Anderson Homes, LLC

A couple who were looking for the right contractor to build their custom home in the Sequim area thought that it might be a good idea to hire a small builder who only builds one to three houses per year.   It was apparent that these good folks were assuming that there would be certain benefits to them in working with a small builder.   Is that true?

The question I want to address here is, “Does the size of the contractor’s company matter?   Should one hire a small builder to get personal attention, or should one hire a large builder to get the lowest price?

Notice that these questions are assuming facts not necessarily proven to be true.   Let’s look at these assumptions and consider the size of the general contractor’s company, or the number of houses built by the company, and see if we can separate the wheat from the chaff.   The goal of this article is to dispel some common misconceptions about contractors so that you can select the best builder for your custom home.

Small Home Builders.   The question above assumed that the small builder will give the homeowner more personal attention.     For Sequim and Port Angeles areas, let’s accept the general notion that a small builder is one who builds one to six houses per year (plus or minus a couple of houses, there’s no magic to the number).   This assumption that a small builder will be able to give you more personal attention is normally also assuming something else, called “certis peribus” in Latin, which means “all other things being equal.”   Even if a small builder could give you more personal attention, are all other things equal?   All other things, like price, quality, quantity discounts, and so on are not equal.

As far as personal attention goes, small builders are often the least likely businessmen to have a great customer relationship management system in place.   Personal communication skills are not bit on small builder’s list of skills.   They are not.   I’ve been watching this for 30 years as an adult, and as a child, I grew up working for a contractor.   The small contractor (sole proprietorship or individual owner) are most often disorganized, not especially good at sales or regular communication with clients, and they normally hate paperwork and billing.   Notice I did not say all small builders have these shortcomings.   Sure enough, out there somewhere is a small builder who really is a master of all.   But my point is that is rare.   Most are not masters of all aspects of running a home building business.

The profile of a small home builder has advantages and disadvantages.   A sole proprietor who builds his own homes is often a man who likes to work on his own schedule, take his time, and enjoy his workmanship.   Usually, his homes are something he is proud of.   This is all good.   For him.   What about the client who hired him?   What are the disadvantages?   A small builder will not get volume discounts from the building supply companies.   He can’t.   He doesn’t build enough houses.

That also means he can’t pass on the savings to clients, or from another perspective, it means he will be more expensive per square foot by the time the home is completed.   Second, the small builder who does most or all of his work may not be an expert in every aspect of building.   The major reason a general contractor hires subcontractors is because they are specialized and can do the job better and cheaper.   If a small builder does all his own work, or only subs out small portions, the home will cost more per square foot.

There’s one other very significant issue that came up many many times when I practiced law.   Clients would often learn that the money they were giving to their small builder was actually going to purchase supplies on the next customer’s house.   I call this, “robbing Peter to pay Paul.”   In 20 years of real estate law practice, I saw many small builders who were always struggling to complete the house they were currently building without using funds from the next customer.   There’s nothing illegal about this.   The hope is that the builder doesn’t go out of business, because the last man standing would be the loser.

This points out that small builders do not have the financial resources of larger builders.   That does not provide the client with a great measure of security that the home will be built on schedule and at contract price.

In the next article, Part 2 of this 2 part series, we will look at large builders, the advantages and disadvantages for the consumer.   Read Part 2, Large Home Builders.

[The giant in the photo above was the tallest man in the world at 8 feet and 7 inches tall.   The photo appears to have been taken in the 1960's.   His name was Clifford Thompson.]

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