Riddle:  How Can His Prices Possibly Be That Low?!?

[Editor’s Note:  For obvious reasons, no names or other identifying info on this post.  However, I heard the following anecdote from an “extremely reliable source” (as they say), and believe it to be true.]

So, how does one very cost-competitive Twin Cities builder deliver such eye-popping prices?

By “exploiting” (I had another word in mind) his subcontractors.

How to, ahem, “Take Advantage” of Contractors

According to a client who heard the builder’s boast firsthand, here’s how he gets $20,000 of electrical work for $12,000:

The builder will drag his feet paying the electrician, then — at the last possible moment, when the home is about to close — offer to settle up for 50¢ on the $1, in this case $10,000.

When the justifiably furious contractor rejects that offer, the builder’s response is, “fine, sue me.”

After several hours (days?) of heated argument(s), threats, counter-threats, etc., the still-furious electrician decides to cut his losses and accept $12,000.

Net “savings” realized by builder:  40%. 

Multiply that by 8-10 subcontractors, and pretty soon you’re talking about real money (I mean, “savings”).

Playing with Fire

Should you hire such a builder?

I wouldn’t recommend it, for LOTS of reasons.

I equate it to having a firearm in the house:  the odds of it harming you or a family member are a lot higher than the odds that it will help you thwart an intruder.

Ditto for getting bit by such an unscrupulous operator (vs. benefiting from his shameful tactics).

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

Leave a Reply