We've been working with an modular home manufacturer and one of their trusted builders for over a year. Floor plans, specs, options, pretty much everything required for design has been complete and we've had an estimate for several months. We are in the process of submitting the loan application. The builder is now saying they made a pricing mistake and wants to increase the price by over $20K. The original price quote was ~$175K and is now ~$195K, representing about a 13% increase. The builder and the manufacturer claim that a glitch with the manufacturer's pricing software omitted the builder's margin on some of our options. Are sharp and unexpected increases in price quotes typical in the "home builder world"? If so, how have other consumers handle them? Any advice or recommendations would be greatly appreciated.
Hi Jeff, Sorry to hear that you're running in to problems! First off, while unexpected increases in pricing are absolutely typical for site-built homes, they are much less common for modular homes, especially during this stage of the home building process. You may of course still run in to unexpected costs when you're laying your foundation for example, but for the most part, costs are fairly fixed with the actual fabrication and assembly of the home. It is certainly possible that they made a pricing mistake on an initial quote, but since you say you've been working with them for over a year, it may also be likely that their costs have changed since you first reached out. This could be due to any number of reasons. For example they may have changed their standard home specifications to use more expensive building materials. Or the builder may have renegotiated with the manufacturer to get a higher rate on homes they build and the manufacturer is passing on the cost to you. Or it could be due to exactly what they claim. 1) Point out that you were budgeting for 175k and ask if there's any wiggle room to be found in the price increase. If not you may have to cut back on some options. This won't bother the manufacturer at all, but extra options is where the builder makes all of his profit. Taking those away means profitability for the builder goes down the tubes. 2) If you don't already have one, request a detailed cost breakdown that tells you exactly where your money is going. This is extremely important and will let you do research to see how much other builders and manufacturers charge for the same service/product/options and ask them to justify why they're charging more. This is actually one of the first things you should do when picking a builder. 3) If all else fails, request a quote from another builder. Be upfront with your current builder and manufacturer about what you're doing or you may sour a working relationship that you still need. What builder and manufacturer are you using? Is this a custom plan or one of their standard home designs? How much customization have you done?
