2019 Idaho Real Estate Blog

Is Bidding Good for Consumers? Main Idaho Real Estate Insights
Although it may appear advantageous, a client's request for multiple bids on their new custom home or remodel is not always in their best interest. It makes sense at first, but there are some compelling reasons why a potential client should resist the temptation to create this competition.

The Case Against Competitive Bidding

Who Wants A Cheap Home?
Looking for the lowest bid may assure the client of the "cheapest" home, but is he/she really looking for a "cheap" home? Rather, the client should be convinced that the quality and value are more imprtant than a lower price.

There's No Price Tag On Trust
Bidding the home out to "keep the builder honest" is the wrong way to approach the process. If the client doesn't trust the builder, why is he working with him or her in the first place? The client should realize that builder's mission is to design the best possible home within budget and make a fair return for his or her efforts.

Bidding Mistakes Don't Help A Client.
It is risky and unrealistic for clients to hope that the builder will make a large bidding mistake in their favor and then expect him or her to eat it after construction has begun. Consumers must understand that a builder who realizes that a bidding error is going to reduce his margin will be difficult to deal with regardless of the contract.

Only One Builder Wins.
A custom home takes an incredible amount of time and expertise to bid correctly. These "bidders" are people with whom the client will have to spend a great deal of time, and they will likely become friends. Once the client has selected a builder, he will have to tell two or more builders the bad news that they didn't get the job.

Comparing Apples To Oranges.
Add to this the difference in how jobs could be bid. If plans and specifications are poorly drawn and executed and/or if the bid instructions are vague and incomplete, the bids will be so far apart that it will be impossible to reconcile them and determine which among them is really the lowest. If plans and specifications are properly drawn and executed and if the bid instructions are complete, three competent and reputable builders will appear with pricing that is almost identical. If this is so, why submit to the stress of bidding out the home? Buyers should know that builders are chosen the same way as they would choose any professional-reputation and warranty.

Customer Service
And one final consideration,

Low Bid=Low Profit=Low Customer Service


Copyright Design/Build Business - August 1997

 
Posted by tlangford at 11/24/2009 4:51:00 PM
Comments (9)
Re:Is Bidding Good for Consumers?
If the plans and specifications are complete and the builder bids the project properly, no mistakes should occur and the bids should be apples to apples, not apples to oranges. The key is having complete construction documents.
The client should check out the builders reputation by visiting with previous clients and looking at projects in progress. If the client feels there might be issues, such as trust, they shouldn't waste the builder's time. If the client has decided on thier builder and is going through this process hoping to get a better bid, this process is a waste of everyones time.
If the client has done thier homework and picked builders that they feel comfortable working with on the project, the end product should be the same. The savings might not be huge, but it could be well worth the time.
Posted by on 5/30/2006 8:46 AM
Re:Is Bidding Good for Consumers?
How is someone supposed to protect themselves from being completely ripped off if they don't have at least two bids to compare? People are just asking to be taken advantage of if they don't sanity check any bids with at least one other source. How do you suggest they do so if they only have a single bid on a project?
Posted by on 6/15/2006 1:40 PM
Re:Is Bidding Good for Consumers?
Bidding is always good for the consumer. The bidding process is not necessarily to find the cheapest bid. Often, it is the process of finding a contractor you feel comfortable working with, a contractor you can understand and one that suits your needs. Consumers uncomfortable with the bidding process may engage the services of a consutant and mediation company. For peace of mind, hire people that do what they do best. A consultant can save you money and heart ache down the road.
Posted by on 8/12/2006 4:47 PM
Re:Is Bidding Good for Consumers?
"If the client doesn't trust the builder, why are they working with them in the first place?" The same reason we use any vendor. To secure a product or service at the best price. It has nothing to do with making friends. What a croc. Most builders and customers end up at each others throats before the process is finished. Don't overpay for that luxury.
Posted by on 9/16/2006 7:02 AM
Re:Is Bidding Good for Consumers?
Curious to hear from the builders on this...are you insulted, afraid or not interested in wasting time with a bid process for a new home?

Curious builders...do you believe that the value YOU provide is so invisible and unproveable that you cant justify a proper bid and win even if its not the lowest.

Trey- Cant support you on this. I would say this is the biggest purchase most people make, but given its 3.5% or less down for most clowns these days I doubt they care as much. If a builder I deal with is afraid to back their service with a bid and proof (referals, projects, green cert etc...) they are IMHO unprofessional and I dont want to deal with them.
Posted by on 11/25/2009 7:12 AM
Re:Is Bidding Good for Consumers?
Another comment..

Look at commercial. Are they idiots...they always bid! Do you think when Walmart builds a n?w site the manager just finds someone with a good rep and a nice smile. I say be like the pro's.

Oh, and the real commercial guys always negotiate the Realtors(R) rate or even better just get a RE attorney and save the 'prices are going up' 'its a great time to buy' speeches for the sheeple
Posted by on 11/25/2009 7:20 AM
Re:Is Bidding Good for Consumers?
Curious to hear from the builders on this...are you insulted, afraid or not interested in wasting time with a bid process for a new home?

Curious builders...do you believe that the value YOU provide is so invisible and unproveable that you cant justify a proper bid and win even if its not the lowest.

Trey- Cant support you on this. I would say this is the biggest purchase most people make, but given its 3.5% or less down for most clowns these days I doubt they care as much. If a builder I deal with is afraid to back their service with a bid and proof (referals, projects, green cert etc...) they are IMHO unprofessional and I dont want to deal with them.
Posted by on 11/25/2009 8:33 AM
Re:Is Bidding Good for Consumers?
Because I work for a builder/developer, we don't get involved on bidding on custom homes. My father is a custom home builder and regularly bids on work. The quality of the plans and specifications will determine the quality of the bids. If specifications for light fixtures, plumbing fixtures, trim and doors, and flooring are not specific, then the bid results can vary greatly and you won't have apples to apples. The bidding process may also be important to the process of finding out if the builder is any good. If the bidding process goes smoothly and the builder shows a high level of professionalism and service, then it is likely that those characteristics will carry into the building process.
Posted by on 11/25/2009 10:26 AM
Re:Is Bidding Good for Consumers?
I work for a builder here who also does the design work. We regularly invite our design clients and even encourage them to bid out their projects to more than just us. A company should be comfortable in their prices and know that they can be competitive. I do think that the bidding process reveals a lot about a company and how will they might work with you on building your new home.

As a builder we bid out our projects to subcontractors. This helps ensure honest pricing and makes subs give us their best pricing. There are several great subs available out there right now and in a price competitive market we realize how important it is to ensure great sub pricing while not sacrificing quality. So if we bid out subs and commercial and government jobs are bid out then why shouldn't residential homes be bid out? You can't just always get work based on credibility. You have to back up that credibility with fair prices and the ability to fully understand the scope of the work.
Posted by on 11/27/2009 1:49 PM

 

Michelle Penick, Build Idaho Client Real Estate Services

Michelle Penick

Client Care Team
208.629.0217 | [email protected]

Contact Agent
Search
★★★★★ 5 stars - "Our experience with Full Sail/ Build Idaho was great from start to finish! "