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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Don Earl who wrote (59854)	8/13/2006 7:25:15 PM
From: Elroy Jetson	Read Replies (4) \| Respond to of 306849

Your comments show how little you know about the way major builders operate. You may be paying 67% to 250% more for building material than major builders do. I would suggest you stick to what you know about, building one custom home at a time and paying through the nose for building supplies. That's what you're good at. And you've built three of them! Wow. An expert dilettante. Yeah, they get a deal buying in volume, then the materials have to be transported to a warehouse, which has to be paid for and staffed, then the materials have to be invoiced out, sorted, and transported to the job site. Obtaining a major discount below the wholesale price does not require you to accept enormous shipments of material to a central location. Major builders do not have warehouses as you imagine in your fantasy. The individual components are shipped by the manufacturer direct to the job-site. This is either where the building pad is located, or to the factory where much of each home is actually built. And yes, major builders move far more of the individual components than big box stores do. Big box stores carry a far greater variety of material than any one major builder does. This dilutes the purchasing power of the big box store with any one manufacturer. The sad truth is that you are paying 50% over wholesale cost, the amount of Home Depot's markup. Major builders obtain discounts below wholesale, often as much as 40%! On those items, you are paying 2.5x what a major builder is paying for building material. On some items builders can obtain only a 10% discount off wholesale price. On these items you are paying only 67% more than major builders pay. Of course we need to subtract the discount Home Depot receives. But at a minimum you are paying 50% more for supplies than major home builders. So in your imagination, you can think you pay less than major builders because you buy many of the items off of the discount table, and obsolete discontinued items when you can. You "know" your building costs are far lower than major builders. What a self-deluded simpleton. In reality your costs are incredibly inflated. The real estate down-turn will reveal the reality of the economics of your situation. .