Titan Properties USA

This topic comes up so frequently on the BiggerPockets forums that I thought it could use its own article just to get a succinct train of thought from one very experienced person.

So what’s my experience? I was a general contractor (GC) in an extremely wealthy Southern California town for decades, as well as holding several other licenses in trades such as swimming pool construction, plumbing, concrete, and interior design.

Where the Contractor Fits in Picking Materials and Finishes

It is a common occurrence for a customer to want to pick out design finishes. Of course, they want to choose the electrical fixtures, such as area lighting, pendants, and plumbing fixtures, as well as faucets, toilets, shower heads, and the like. 

They will choose these with my blessing because I really do not want to be involved in such a personal choice. I will, of course, offer my opinion based on my experience with certain types of fixtures or even the quality and endurance of certain brands and models.

The same applies to cabinets and countertops. The customer should absolutely choose these because the myriad of colors, wood species, and materials make it an important and difficult decision for anyone, and the GC does not want this responsibility. 

Once again, I would offer my opinion on things like wood species, i.e., which is harder and more durable, as well as counters, stone, and tile materials—which will hold up better, take sealer better, last longer, hold a shine better, etc. I would even urge them to avoid certain species of stone that last well for a few years and then start to deteriorate (some types of granite have this issue). It is precisely my decades of experience that the customer is looking for and buying when they choose me over a newer/younger contractor.

But the customer’s involvement in the process must stop right there. Occasionally, a certain type of customer will want to order products themselves, usually because they think they are going to save money. Sometimes, they’ll say those dreaded words: “I want to get points on my credit card.” This is a shortsighted attitude—trading control of the project for a few measly dollars or miles. This is where a good, experienced GC will put their foot down and just say no. 

A lot of people new to the construction business, either investors or just homeowners, cannot understand why it makes any difference who pays for the materials. Let’s discuss that now.

Why the Contractor Should Be in Control of Materials

It is a basic fact that the GC is and should/must be the “king” of the job site. It is not about ego or some personality issue; it is simply about this: Having ultimate control of a project is imperative for the project to go smoothly and end up finishing on time and on budget. 

The GC must oversee the schedule, subcontractors, his crew, the building inspectors and city building and planning departments, OSHA, federal and state laws, job site security, neighbors, and materials so that everything moves seamlessly through the remodel (or new build) process

Any and every aspect that moves into someone else’s arena is another accident waiting to happen. In other words, every facet of the project that the contractor loses control of is another thing, amongst the hundreds of moving parts, that can and will fall into Mr. Murphy’s wheelhouse.

What Can Happen When the Contractor Is Not in Control of Materials 

I can provide an example from my own past. A customer had ordered some finish material, furniture, and fixtures from Italy. 

We got to the point in the process where these items were needed, and needed now, to allow my crew and subs to keep moving ahead as planned. That was when I was informed: “Oh, I forgot to tell you. These are being shipped from Italy. They were supposed to be here a week ago, but they just told me that they’ll be two weeks late.” They were actually a month late and caused the project to be partially shut down because in construction, you have to install Part A before Part B, and so on. 

This Is Not About Marking Up Prices

Every contractor I know has stories about what happens when the customer tries to get involved with materials. They always seem to think they can find them cheaper and save the markup. 

But this “markup” is greatly misunderstood by the public. It usually does not really exist. Any good, long-time general contractor will have their favorite vendors, and they’re usually not the big-box stores.

From windows and doors to electrical and plumbing, a GC has probably bought hundreds of thousands of dollars worth of products from these vendors. That gets them volume pricing that a regular consumer just cannot touch. They will then add a percentage to this special pricing to compensate them for this variable, which I’ll discuss next.

The Customer/Investor Never Thinks of This

So, let’s say an investor (for example) insists on choosing and paying for their own products for a remodel, and the young contractor foolishly decides it’s not worth arguing about. Besides, they really need the job. The investor calls Home Depot and orders materials or sends the contractor with their list and has the materials paid for on their credit card (and they get their precious points). 

Okay, great. Why is that any kind of issue? Well, let’s examine this: Who does the following very necessary tasks?

  • Load the materials onto carts in the store.
  • Load them into their trucks.
  • Unload them at the job site.
  • Put them in a safe place in an already or soon-to-be partially demoed house.
  • Provide security for the duration of the project.
  • Take back the wrong products, like those that are the wrong color/size/brand/don’t fit.
  • Deal with warranty service for those products that break or fail while still covered.

We all know that the customer will not do this—they will expect the contractor to do all of the above. And they will be outraged if the contractor expects to be paid for performing all of these important, necessary, and critical tasks.

Examples of When the Customer Can Be Involved in the Material Process 

Now that I’ve spent all this time destroying the concept of customers being involved in the material process, I must get into a circumstance where they can and maybe even should be involved.

In most large cities, there are supply houses attached to plumbing and electrical warehouses that have huge areas set up with many samples of their wares, such as dozens of sinks, tubs of all sorts, the latest and greatest in modern toilets, etc. There are other establishments (like Pirch, for example, in SoCal) that have two- to three-story facilities with kitchen areas set up, bathroom areas, outdoor living areas, and more so that you can take a customer there and walk the whole store where they can get a great overview of all the products available to them in today’s market. They will assign a rep to you and the customer to facilitate the process, babysit the customer as they select and purchase products, and even serve you lunch.

Yes, I said the contractor should select and purchase products. So why am I saying it is okay in these cases? 

Because the GC is still in control. The company rep essentially works for the GC because the GC will send them many customers every year. The rep will make sure that the customer chooses materials that the GC will approve and want to install. The GC will not necessarily receive a monetary kickback (although it can happen), but they are compensated in other ways.

Final Thoughts 

So, we can see that it is critical for the general contractor to have full control of the construction project, especially the management of materials and supplies. Some of these are automatic, like the wire the electricians use or the pipe the plumbers use. But even though a well-meaning customer might want to buy the materials, they should realize that this is a huge mistake. 

Pick out the materials? Yes, of course, within reason. But leave the rest to your contractor. Let them pick them up and pay for them. 

If you insist on getting some credit card points, perhaps you can work out a deal where the GC buys the materials, and you make a credit card payment to them for a single invoice that reflects the materials specifically. But you, as the customer, will be doing yourself a huge favor by staying out of the whole materials and vendor part of the game.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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