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