Will You Match His Price?

How homeowners are controlling the conversation - and why that needs to stop.

Building or renovating a home is a giant investment - and a large risk. And it’s understandable that homeowners have some real trepidation when embarking on a project that involves tearing down and rebuilding their single largest investment of their lives. 

This is because they are not builders (that’s why they are hiring you), and they are not educated on the topic despite what their HGTV experience is. Being uneducated about the building process means they have no concept of what time, effort, expertise and cost goes into a renovation or new home building project.  This is why many homeowners look for ways to “cut costs” that ultimately provide issues for the builder and the project unbeknownst to them.

This often means pitting builders against each other by engaging in competitive bidding and trying to circumvent the process by wanting to supply their own materials.  It completely disrupts the client-builder relationship and reduces you to an order-taker.

As builders, we cannot let clients control this conversation. There are several reasons why this is an ineffective way to do business, and at worst - a disaster scenario waiting to happen. 

I want to share a recent experience one of my builder clients had with a prospective client of theirs. 

In this exchange, the client solicited four bids on their project and wanted my builder client to come in lower than they quoted in order to win the job.  As well, the client wanted to supply the majority of materials so they could lessen the cost, and could use the purchases as claims on their tax return. The builder’s response in this conversation perfectly highlights how to manage the competitive bidding scenario and focus on educating a client on the value of a relationship-focused builder.

CLIENT:

Sorry it has taken so long to get back to you on this. I got 4 quotes on this basement, so I had to wait to get all of them so that I could compare. There was one quote that gave the me best price of them all, so I was leaning on going with them. But, before I did, I wanted to give you a chance to see if you could beat his price. 

Let's see if we can meet halfway and I'll do the deal with you. Builder A is going to agree to $35,000 + HST for a total of $39,550 for the following scope of work, so if you can beat that price, I'll sign the contract agreement with you in the morning. 

Below is the scope of work that he will do. I'd like to see if you could come close to this price please. Mind you, I know you priced everything in at the $70k price, but Builder A gave me a great deal if I supplied most of the items. I like the option of buying my material vs you buying them because I can use some of the expenses for this renovation for my 2020 taxes. Let me know your thoughts. I'll give you a call tomorrow to chat more. 

Scope of work is below:

• Complete finishing of basement
• Furnace room and storage room will be un-finished on the inside
• Walls and ceiling finished with drywall and fully painted 
• Carpet with under-padding throughout basement and on stairs
• All electrical brought up to code with pot lights and dimmer switches throughout 
• 20 pot lights included 
• New electrical circuit for bathroom and kitchen 
• Bathroom will also be finished with toilet, vanity, whirlpool jacuzzi, stand up steam shower and ventilation installed
• Install heated tile floor in bathroom 
• Install touchscreen programmable thermostat 
• Regular tile (12x24) floor in kitchen area, and sliding door area
• Kitchen will have electrical for the stove, and GFCI outlets 
• Kitchen will also have cabinets (pre-assembled) and quartz countertop installed and sink/plumbing 
• Install small 60 inch island in kitchen 
• All doors supplied, painted white and installed
• Shelving in the little alcove for books 
• Supply and install baseboard: 5", Trim, 3.5" matching casing
• Trim painted white and caulked 
• Backsplash in kitchen installed
• Bathroom exhaust to be installed with venting to outside
• Kitchen OTR microwave to be installed with fan venting to the outside
• Water softener moved with proper water lines into the furnace room
• Make that area where water softener used to be in office a small closet with shelves
• Mount up 1 x TV to wall in entertainment room (ensure electrical setup for wall mount to hide wires)
• Complete ductwork to ensure minimal bulkheads throughout the entire basement 

Quote includes all materials except for the following: vanity, jacuzzi, stand up shower, sauna, bathroom fan, faucets, tiles, tiling materials, bathroom accessories, kitchen cabinets and countertops, sink, carpet.

Agreed that Builder will pick up any materials I've ordered directly from Store. Builder agrees to pick up sauna as well.

Quote includes all labour, sub-contractors and clean-up and removal of waste materials.

6-week estimate for job completion.

Anyone else's skin crawling right now? Even the language this prospect has used is all wrong. They know enough to make them dangerous but clearly based on the order of how they've listed the scope, they have no clue has a renovation project comes together.

Here's my clients response:

Thank you for your email and feedback.  

I appreciate that you are looking for the best price, but this scope of work is not really an apples to apples comparison to the service we offer.  Our value lies in being able to assist clients manage their project properly from planning and design through to completion, providing layout and design guidance, and helping to select their finishings.  We offer an organized process that provides a smooth and stress-free experience while you renovate, in addition to a high quality finished product, and we utilize an online portal that keeps everyone on track and informed throughout the project.  

With the scope of work you forwarded, all design and finishing materials seem to be your responsibility, which means we would not be able to deliver on our usual process, which can really have repercussions for how smoothly the project goes. 

Just as a quick example off the top of my head, if you are buying pre-fab cabinets and they don't fit perfectly in the space, you could having gapping, and you may want it fixed somehow, but you would have to go buy a matching filler strip and have the installation added as an extra because the scope only includes for installing the pre-assembled cabinets you provide.   We use a custom cabinet installer, so we don't have these worries about what the finished product will look like.  We also cannot provide any warranties on store-bought cabinets, or any of your supplied materials which might not seem like an issue right now because you are focused on price, but I can assure you that if something does arise you will find frustration in that we cannot warranty this.  

There are so many little details that can pop up if they are not all properly ironed out ahead of time, which cannot be done without the design and planning phase completed before construction begins.  I am not trying to scare you away from this method, you might get lucky and have everything go perfectly, but it is just that we used to do things this way and it left so much room for errors, delays, misunderstandings, etc.  and unhappy clients as a result.  Which is why we changed our model of service based on our years of experience and client feedback so that we can now provide an exceptional client experience.  

From a technical standpoint, there are a lot of details left out of this scope that can lead to misunderstandings at best, and change orders and extra costs at worst, like:

• What kind of trim is he using (MDF vs wood) and who is responsible for picking the profile?  
• What kind of paint is he using? (it's not specified, we use Benjamin Moore - details were in the quote, including their high-end bath paint that is specifically for high moisture areas)  
• What kind of waterproofing materials/method is he using in the tub/shower surround? (we use Schluter which has a 20-year warranty against leaks, mould, and mildew).  Also by installing a steam shower there are much more rigid waterproofing requirements - you need to use an epoxy grout, which is more expensive and labour intensive, you need to slope the ceiling at a certain angle, you need to install a specific liquid vapor barrier on top of your tile backer board, etc. - he doesn't specify that he is doing any of this.  He also doesn't mention anything about using a licenced electrician or getting ESA permits and approvals (we did, so the cost is higher - we always use licensed electricians)  
• Who is supplying the carpet underpad, and what kind of pad is it?  

These are just some quick things I noticed that could be red flags in the build process. 

I do appreciate the time you took to meet with us and review our proposal, but it sounds like you may be looking for a service that we do not provide anymore.  If you would like to discuss things further, please feel free to give me a call and I would be more than happy to answer any further questions you may have.

In this builder’s response, they clearly articulated the need for finding a builder who is willing to build a relationship first and a house second. Pointing out all the potential red flag issues with a client-led renovation project shows that their biggest concern is for their client’s happiness, not just winning the job.

Anyone who has worked with me or taken my Sales Class will tell you that the amount of time and money they save from being able to quickly weed through prospects in this manner is invaluable.

It allows them to focus on the clients who understand the builder’s expertise and value add to their project.  At the end of the day, if a client can’t see past the bottom line price, they are not your client.

So my message to you is this: If you want prospects to respect you and your expertise/time, then you first need to respect yourself.  You will receive in life what you tolerate, so don’t tolerate prospects that try to undercut and undermine what you bring to the table.