Browse Forums Building A New House 1 Jun 26, 2011 11:01 pm Hi, I'm looking for advice as to how to negotiate the best deal with a new home builder. I like the idea of building a custom floorplan designed to suit my lifestyle and block. It is my understanding that when choosing a Project Builder, a cost of between $500-$3000 is paid to the builder for completion of a 'Feasibility Study' (i.e. Design of floorplan, soil tests and contour surveys). This cost is then taken off the price of the build if a contract is entered into. My problem is that I think all bargaining power in negotiating a discount is lost after the Feasbility Study is completed because I will likely become emotionally attached to the floorplan and not want to loose my down-payment. So, I wish to negotiate a discount upfront prior to completing any design with the builder. My idea is to agree upon a discounted cost plus mark-up (i.e. instead of the builder charging cost plus 20%, maybe cost plus 15%). Then on completion of the design, using this cost plus mark-up an estimate is created and that estimate forms a fixed-price contract. The reason I like this path rather than paying a draftsman to design the plan and tendering amoung builders is to obtain pricing from the big Project Builders who wont particiapte in tenders where I own the IP, and to save costs on design through using the builders in-house staff. Does anybody see any problems with this method, or feedback on better ways to acheive discount? Also, what is everybodys thoughts on a realistic mark-up % to work towards? Building in Mandurah, WA. Thanks! -Chris Re: Project Builder - Negoitation tips - Cost plus mark-up? 2Jun 27, 2011 12:02 pm Every1H8sChris Does anybody see any problems with this method, or feedback on better ways to acheive discount? Also, what is everybodys thoughts on a realistic mark-up % to work towards? While this sounds good in theory, the reality is that it could have a negative affect on the builder's desire to source discounted supplies. For instance, if the trade price on the required sink is $100 - the builder makes 15% = $15. However, the builder could just as easily walk in to the retail side of the store and buy the same item for $150. The profit for the builder increases by $7.5 to $22.50. But the expense for you is far more Obviously this example is drawn out of thin air, but hopefully you get the idea Always get multiple quotes, no matter how reasonable/cheap you think it is. I remember getting a few quotes for a pool fence, roughly around the same price, thinking the… 5 6751 Alternatively, you can sign a contract with pre-defined known amount you pay to the builder for management and warranties and then you just pay the invoices their provide… 2 5247 1000000% definitely add insulation. I have in my home and it makes a big difference minimising sound transfer. Insulation is pretty cheap and definitely worth it 2 3662 |