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Old 02-18-2009, 02:03 PM
 
194 posts, read 317,776 times
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Just wondering what is a typical profit margin for high end builders, say in the 1.5-2 mil range?
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Old 02-18-2009, 03:05 PM
 
Location: Johns Creek, GA
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Today's 1.5mil- 2mil home?
Or are you referring to the 1.5- 2mil homes from a couple of years ago?
If you know the answer to that- you know the answer to your original question.
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Old 02-18-2009, 03:21 PM
 
194 posts, read 317,776 times
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I'm thinking of building a home in that range and wondering how much room we have to bargain.
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Old 02-18-2009, 03:39 PM
 
Location: West, Southwest, East & Northeast
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Under normal circumstances (a few years ago) a high-end quality builder for your price class house will be in the 12%-20% profit range after expenses. Today, many builders are willing to sell their finished or almost finished unsold houses at cost or lower to access much needed cash.

In these times I would think you should be able to get the house built with the builder making somewhere in the 10%-15% range. Or maybe you could work with the builder on a cost-plus basis at 10%-15%, but be aware that cost-plus is not always based on the builder's "true" cost. The builder can manipulate his costs with high invoices and credits you'll never see, etc., etc., etc.

Also, keep in mind that any changes or deviations you make (to the original signed-off on plans) are considered change-orders that the builder will certainly reap a higher profit on. This is true regardless whether you agree on a straight up price or having the house built on a cost-plus basis.
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Old 02-18-2009, 07:29 PM
 
132 posts, read 336,471 times
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Quote:
Originally Posted by Kootr View Post
Under normal circumstances (a few years ago) a high-end quality builder for your price class house will be in the 12%-20% profit range after expenses. Today, many builders are willing to sell their finished or almost finished unsold houses at cost or lower to access much needed cash.

In these times I would think you should be able to get the house built with the builder making somewhere in the 10%-15% range. Or maybe you could work with the builder on a cost-plus basis at 10%-15%, but be aware that cost-plus is not always based on the builder's "true" cost. The builder can manipulate his costs with high invoices and credits you'll never see, etc., etc., etc.

Also, keep in mind that any changes or deviations you make (to the original signed-off on plans) are considered change-orders that the builder will certainly reap a higher profit on. This is true regardless whether you agree on a straight up price or having the house built on a cost-plus basis.
Manipulation is right! Allocate more to cost and your margin is lower.
Higher end builders I know factor in a 25-35% margin.

Figures lie and liars figure!
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