Profit on upgrades? (negotiating, price, construction, expensive)

[Paradores]

My builder is making huge profits on upgrades in my kitchen, instead of charging us the cost difference. The cabinet shop actually told the cost was not that much higher than what he was putting in as standard. He has no upgrade pricing list and is actually charging double what the upgrade is. What can we do? New York.

[BizrulesSD]

Do more research before buying..... There is a reason why the builders throw in "upgrades" for free or close to nothing.

[spencgr]

Your builder is running a business and is allowed to make profits; ideally "huge", for the investors.

You, as a consumer, should have done more research as to cost and quality, and then negotiated BEFORE agreeing to upgrades.

It's too late now, but a lesson learned for the future.

[bbronston]

Does your contract allow for a change order and at what cost? If you believe that the builder is price gouging, depending on the timing of all this (i.e. if it is not too late) it might cost you a couple hundred dollars to go back to the standard and then upgrading once you close. Or, you might try renegotiating but it sounds like it is too late for all that if the installer is already there.

If it is too late, you might be able to leverage what you know now into getting some additional freebies later (i.e. better landscaping, better or more lighting, window coverings, etc.)

[Febtober]

This is how capitalism works - nobody sells something something for the same price they bought it.

Did you know how much he was going to charge before you agreed to the upgrade? Is there something in your contract that specifically prohibits this?

If not, the price the builder paid for the materials is irrelevant. He could have gotten them for free and still charged the same price, which you (I assume) agreed to.

[johngolf]

Para

It sounds like you are going behind the builder's back to check on his cost then complaining he is charging to much.

[oregonwoodsmoke]

No businessman is going to charge you exactly what his costs are. There is going to be some mark-up.

When you change your order, there is additional cost to the contractor. He might have to reschedule workers. He might have to cancel previous orders.

[emm74]

The time to do these price checks was before you signed the contract, not after and then make your decisions about which upgrades to take from the builder.

I had a spreadsheet with every upgrade for my house that I was thinking about doing, and I comparison shopped to see if it was worth doing through the builder or waiting to do on my own. It was a real mixed bag to be honest. For some things, they were crazy expensive (upgraded toilets for one) and some things were super cheap, like nice door levers instead of builder grade knobs and Dacora light switches - I couldn't have even bought the parts for the price of the upgrade, never mind adding on for the labor to install.

[Lacerta]

Question:

Is this a "change" or just an upgrade? The difference being an upgrade is chosen up front. A change is chosen after the house has started construction.

Changes are a lot more work than upgrades, and usually end up causing delays, and almost all builders charge a markup as well as a change fee.

[CGab]

Originally Posted by bbronston

Does your contract allow for a change order and at what cost? If you believe that the builder is price gouging, depending on the timing of all this (i.e. if it is not too late) it might cost you a couple hundred dollars to go back to the standard and then upgrading once you close. Or, you might try renegotiating but it sounds like it is too late for all that if the installer is already there.

If it is too late, you might be able to leverage what you know now into getting some additional freebies later (i.e. better landscaping, better or more lighting, window coverings, etc.)

I agree! I have built 2 homes and builders always add more cost to the upgrades then what you could actually buy them for yourself; however, the contract can be modified. Tell them you know the cost is WAY to high on the upgrades and you're not happy. Ask for free appliances (fridge, oven, dishwasher, microwave), upgraded lighting and/or a landscaping package. You could also ask for $$ towards your closing costs or have them paint the whole interior!