By Doug Hanna, Principal, S+H Construction, Inc.
A recent online discussion in the builder’s group NARI (National Association of the Remodeling Industry) sparked some strong opinions from builders across the country. The hot topic being discussed is whether builders should charge for consultations and if so, how much.
To be clear, we are not talking about estimates. Most builders seem to agree that producing an estimate is part of the cost of doing business. But there is a distinct difference between a consultation and an estimate. For instance, someone who actually OWNS the property in question and has a clear intention to contract for some repairs or improvements is very different from someone who is in negotiations to buy a property and needs a contractor’s advice.
Property buyers often need qualified advice and pricing, which can give them important knowledge and leverage in their sales negotiations. Experienced builders and contractors possess specialized knowledge about the overall quality of structures and have the ability to recognize potential problems or “money pits.” For people who are in the market to buy a home or business, a few hours spent with a contractor walking through a potential property and having the contractor do a quick “ ballpark “ estimate of the cost can be quite valuable. These “ pre – purchase consultations” performed by an experienced trade professional, often become a significant factor in offers and counter – offers between buyers and sellers, and can literally change the selling price on a property by up to tens of thousands of dollars, depending on what is discovered.
So it is only right for building experts (builders, contractors, etc.,) to be compensated for this valuable service. These consultations may be done for either buyers or sellers, but usually it is the buyers
who need to beware (caveat emptor), and require a knowledgeable advisor regarding possible building defects. Sometimes sellers will hire other professionals to rebut an analysis performed by a buyer’s expert. But no matter who the service is being provided to, it is critical the expert they hire be highly experienced, secure in their business, profitable and objective. It would be unusual if the builder called upon for this consultation did not also have some interest in doing the potential work, if the property is purchased, but that should not be the over riding motive.
Based on the discussions, the going rate for consultations of this kind seems to be in the $ 100 - $ 200 per hour range. The amount of time spent walking through an average – sized home, taking notes and working up and estimates, depending on the scope of the issues is usually in the 3 to 5 hour range. A professional consultation gives potential property buyers a true picture of what possible problems they are buying into and the power to negotiate the purchase price. Although it should not take the place of a standard home inspection, a consultation with a builder is usually money well spent, if there are obvious defects, in order to estimate the cost of repairs.