Episode 5: Builder Selection with Matt Sneller
In this episode:
Now that Brian and Heather have their future home designs they move forward with choosing a builder for their project. Rather than choosing someone based on custom home expertise, they focus on finding someone that provided a free estimate and the lowest bid. Will things improve for them or will they be stuck with another costly consequence on their hands?
We speak with contractor and owner of Sneller Custom Homes, Matt Sneller, about the factors to consider when choosing a builder, the importance of having a project development process in place, and how essential it is for all the key players to be involved from the start. We unpack all of the couple’s choices in our story and the problems that transpired as a result. Selecting a builder is not simply about choosing the builder that gives you the “best” rate with a free estimate. It is about finding a builder that has earned your trust and acts as an advocate for you, to achieve the best possible outcome within the scope of a well-planned budget.
About our Guest: An Austin native, Matt Sneller graduated from Texas A&M University and began working his way up the ranks of commercial construction, through production building and finally to custom home building and remodeling. He and his wife Jenny founded Sneller Custom Homes & Remodeling in 2011, where Matt remains passionate about the industry, and loves bringing fresh designs and ideas into peoples’ homes.
Guest: Matt Sneller
Business Title: Owner
Company: Sneller Custom Homes
Bonus: Accompanying every episode are show notes with links to guest speakers and other helpful sites mentioned in the podcast.
How to get in touch: Please let us know what questions you have and we will address those on our final episode of the season, Episode 16. You may email us at email@example.com.
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Hey there! Welcome back to the Your Project Shepherd Construction Podcast. The last time we saw Brian and Heather, they had just signed off on Rick’s plans for a much bigger house than they bargained for. After getting a hard lesson in permits, surveys, specialized tests, fees, and even more fees, their cash reserves are not looking as comfortable as they were a few months back, and they’re starting to realize that Heather may once again be put on bed rest.
Towards the end of her pregnancy, the stress of demoing the house is more than they expected and is causing them both to fear the worst, but Heather insists she’s okay and won’t let herself stress out too much. Instead, she’s looking forward to the future and is happy to have such a big project to work on. While they are excited to be moving forward, they realize every day that the cost of building a new home is not as cut and dry as they assumed to get everything on their wish list into their new home.
Rick has expanded their ideal 3500 square foot house to now 4800 square feet, however, they feel like they’re finally starting to experience some real progress on the project and surely this is the last of the surprises, right? Despite going out of pocket beyond their expectations, they officially have a signed contract with an engineering firm to start their new dream home’s structural design, and they have a set of plans in hand for their “forever house” with all the features they want, including a big game room, a media room, a study, and five bedrooms.
The future is looking up, although maybe a little bit snug financially. As Brian and Heather sit in Rick’s office, they feel some relief after signing off on the plans. Then Rick tells them it’s time to get competitive bids from builders and Rick picks up on Brian and Heather’s glances. It is clear they don’t know where to begin with finding builders.
He recommends three builders that he’s worked with before and reassures Brian and Heather that working with any of these three will be great. Then Rick suggests they go ahead and email the plans to each of them so that they can get a budget for their lender that night after work. Heather asks Brian to proofread emails to the builders before sending them.
They want to make sure they’re getting a good first impression. Once they both feel good about the email, they hit send. Despite being late in the evening, they kind of stare at the computer screen waiting for a response. After a while, they realize the builders aren’t going to respond that fast, and maybe tomorrow will check back. The next day rolls around, and then the weekend, then another week. They start sending follow-up emails and making calls to make sure the builders receive their requests. Finally, after a couple of weeks, the first builder comes back with a quote for $350 per square foot. Ouch. It’s definitely higher than they expected. The next one’s got to be much lower! Two months later, the second one finally gets back to them with a quote for $300 per square foot. It’s better, but it’s still high in their mind. They’re holding out hope for the third one, however, the third one never gets back to them after months of follow-up calls and emails, and still no response.
Overall, Brian and Heather feel devastated at this point at the, quote, and prices they received. They just can’t afford to build the house they designed.
They talk about scaling the house back, but Rick tells them that the plans are finalized no so scaling back means almost starting from scratch and paying all the fees over again, which is like $10,000 on top of everything else. Brian and Heather’s neighborhood woes are growing. The HOA and the city keep calling and sending them letters because their wide open house is just not safe – their voicemail is full, and they’ve lost track of the number of notices taped to the front door. The pool is infested with mosquitoes, and it’s a drowning hazard because there are big holes in the fence that the neighborhood kids can climb through. They have no choice now but to spend another $5,000 to secure the house and another $18,000 to fill in the pool the right way and do all the property testing with the permits this time.
Brian and Heather feel like they couldn’t burn cash as fast as they’re spending it. Determined to find a better builder situation to try to save money, Heather starts asking around on the local Facebook groups. A woman replies and says her husband Derek, just started his own business. He had been working for a production builder out in the burbs since college, but he got tired of working for a big corporation and just decided to start out on his own.
Heather emails the plans to Derek and he quickly responds with a quote of $180 a square foot. All the anxiety over money and her pregnancy are starting to lift. The next day, Brian, Heather, and Derek meet at a coffee shop near the property. Derek quickly puts Brian and Heather at ease, because he’s been building houses for years and he has connections for materials and subcontractors at a low cost from his previous job.
Plus, he offers to do the work based on a cost-plus model. This means if he can get it done cheaper, they will save even more money and he’s allowing them to buy their own appliances and fixtures to save his markup. Between the cost savings benefits of this deal and Derek’s experience building houses quickly and cheaply, Brian and Heather are starting to feel some peace.
Later that night, they crunch some numbers with the current childcare expenses, the new baby on the way, Heather’s impending unpaid leave, and the unforeseen costs of their new home. The next few years are going to look different than they imagined, but they’re excited to get things moving and if Heather continues working for just a few more years, they’ll be back in a financially stable place again.
Things are looking up. Ecstatic to share the news, Heather calls Rick to tell them they found a builder. “That’s great,” he says, “what company is he with?”
“Well, he’s on his own,” Heather says, “but can you believe he’s only $180 a square foot?”
“Well,” Rick says, “what are his references? What other builds has he been the lead on? Not everyone who works in construction knows how to manage an entire custom house build.” Heather politely ends the call, and she calls Brian to tell them Rick must be annoyed that they’re not using one of his recommendations. They wonder if they should slow down and dig deeper into Derek’s abilities, or if maybe Rick just prefers his own people because he’s getting a kickback or something like that.
They decide that must be it, and that they’ve made a great choice with Derek.
CURTIS: Hey everyone. Welcome back to Your Project Shepherd Podcast joining me today is my friend, Matt Sneller with Sneller Custom Homes up in Spring Texas. Matt runs the company along with his wife Jenny and they’ve been in business for about 11 years, and they focus on design, driven Custom Homes, and remodels.
Is that right?
MATT: That is correct. Absolutely
CURTIS: So, Matt and I first met through a mutual friend, Toner Kersting, whom we are going to have on a future episode. And we see each other regularly at HBA events and things like The and Matt, you are one of those guys, I know who does things right? And I wanted to get you on the show to talk about our story that we just heard what your processes are and to help folks understand the right way to go about building a custom home. So Welcome!
MATT: Absolutely, thank you for having me.
CURTIS: So, let’s talk about our friends, Brian, and Heather in the story. A little bit of trouble, so they bought a for sale by owner lot in the floodplain. They bought plans on the internet. When those did not work out, they hired a cheap house designer.
MATT: What could possibly go wrong…?
CURTIS: …and now they’ve hired a builder, who is transitioning from buildings production houses in the suburbs to building Custom Homes. He gave them a free estimate and he said he could do it for a hundred eighty dollars, a square foot and he might even save them if they do a cost-plus contract. Yeah. So, there’s a lot of stuff to unpack there that they did wrong.
MATT: A lot went wrong there very quickly.
CURTIS: So, let’s start with how they selected a builder.
She went on the local Facebook group, and she was asking for recommendations. So that wasn’t a bad thing necessarily because you are getting some referrals, but in this case, wasn’t really a referral that the guy’s wife chimed in and said, her husband starting a new company and he comes out and gives her a free estimate, which was based on his experience as a production Builder. So, I guess the first big mistake, you know, what is, what is the difference between a custom home builder, like yourself, and a custom builder, out in the suburbs?
MATT: Yeah, there and there’s a huge difference there. I think you cannot knock the guy for wanting to go off on his own. We all had to start somewhere, so, and that is great for them to want to give him an opportunity at that but there is a huge difference between production and custom production guys, I worked for a production Builder when I first started my career and you are basically just assembling a Lego set, it is all the purchase orders are there, all your subs are already chosen for you, and all you are doing is making sure that people show up and that the house gets finished but the custom building is so different. There are so many parts and pieces that have to be decided along the way there are changes. There are just too many decisions and too many things that happen that you do not know about as a production Builder.
CURTIS: Mhm. And when he gave them a kind of a price range, he said he could build it for a hundred eighty dollars a square foot, because that was his experience you know using some his subs and trades from when he was a production Builder you know, what does that, what does that mean? Why is that a bad way to approach a project?
MATT: Well, you know, everybody, everybody asked about the price per square foot and it is, I understand that you want to make sure that you are in the right ballpark, the problem is in that situation, specifically, the problem is, that is probably the pricing, he was used to getting at a production builder, whom they’ve got national accounts with suppliers and subcontractors, so they are getting crazy pricing. He’s not going to get that same pricing as a single custom builder. Building one or two projects a year. Overall, the problem with the price per square foot is that we are talking about living square footage, you know, living or condition square footage, or we are talking about total framed, gross square footage. Because what we found are garages and patios, they cost almost as much as the house, yeah, you do not have to air condition, but we are putting sinks and appliances and flooring and ceiling treatments, and garages are getting sheet rocked and trimmed out and all that stuff. Garage doors are incredibly expensive and so it really isn’t that much cheaper and so when we are talking to people about that, as per square foot. We got to make sure they realize you cannot just talk. If you say, I want to build a 3,000 square foot house, that is more than likely that will probably be 4202sq ft. or 4,500 square feet.
CURTIS: or 5,000sq ft even
MATT: You know, if you got a giant patio and your car guy, and you’ve got a four-car, six-car garage. Yeah, it is 5,000 square feet and so, that is, that is a huge difference in your budget that you can completely blow your budget. If you designed your house thinking, it is going to cost X amount, and ended up Crossing X plus, you know, $300K, that is you are going to be in a pickle.
CURTIS: So are people realistic in general when they come to you with their budget for building a house?
MATT: Very, very rarely. I think they are usually Surprised. I think it is got to be a conversation. I explain that about the total square footage versus living or condition square footage. And then we just talk about the things that affect that price. There’s its custom. Every decision is custom. Yes, we have a standard set of specifications that we go by, but it is still kind of a starting ground and there are so many differences and decisions that need to be made that even to tell somebody what the price per square foot is, that is a starting range, but then the sky’s the limit from there. And so, it is really difficult to do that.
CURTIS: How should somebody arrive at a budget?
MATT: That is the million-dollar question. You know, I feel like clients have got to there’s this stigma that if I’m honest with my builder he’s going to rip me off and you know if I tell him, I want to spend a million dollars in the house only cost 800,000 to build, he’s just going to pocket the extra 200 Grand. Like know a good reputable Builder is going to charge a fair markup for his work and for the professional services that he provides, but things cost what they cost clients drive the cost of Custom Homes that is it and their decisions and so you know they try to help them come up with an overall budget of – hey, based off of you know you told me you want a four-car garage, and you want a big patio and you want these certain things, you know, do they want automation system that could potentially add a hundred thousand dollars in the budget; let’s come up with an overall budget number – That is probably based on some prices per square foot in my mind. I’m not really telling them that and at least it produces an overall budget. And so, we say, hey, based on what you are describing, I think your budget needs to be a million dollars and they say, well, we only have $800,000 to spend. Well, then let’s talk about what we can do to get it closer to that, but you got to get, you got to start somewhere because you do not want to talk to somebody that has a $500,000 budget and you know that it is going to cost a million to build, it is wasting both your time if you move much further.
CURTIS: Right, so there has to be a reality check for people.
CURTIS: Quite often that they just cannot get what they want necessarily. If their budget is a million dollars and they want a million and a half worth of stuff, sometimes.
MATT: Yeah, something’s got to give right, it is got to give. Are they willing to give up on the size of the house or the finishes that are inside the house? They have got to be willing to sacrifice something.
CURTIS: Yeah. So, we see people who talked to builders, and they say well this guy is charging $400 a square foot, or he threw out 300 to 400 square feet, as a range, and this other guy said he can do it for $250 sq/ft. I mean to make my budget work; I’m going to go with the guy that they can do it for $250 sq/ft. So, what is somebody getting for 250 that there?
MATT: Yeah, well and I think the, what the clients got to do in that situation when they talk to builders and they see such a broad range, ask each of the builders for their standard set of specifications and I mean you and I know, especially with the, our mutual friend Toner, like, what are their, what are the weatherproofing features that they are putting in there? Are they putting a drainage plane in? Are they doing, you know, stuccos becoming really popular, are they doing stuff the right way? Because it is really cheap to do stucco the wrong way, Right, it is catastrophic, but it is pretty expensive to do it the right way. And so, are they doing it the right way? What you know, those kinds of things aren’t necessarily decisions that clients are a part of but they there are differences. Between Builders, you know, as a standard for us is a standalone dehumidifier in every house – that is five thousand dollars or whatever it is for five thousand dollars but that, if this other builder at 250-foot, he’s not doing that, you know? And we found that that is best practice. There are certain things that the clients just have to be, they’ve got to educate themselves. They cannot just ask a price per square foot and then say, all right, let’s go with the cheapest one.
CURTIS: Right, so this process of Delving into what people can afford, should afford, could have for what they can get for their money. We call that the design-build process. You can call it a pre-construction Services process or a project development process but talk about why that process is kind of the right way to go about building. A custom home or designing a custom home.
MATT: Yeah. So, you know what we have found is a team approach to building a custom home is what works. There’s the kind of key members of that team that we feel like the Builder, the architect, the interior designer, the structural engineer, or the engineer because oftentimes we need civil engineering as well and then we would, you know, add in building performance, a specialist in there. So we feel like you have to have all members of the team there from the beginning so that all are aware of that budget and the goals of the client, and they walk through that process together. Because as you know, Architects are amazing at drawing beautiful projects, though unfortunately, they may have an unrealistic view of the cost, and so the client goes to an architect before they’ve ever talked to a builder, architect designs in their dream home and then they send it out to me to put together a proposal on and it is, you know, five hundred thousand dollars more than they wanted to spend so now I’m the bad guy because I’m too expensive, so they either have to figure out how to get more money or they’ve got to chop up this beautiful home that they just designed and fell in love with. So better from the beginning, let’s review as we are going along “Hey remember you told me your budget was a million dollars? What you are asking the Arctic to draw right now, is probably going to be more like $1.2 million, you never mentioned to me that you wanted that conditioned wine room, that is probably a 50-thousand-dollar budget line item. Are you okay with that? I did not have that in my initial rough budget. And so that is going to put us over budget”. Then they can at least they can be involved in that decision and then when you get to the end and they are over budget, you can remind them, “Hey, remember when we talked about the wine room and I told you, it was not included and you said, you are okay with it?”
It does not fix the problem, but it at least makes it more palatable for them because they have been made aware of it before.
CURTIS: So well, what you say, people were hesitant to engage in that preconstruction project development because maybe they are scared that they are not going to get the best deal or that they are going to be locked into using a builder kind of before they are ready to be locked into using a builder.
MATT: So, you know, unfortunately, I do not even want to say the industry standard, but the stereotype standard is I need to get three bids. I do not know if clients really think about that, like do you realize what is happening when you get those three bids? Basically, for me, as a builder, at this point – now we charge when we put together a detailed estimate – but if you are getting a free Bid from a builder, are you really getting his best bid? Or is he just easy either throwing together, the cheapest thing possible in order to win the bid and he knows that he’s going to kill you with change orders later, or he’s not really spending that much time on it and it is just going to be high because he figures hey, if I get it, at least I’m high and all make good money on it.
The beauty of that team approach, that we really encourage our clients is to interview some builders that, you know, build within that General budget range that you are comfortable with but then pick a builder to go through that process with before they’ve ever given you any detailed pricing because then that Builder can be your Advocate. They can, you know, if they know your budget and a number from their painting contractor comes out, comes back higher than they expect. They do not just throw it in the budget and think, well, I’m going to make a little bit more off of that. They think, hey, you know, they go back to the painter and say, “Hey, man, this is higher the last couple of projects have been, what is the reason for that, and they really will be your Advocate.” I mean it is we are professionals and yes, we need to make money, but we are not out to screw the clients and try to get rich off one project. We really if they’ll trust us again, that is this whole thing is they’ve got to trust us from day one, and we have got to earn that trust, but they’ve got to trust us that we are going to be their Advocate and that is, you know, whether it is me, put the estimate together, my estimator that we are spending the time. Ali figuring out the best way to get that house that they want within the budget that they have.
CURTIS: Right, and you said that you should charge a fee for project development now (and we do the same thing), what kind of fee do you charge? What is the general cost for somebody to do that?
MATT: I think it ranges, you know, it is all obviously going to be on the size of the house if we are just if a client already has a complete set of drawings and they just want us to put together a detailed estimate, you know, that is generally 80 to 100 hours of my estimator’s time – we come up with an hourly rate – I cannot remember off the top of my head but I want to say it is a $115-$125/hour or something like that. So, you know what is that going to be ten thousand dollars right for that? If it is if we are going through the entire design process and I know that not only is my estimator going to spend those 80 to 100 hour, but I’m also going to spend another 30 or 40, or 50 hours meeting with the architect and the client walking through that, then obviously it is going to go up from there, but, it is it sounds like a lot in it. I think to clients it feels like an unnecessary expense but what you are doing is you are paying to have that team together from day one and walk through the entire process of view, and I think it can ultimately help reduce costs because we are there for the entire process and I remember things that you said you wanted that the Architects forgot about; it is a lot cheaper to draw them in the plans now than it is fully framed and sheet-rocked and then you remember that you wanted whatever and we have to spend a ton of money fixing it at that price.
CURTIS: So, spending ten or fifteen thousand dollars, upfront could save you $10,000 or $15,000, or more, easily during the build process. Just one item could pay for itself.
MATT: Right, yep. Yep.
CURTIS: So, if, if you are in this, this design process is preconstruction process, and a client keeps making decisions to increase the scope – let’s add that wine room, whatever, and you know, you’ve told them, hey, your budgets going up, your budgets going up, but then we get to the end and here’s your final contract, sir, and it was going to be a million and now it is 1.5, what happens them, you know, what do you do once you’ve warned him about it, and you go all the way to the end and they are having a meltdown?
MATT: You know, hopefully, we have built up enough trust that it is not a complete meltdown.
We just had recently, that, you know, they came to us and said, hey, our budget is $900K and our first round of the Proposal came back at like $1.2mil and you know, we said, hey there are some things we can do to get it down but really with that they came to us with a set of completed drawings, we said really with these drawings we do not think we are going to get much lower than $1.1mil a little bit underneath that and so they said well I think we want to wait to build up our finances and maybe readdress this in six to nine months and see what cost of done at that point in time and so, they trusted us, they are like we want to use you as our builder was bought to you all, but we just we literally do not have the money right now, and so let’s wait and see if it can still happen. So that is the best-case scenario, but right, oftentimes, unfortunately, you do have that meltdown. And I mean, all you can do, is we have to remember, I think it is easy as Builders we get, we get. So tied up in all the problems that we are facing every day from subcontractors to clients being upset, we forget that we are getting the chance to build people’s homes. This is the place where they spend most of their time, this place where they are going to raise their family, the place where they escaped from work and so, to remember how big of an investment that is, but how big of a deal it is that they invite us into their homes to do that and to just to not be overly difficult with that conversation and just to be empathetic and say, “hey I’m really sorry that it came this far over budget. I thought that we had done our due diligence and explained to you where we had gone over budget. I wasn’t surprised by this final number because I thought we’d had all these conversations and so you know here’s where we are at what do you want to do” and you let them make that decision do we, you know sadly there are some clients that will throw their hissy fit and will be okay let’s do it. You know like okay we are the extra five hundred thousand dollars come from but there are some that they just say yeah, we are just we cannot do it and they move on and maybe they find another Builder, they can do it for that.
CURTIS: But it is you know where they can say.
MATT: That is the tricky part. That is the other thing, anytime you get that lowball offer I just I’m waiting for that shoe to drop – the change orders. It is just if you are really specific in your plans and the finishes that you want to put into that, again things cost what they cost. If you are working with a reputable Builder, we are all, if not using the same contractors, some of the same contractors and the same level of contractors were all getting similar pricing. Yeah, you might be paying a dollar a square foot cheaper for your framing than I’m, or I might be paying $20 a linear foot less for my cabinet guy to build cabins and you are but it is really, it is minimal.
CURTIS: Yeah. Right.
MATT: What determines the cost is the finishes that the clients choose to put in there.
CURTIS: Right, and even that the difference in markup between two Builders might not make a giant difference if I’m, and I’m not charging this, but let’s say I’m charging 25%. You are charging 20% that 5%, the markups not going to swing a budget from a million to a million five. So, there’s not so much. Something is being left out of the budget. If there’s that much of a discrepancy,
MATT: Right, yep. Absolutely.
CURTIS: Yeah. So, let’s talk about one of the other things that this, this Builder that Brian and Heather decided to work with did he said he’s going to do a cost-plus contract. Yeah, there are two kinds of contracts for people who are listening to that. Do not they do not really know about this stuff.
There is a fixed price where I give you a price and that is the price unless you change something and there’s a change order.
A cost-plus contract is when whatever my costs are, I pass those along to you and I apply a percentage markup to it.
MATT: Or a fixed fee
CURTIS: Or a fixed fee. If there was $500,000 worth of materials and my Cost-Plus markup is 20%, I make a hundred thousand dollars. It is and people are attracted to that because they say well we can control those costs you know we can pick and choose what we do and there’s transparency. There are a lot of reasons that people are attracted to that but what are some of the fallbacks to using the downfalls to be using a cost-plus contract?
MATT: Yeah, so when we first started, we did all costs plus, and I’m not saying this is true of all Cost Plus Builders, but for me, honestly, I think it was laziness on my part, I did not, I did not want to put forth the amount of time that I should have into an estimate. So it is a lot easier if the risk isn’t on me. If the risk is on, the client is a lot easier to just throw together an estimate. And if I made a mistake, you as the client really have to pay for it, I’m not saying that is what all costs billers do. But for us, ultimately what it came down to, was it when it is Cost Plus the client feels like they should have a say in which subcontractors are used, they do not realize that you know, for us when we say we have been working with a painter for five years or with a framer for 10 years, it is not just that I know him and I know his kid’s names, it is that he knows my expectations, I do not have to spend a ton of time. You know, I still punch his house, but I do not have to spend a ton of extra time catching all these details that another framer the client found that is you know, two dollars, a square foot cheaper, missed all of the details and therefore I have to spend a bunch of extra time on my end catching all those mistakes that he made. Well, that is no skin off the homeowner’s back because that is my time, then they are not paying me hourly they are paying me a fee and so obviously they want it less expensive so that my fee is lower. We also have run into a lot of issues where, you know, if there’s a mistake, either a mistake that is made or the easiest example that I always give is drywall patches. There are always drywall Patches at the end of a project and, you know, the electricians often have to cut quite a few holes, you know. Maybe it is an outlet was covered up or they’ve got an outlet not working and they realize there’s a nail in the wire, will The Client see that a ten thousand dollar means, sorry $800 charge from the sheet rocker and they said well I do not want to pay this, your electrician should have to pay this; well, it is not the electrician’s fault that there was a nail in his wire. Well, whose fault is that? Well, it, I guess technically, it is maybe my trim Carpenter and my frame Carpenter, but it is just, there are so many things like that in a relationship with our subs, we are not a real chargeback-heavy Builder. Like if a sub makes a mistake, then, okay, let’s just figure out a way to fix it and I’m not going to penalize you for, you know, making that mistake and so clients, unfortunately, especially in the custom world. I heard somebody in a podcast a year ago, building a custom home means that you are building a prototype every single time this has never been done before. There are going to be mistakes that are made and in a cost-plus scenario who pays for those mistakes – the client does not want to have to pay for those mistakes and it is just it just means you are having that same even if it is not an argument, even if it is just a discussion, it is a discussion that you have to keep having it felt like over and over again, and it is just exhausting.
CURTIS: So, yeah, so when there’s a fixed price contract, you can have a cushion, or a contingency built into the contract to take care of the situations. Right?
MATT: Yep. Absolutely.
CURTIS: Okay. So we are going to change gears. We talked about some of the negatives and the wrong ways to go about things and then the right ways, but tell me about your dream customer, like, what is a builders’ dream customer?
MATT: You know, I think jokingly, you know, you want to say, oh, somebody that does not have a budget at all, or it is really, it is not a particular person. It is not a particular budget. It is, it is honestly somebody that trusts us; that is the bottom line is that every time we have an issue that comes up on the job side that I’m not stressed about calling them because I realized that you know they are understanding and they trust me and that they trust that we are watching the job and mistakes still happen sometimes and you know as long as we are providing a sensible solution to that mistake than that, they trust us and let us go on with it. You know I heard a podcast recently about a lady that had built a home in Austin, and she was talking about you are familiar with the tab contract in the price escalation clause. Lumber was particularly the most volatile one right now: if Lumber spikes and then we do have not a clause in our contract that says that we can charge the client for that difference in the cost. And she said that her builder came to her and then said, hey, your Lumber package increased by, it was either 30 or 50 Grand. I can remember. And she said she, you know, her and her husband talked about it that night and she was like you know that we had the decision to make do we fight this? Do we throw a hissy fit? She was like, ultimately, we realized it is not his fault, he’s not overcharging us for a mistake that he made; this is just the market that was in and they decided to pay it. She said, you know, I really feel like there were a lot of instances where I know that he had two choices to make, you could go, you know, the best route or kind of the good route and he went the best route.
And she’s like, I really feel like a lot of that is because he trusted us because we did not, we did not try to screw him that very first time the first issue came up and so it is all about that trust and building that trust between the client and Builder.
CURTIS: On the flip side of that, what kind of person is a builder’s nightmare, or what kind of person should not even try to go through this custom home-building process?
MATT: There are a lot of people that shouldn’t go through their custom home building process. I mean, you know, I think if again, the trust, if you cannot trust your builder, you shouldn’t go through the process – that is the bottom line. There are some people that are there either so, hands-on, or there or they really just won’t let go of that control and so they just cannot go through the process. Luckily, we have not had any clients that are that bad, but we have had some clients that you know, they are very much wanting to maintain control. They maybe want to know about one recently actually that they you know somebody and I think it was the wallpaper installer had come through to prime some walls for wallpaper that was going in a few weeks later and then the wood floor guys, came to prep for wood floors and is really dusty and so dust got all over the freshly primed wallpaper areas and there are freaking out there like “why didn’t you tell us that it was going to be dusty?” I was like “Well that is my job, I know that the wood floor guys are going to be dusty; when I tell you that they are doing the wood floor,” and they were like well you didn’t tell me that.” Well, again, as a builder, we do not tell clients, we should not have to tell clients every single thing that is happening on the job. Yeah, there are key Milestones that we should let them know what is happening, but they are not a builder, they do not need to know every single part in peace. I think those people that cannot let go of that, that just need the control of knowing exactly who is going to be there at what time and how long they are going to be there, it is too fluid of an industry, and it is as you know it is impossible to get all those details.
CURTIS: People joke about not building for engineers or attorneys, we have done plenty of jobs for engineers, and attorneys, which have gone perfectly fine, but I’ve also had jobs for engineers and attorneys where it happened.
MATT: Exactly. So I do not think there’s necessarily one, you know somebody in a certain industry. It really is that personality. Are they willing to trust? Lawyers, attorneys, can be great because they are professionals that are used to being paid for Professional Services and they are busy and so they are not going to have a ton of time on the job site. I mean I think that could potentially be another answer to that question is, people that want to spend a lot of time on the job site? It is custom. I get it. You want to be there, but the more time clients have been on the job site, I feel it is a direct correlation to issues that come up, just because a lot of times clients assume it is being done wrong. They do not realize that you are only seeing half of the process. And, yeah, it is going to be right once it is done. But right now they freak out and blow up your phone. It is like, again, just trust us. Let us if you see something going on. Yeah, you can call me and question if you do not need it. We got about it and yeah. Sorry, blowing everybody up.
CURTIS: So we want you involved in the process. We want to see you on the job. We do not want you to camp out there and look over our shoulders the whole time.
MATT: Nobody wants to work with their boss, looking over their shoulder. I mean, you do not want that, I do not want that nobody wants that. Clients need to remember that these subcontractors, may not always seem like it but they are skilled at the trade that they do. You know, they really do know what they are doing. Most of them are very good at what they do and the clients just need to trust that they know what they are doing and let them do it. But to stand there, you know, stand there. And look over the painter’s shoulder while he rolls a wall and tells him that he overlapped the seam or something. It is just it is ridiculous.
CURTIS: I’d say that with a good Builder, you are going to have good trades. Right? But that is not always the case. There are some Builders who are going to have trades that I would not trust.
MATT: That is true for sure. But yeah.
CURTIS: Your trades. My trades. We Trust right?
MATT: The baseline assumption here, is that it is a good builder with good trades,
CURTIS: Right, I would say the other person, maybe who shouldn’t go through the process is somebody who is just pushing the limit money-wise or budget-wise that, you know, they’ve got this amount of money, and that is all they’ve got and they are putting everything into it because man, if they get into it and the lower prices go up, like, they have and they’ve got to cough up another fifty thousand dollars and they have known no way to get that, you know. So, if You are if you are already tight with money, you probably should not be building a house just to impress your friends or whatever, you know?
MATT: Absolutely, I totally agree with you. I think you know, even if there’s not a contingency line item within your budget that your builder includes as a client, you’ve got to have a certain amount of contingency savings. That you have built up expecting that, you know, it is a custom home. Inevitably, you are going to make changes, you are going to find, you are going to go to a friend’s house and see some ‘gee whiz’ thing that you just have to have in your house and that is great. We love to put that in for you, but it is an extra $20,000, do you have that? Like you said there is nothing more frustrating, Trading. Then, seeing these things and then you cannot put them in your own home even though you want them because you are already stretched the limit.
CURTIS: Right but have those conversations early on during the design phase and kind of know where you are going to be before you even start.
CURTIS: Do not try to add it at the last minute
MATT: Tell clients honestly, you should have, if we did not build a contingency into your contract, you should have a probably at least a 10% buffer and your personal finances that, you know, that I can handle a 10% buffer if whatever: if the lumber goes up or if I find that ‘gee whiz’ thing or just whatever it is that that you have, that they are just in case.
CURTIS: Right, so do you have any horror stories or if not a ‘Horror Story’, just an example of a project that went really badly – that you would mind sharing with us? It could be something that you did or something that you’ve observed someone else do.
(Matt laughing): Yeah, I mean I think not keeping control of a client. I do not have necessarily a specific horror story, but I think the times that we have gotten into the most trouble is when we do not set the right expectations with a client from the beginning and then things slowly start to get off course and we do not make course corrections. So then the client, it goes back to the trust thing, and the clients they are looking over the subs shoulders and we do not say anything about it, and then then the next time they are there again and they actually stop the sub and then what they do not realize is that when they upset a sub like that they are going to leave and go to a different job and it is not Like I can just get them back tomorrow; they might disappear for a week or two or they may say we have got we have had Subs before that say “Hey I cannot work on that job site because that client is too crazy or she’s too demanding whatever, I’m not coming back” and it is like you have to tell the client that hey, so-and-so is refusing to come back because you did X, Y, and Z and we have found that it. It is never a surprise for that client. That does that because you’ve let them push the envelope throughout the process and so to just sit down with them is not to be scared, again the tab contracts that we use there remember what the term for it is, but there are items in there that the Builder, basically not default, but the Builder can basically stop the project and say, hey, we are stopping construction and here’s a reason why. You do not want to, you want to scare the client almost and just say, “hey, this cannot continue the way it is going, we know where this is headed, and it is going to be a disaster It is going to be Frustration for both of us and so let’s stop.” “Let’s kind of catch our breath and let’s reset expectations so that we can move forward, and both be happy moving forward and not have a miserable process.
CURTIS: Those are hard conversations to have with a client saying I’m going to stop your project if this does not improve
MATT: but there’s nothing like that to catch – if you really want to catch clients’ attention, that is the quickest way to catch their attention because anybody doing a construction project, they do not want to see a job site that is just sitting still so right? It is a very worst-case scenario and it is the last resort by any means. But occasionally, you do have to go to that.
CURTIS: So yeah, well Matt, I really appreciate you taking the time today to come and talk to us. Yeah. And it was great to have you on if folks want to work with Sneller Custom Homes, what should they do?
MATT: The best way to find us is https://www.snellercustomhomes.com/, you can look for us on HOUZ, Instagram, and Facebook, but start with our website and then you can find us from there. So appreciate you having me. It has been fun.
CURTIS: All right, thanks, have a good one.
We teach that every successful project has four key components. And these are represented by a very simple drawing of a house. The line of the bottom, the foundation is planning, the left wall is your team, the right wall is communication, and the roof is proper execution. Have all four of those components in your project will succeed.