YOUR BUILDING BROKER
The Myth Of Big Builders Better Buying Power Reducing Prices
Can big builders build your home for less because they have better buying power than smaller builders?
Here’s a test you can do yourselves when you’re visiting a display home this weekend.
Let the sales consultant know you’re thinking of building with a smaller builder (someone who builders 15 homes or less a year). You’ll start to get a number of worrying statistics about ‘smaller builders’ being riskier and more expensive, among others.
So lets break this down a bit further and dispel this myth.
First of all, it’s a common sales line used by many sales representatives working for the larger project home builders.
Our buying power means you’ll pay less on your home than if you build with a smaller builder.
But is that really true? The answer is it’s half true – and here’s why;
Big builders definitely pay less for building materials. So, often project builders will pay a reduced supply rate from suppliers because they do purchase a lot of products. Take Bunnings as an example.
On the surface, that alone should mean the project builders houses cost less right?
This is where the half truth comes in.
Most project home builders spend hundreds of thousands in advertising and marketing each year. In fact, a couple of the home builders we know in Perth have marketing budgets well over $1.5 Million.
This is the real catch – to cover their advertising and marketing costs, they need to increase their overall margin on the cost to build your new home.
Compare that to a smaller builder. Often who work out of a home office or a smaller office, but don’t advertise or build expensive display homes. These builders typically work on margins 10, 20 and sometimes 30% lower than many project home builders. (In fact, I can cite one example of a luxury builder who was pricing homes with a 65% markup vs a small boutique builder who only adds 20%).
And here’s where we provide outstanding value for our clients.
On the one hand, we could suggest you build with the large project home builders – but when it comes to the crunch of paying 10% more for your new home to have it built by a ‘big builder’ the majority of our clients say “no thanks”.
Using a smaller builder, paying less and having a personalised service = you winning every time.
But you know what – like most things in life, price is only one consideration. There are lots of factors that come to mind when you choose who you should build with. Which is why 7 out of our last 10 clients chose NOT to build with the cheapest builder.
Can big builders build your home for less because they have better buying power than smaller builders?
Here’s a test you can do yourselves when you’re visiting a display home this weekend.
Let the sales consultant know you’re thinking of building with a smaller builder (someone who builders 15 homes or less a year). You’ll start to get a number of worrying statistics about ‘smaller builders’ being riskier and more expensive, among others.
So lets break this down a bit further and dispel this myth.
First of all, it’s a common sales line used by many sales representatives working for the larger project home builders.
Our buying power means you’ll pay less on your home than if you build with a smaller builder.
But is that really true? The answer is it’s half true – and here’s why;
Big builders definitely pay less for building materials. So, often project builders will pay a reduced supply rate from suppliers because they do purchase a lot of products. Take Bunnings as an example.
On the surface, that alone should mean the project builders houses cost less right?
This is where the half truth comes in.
Most project home builders spend hundreds of thousands in advertising and marketing each year. In fact, a couple of the home builders we know in Perth have marketing budgets well over $1.5 Million.
This is the real catch – to cover their advertising and marketing costs, they need to increase their overall margin on the cost to build your new home.
Compare that to a smaller builder. Often who work out of a home office or a smaller office, but don’t advertise or build expensive display homes. These builders typically work on margins 10, 20 and sometimes 30% lower than many project home builders. (In fact, I can cite one example of a luxury builder who was pricing homes with a 65% markup vs a small boutique builder who only adds 20%).
And here’s where we provide outstanding value for our clients.
On the one hand, we could suggest you build with the large project home builders – but when it comes to the crunch of paying 10% more for your new home to have it built by a ‘big builder’ the majority of our clients say “no thanks”.
Using a smaller builder, paying less and having a personalised service = you winning every time.
But you know what – like most things in life, price is only one consideration. There are lots of factors that come to mind when you choose who you should build with. Which is why 7 out of our last 10 clients chose NOT to build with the cheapest builder.
Really good post, but there are a number of things which make it hard to distinguish between bots and real people. Lodha Amara
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