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 Post subject: Why do home builders charge so much for their upgrades?
PostPosted: Thu Feb 09, 2006 2:06 pm 
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I recently purchased a new home around the Los Angeles area and when my wife and I went to the design center, they were charging a little over $17,000 for approxamately 950 sq feet of engineered, glue down hardwood flooring. There are no stairs,weird angles, or furniture to deal with either. We looked at the Koa (a natural looking wood) that was around $4 per sq ft. What is there reasoning for charging so much when you can get the job done for a great deal less by contracting it out? I am currently researching either hiring someone to do the job or doing it myself. Is this a project that a newbie should attempt? Or should I contract out? The subfloor is concrete. If I did it I would consider the floating floor option as well as the glue down. Any advice is greatly appreciated.


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PostPosted: Thu Feb 09, 2006 4:01 pm 
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I live in the south so I may be wrong but I heard that upgrades are where the builder makes all their money. When we built our house I only purchased upgrades I couldn't do myself. I feel better about the work and save money when I do it myself.

I recently just installed 3/8 engineered over concrete in my formal dining room. Not hard to do at all.


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PostPosted: Thu Feb 09, 2006 7:04 pm 
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That's home building for you! They are not charging you anything what it costs, they have it all priced to make a profit. The finish work you actually see, all adds value to the home, and what it will be appraised at. Now they charge you what the added value is to the home in the appriased value. You will also pay taxes on that appraised value.

Many of my clients buy with cheap cheap base grade carpet, in their new built home and have it removed after move in, and upgrade flooring with what they want, and not what the builder is pushing, because he can put a killer mark-up on it. Getting it done at a ΒΌ of the cost had they went through the builder, and they get a better installation.

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PostPosted: Thu Feb 09, 2006 9:47 pm 
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Let me explain to you the nature of track (residential) home construction. The developer ( I don't call them builders because they don't actually do any building anymore; everything is subbed out ) put out to bid ALL phases of a subdivision. Lowest bid wins the contract. With floor covering, the typical contract costs the developer ZERO, NADA, NOTHING. Here's how it works. The flooring contractor bids the "job" with the bare bones basic floor covering. The cheapest vinyl and carpet the FHA will allow: no hardwood or tile; that's an upgrade. Unless it's a 4x4 finger block parquet entry. But the flooring contractor gets an exclusive on the delelopement. Meaning, no other flooring contractor can work there before a home closes. The buyer must take possesion and close escrow before he can hire his own contractor to work in his house. Before escrow closes, it isn't his house! So the flooring contractor, along with the tile contractor and cabinet company and others, gets to set up a "design center" in the offices or elsewhere. Here, the buyers get to see the "junk" that the home comes with or what they can get as an upgrade. Well, since the flooring contractor gave the developer all the basic flooring for nothing, he charges the buyer big time for the upgrades to make up for that. Almost double market price. The developer often gets a piece of that action, as well as the realtors. Everyones hand is in the pot, so to speak, on the upgrades. Well, the buyer often knows they're getting reamed on the upgrade price but guess what? You can finance that upgrade (roll it into your mortage loan) and have it done BEFORE you move in. NO hassle to you and it will only increase your mortgage by $75. 00 a month. If you hire someone to do it after you move in, you'll have to pay them now. The $5,000.00 + that you need for furniture and window coverings and landscaping. So it's not too hard to see why many choose to have the developer go ahead and do the upgrades, even though they are paying through the nose for them. Everyone (except the buyers) understand this and count on it. Bottom line: Why do the "developers" charge so much? Because they can!


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PostPosted: Thu Feb 09, 2006 10:47 pm 
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Yep, that sounds like how some of the really fast paced slap them up "developers" do it here.


The smaller and more of a custom builder, is more as I depicted.

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PostPosted: Thu Feb 09, 2006 11:42 pm 
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That's how they do it everywhere! :lol:


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PostPosted: Fri Feb 10, 2006 11:34 am 
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It's been quite a while ago (1988) but we bought a developer house and received a fairly substantial credit for not having the standard flooring installed. I did my own floors prior to closing and this was a part of the original negotiation. The builder wasn't particularly happy when I required them to make the HVAC operational much earlier in the process of construction but they got over it. I imagine things are much different now.

Don


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PostPosted: Fri Feb 10, 2006 2:14 pm 
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They used to do that, give you a small credit and let you put your own flooring in but no more as they don't consider it your house till escrow closes. I guess too many homes fell out of escrow because of buyer problems and then they got stuck with no floors, paint, counters, etc. Anyway, can't do that today. There might be some small developer that could make an exceptiopn but typically, for the buyers that want to do their own flooring, the buyer needs to take possession of the house and tear out the floors he wants replaced. I just did this last year for a buyer. He bought the house with the standard flooring then ripped it out the day escrow closed. then I came in and installed wood.


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PostPosted: Fri Feb 10, 2006 2:22 pm 
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That is why the best thing to do is have them install cheap vinyl throughout and then install the wood over top. It saves the hassle of having to install the vapor barrier yourself and you dont have to do removal. Since it has to be done anyways it is the best way to get out cheap.

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