So you are ready to build your custom home and you are pretty excited about the fact that there are a lot of hungry builders willing to fight for your business. This can be a great opportunity to build your home at a lower price while the market is down. Builders understand the market and realize that they need to adjust to it. However, there can be unintended consequences when you are not careful in your approach to selecting a builder.

Let me share a story with you that I heard the other day about someone who sent out their plans to seven builders to have them bid. Now, you are probably thinking that in the current market, this would be a great strategy for getting your house built at the lowest possible price. After all, it works when you get several dealers competing for your business when you buy a car. Here is the rest of the story.

The seven builders turned in their bids and the potential clients narrowed down their choices based on price. They settled on the lowest bidder and were excited to move on with the project. Unfortunately, a few weeks after moving forward with the builder they selected, the builder came back to the client and told them it would actually cost $150,000 more to build the house than the builder had originally estimated. Whether the builder intentionally underbid or was just not experienced enough to properly bid the house did not really matter at that point. The potential clients could not afford to build the house at the new price.

This was a bad situation for everyone involved. The potential client was at a standstill with a design to a house that they could not afford to build. The builders who accurately bid the project lost the deal and all of the time they spent bidding the house.

However, there are ways to avoid this scenario and have a fun and successful building experience.

There were two problems in the previous story. The first problem is that the house that was designed did not fit their budget. The second problem is that a custom home is an extremely complex thing- not a commodity. There are hundreds if not thousands of specifications. It is extremely difficult to get a true apples to apples comparison when bidding a custom home. Each builder may make different assumptions about the details that are missing from the plans. When there are several bidders, there is a lot of pressure on the builder to come in with a low estimate. In the worst case, unethical builders underbid the project and figure that they will break the news to the client later after they have won the business. They are willing to risk their long term reputation in order to win the job today. Even in the case of an ethical builder, there is a lot of pressure to bid the best case scenario. They assume a build in which everything goes perfectly and there are no unexpected costs. If the engineering has not been completed, the builder assumes that it will require the simplest and least expensive foundation and structural design. While it is more appropriate to bid in a more conservative manor so that it is extremely likely for the house to come in on budget, it is likely that the builders taking this approach will not win the business.

There are really two ways to go about the process of choosing a builder the right way to avoid this problem. They can both be effective and it really depends on the goals of the client as to which option is the best for them.

Option 1

In the first option, the clients choose an experienced architect who will produce an extremely detailed set of plans and specifications. This should also include full and complete engineering. All of this involves a large investment in time and money. Every single detail must be carefully thought out and documented for the builder to follow. This is much more difficult to accomplish than one might think. Any minor detail left out has the potential to be “underbid”. The vast majority of architectural plans are not detailed enough to make this option work so it is very important that the architect be experienced at working in this way. The more thorough set of plans is then put out to bid. The builders are more accountable to their bids because all of the specifications and selections are clearly documented. The architect serves to help the client choose a builder based on experience in working this way. The plans are sent out to two or three builders who are experienced in building these types of homes and have a history of coming in on budget.

Pros-

The plans are very detailed so the client should have a very good idea as to what they are getting and how much it should cost. There are also fewer decisions to be made during the build. Lastly, the architects provide an extra layer of oversight on the project so the fox is not guarding the hen house.

Cons

The price of homes done this way are typically more expensive for a couple of reasons. First of all, the architects are providing a lot of extra services and are therefore, more expensive. The second reason is that the details of the specifications that are being chosen by the architect can drive significantly more costs and are not necessarily the best “value” options. This results in a much more expensive home than necessary. This option also typically takes more time to design and build.

Option 2

In the second option, the clients choose their team up front. This can be a design build setup or a separate architect and builder. The team is carefully chosen by experience and a reputation of building quality homes and bringing projects in on budget. The team works together to understand the goals of the client. The team collaborates throughout the design to ensure that the plans are in line with the established overall design and budgetary guidelines. When the plans are ready, the customer might send out the plans for a second bid as a sanity check before moving forward with the builder but the intent is to have the original team complete the project.

Pros-

This approach is typically less expensive overall and quicker to implement. This approach is better for accomplishing up front budgetary goals. They are more easily accomplished in this scenario because the builder is generally more knowledgeable about the budgetary impacts of various design ideas. The builder is in a better position to properly set expectations without fear of losing the deal to an unrealistic competitive bid. Everyone on the team is working together in harmony to reach these goals from the outset. The client has a lot of interaction with the builder to ensure a comfort level with the integrity of the builder and personality fit with the builder before actually starting construction. There is more flexibility to make decisions during the build instead of trying to make all decisions up front.

Cons-

A higher level of trust is required with the builder to avoid abuse of the more nebulous specifications. There is typically less oversight of the builder by the architect. While the client can elect to build with another builder, the builder has invested more time on the project so the client may feel more obligated to stick with the original builder.

As you can see, these are two very different approaches. Option 1 is typically a good fit for someone who knows exactly what they want in the house and are willing to pay whatever it takes to get exactly what they want. Option 2 is typically a good fit for someone interested in the best value or someone who has very specific budgetary goals that they are trying to accomplish.

In a both cases, it really comes down to selecting a team that you can trust. If the team has integrity, a good attitude, and the proper experience, then you are setting yourself up for success.

Please visit www.butterfield-shore.com

My wife and I just returned from a long date weekend in Boston.  It’s a great town for both of us; for every activity I can dream up (a 4 minute cab ride to the North End to grab pizza, or a $1.70 T  ride to a Celtic playoff game), there’s ten more opportunities to indulge a Shakespearean Lit graduate turned English teacher.  Did I mention that my wife majored in Shakespeare and teaches English?  So we ate pizza and I suggested a nap afterwards.  I got my nap.  Thirty-five minutes later, we were laced up and walking in what turned out to be a seven mile all afternoon stroll through the city, culminating with a stop at an outdoor café on Newberry Street for a couple of $24 salads and two $16 glasses of Portuguese vihno verde.  Her Boston and my Boston are so different.  The next day we went for a run and finished at my favorite Italian bakery for coffee and some éclairs.  Her turn: how about a four hour visit to the Museum of Modern Art to study Dutch pottery?  That trade worked out for me about as well as the last time I got hit by a flying golf ball. But I digress.

What actually got me thinking about this article was the downtown hotel that we briefly called home during our stay.  It’s actually a fantastic structure with a phenomenal location, excellent service, and quite the amenities.  It’s also gone ‘green’ since the last time we visited.  From the lobby to the exercise club, to the bathrooms, you could hardly walk five feet without stepping on a postcard about environmental stewardship.  Funny thing, I do recall the elevator being devoid of any green marketing.  On the contrary, they were displaying a photo of the Wagyu steak served at their hip street-side restaurant downstairs (you know, the hand-massaged cows gently slaughtered and then flown 6,000 miles for consumption).

Anyway, back to ‘green’.  Although the lights were on and the CD player was humming a piano concerto upon the porter opening our door, the hotel had made some reasonable changes.  Compact Fluorescent Bulbs were in each fixture, the windows had nifty motorized solar shades hidden under the valance, and bottled water had been replaced with morning and evening glass, ice and water service.  Towels, robes, and sheets weren’t replaced unless requested, and the complimentary shuttle even ran on natural gas.  Channel 1 was the usual hotel overview and Channel 2 was some sort of Eco Channel specific to the property’s ownership group.

What at first seemed reasonable later struck me as ‘greenwashing’.  For those of you that haven’t heard the term before, ‘Greenwashing’ is disingenuous green marketing, or a PR maneuver that makes the environmental benefits appear to fit the sacrifice.  Let’s face it – we don’t sacrifice too much here in America.  True green lodging would probably be a cot and a tent.  Motorized solar shades?  Twice daily glass service that results in extra glasses and more dishwashing?  A hotel-sponsored EcoChannel running on a 42” flat screen?  There was no need to request a change of sheets; we had four of them on the bed.  I’d wake up each morning tangled somewhere in between the 2^nd and 3^rd layers.

While in the room, I probably spent too much time obsessing over logic breakdowns in their newly found green culture.  It was either that or listening to the local news anchor read 20 minutes of ‘Big Dig’ lawsuit stories.  So obsess I did.  I started thinking about our own company and our clients – even some of our competitors.   I took some notes in my Kindle and enjoyed the rest of the trip.

Upon my return last week, I checked my notes and had some research put together.  I culled through industry data and professional journals and then decided I had my blog topic for this year (not too bad – it’s still May).  So each month for the remainder of this year, we’re going to dive into some of the more trendy green building techniques.  We’re going to analyze their merits, their hidden tradeoffs, and try to discern how they stack up with regard to: 1) environmental stewardship, 2) cost savings (i.e. is there really a business case) and 3) comfort.   Intentionally, we’ll even dedicate a few editions to some of our favorite techniques that rarely get discussed.  Not trendy or overly popular discussion points, but sincerely green.   Here are some of the topics we’ll try to cover:

• Insulation – looking into foam versus batt insulation, radiant barriers, proper applications of both, and industry claims and studies.
• Windows and Doors – design of the custom home, material selection amid the ongoing vendor deluge of marketing, and solar film and its’ introduction to a dog-eat-dog world.
• Solar PV – is the payback 12-15 years or 4-7?  Is payback the right metric?  How do you incorporate into design and planning?
• Rainwater Collection – it’s a black and white business case, and always one or the other.
• Tankless Water Heaters – I was against them before I was for them.  No I’m not making fun of any specific politician; I’ve genuinely switched directions on this one.
• Eco-friendly surfaces – examining flooring, countertops, trim and even paint.  Too much to cover here, so we’ll have to pull certain examples to illustrate the sin versus the morality.
• Design – just design.

I just remembered that the average online attention span for reading is 4 minutes, so I’ll wrap up this month’s musings.  If you visit our website, you won’t see a section devoted to green building.   We build upscale homes, but we’ve always done so with as much common sense as possible.  That means understanding the clients’ goals, and then taking advantage of certain products and solutions while carefully filtering through the rest.  We’ve avoided the temptation to market our luxury product as green, but we still put forth a green effort.

One last thing I forgot to mention about the Boston trip.  On the last day, I suggested a trip up to Salem.  I figured a nice lunch together on the water and plenty of stores would all but assure me an asylum from another museum hardship in Boston.  It was raining that day, so I knew I had outsmarted her with this insurance policy.   Half an hour into the commuter rail ride, she told me we were going to get to see the House of Seven Gables.  Remember Nathaniel Hawthorne? Ughh!  I told her how pleased I was to have this opportunity and feigned excitement. We took the tour and I forgot to ask her afterwards what she had learned.  My takeaway: the house wasn’t very green for its time.

Stay tuned for June, Part 2 – Solar

Here’s a great piece from CNN on Austin, and how our ‘buy local’ approach and upbeat citizenry is helping to make the region outshine the rest of the country.  Click here to watch 2 min video.

Do you remember Peanuts, when Lucy would hold the football for Charlie Brown and yell at him to come try a kick?  Charlie Brown would say no to Lucy because he was well accustomed to her antics.   Against his better judgment and with much cajoling from Lucy, Charlie Brown would finally agree.  He put his head down, took laser aim at the football, and began the run towards the ball in hopes of kicking it further than ever before.  You know the rest of the story.  (If you don’t:  Lucy would swipe the ball away at Charlie Brown’s last pre-kick step and he would go flying through the air in flips until he landed flat on his back.   “Ughhh”)

When I first started in this business, I brought the pure naïve excitement that Charlie Brown had every time he’d try his kick.  I would call my business partner, who had been in the business already for 6-7 years, and suggest we go look at a lot that I had just discovered on my MLS meddlings.  “Matt, we need to go see this lot –it’s a full acre in Westlake Hills with partial city views at a great price.  I can’t understand why it’s been on the market for 200 days.”   Matt would assure me something was off or wrong, but I’d convince him to go anyway.  When we got to the lot, we’d have to break out the belays and carabiners to lower me down the side of the cliff.  On the way down, I was trying to imagine how our foundation crew might like this project, or even worse, how much concrete and how many retaining walls would be necessary to build something here on the side of El Capitan.

While I still have the enthusiasm that I had in my first year, and I still believe in excellent lot finds, I’ve also learned a good bit about how to value a lot.  For those of you in the early part of your process, (the ones looking for a lot) I’d recommend taking a systematic approach to ensure that you find something you love but also something that makes financial sense.  An important part of that approach should be to determine what “lot-driven costs” might exist in the construction of your planned home.   Lot-driven costs, or site costs, include items that you must account for in the eventual construction of you residence.  These costs are typically ones that you don’t necessarily receive credit for when you go to later sell your home.  In other words, if a potential buyer is walking into two homes of equal quality and equal value, will he/she appreciate the fact that one home has a foundation that cost $100,000 more than the house next door, or will he/she be more interested in the finish out and amenities? Here are some of the more important factors to consider:

• Slope of lot:  As I already referred to in the introduction above, slope can certainly impact construction costs.  While a flat lot is not only easier for the crews to navigate and work, the raw material requirements (concrete, steel, and fill) are usually lower.  If you think about a lot with a 15% natural grade, you can quickly see how more foundation will be needed, assuming you’d like a flat slab.  You and your architect may even decide to cut into the earth to lower the finish floor height, but the machine work and labor involved with such a cut is also expensive.    If you are hoping for a pool out the back and close to the outdoor living space, as most of our clients prefer, then you also have to consider the extra costs associated with a taller pool and deck foundation.   Lastly, the driveway may tend to be more expensive if it’s steep, because of the extra footings required for support.   So pretend that you are evaluating two lots each half an acre, and one is flat and for sale at $10 and one is steep and for sale for $8.  Assuming you would put a $40 house on both, but the slope of the $8 lot causes you to actually spend $45 to build your home.  At the end, your $8 lot actually cost $13 because of the extra site costs.  You don’t get credit for your slab when buyers come to look at your home so you probably would have been better off with the $10 lot – all other things being equal.
• Improvements:  although this is a fairly obvious item, many people forget to fully add the costs associated with water, electric, and sewer.   If your lot needs septic, don’t forget to add in the costs for extra engineering fees and permits/inspections.  If your neighborhood already has water and sewer, but the developer has chosen to offset the lot costs by attaching a mud bond to the property taxes for the next 20 years, you will get dinged every year until those bonds are paid off.  The net present value of those bonds can add up quickly.  If you have electric at the street, but your site will be located 400 feet from the street, don’t forget to add in the costs for the underground electric work.  If you have any unsightly utility poles, you want to bury them.  Assuming you can get approval to do so, this will also add to the cost.  Lastly, you may need a well.  You should talk to well experts in your area to see what the total cost (well, pump, storage tank) will cost, and what water quality should be expected.
• Lot shape:  developers have mastered the art of maximizing their return by shaping lots to get the most bang for buck.  If the street in question has panoramic views out the back, you should expect long narrow lots, with little street frontage.  If your neighborhood has cul-de-sacs, the developer may have drawn the plat to cram more lots in the cul-de-sac and the result may some pie shaped lots.  For the long narrow lot, with little street frontage, this probably means a longer driveway, and possibly even more landscaping requirements (based on the CC&R’s), more irrigation needs, and more maintenance.  If it’s a pie-shaped lot, you too may have a longer driveway, but also often times find a difficult situation with the foundation footprint fitting in the setbacks, requiring your architect to add twice or even triple the amount of corners to your plans.  All of these items can increase costs.
• Soil:  while most lots in Central Texas are moderately safe, we have encountered some surprising conditions.  My business partner, for example, found during the planning stages of his personal home in downtown Austin, that he would be building on top of a small spring.  The wet, clay-like conditions increased the scope of his site work, foundation’s beams, and retaining walls.  Had he not purchased his lot at a discount to other lots in the neighborhood, he may have wound up in a mispriced situation.  We’ve also encountered other lots where during the soil testing phase, we discovered that 8 feet of fill had been placed in the middle of the lot many years back.   Since you can’t lock the slab down on fill, we had a choice to either have the fill hauled off, or to dig deeper beams and footings for the foundation.    This isn’t something to be paranoid about, but if you have even the slightest doubt during your negotiations, you can ask the seller to provide you with a soil test during your option period.

None of the above items are show stoppers, and we routinely handle at least one to two of these conditions for three fourths of our projects.  These types of additional site costs can actually make perfect sense in the right scenario.   You must be willing, however, to calculate these items in comparison with other lots in the same or even a similar neighborhood to ensure you are buying value and not overpaying on your lot purchase.   The above examples shouldn’t cause you to run from the lot, they should just help influence how much you are willing to pay for it.  You don’t want to be the one running full speed while Lucy holds the football.

I was listening to one of the 24×7 financial news channels the other day in my car, and within a fifteen minute time span, I heard an analyst predict a 30% rise in the Dow by April, and then a different analyst predict a new market bottom by summer.  A few moments later in the third interview, another market insider helped to really clarify things – announcing the possibility of a recession!  My business partner and I have had a blast the last 3 months following the election, the financial markets, and listening to the ‘experts’ in the media discuss their predictions of what we already know.   It’s kind of difficult for us to take them too seriously when you can’t get agreement from the ‘experts’ or when the advice given on what to do, is already six months late.

Last month, I wrote about the value equation and the customer’s responsibility in the planning and design phases of the custom home building process.  With the political pundits and market prognosticators predicting financial Armageddon here recently, I thought it would be fun to share my thoughts on the first step of building a custom home – actually deciding to do it.

So what is the big picture?  It’s quite clear we’re in a recession, just as it’s clear the S&P has lost 40% in the last 12 months.   It’s also obvious that nobody can tell us what will happen tomorrow.  There’s a battlefield with a trench running down the middle that separates the 50% who see fear and doom, from the 50% that see opportunity.  Oddly enough though, you can walk down the middle of the trench and ask this question to both sides:  “Have you heard the saying Buy Low, Sell High?“  You would be hard pressed to find anyone confused by your question.   Everybody knows the principal and understands the concept; just like Warren Buffett, they get how great investors think.

The funny thing about human nature, though, is that we seem to have an almost inverse correlation in our behavior between what we know we should do, and what we actually do.  When things are going well, moving up, and feeling safe, we all want to be part of it.  When times are precarious, trending down, and nerve racking, we want separation and a place to hide from the ensuing disaster.  In short, we want out.   We buy hype and we sell pain, rather than buying low and selling high.

If you found yourself at a Halloween party in 2007 and you announced to your friends that you had just sold your shares of Google (see chart) at $685, you were probably laughed at, called a few names, and upset at yourself for opening you mouth.  The stock was too hot and you were crazy to take profits before it busted through $700 on its’ way to $1000. You were a wet blanket and just sucking the air out of a festive room.   Conversely, if you’re standing in a small circle at a cocktail party this month, you’d be well advised not to mention your recent purchase of the NASDAQ q’s, or better yet, shares of a financial sector fund.  You would soon be standing all by yourself.  The fashionable in-thing today is to mope around and talk about your safe haven treasuries earning a quarter of a percent.

How then, does all this relate to buying a new home, or building that custom you’ve been thinking about for the past several years?   How could one possibly muster the courage to start a significant project in such tumultuous times?  Here are some facts (and musings) to contemplate:

1)      If we achieve an unthinkable 8% decline in GDP, we are still producing and consuming 92% of the previous year’s number (i.e. 2005).  Was it so bad in 2004?  Did the world stop?

2)      Commodity prices have plunged.  Oil, lumber, steel, copper, concrete – all major components of a home, have dropped dramatically in price over the past several months.    The very costs that drive foundations, framing, mechanical work (electric, plumbing, and HVAC), appliances, windows and doors, etc. have all fallen.  Here is a true opportunity to “buy low.”

3)      Builders are getting calls from skilled trades requesting work.  They’re offering price discounts to stay working.  Although most good builders won’t cycle through their best trades to save a few cents on tile work or trim carpentry, the opportunity certainly exists to sharpen the pencil.  At this moment, your builder is in a position to demand even higher quality at a reduced cost, and should be able to pass the savings along to you

4)      Interim financing interest rates are half of what they were two years ago.  On a million dollar build, this represents $40,000 – $60,000 in savings just during the course of construction.  It is true that lending requirements have toughened, but it’s better for everyone if Sparky isn’t asking for a construction loan to build a home four times more expensive than what he can really afford.

5)      Most builders are building fewer homes this year than last, and should have more time to provide you with the individualized service you desire.  That has to be a good thing for the client.   Exceptional builders will be able to scale their team and its’ capacity to deliver in any type of market, but almost all builders will find some extra time for you when the number of starts is down.  (Note: be careful to examine your builder’s credit worthiness, capitalization, and recent activity with various suppliers and trades, as you don’t want to get into a relationship with a team so desperate for immediate cash, that it puts your dream project at risk).

I look at most of our clients whose homes we’ve either started in the last quarter of 2008, or are preparing to start early this year, and they all share one thing in common:   nerves of steel, and excitement about the value they are getting.  They’ve made the decision to move ahead at or near the bottom of the market.   Recently, one of our clients was so fired up, that he proposed a 25% bonus to our team for every dollar saved on the estimate of our cost-plus contract.  Most, if not all of those starting now, will enjoy higher equity in their homes than those who wait for the market to recover.

If you’ve been sitting on the fence, trying to decide whether to buy or build a new home, you should  take a careful look to see what everybody else is doing.  If your friends and coworkers are staying put, playing it safe, you might want to consider taking the other path.  Once the swing comes, the real opportunity will have passed.

I remember the afternoon my dad took me shopping for the new family TV.  I was perhaps 12, and my dad had been discussing the need for a 27 inch color tv for the living room.   We went to the store and methodically made our way to the television section, checking out the dishwashers, beanbags, and radar detectors along the way.  Moments after our arrival in the department, a salesman cornered us, asked a few questions, and immediately detected the scent of blood.  He walked us to the center aisle and had us stand back a few feet from two televisions sitting side by side.  I had the feeling one of these would be coming home with us that afternoon.

The salesman began his well-rehearsed routine, explaining the benefits of the newest technology, the shape of the screen, and the richness in color now available.   He had us stare intently at the two competitors while he compared the blue ribbon television with last year’s model.  It might have been a rerun of the Loveboat, but he was right – the quality and crispness of the picture was obvious.  You couldn’t argue with him.   I had made up my mind, and I decided to let my dad know it.  “Dad, I know it’s a lot more expensive than the other television, but we have to get the . . .”

My dad just stood there, smiled at me, and thanked me for my wisdom.  A few more moments passed, and then he asked the salesman to turn off the more expensive television.   He looked my way and asked me to imagine our television at home, sitting right there on the shelf next to the half price television.   He asked me what I thought of the half price television now.   Pretty good lesson at the age of ten, topped off by an even better conversation on the drive home about value. (Side note – we went home and setup the new “half price” television.  Nobody in the family ever knew the difference besides me and my dad.)

In the custom home building experience, the concept of value is far more subjective and complicated than the illustration above, but thinking about value during the process can provide the owners with a sizable advantage and a fair amount of equity the day the home is completed.  Most of our clients share in this philosophy, and have enjoyed the results of keeping value as one of the guiding principles during the process.   Here’s a list of general considerations:

Know Your Neighborhood – One of the most important items overlooked in the process is an understanding of the neighborhood in which you are building.  You need to understand what the other homes cost, what styles have sold quickly and at higher comps?  What demographics comprise your street  – are they younger couples that want a master bedroom near the kids’ rooms, or are they empty nesters looking for a place to store their collector cars and golf carts?  Even though this home is for you and needs to meet your needs and desires, it’s not too difficult to use this information to make educated decisions along the way.  What can I build that I’ll love, yet most people will want 4 years later (the average number of years an American couple occupy a residence).  It’s important that somebody on your team (you, the realtor, the architect, the builder, or the designer) takes responsibility for becoming intimately familiar with the neighborhood.  Not every person needs to be an expert, but someone you trust to observe and effectively communicate, should take the responsibility of training the team on these items.  Except in certain circumstances, your all-in budget, including land and carrying costs, should pencil out to less than the average selling price of homes in your neighborhood.  Unless you are intentionally building the most expensive home on the street, or building for a very unique purpose, a higher budget means you should revisit your thinking.

2-3 Choices:  In most cases, you will have a long list of selections that can include doors and windows, flooring and surfaces, appliances, lighting, plumbing fixtures, hardware, and sometimes even insulation preferences.  I’ve often seen clients get into trouble the minute they step foot into a store (think televisions).  You walk into an appliance store with a budget in mind, and you walk out with commercial grade cooking and refrigeration, three in-wall coffee makers, and a trampoline.  The better example is the tile and granite showrooms – this is where my wife breaks the bank for our own family’s projects every time.  I know it’s fun to visit these places and peruse the endless choices, but there are alternative solutions that can save you a lot of time and money.  A handful of our clients have done a sufficient enough job in casting the vision, that the entire team, including the designer, understands how the end project should appear.  Ask your designer to go the showrooms and make 2-3 recommendations for your approval.  Let them create a storyboard with choices.  You can always send them back if you don’t like the options, but 99 out of 100 times, a good designer will hit the target and save you the frustration of looking at wall after wall of colors and shapes and dollars and more dollars.

Price check your builder’s trades:  Everybody wants quality and craftsmanship and every builder will tell you they have it.  Walk some of your builder’s homes and see for yourself if you like the way the molding is installed, the quality of the cabinet drawers, or the texture and paint on the walls.  If so, ask your builder how much they pay their painter per covered square foot.  In a different conversation, ask your architect for reasonable guidance.  Compare the answers.   Anybody can hire Pablo Picasso to paint their home, pay a small fortune, and talk about quality.  The builders with value built in to their pricing, have identified the reasonably priced trades who can consistently perform; they’ve treated these trades with respect and maintained a good working relationship over the years.  These trades provide quality work and favorable pricing, and tend to deliver on time.  This exercise alone can be more telling than having multiple builders bid your project.  Unfortunately, even the best bid processes are difficult for a client to assess the results and make detailed comparisons across bids.    Comparing price is far different than comparing value.

Splurge a little – a little:  We’ve seen it all and we’re still only in our mid-thirties.  From the client who wants to chisel off pieces of the Hope Diamond for her chandelier, to the client that wants to employ the same fresco technique used by Michelangelo in the Sistine Chapel for their faux work on their dining room ceiling.   Perhaps a bit of exaggeration, but the truth is there is no wrong answer.   Make the home amazing, and use your own taste.  Pick the handful of things that you know are going to be expensive and build them into the plan and the budget.  Hopefully, your choices align with mainstream buyers in your price point, but accept it if not.  Be smart with the remainder of the items however, and ask your designer or builder to help you find deals.   Does a supplier have leftover travertine from a downtown condo project on sale?  The color may be 1/20 a shade darker than you wanted, but $2/sf versus $7/sf adds up quickly.  Do you really need cypress flooring from the Redwood Forest, or is there another variety that looks as great, but doesn’t require an act of the California state legislature to procure?  Perhaps even consider working with your architect to reduce the number of rooms and think about labeling one room with two purposes.  There’s already a trend in combining the breakfast nook and dining room into an “eating room” – something nice enough to entertain in, but comfortable enough to use every day.  Same thing for the pool cabana, game room, media room.  Talk to your realtor first to understand what will work in your neighborhood, but don’t be afraid to cut space to achieve more value.