27 Aug July 2009
Willis Sinclair Homes
“The Lowcountry’s Premier Custom Home Builder”
Personalized Full-Service Construction
Fixed Price and Cost Plus Contracts
Celebrate Independence Day!
24 Gabriel Road
Lodge, South Carolina 29082
843 846 2500
Who is Abbey Burdick?
Abbey Burdick is the bookkeeper for Willis Sinclair Homes as well as all around administrative assistant. She is also involved in the final punch out and cleaning details of our homes. She makes sure that the houses are clean and completed to the satisfaction of a lady.
Abbey is one of Bill’s daughters and has worked with him in several of his previous businesses over the years. She was also the bookkeeper at our previous company, Ponds & Sons, and she is very good at organizing and keeping track of business matters. If you have a question about your account, don’t hesitate to call her. She will be glad to help you.
Abbey is a home school graduate and is dedicated to continual learning. During school she enjoyed such fun things as physics, chemistry, algebra, trig and calculus with her Dad…..at 6 o’clock every morning.
Abbey is an accomplished photographer and has just started a side business specializing in photos of children and families in natural settings. Many of the later photos in our portfolio were taken by her. Call (843 599 2302) or visit her website www.photosbyabigail.com.
July 4th, 2009
America’s 233rd Birthday
Willis Sinclair Homes
From the desk
of Willis Ponds …
Business has picked up a bit for Willis Sinclair over the past month. We have finished our last project for Ponds & Sons and are beginning another project at Willis Sinclair. We also have a couple of new prospects which is more than we can say for the past few months.
This month we are introducing a couple of services that we offer. Our Project Rescue service is sure to prove invaluable for those who have had the misfortune of hiring the wrong builder. You can read more about our Project Rescue service later in this newsletter.
We also offer Value Engineering services to our clients. We work with you and your architect during the design phase to help determine how to build you the perfect house and stay within your budget. It is most efficient to have our input during the design stage but we will still offer Value Engineering suggestions throughout the building process.
We are uniquely qualified to identify potential cost savings for two reasons. First, we typically build custom homes for a fixed price so we know what each part of a house costs. Secondly, Bill Burdick is a former engineer for Philips and spent years value engineering their TVs to achieve maximum production efficiency.
Saturday is Independence Day and we hope that you have a safe Holiday and remember to pause to say a prayer for our great nation.
These are uncertain times. The economy is slow and some builders are bidding very low to win construction projects.
Since some builders are contracting below their costs, one of five things will probably happen:
The builder will pay the extra cost he incurs over the price he contracted. This is unlikely even if the builder has the funds which is also unlikely.
The builder will beat his subs and suppliers down and force them to provide shoddy materials and/or workmanship.
The builder will try to make up the money through change orders and other cost increases.
The builder will simply abandon the project or go out of business, leaving the home owner holding the bag.
The builder will collect from the home owner, but not pay subs and/or suppliers. In the end, you have liens on your house from the unpaid people.
Situation 1 is not very likely to occur although it is the best scenario for the home owner. Builders just cannot afford to make up the amount that they underbid. The other four scenarios are bad for the home owner.
Probably situation 2 is the worst because often shoddy framing and mechanical work can be hidden. You cannot count on building inspectors to catch every defect. Unfortunately, you may not know if shortcuts were taken with your foundation or framing until the next big storm or earthquake….
Situation 3 is not good either because you will end up paying more than you had budgeted and anticipated, but at least you will likely end up with a well built house.
Situation 4 can be a real problem because the home owner now has a house that is partially complete and no builder to finish.
The last situation is also bad. You may not know it is happening until the builder is paid and gone. Suddenly liens against your home will start to appear. This is a serious problem and is one of the reasons you should always insist on lien waivers.
You can also wind up with no builder if you catch your builder cutting corners and doing shoddy work. Be sure your contract allows you to discharge your builder if there are deficiencies in his materials or work.
Many builders hesitate to follow other builders and charge very high fees if they do. Sometimes, they will only take the job on a cost-plus basis.
Willis Sinclair Homes offers a Project Rescue service to help our clients with this problem. We assess the situation and review the plans and then offer you a fixed price or fixed fee contract to complete your home. Of course, we will have to have a clause in our contract in case problems exist which we are unaware of. We cannot see through walls very much better than anyone else.
You may rest assured though, we will do our very best to get your home back on track for the lowest cost possible. We want you to be happy with what we do and comfortable referring us to your friends. We are not interested in taking advantage of anyone.
Call us or email us. Ask about our Project Rescue Program. We are always glad to help.
Types of Contracts
Basically there are two general types of home building contracts: fixed price and cost plus (something).
A fixed-price contract is a contract where the builder agrees to build your house for a fixed price. Typically, there are allowances because most home owners have not determined all of the details beforehand.
The builder will provide a realistic cost estimate of the items in questions, such as appliances, for example. The home owner will simply be charged for the actual cost of the appliances plus some percentage or fee.
Allowances enable the home owner to know the bottom line price of the home before signing anything.
Usually, it takes about two or three weeks for a builder to provide a complete price on a custom home.
If the owner stays within the allowances and makes few changes then the total cost will be very accurate. If you have a tight budget a fixed price is the best way to go.
One advantage of a fixed price bid is the builder has to study the plans carefully, so many structural and other problems come to light when they are easy and inexpensive to correct. Problems found during construction, are much more expensive to solve.
With a fixed price contract, the builder warrants the house for a certain period – usually a year.
There are two types of cost plus contracts. One is a cost-plus-percentage contract. In this case, the builder keeps track of his expenses and adds some agreed upon percentage to the amount he spends.
The second type of cost plus is a cost- plus-fixed-fee contract where the builder agrees to build the home for his cost plus a fixed amount. This is actually the safer of the cost plus agreements for the owner.
A cost plus percentage contract rewards the builder if he has to do work two or three times and certainly gives him no incentive to save money. In our experience builders who only build on a cost-plus-percentage basis are about 10% higher in cost than others.
Another thing to consider for the home owner is that warranty work is typically done at cost plus something. This means that there is typically no builder-paid warranty work with cost-plus-percentage.
Of course, all contracts are different, so be sure to read it carefully before you sign. Not all builders are ethical. Some will take advantage of their customers, especially if they think they have deep pockets!
One advantage to a cost-plus contract is that building can begin just as soon as the building permit is issued. There is no need to wait for bids or price negotiation.
At Willis Sinclair Homes, we will offer you any type of contract you wish. Typically we do fixed price contracts so we are very familiar with your plans before construction.
Call or email us. We will be very happy to discuss other pros and cons of each type of contract or any other construction related questions. (Bill will even be glad to talk with you about his grandchildren.)
Call 843 846 2500