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Started By
Message
On average, what is a residential General Contactors fee/percent?
Posted on 1/6/17 at 9:57 am
Posted on 1/6/17 at 9:57 am
I know this is similar to asking whats the cost to build a house (impossible to accurately give) but its been a few years since we built ours and the quote my brother just received seems a bit high.
He is doing cost plus but either way, all GC have a percentage built in. Ours was 8%, but he was just quoted 17%.
He is doing cost plus but either way, all GC have a percentage built in. Ours was 8%, but he was just quoted 17%.
8
Posted on 1/6/17 at 10:02 am to SippyCup
A lot of factors to consider. Spec home or custom? How much of a pita is your brother? How much does the builder need work/ how good is he? Location compared to builders normal work area? Etc.
Also, if in Baton Rouge or close I gotta feel like a lot of builders are still very busy.
Also, if in Baton Rouge or close I gotta feel like a lot of builders are still very busy.
Posted on 1/6/17 at 10:12 am to baldona
Custom home, around 2800s/f, St Tammany, he is not a PIA. Basically sat down with the builder gave him the plans, answered a few questions and that was all.
Like I said, I know this is similar to asking "how much it costs to build a house" but I have no idea if 17% is ridiculous or in a normal range.
Like I said, I know this is similar to asking "how much it costs to build a house" but I have no idea if 17% is ridiculous or in a normal range.
This post was edited on 1/6/17 at 10:13 am
Posted on 1/6/17 at 10:15 am to SippyCup
I don't think 20% is unheard of especially for a custom home. I know I have a friend that made 20% recently but I don't know how often he gets that. Was the 17% firm? Or just the starting point? Is he locked in or was that just a bid?
Posted on 1/6/17 at 10:22 am to baldona
Just a bid. Cost to build came in around $98 s/f and then on top of that the GC was going to make another 45k at 17%.
Being that we paid 8% on a similar build a few years ago I thought it was extremely high.
Being that we paid 8% on a similar build a few years ago I thought it was extremely high.
Posted on 1/6/17 at 10:32 am to SippyCup
probably 15%+
Posted on 1/6/17 at 10:35 am to SippyCup
quote:
Just a bid. Cost to build came in around $98 s/f and then on top of that the GC was going to make another 45k at 17%.
Being that we paid 8% on a similar build a few years ago I thought it was extremely high.
Tell him to negotiate what he thinks is a fair rate (17 sounds reasonable to me in the current economy) and then offer a 1-2% bonus for an on time project.
Posted on 1/6/17 at 10:35 am to SippyCup
I believe people should do hard bids only with solid agreements with builders. Why would it be in your best interest to pay percent. So one instance, counters, you can absolutely spend $3k or $15k on counters based on the rarity of stone. But you pay the contractor 5x more for that? Crazy. Have him get 3 hard bids and if he isn't sure of finishes, have the 3 use the same allowances.
Posted on 1/6/17 at 10:43 am to SippyCup
Buyer or sellers market where he is? If there is tons of business to be had the contractor is going to up his margin. Supply and demand.
ETA: I look for a 40% margin after labor and materials are paid in my business. It sounds like a lot but it isn't when you start weighing in the other costs of running a business.
ETA: I look for a 40% margin after labor and materials are paid in my business. It sounds like a lot but it isn't when you start weighing in the other costs of running a business.
This post was edited on 1/6/17 at 10:45 am
Posted on 1/6/17 at 11:00 am to Libertariantiger
quote:
I believe people should do hard bids only with solid agreements with builders
This is basically what he is doing. Cost-plus a fix fee, but that fixed fee is based off an initial percentage. It wont change if he goes above or under his allowances.
quote:
So one instance, counters, you can absolutely spend $3k or $15k on counters based on the rarity of stone. But you pay the contractor 5x more for that? Crazy.
While I prefer the fixed fee, I can see where a GC may prefer the cost plus percent. A GC has more risk if he damages a 20k counter over a 3k.
Posted on 1/6/17 at 11:43 am to SippyCup
What did the 8% cover?
What does the 17% cover?
Example of one of an extensive list items that need to be determined...
Is the contractor's insurance coverage included in the cost of work or his fee? How is the insurance allocated if it is part of the work and he has multiple projects?
What does the 17% cover?
Example of one of an extensive list items that need to be determined...
Is the contractor's insurance coverage included in the cost of work or his fee? How is the insurance allocated if it is part of the work and he has multiple projects?
Posted on 1/6/17 at 1:50 pm to Maniac979
10% for overhead and 10% for profit is the industry standard. Every insurance claim and construction cost index includes this industry standard figure.
The total figure covers all his expenses to run the business and make a decent return for his work. I would avoid a builder that doesn't charge a single transparent fee for all overhead and profit. It shouldn't really matter how the builder allocates his expenses on his side, but the total should be clear to you on the proposal. Go with a fixed price contract instead of unlimited cost plus fee, and most banks will not lend without a fixed price contract.
Insurance is included as overhead and I assure you every good builder has a rate schedule for each coverage he allocates to a job. He has to track every job during the year and pay accordingly based on activity, but that shouldn't concern the buyer. All his insurance costs are charged at a fixed rate per coverage for each job, based on payroll/payments to subs (WC/GL) and the completed project value (Builder's risk/property).
The total figure covers all his expenses to run the business and make a decent return for his work. I would avoid a builder that doesn't charge a single transparent fee for all overhead and profit. It shouldn't really matter how the builder allocates his expenses on his side, but the total should be clear to you on the proposal. Go with a fixed price contract instead of unlimited cost plus fee, and most banks will not lend without a fixed price contract.
Insurance is included as overhead and I assure you every good builder has a rate schedule for each coverage he allocates to a job. He has to track every job during the year and pay accordingly based on activity, but that shouldn't concern the buyer. All his insurance costs are charged at a fixed rate per coverage for each job, based on payroll/payments to subs (WC/GL) and the completed project value (Builder's risk/property).
This post was edited on 1/6/17 at 1:54 pm
Posted on 1/6/17 at 2:37 pm to SippyCup
for good work my experience has been around 20% (10% Margin,10% overhead). I've hired folks for far less and the job was not done well.
Posted on 1/6/17 at 4:00 pm to SippyCup
In the cost + Does cost really include everything?
Posted on 1/6/17 at 4:30 pm to Mr.Perfect
The more I think about it OP, are you sure you only paid 8%? That is an incredibly small margin. Was it a spec house? I can't see a builder touching a custom house for 20k, one $15,000 issue on a $300k house and he's cutting it close on profit
Posted on 1/6/17 at 4:41 pm to baldona
quote:
one $15,000 issue on a $300k house and he's cutting it close on profit
He'd have no profit.
Posted on 1/6/17 at 4:42 pm to baldona
I'm trying to find my contract to see. If I recall the itemized bid had the subs, insurance, overhead, etc. included line by line and then the builders fee at the very bottom, which I know came out to 8%.
I'm also trying to get a copy of my brothers to see the difference. I have a feeling none of the insurance or overhead, etc. is itemized but instead all included in the 17%.
I'm also trying to get a copy of my brothers to see the difference. I have a feeling none of the insurance or overhead, etc. is itemized but instead all included in the 17%.
This post was edited on 1/6/17 at 4:44 pm
Posted on 1/6/17 at 8:11 pm to GoIrish02
You may want to assume all contractors conform to what you refer to as industry standard. I damn sure wouldn't and if I was a contractor I sure as hell would let some industry standard set my OH and Fee.
Posted on 1/7/17 at 4:58 am to SippyCup
quote:
Cost to build came in around $98 s/f and then on top of that the GC was going to make another 45k at 17%.
Where are you building for that price? New housing construction in the Mecca and Ruston goes from $160-$180.
Posted on 1/7/17 at 5:13 am to SippyCup
I work in a pretty high end market (750k and up). Most guys do a flat 75k-100k over CTB. I've heard the 10 & 10 model for lower end builds as well.
This post was edited on 1/7/17 at 5:16 am
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