to to 241 00:15:49,960 --> 00:15:53,520 look at some of these things and and bring some thoughts and 242 00:15:53,520 --> 00:15:55,880 ideas to your mind. And even we miss, right. 243 00:15:55,880 --> 00:15:57,760 We're not the designers, we're the builders. 244 00:15:57,840 --> 00:15:59,560 And then those are two completely different things. 245 00:16:00,440 --> 00:16:06,600 Yep, Yep, cool. Jumping into our next point 246 00:16:06,600 --> 00:16:10,920 here, so another price trick for people to be aware of and look 247 00:16:10,920 --> 00:16:13,680 out for. This one in particular actually 248 00:16:13,680 --> 00:16:17,880 falls on fixed price contracts. So when a fixed price contract, 249 00:16:17,880 --> 00:16:21,920 you have to be very aware of escalation clauses. 250 00:16:22,440 --> 00:16:27,360 And in the world of COVID, that was when these escalation 251 00:16:27,360 --> 00:16:31,160 clauses were really hot topic. Of course, with lumber 252 00:16:31,160 --> 00:16:34,680 skyrocketing and other building materials going through the 253 00:16:34,680 --> 00:16:38,560 roof, no pun intended, You know those. 254 00:16:39,160 --> 00:16:43,360 Price escalation clauses were very, very important for both 255 00:16:43,360 --> 00:16:46,040 sides. Number one, to protect the 256 00:16:46,040 --> 00:16:50,680 builder from losing significant amounts of money on fixed price 257 00:16:50,680 --> 00:16:53,320 contracts that they had already locked in before lumber 258 00:16:53,400 --> 00:16:58,320 skyrocketed. And so it was a protection for 259 00:16:58,320 --> 00:17:02,760 builders, but it also is. Something that homeowners on the 260 00:17:02,760 --> 00:17:05,079 flip side need to just be aware of, right? 261 00:17:05,160 --> 00:17:10,920 Be aware of and be real diligent about how they how you're 262 00:17:10,920 --> 00:17:12,960 analyzing those cost escalation clauses. 263 00:17:12,960 --> 00:17:15,440 So dive into that a little bit more. 264 00:17:15,440 --> 00:17:19,319 If you have a fixed price contract and the cost escalation 265 00:17:19,319 --> 00:17:25,720 clauses are set at a percentage of say a really low percent like 266 00:17:25,720 --> 00:17:33,040 1 or 2% escalation if lumber goes from. 100,000 to 102,000, 267 00:17:33,680 --> 00:17:35,840 OK, well, the builder still has to take that hit. 268 00:17:35,840 --> 00:17:42,920 If lumber goes from 100,000 to 150,000 then the client has to 269 00:17:42,920 --> 00:17:46,920 take the hit of the 48,000 that it went over that 2% escalation 270 00:17:46,920 --> 00:17:49,960 clause. So another thing just to be 271 00:17:49,960 --> 00:17:53,840 aware of and be real real diligent about what escalation 272 00:17:53,840 --> 00:17:57,080 clauses are in your fixed price contract and. 273 00:17:58,280 --> 00:17:59,960 And making sure that they're reasonable, right. 274 00:17:59,960 --> 00:18:04,480 I mean every builder has a different amount or percentage 275 00:18:04,480 --> 00:18:08,600 that they deem as reasonable. I mean, Brian, you can chime in 276 00:18:08,600 --> 00:18:12,600 too, but I would say something reasonable would be 510%. 277 00:18:14,080 --> 00:18:18,560 You know of course the higher the number, the more that falls 278 00:18:18,560 --> 00:18:21,320 on the builder, the lower the number, the less that falls on 279 00:18:21,320 --> 00:18:23,480 the builder and those fixed price contracts, so. 280 00:18:25,000 --> 00:18:28,840 They, I will say that they're not something that any builder I 281 00:18:28,840 --> 00:18:32,760 would imagine would completely eliminate because it's it's too 282 00:18:32,760 --> 00:18:35,560 much risk in a fixed price contract. 283 00:18:35,560 --> 00:18:39,000 But it is something that needs to be healthfully balanced on 284 00:18:39,000 --> 00:18:42,200 both sides. Yeah, yeah, escalation, 285 00:18:42,200 --> 00:18:48,160 escalation can be right. It's it's a balance as you said 286 00:18:48,400 --> 00:18:54,320 on making sure the homeowner understands what they're signing 287 00:18:54,320 --> 00:18:57,920 on what this means the the risk on both sides, right. 288 00:18:57,920 --> 00:19:02,360 There's there's there's risk that is out of the homeowners 289 00:19:02,360 --> 00:19:05,880 and the builders control that just has to be mitigated and 290 00:19:05,880 --> 00:19:08,160 managed and understand who is carrying what. 291 00:19:08,280 --> 00:19:14,320 So what's really difficult is when a builder has to enforce 292 00:19:14,320 --> 00:19:17,680 the escalation clause because it's a it's a complete surprise 293 00:19:17,760 --> 00:19:19,800 right. In most cases that homeowner is 294 00:19:19,800 --> 00:19:23,280 not expecting this saying oh I got to make this phone call or 295 00:19:23,280 --> 00:19:25,800 deliver this news and it's going to come as a complete shock 296 00:19:25,840 --> 00:19:27,360 right. In a fixed price contract 297 00:19:27,360 --> 00:19:32,880 especially when we sign them. Yeah, part of our part of our 298 00:19:32,880 --> 00:19:36,920 offer and and what what we do to differentiate ourselves is say 299 00:19:36,920 --> 00:19:41,120 we we have a on budget guarantee obviously with some other 300 00:19:41,720 --> 00:19:44,040 exclusions and exceptions because of things that are 301 00:19:44,040 --> 00:19:47,800 outside of our control, right. But you know people we've set 302 00:19:47,800 --> 00:19:51,120 that expectation there and then something outside of our control 303 00:19:51,120 --> 00:19:53,200 comes up and that that's never fun, right. 304 00:19:53,240 --> 00:19:58,520 So they're there that there's no other way to handle them, right. 305 00:19:58,520 --> 00:20:01,880 Either it's a fixed price with escalation clauses or it's cost 306 00:20:01,880 --> 00:20:05,720 plus and and so to to build this home somebody, somebody has to 307 00:20:05,720 --> 00:20:09,960 take on the risk of the liability throughout the whole 308 00:20:09,960 --> 00:20:10,680 thing. Right. 309 00:20:10,720 --> 00:20:12,240 That's just, that's just how it goes there. 310 00:20:12,240 --> 00:20:15,720 There's no skirting around that. Yep, Yep, for sure. 311 00:20:16,200 --> 00:20:20,240 And another point on that is that you know cost escalation 312 00:20:20,240 --> 00:20:23,920 clauses are important. A lot of times when you go to 313 00:20:23,920 --> 00:20:26,760 get a bank loan or a construction loan for a build, 314 00:20:27,400 --> 00:20:30,920 the banks will want to see some sort of variance is what they 315 00:20:30,920 --> 00:20:33,680 will call it. Most builders will bake in maybe 316 00:20:33,680 --> 00:20:38,600 a 5 or 10% variance on. Several line items or every line 317 00:20:38,600 --> 00:20:42,520 item of cost for that build. So it's something that banks are 318 00:20:42,520 --> 00:20:45,840 aware of that on a fixed price contract, there are going to be 319 00:20:45,840 --> 00:20:49,800 some variances whether it's in the allowances that the builder 320 00:20:49,800 --> 00:20:53,680 has set forth that the homeowners want to go over on 321 00:20:53,800 --> 00:20:57,360 occasionally. You know those banks want to 322 00:20:57,360 --> 00:21:00,160 make sure everything is within reason and I would say like we 323 00:21:00,160 --> 00:21:03,960 talked about a 5 to 10% variance is. 324 00:21:04,600 --> 00:21:08,120 What we've seen as I would say average, right, there's more, 325 00:21:08,120 --> 00:21:12,400 there's less and that also lines up fairly well with those cost 326 00:21:12,400 --> 00:21:15,720 escalation clauses that we typically see of five to 10% as 327 00:21:15,720 --> 00:21:18,760 well. You know and I think those are 328 00:21:18,760 --> 00:21:22,760 numbers that are fair like we just talked about on lumber. 329 00:21:22,760 --> 00:21:27,280 I mean if if lumber goes up $50,000 or 50% or whatever the 330 00:21:27,280 --> 00:21:31,400 number is. It's really out of everyone's 331 00:21:31,400 --> 00:21:34,160 control that's involved in that, you know the builder and the 332 00:21:34,160 --> 00:21:37,760 client and the bank. So the only person who really 333 00:21:37,760 --> 00:21:39,840 has control over that are the lumber companies. 334 00:21:39,840 --> 00:21:43,000 And to get the job done, somebody has to front that 335 00:21:43,040 --> 00:21:45,640 additional cost. So how is that handled? 336 00:21:45,640 --> 00:21:48,640 And that's just something that needs to be discussed up front. 337 00:21:48,640 --> 00:21:51,840 So there aren't any tricks going on with the pricing of the home. 338 00:21:52,200 --> 00:21:58,600 Yeah, yeah. It's it's important to recognize 339 00:21:58,600 --> 00:22:02,840 this as basic as it sounds. How how big is your contract? 340 00:22:03,080 --> 00:22:05,920 I mean when you're at, when you've gotten through the design 341 00:22:06,240 --> 00:22:09,600 and preliminary building steps, no matter how your builder does 342 00:22:09,600 --> 00:22:12,960 it, how many pages is that building contract, right. 343 00:22:13,120 --> 00:22:17,600 And you'll see that our building contract is over 100 pages long, 344 00:22:17,760 --> 00:22:19,200 right. Because we try and be in deep, 345 00:22:19,200 --> 00:22:25,040 we try to be as detailed as possible because we're, as we 346 00:22:25,040 --> 00:22:27,160 said at the beginning, trying to do our best to manage your 347 00:22:27,160 --> 00:22:30,200 expectations, keep everything as black and white as possible. 348 00:22:30,200 --> 00:22:31,760 Do we miss stuff? Yeah, sure we do. 349 00:22:31,760 --> 00:22:33,200 Right. These are these are massive 350 00:22:33,200 --> 00:22:35,600 projects with a lot of intricacies. 351 00:22:35,600 --> 00:22:38,120 So we do our best. There's a lot of builders that 352 00:22:38,120 --> 00:22:44,920 their contracts not nearly as long maybe 25% as many pages as 353 00:22:45,040 --> 00:22:46,640 as ours and other other builders. 354 00:22:46,640 --> 00:22:49,320 So just that alone should tell you something that why is 1 355 00:22:49,320 --> 00:22:52,760 contract 100 pages and the other one is 25 right When when I'm 356 00:22:52,920 --> 00:22:56,280 when I'm embarking on this journey as we always say with 357 00:22:57,520 --> 00:23:00,680 with a builder that you better trust it is a journey it's a 358 00:23:00,680 --> 00:23:04,200 it's a partnership. So you know just think through 359 00:23:04,200 --> 00:23:05,480 some of those. I know it sounds like it's 360 00:23:05,480 --> 00:23:08,240 common sense but but it is important when you say OK I'm 361 00:23:08,240 --> 00:23:11,720 I'm at the stage and I need to I need to decide on a builder and 362 00:23:12,440 --> 00:23:15,720 even as basic as how many pages is a contract is is can be a 363 00:23:15,720 --> 00:23:16,480 big. Difference. 364 00:23:17,600 --> 00:23:18,680 Yep. Yeah. 365 00:23:18,800 --> 00:23:22,880 Very good points and a note on that. 366 00:23:22,880 --> 00:23:26,760 I think everybody hopefully is aware that, yeah, if something 367 00:23:26,760 --> 00:23:31,160 is not in writing with you and your builder, it most likely 368 00:23:31,160 --> 00:23:33,400 doesn't count, right? And I hate to say that, but it's 369 00:23:33,400 --> 00:23:35,400 the truth. If you try to just have your 370 00:23:35,400 --> 00:23:40,200 word versus theirs, or your word versus the builder's word, it's. 371 00:23:40,800 --> 00:23:46,080 It's not something that's easily defensible, you know, So just 372 00:23:46,080 --> 00:23:49,000 something to think of and make sure that anything that has been 373 00:23:49,000 --> 00:23:52,600 discussed or selections or any changes or anything like that 374 00:23:52,600 --> 00:23:55,920 are all documented. That's another thing that can 375 00:23:55,920 --> 00:23:59,640 cause heartache and price increases on things that a 376 00:23:59,640 --> 00:24:02,880 client believes that they have told the builder at some point. 377 00:24:03,480 --> 00:24:05,880 Whether they did or didn't, or whether it was on a phone call 378 00:24:05,880 --> 00:24:09,080 that was never documented or whatever, have it in writing. 379 00:24:09,120 --> 00:24:12,400 Make sure it's documented. And if even better, have 380 00:24:12,400 --> 00:24:15,160 everybody sign off on it, you know, get it on DocuSign. 381 00:24:15,160 --> 00:24:17,400 It's so easy to collect digital signatures now. 382 00:24:18,320 --> 00:24:21,600 Just protects everybody. So yeah, little side note there. 383 00:24:23,720 --> 00:24:26,560 We can't reiterate enough how important it is to pull that 384 00:24:26,560 --> 00:24:29,560 builder in as early as you can during the design phase, right. 385 00:24:29,600 --> 00:24:33,720 And even if it ultimately comes down to the fact that the 386 00:24:33,720 --> 00:24:36,080 builder that you worked with on the design phase isn't the 387 00:24:36,080 --> 00:24:38,480 builder that you ultimately choose to build your home. 388 00:24:38,880 --> 00:24:44,360 You had builder input and and hopefully proper or or fair 389 00:24:44,360 --> 00:24:50,160 guidance on the cost estimates as you go through that design 390 00:24:50,280 --> 00:24:52,760 phase, right. And that that's really, really 391 00:24:52,760 --> 00:24:57,440 important because you want to be able to get to the end avoid 392 00:24:57,440 --> 00:25:02,560 these price tricks and say hey I got the house that I wanted that 393 00:25:02,560 --> 00:25:05,000 is within my budget on this piece of paper. 394 00:25:05,000 --> 00:25:09,400 We've reviewed all these details and we feel good about moving 395 00:25:09,400 --> 00:25:12,320 forward with hopefully at this point hey the builder that that 396 00:25:12,320 --> 00:25:14,800 we've been working with for some time or another one that we've 397 00:25:14,800 --> 00:25:18,440 been talking to that we feel really good about really good 398 00:25:18,440 --> 00:25:20,320 trust. So you know, make sure you ask 399 00:25:20,760 --> 00:25:24,720 for a complete price and you know we're just trying to 400 00:25:24,720 --> 00:25:29,320 minimize or eliminate the cases where the you're shocked that 401 00:25:29,320 --> 00:25:34,160 the final price comes in significantly over the initial 402 00:25:34,160 --> 00:25:36,760 estimate, right, Initial estimate being ballpark, the 403 00:25:36,760 --> 00:25:38,680 builders done no work. They're just saying, hey, 404 00:25:38,680 --> 00:25:41,600 ballpark figures, this is this and you say, OK, I feel good 405 00:25:41,600 --> 00:25:42,920 about it. Then you go do all the work and 406 00:25:42,920 --> 00:25:45,160 then they come in and surprise you and it's over your budget 407 00:25:45,680 --> 00:25:49,080 and you're stuck with, OK, well now we've done all this work and 408 00:25:49,080 --> 00:25:51,800 we have to backtrack to make it to where it fits within our 409 00:25:51,800 --> 00:25:57,320 budget or whatever it may be. So you know it it it's tough. 410 00:25:57,400 --> 00:26:01,880 It's a it's a delicate balance when you're looking for 411 00:26:01,880 --> 00:26:04,200 information, but the builders also looking for information to 412 00:26:04,200 --> 00:26:07,880 give you the, the, the proper information that you're 413 00:26:07,880 --> 00:26:10,720 requesting and and there's still a lot of unknowns all at the 414 00:26:10,720 --> 00:26:11,640 same time. Right. 415 00:26:11,640 --> 00:26:16,120 So it's it's also about asking your builder what, what is their 416 00:26:16,120 --> 00:26:18,000 process, right. What do they do? 417 00:26:18,000 --> 00:26:19,920 How do they organize all this? How do they manage it? 418 00:26:19,920 --> 00:26:23,600 And that's why so we've hopefully been fairly clear and 419 00:26:23,600 --> 00:26:26,360 vocal on our process and and what we do during the 420 00:26:26,400 --> 00:26:28,680 preliminary building agreement and all the pre construction 421 00:26:28,680 --> 00:26:30,400 work before you ever even start building a. 422 00:26:30,400 --> 00:26:32,400 Home. Yep. 423 00:26:32,960 --> 00:26:35,120 Yeah, fantastic point right there. 424 00:26:35,120 --> 00:26:38,440 And just to reiterate that that I think a lot of these price 425 00:26:38,440 --> 00:26:42,040 tricks that we've talked about in this episode can be mitigated 426 00:26:42,560 --> 00:26:47,320 by a fixed price contract and like you mentioned. 427 00:26:48,320 --> 00:26:51,840 Looping your builder in early on in the design process so that 428 00:26:51,840 --> 00:26:55,920 they can consult. You can be on the same page as 429 00:26:55,920 --> 00:26:59,760 you and know exactly what is going to be involved in this 430 00:26:59,760 --> 00:27:03,680 build and that allows them to more accurately quote their 431 00:27:03,680 --> 00:27:08,320 allowances. And you know, all that ties 432 00:27:08,320 --> 00:27:11,400 together to really mitigate quite a few or maybe even all of 433 00:27:11,400 --> 00:27:13,640 these price tricks that we just talked about. 434 00:27:13,640 --> 00:27:17,560 So fixed price roping your builder in early. 435 00:27:18,040 --> 00:27:21,600 And making sure that everybody's on the same page with allowances 436 00:27:21,600 --> 00:27:25,480 and what all exactly is being built into that home that you 437 00:27:25,480 --> 00:27:29,000 want. And yeah, in the end, you know, 438 00:27:29,000 --> 00:27:31,120 this isn't supposed to be a scare episode. 439 00:27:31,120 --> 00:27:35,120 It's just to open the listeners eyes and ears that this is stuff 440 00:27:35,120 --> 00:27:38,080 to be aware of, you know. And I don't know that many 441 00:27:38,080 --> 00:27:41,680 builders do these price tricks or, you know, have these things 442 00:27:41,680 --> 00:27:44,720 happen maliciously or on purpose. 443 00:27:44,720 --> 00:27:46,280 I think a lot of them are actually. 444 00:27:46,880 --> 00:27:49,480 Accidents or just miscommunication or lack of 445 00:27:49,480 --> 00:27:52,720 detail. So I don't know, maybe that's me 446 00:27:52,720 --> 00:27:56,560 being naive. I know there are some, you know, 447 00:27:56,720 --> 00:28:01,400 bad builders out there that are crooks or scam artists or 448 00:28:01,400 --> 00:28:04,760 whatever, but I like to think that most of them are not. 449 00:28:04,840 --> 00:28:08,800 And you know, there really is just so many details that go 450 00:28:08,800 --> 00:28:13,200 into any custom home building. It it, it's really, really tough 451 00:28:13,200 --> 00:28:15,920 from a builder perspective to keep all the details straight, 452 00:28:15,920 --> 00:28:17,840 know exactly what the clients want. 453 00:28:17,840 --> 00:28:20,880 And we aren't mind readers. So we have to communicate 454 00:28:20,880 --> 00:28:22,560 clearly. They have to communicate clearly 455 00:28:22,560 --> 00:28:25,120 to us. And in the end, you know, the 456 00:28:25,560 --> 00:28:30,280 ultimate goal is of course to get what the clients want built 457 00:28:30,720 --> 00:28:33,800 in a timely manner for their budget on their lot, right? 458 00:28:33,800 --> 00:28:37,240 And if that's what we can do, that's exactly what we strive to 459 00:28:37,240 --> 00:28:39,360 do. So Yep. 460 00:28:39,840 --> 00:28:45,600 And as we hear about or come across or experience other price 461 00:28:45,600 --> 00:28:49,160 tricks will jot them down and maybe have an episode too here 462 00:28:49,160 --> 00:28:52,200 in the future. A continuation of this because 463 00:28:52,200 --> 00:28:55,160 these certainly aren't all of them and and Steven you you you 464 00:28:55,160 --> 00:28:59,480 said that most builders are not trying to do this intentionally 465 00:28:59,480 --> 00:29:02,280 and and I I do believe that right there there's there's 466 00:29:02,600 --> 00:29:06,520 there's bad contractors and people out and in every industry 467 00:29:06,520 --> 00:29:11,800 but as a whole it's it's just that catches builders by 468 00:29:11,800 --> 00:29:14,960 surprise but then unfortunately both the builder and the 469 00:29:14,960 --> 00:29:19,240 homeowner in a in a not so fun place and it affects the the the 470 00:29:19,240 --> 00:29:21,080 experience as you as you go through this. 471 00:29:21,080 --> 00:29:24,680 So yeah we've got plenty more and we'll jot them down and keep 472 00:29:24,680 --> 00:29:27,400 them in our notes or our back pocket for when we have have 473 00:29:27,400 --> 00:29:28,880 enough for a continuation of this. 474 00:29:28,880 --> 00:29:32,400 So thanks for your time. Yeah, same to you. 475 00:29:32,760 --> 00:29:35,560 Great episode. And once again, just to wrap 476 00:29:35,560 --> 00:29:38,120 this episode up like we've been asking recently, but. 477 00:29:38,560 --> 00:29:40,920 We really appreciate everybody listening. 478 00:29:40,960 --> 00:29:44,320 And the number one thing that we just asked from all the 479 00:29:44,320 --> 00:29:49,120 listeners is that you guys rate and review us on whatever 480 00:29:49,120 --> 00:29:50,760 podcast platform you're listening on. 481 00:29:51,080 --> 00:29:53,920 And however you found our podcast, if you don't mind just 482 00:29:53,920 --> 00:29:57,120 sharing that with your friends or, you know, helping us out by 483 00:29:57,120 --> 00:29:59,640 getting the word out there for people that would find our 484 00:29:59,640 --> 00:30:02,320 content valuable, so. We can continue to grow this 485 00:30:02,320 --> 00:30:06,080 podcast and get the word out and the education out to more people 486 00:30:06,080 --> 00:30:08,000 that want to hear it. So thank you. 487 00:30:08,000 --> 00:30:10,120 Thank you. It makes our day whenever you 488 00:30:10,120 --> 00:30:12,480 reach out to us and tell us what you like or don't like. 489 00:30:12,480 --> 00:30:14,640 So please, please do that. We love the feedback. 490 00:30:14,640 --> 00:30:16,400 We love the interaction with our listeners. 491 00:30:17,000 --> 00:30:18,600 Absolutely. Absolutely. 492 00:30:18,800 --> 00:30:21,360 Cool. That's a wrap for Episode #15. 493 00:30:21,360 --> 00:30:23,400 And thank you all. We'll catch you on the next one. 494 00:30:24,040 --> 00:30:24,240 Bye.