We were on the Washington coast last weekend. On the way home I passed a billboard on the side of the road and boy, did it catch my eye. It loudly declared, “We will build your new home for $32 a square foot.”
Oh my. $32 a square foot to build a complete new home. I wanted to stop and take a picture so you wouldn’t think I was kidding, but the traffic was heavy and I wanted to get home, so you’ll just have to take my word for it.
Folks, I sold room additions back in 1978 for about $45 dollars a square foot if memory serves me. 33 years later, a whole house for $32/square foot? Hold your breath.
They will probably get several inquiries and may even build some of those homes. I can guarantee you it won’t be anyone’s dream home. Will it include appliances and floor coverings? Will it be painted?
But let’s take a look at what this company is doing to itself. First, assuming their sales people are honest and this is not one of those bait and switch scams, they’re kidding themselves and everyone else when they advertise that kind of a price. Even the major low-end builders who crank out multiple thousands of homes every year have a SF price of at least $85 to $90 a SF. They buy stuff by the rail car in volume. And don’t forget that many of those builders have gone bankrupt over the last 4 years.
And many customers who see that sign are now convinced that the other contractors in the area are charging way more for their work than they should.
If this is a bait and switch scam, which I believe it probably is, that’s also bad for all contractors. The potential client walks into the company office with the intent of buying a low cost home and when they leave, they have been put through the old “tin-man” wringer and are trying to figure out how the price of the simple home they wanted went from $32 to $119 a square foot or higher. They can’t wait to tell everyone how all contractors are crooks.
If you know contractors who operate like this, please talk to them. Send them this blog post. It is just a matter of time before this company goes out of business. In the meantime, they make all of us look bad.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.
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