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Building a New Home? Should an Owner Builder Buy a Home Kit to Save Money?

Home kits or material packages can be great tools to help owner builders construct a home, because they bundle the materials together for you and send it as one package.

And, owner builders don't have to spend the time getting cost estimates on those specific items included in the package. There is a myth, though, that these home kits are always a way to save money.

Consider this: when have you ever received a discount for something that provides a large convenience factor? Look at convenience stores - when you buy a carton of milk from a convenience store you expect to pay more than you would pay at a grocery store. Why? The convenience.

The same principle applies to owner builder construction and buying a home kit from a material package supplier. The dealer or manufacturer is taking the time and effort to gather the specs on the materials, purchase the materials, and put them all together in one nice bundle for the customer. The customer will probably pay a little more for this service. In fact, the more materials that are packaged together, the more convenient the home kit becomes. And the more you pay.

This is not necessarily a bad thing. But, if you are trying to cut costs, and you think that a package is a sure-fire way to do it, you better take the time to break down the numbers. Don't just trust that the costs must be lower with the home kit because the dealer told you so.

The main reason that an owner builder typically wants to believe that a home kit supplier provides all of this convenience at a discounted price is the principle of buying in bulk. Most people readily believe the idea that the home kit dealer is operating in such massive quantities that the materials being provided in the kit are cheaper to purchase through the dealer.

It seems reasonable on the surface, but why would a home kit dealer spend all of the time, energy and upfront costs just to pass the savings along to the customer? Instead, if the dealer is going to receive a discount for buying materials in bulk, he has every right to sell those materials at retail prices to you in exchange for the convenience.

For example, imagine a home kit dealer that sells panelized wall packages for a specific set of blueprints. The dealer is selling a package centered on the concept that the wall panels will make the framing of the home easier for an owner builder or a general contractor. Along with this main item, the panel dealer provides some other package items for the customer's convenience - perhaps windows, exterior doors, interior doors, exterior siding, roof trusses, and roof finishing materials.

Overall, this can be a great package for the home, based specifically on the set of blueprints that go with the package. The owner builder no longer has to take the time to figure out the quantity and price of all of those materials for this package. The customer's life just got a whole lot easier.

But, a savvy owner builder should not automatically expect that the overall package price is going to be cheaper than purchasing all of the items separately.

The only way to know for sure is to do a true apples-to-apples comparison on the package you are considering. Make sure you are looking at the exact brand and model for each of the items in the kit.

For instance, don't go looking at prices for solid oak interior doors if the kit comes with hollow doors.

This type of comparison gets difficult, though, because it is hard to put a value on the panels themselves. Sure, you could go price out the amount of materials that go into making the panels, and you would, of course, get a much lower cost than the cost of the panel itself. But, what price do you put on the cost of labor to put the panel together and the convenience factor of the panel itself?

This is the very concept that allows a home kit dealer to charge an owner builder whatever price he wants to charge for the rest of the materials.

There is no good way to determine the value of the convenience factor unless you have already done your own estimates of the materials and labor for the items that are provided in the kit. If an owner builder knows what the convenience factor is worth, then he can make an educated decision.

Until then, don't automatically expect a home kit dealer to take his time and energy rounding up extra materials for your home without charging you for it.

Again, this is not to suggest that an owner builder should not use home kits. In fact, they are a terrific way to control costs and save time. But, you should base your decisions on all of the facts and your own analysis of what is, and is not, important to you for your project.

And, cost alone should not be the most important factor when an owner builder is selecting materials for their new home.

Article Source: http://www.articlewide.com

Information about the Author:

Owner Builder 101 provides construction financing specifically for owner builders who wish to oversee the construction of their new homes. Chris Esposito specializes in owner builder construction loans, and if you wish to contact him, visit www.OwnerBuilder101.com, or call (877) 876-3688.

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