Mike and the PMs discuss Change Orders when Building a Home

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About This Episode

Have you decided on a change in the middle of building your home? Have you considered the impacts of those changes? Join the experts from Stanley Martin Custom Homes, Michael Schnitzer, President Stanley Martin Custom Homes; Pat Kearns, VP of construction; Brian McGranahan, Project Manager, as they explain change orders, how they work, and what to expect if you have changes in your home plans while it is under construction. If you’re currently building your home or even considering it; don’t miss this special episode!
Stanley Martin Custom Homes



[00:00:06] Speaker 1 All right. Here we are with another episode of the Go with John Show. We are in the studio today with Brian McGranahan, Michael Schnitzer and Pat Kerns. And we are going to talk about change orders. So, Michael, welcome back.


[00:00:19] Speaker 2 Hey, John.


[00:00:19] Speaker 1 So can you get us started? What are what are the folks out there who are thinking about building a Stanley Martin custom home need to know about change orders because it’s a hot topic.


[00:00:28] Speaker 2 Sure. Absolutely. So let me break this down and Pat and Brian will talk about when we start construction right in our process. But prior to construction, there are no change order fees. Mm hmm. Right. So if a customer comes in and they want to add some custom faucet and we got to get it priced out and blah, blah, blah, that’s all part of the process. Right. And so a customer could come to us with five requests, 25 requests, whatever it is, right? So that’s all part of the process. No cost.


[00:01:09] Speaker 1 Right now, is there a difference between people who are customizing and customizing? So how does that work?


[00:01:14] Speaker 2 Yeah. So I’m specifically speaking to the customers who are going through our customization process. Okay. Customers that aren’t customizing do everything within the within the selection studio, within our kind of portfolio of options. Right. And so there’s, you know, absolutely no change orders for that. But right when a customer goes outside the box and does custom appliances and this and that and the other in the back office is working up shop details and this and that, you know, is a lot of time that goes into that. And we do this as part of the process. It’s free of charge there. We kind of flip a switch. So when we go into construction, there’s another process. So up till construction, no change order fees. And I’ll let Pat and Brian cover. What is the process during construction?


[00:02:14] Speaker 1 Right. So, Pat, what happens then? So once the construction process starts, how does somebody initiate a change order?


[00:02:22] Speaker 3 So I guess the first thing we talk about is the fact that we spend a lot of time with the customers before we even begin the construction process going through the House, the floor plans we’ve had, the floor plans, particularly when there’s customization involved and do peer reviews to make sure that we’re trying to catch every conceivable thing that may differ or cause us issues in the field to build the house, right? We then take the time to do a pre-construction meeting with our own office people when they gets turned over to the construction team to review everything that we’ve discussed with the client, all the stuff that’s come up. And then lastly, we do a pre-construction meeting with the client or the buyer to go through the construction process, talk about everything that we’ve come up with and how we plan on building the house. Right? So we’ve put a lot of legwork in in the back office to kind of go through and then hopefully miss or avoid any changes or anything that we could possibly. You know, what I tell people is we’re going to present you with options that you could not even have conceivably thought of for your home, something that you’ve never even considered and present them to you. The reason why is we’re trying to uncover as many things as possible prior to actually getting out in the field and building the house.


[00:03:35] Speaker 1 Mm hmm.


[00:03:36] Speaker 3 That being said, a lot of times when we’re building a house for a customer that will walk into the home and see it in real life for the first time instead of on paper. And there are things that conceptually they didn’t think of or or there’s lifestyle changes while we’re going through the process, they need to add things to the home for. So we’ve put a process in place to handle that. Right. And essentially what it is, is if you think of something that you want to add, it could be as simple as an electrical outlet or as complicated as adding a deck and a patio in the back of the house. Right. We will write it up and basically present it to the back office. Now, before we do this. The project manager is probably going to sit down with you and discuss the ramifications of making that change. Right?


[00:04:24] Speaker 1 Right.


[00:04:25] Speaker 3 It is not to deter the client or discourage them from making changes. It’s more to present them with, okay, you’re considering doing this. We’re going to try to lay out for you how it’s going to impact the build.


[00:04:38] Speaker 1 Mm hmm.


[00:04:39] Speaker 3 Meaning the timing. If it’s significant enough, we may have to resubmit a set of plans. You know, whether it’s going to delay the process, how it’s going to impact other things in the House you’ve already selected. Try to lay out as much of that as we possibly can. Now, we’re not going to be able to uncover everything. We’re good at what we do. But there are sometimes things that we. Miss or don’t think of conceptually when we’re considering a change. And that’s why we take it and give it to the back office. Right. To present to them so they can kind of delve into it a little bit deeper and consider things that maybe we’re not thinking of impacts jurisdiction. We like meaning do we have to resubmit? Do we have to recalculate for impervious issues if we’re adding square footage or space to the house, things like that. So Brian, as the PM, you would present it to the PM and say, hey, we’re considering doing this. Brian would walk you through the process, kind of talk to you about the impact of doing it and allow the client to consider whether or not it’s something they want to pursue. Right, right. If they decide to pursue it, we would write up a description of the option or the change that they want to make that we submit to the office. And there’s a change fee that we submit the check and the form to the back office. The back office will then, as I said before, go through and price the option out. Think about all the things that we’ve got to do to add that option to the House if it’s just adding a late fixture. We’ll press that out and do that for you if that’s more complicated. Obviously, we have to get engineers involved and architects possibly involved and resubmit the plan to the county or the jurisdiction for approval. Yep. And we’ll continue to try to build the house as much as we can. We’re waiting for that change to be. You know, put together, right? Once they’ve priced everything out and got a formal description of the option, they will send that information along with the pricing and the description over to the PM. The PM will then present it to the client.


[00:06:48] Speaker 1 Right.


[00:06:48] Speaker 3 The client has five days to decide whether or not they want to move forward with purchasing that option.


[00:06:53] Speaker 1 Right.


[00:06:55] Speaker 3 If they decide to move forward, the price of the option will be added to the overall price of the house. Yep. The fee that you provided us with for the check fee would be subtracted from our next draw request.


[00:07:08] Speaker 1 So whatever the the change order fee was would be credited toward the item if you buy it.


[00:07:14] Speaker 3 Well, not credited towards the item.


[00:07:16] Speaker 1 Okay.


[00:07:16] Speaker 3 The price.


[00:07:17] Speaker 2 I would say. Yeah. So you’re you’re speaking real technical, but I think probably for the lay customer, it’s probably just as easy to say that fee, if they move forward, is deducted from the price, which in fact it. Yeah. It is from the overall price.


[00:07:33] Speaker 3 From the overall perspective. Yes.


[00:07:34] Speaker 1 Right. Okay. Okay. Yeah. Okay. So, Brian, welcome back. Thank you for having me. So so talk to us a little bit about, you know, some of your experiences that you’ve had with with with change orders. So you’re building. What kind of things come up that trigger kind of a change order request?


[00:07:53] Speaker 4 We mainly have like two different instances where we have change orders. So the first would be what Pat was just discussing. So a customer comes into the house, they want to add something and even sometimes just delete something. Well, we’ll discuss that it.


[00:08:07] Speaker 1 Well, give us an example.


[00:08:09] Speaker 4 So let’s say that they want to add a window.


[00:08:11] Speaker 1 Okay.


[00:08:11] Speaker 4 Okay. So they want to add a window. Will meet our weekly meeting which which we’ve discussed in previous episodes. Right. You know, I will talk to them about the impact of of what that entails because, you know. It may be a structural item. It may be that we are a couple of weeks away from hanging drywall, and if we add the window, we’re going to have to get an engineer involved for the structural part of it. There may be components of the house, HVAC, plumbing or electrical that’s in the way that would have to be relocated and and kind of cover every everything that would entail making that change so that they understand that this may delay the House, let’s say, for three or four weeks, depending on how long it takes engineering to get back, send it back through the county, all the stuff that.


[00:09:02] Speaker 1 Because you got to update the permit. Right. Okay. And because it’s a structural item, correct? Right. If you’re adding a light or changing a light or changing a few bits.


[00:09:11] Speaker 4 In, depending on the time frame, you know, if you’re adding something like that, it may not impact the the the time frame of the house or the schedule of the house whatsoever. But, you know, if they feel like it’s important enough to them to where they’re ready to delay the house and, you know, because it may get to a stopping point where we’re waiting for the window that goes back to it. Pass it. It’s not I’m trying to talk anybody out of it. I just want to make sure that they have the the factual information to make their decision.


[00:09:41] Speaker 3 Yeah. Now, one of the things I’ll point out is a lot of times people will come to us and ask us about this. And if you talk to somebody about adding a window, it’s like, okay, you’re going to cut a hole in the side of the wall and put a window in and it’s lickety split. It’s done.


[00:09:53] Speaker 1 Right.


[00:09:53] Speaker 3 But there’s a lot more that goes into it that we try to walk the customer through and explain to them why adding that window has a little more impact than just cutting a hole in the side of the house and popping a window in there. As Brian said, there could be structural items. When we do our HVAC calculations, we have to calculate the number of windows that are in the house, and that’s how we design the system. So when we add that, you know, the way we build houses nowadays, we have to go back and recalculate the stuff for the HVAC. So it’s not just a simple, hey, cut a hole and we try to walk people through that because for someone who’s never had a home built before and if it was me, you know, before I gained the experience, I’d do just cut a hole in the plywood, hump a window in, for God’s sakes, and put a couple two by fours around it. What’s the big deal? Why is it going to take that long? Yeah. So we try to walk them through the process and explain it to them so they can understand the ramifications of their decisions. How important is it to you? Because this is what what we’re going to have to do and this is why it’s not just, oh, you’re going to delay the house three weeks. We try to explain to them why. Right. Why it’s that significant.


[00:11:00] Speaker 1 Right. And I think it goes back to, you know, we’re a manufacturer. You put the whole plans together and you’re and you design the home first, then you engineer the home, then you build the home. Now, when you want to do something that’s structural, you’re actually going back to the design in the engineering phase, you know, so you’re backing yourself up in the in the process.


[00:11:21] Speaker 2 And I would say and Brian probably has some examples, there are some change orders and I’m going to really call them addendums to the contract that have no price. There’s no change order fee associated with it. It’s something where we want to make sure we are totally in line with the customer. Brian could probably think back and think of some examples, but there are some things that we have where we say we will not move forward unless a customer signs off on a shop drawing. Right. Well, we’re going to write a change addendum and we’re going bring that shop drawing into the sales contract.


[00:12:01] Speaker 1 Right. Could be for like like a bench and cubbies.


[00:12:05] Speaker 2 Could be usually. You already have that.


[00:12:07] Speaker 4 It was like a I had a porch that the plans it it doesn’t quite work out. It’s you have a pitcher that looks beautiful but then when you’re actually putting it together, the measurements don’t add up to what it’s supposed to look like. So then you may have to make that change, send it back to the architect, have them clarify some things, and then we would send it to the customer, have them sign off because it is altering the original plan slightly. But then we’re not going to charge them a.


[00:12:37] Speaker 1 Right.


[00:12:37] Speaker 4 For a change order. Or it could be just a no cost change because it’s just a clarification of this is how we’re going to build it, right?


[00:12:45] Speaker 2 It could be as simple as like floating stairs. I mean, we do these highly contemporary stairs with these like a metal like mono beam running down the center. And we have the we have the company come out and measure and whatever, and we have them prepare a shop drawing so that we’d want to bring into the plan because it’s an expensive element. Right. And we want to make sure we have there’s no room for ambiguity in what we’re putting in. So those are, I would say, no cost change addendums. Right, that we process. There’s some change addendums that. We provide as it relates to site development. Right. So, Brian, maybe you can talk about this or pact and talk about it a little bit because as we go through the process, there are some allowances that we still have to true up. It could be landscaping. Right. So we don’t tell the customer you must pick your landscape package before we’ve even built the house so they don’t even see the structure viscerally as it’s coming out of the ground to get an idea. Right. So maybe, Brian, you can talk about what you do with reconciling an allowance we may have for landscaping.


[00:14:08] Speaker 4 So, yeah, we, we obviously when we’re doing the site costs, we’re going to put a plug in for items like landscaping. So we’re giving them a plug that would give them enough money to put a generous landscape package in front of the House. But if they were to want to go to town and add a bunch of trees, maybe even like Pat was saying, a patio or something on the back, then then we’re going to get the proposals from our contractors. We’re going to present them to them. And then we would true it up with the.


[00:14:40] Speaker 2 Yeah. Yeah. So I would say there’s, there’s two examples. So one, which is where we intentionally put an allowance to be reconciled during construction. That’s part of the cycle. So there’s no change addendum fee. All we’re saying is we have an allowance for plantings. We have a landscaper will come out and meet with our customer, prepare a plan, give us the cost us, meeting us in the customer, and we’re going to reconcile it against that allowance and we’re going to prepare a change. ADDENDUM Right. There’s no cost to that. That’s just part of the process, right? But if a customer wants to add during the process, a patio. Right. Wasn’t on anybody’s radar screen. Yep. That would generate a fee that if the customer moves forward with that accepts that change had done them right, that fee would get credited back to the price. Right.


[00:15:31] Speaker 1 Right. So so let me let me just just to make sure everybody understands. So a plug in an allowance is the exact same thing, right? If we put in a plug or we put in an allowance and then when we say reconcile it. So if you have a $10,000 plug or allowance for landscaping and you only spend 8000 on landscaping when you meet with a landscaper, what happens to that extra 2000 that you have in the site cost estimate?


[00:15:55] Speaker 2 Well, it reduces the price.


[00:15:57] Speaker 1 Right. So they don’t pay it. Right. It’s out. It’s at cost. And conversely, if they spend 12,000, they’re going to spend 2000 more than the allowance. Zach. Okay.


[00:16:06] Speaker 3 Pat. Yeah. And what I was going to say is, you know, like particularly in a healthy market, like we’re having today, some of that, some of the people that we’re building these homes for are selling an existing home.


[00:16:15] Speaker 1 Right.


[00:16:16] Speaker 3 They may sell their home for a little bit more than what they anticipated. And a lot of times there’s things that they have to, you know, that they wanted to put into the house that they decided to do at a later date.


[00:16:26] Speaker 1 Mm hmm.


[00:16:26] Speaker 3 This allows them the opportunity to just sit down and say, okay, you know, we weren’t. We were we were going to hold off on putting the deck on the back of the house until after we got moved in. Would like to try to add that now and walk them through the process of trying to do that or patio or increase the landscape package now that they’ve realized they have the ability and the a little bit of freedom to to do some of those things right. These are some of the things we run into in having the ability to work with a project manager on site that is in tune with what you’re doing. And having weekly meetings with you to kind of walk through those things gives you the opportunity to discuss some of this stuff and understand, you know, the process of going through it. And what I tell people sometimes is there’s a couple of things to this. You know, there are times, even if we’re walking through and you come to us with a change where we may suggest that you wait until after you settle on the house, because we realize that you have a specific timeline that you’re trying to meet. And we realize that adding that option at that point in time is something that’s easily done after the fact and can be done by somebody else. And we can even provide you with some suggestions of of people that you can reach out to to get pricing for. But we want to ultimately we want to get the customer would be satisfied. And if they’re going to be unsatisfied, waiting an additional month or six weeks to get this thing added and they can just do it after the fact. We like people’s money just as much as they like to give it to us at times. But there’s sometimes it’s better in their in their best interest based on the information that we know about them, to have them wait for that.


[00:18:06] Speaker 1 Right. And one more example that I think Brian referred to our other episode. You know, the weekly meetings episode that we have is really important and we talk about timing and financing and closing the loan. And I think one of the things you’re alluding to is that when people take out a construction loan, their lender may require that the home be completed. By a certain date. And if you’re late into the process and now all of a sudden you want to add a deck. That act in itself may drag out the construction past beyond the date that that’s acceptable to the lender. So there are a lot of moving parts in this transaction and we would go over all of that with the buyer.


[00:18:43] Speaker 3 Right. And you know, it could be their loan expiration. It could be the fact that they want to be in the home at a certain date because they’re going to have an event at the house, you know, a graduation party, a wedding. They’ve got a baby on the way and want to be in the house. These are all things that we kind of sometimes I feel like we’re a life coach because we’re walking people through this process and trying to explain this to them to make sure that, hey, look, we know you’re really focused on this and getting in by this state. This is going to impede our ability to do this for you. Right? So you may want to reconsider this again. It’s not because we don’t want to do it for them. It’s because we’re trying to look at the overall grand scope of things and what they’re trying to accomplish.


[00:19:24] Speaker 1 Right. And you know, what’s interesting is that, you know, I’ve said this 10,000 times, most folks don’t realize what’s entailed in building a home. And at the beginning of the process, many, many, many people tell me, oh, yeah, we’re not going to make any changes. And and I and I said, That’s great. You’ll be the first one, you know. And so, so I think in general, folks don’t realize the things that they’re forgetting to think about. And as they come through the process, we’re going to help them with with these things as they come up. And and I think everybody makes some sort of a change. Would you agree, Bryan?


[00:20:02] Speaker 4 Absolutely. I don’t think that I’ve had one customer that sat down and said that he did his due diligence and he would be the first customer. And I’m pretty sure he had at least three changes. Yeah, yeah. I don’t, I don’t I’ve never had one.


[00:20:16] Speaker 2 Yeah. Well I think, I think customers decompress a little bit during construction because they’re in really good hands with the PM. Right. You know, for instance, Brian does these weekly meetings, I mean, so they get really comfortable with the PM and the PMS knowledge of what’s going on and juggling all the moving parts and pieces. And then I just think it kind of frees our mind up to start thinking about other things. That’s just, yeah, human nature.


[00:20:44] Speaker 3 Yeah. And there’s a ton of stuff out there right now for people to go on and look at and conceptualize things and see things on Pinterest, on all these different avenues that are out there for people to look at things. And there’s things that come up during the build process that change people’s life situation, change, you know, there’s, there’s, you know, whatever it may be, there’s things that that we realize that people, you know, they didn’t they didn’t picture it right in their head on the paper versus when they walk into the house and actually see it in real life. Right. You know, and sometimes that’s hard for a person to do who’s not used to doing that on a regular basis, looking at a set of plans and visualizing something versus what it’s going to be in person. Whereas people that have been in the industry and done it for a while can almost have that 3D image painted in their head as they’re looking at the set of plans and trying to conceptualize what it’s going to look like. Yeah. So, you know, that’s that’s part of it too is there’s that, that dynamic change from when you go to looking at it on paper and then when the structure and the roof go up and you’re walking through the rooms and seeing it and going, okay, I’m going to put this piece of furniture here and I’m going to do this and I’m going to do that. And then all of a sudden it’s like, oh, you know, we really should have put a, you know, an eyeball light to for that piece of art that we’re going to put in that on that wall there or whatever it may be. There’s a lot of there’s little things that we go through that we’re that, you know, we’re glad to be able to assist and help people out. And typically, it’s stuff that is going to be obtrusive to do in the home. After we get to a certain stage, there’s going to be a lot of damage and repairs that have to go on to accommodate adding that thing. So we try to do it for them while we’re at a point where it can be done easily.


[00:22:32] Speaker 1 Yeah, usually, yes.


[00:22:33] Speaker 4 I think we get a lot of future proofing. So people, once the structure comes up, they realize, oh, I want a pool in the backyard with this deck in this outdoor kitchen. So I need to add the electrical or whatever it may be. But, you know, as it’s going up, they’re thinking, they start planning, okay, well, I’ve spent all this time planning on what my house is going to be. And now that I see it now, I’m going to have that party and I’m going to have all the neighbors over. And I want to add this and whatever it may be.


[00:23:01] Speaker 1 Right, right.


[00:23:02] Speaker 2 It happens. But I would say that we definitely probe the customer at the beginning of the process. So if they’re thinking about adding a pool, we typically and Brian’s right people change their mind during the process, but we’re typically saying, hey, if you’re going to do any, you start with the end in mind. Tell us what you want so that the grading plan won’t kind of be future proofed. Right? Well. Clear the trees for the pool, whatever. Inevitably, people. Change their mind. Yeah. And that’s where Brian’s they were. They had no idea they were even going to do this. And now all of a sudden, they’re out there like, Oh.


[00:23:38] Speaker 1 Yeah, yeah, yeah. So going back to Pat’s example about the eyeball light, it’s easier to add the eyeball light for a piece of art before the drywall goes up. So when you were when you were talking through it, you know, once the drywall goes up, we can still add the eyeball light. But now you’re past that point where.


[00:23:57] Speaker 3 Yeah, so we advise people, hey, look, if you’re, if you’re thinking of making a change, let us know about as soon as you’re thinking about it.


[00:24:03] Speaker 1 Right, just yet. So the and.


[00:24:05] Speaker 3 That’s why we have the weekly meeting, so the PM can kind of conceptually lay it out and realize when we can even tell people, hey, look, if you’re thinking about you’re still thinking about adding this, you need to make that decision now because we’re getting to the point of no return here where it’s going to be even more costly to do it because we’re going to have to tear things out in order to do that option.


[00:24:25] Speaker 4 Right.


[00:24:26] Speaker 2 So, yeah, I would say I’m not sure if Brian or Pat brought this up, but when the office provides all the detail back to the PM, they’ve communicated with the the project manager that we’ve communicated with. Brian said, okay, where are you in the process? When are you going to order X-Y-Z material? Right, right. And Brian may say, okay, I really need to order it to not lose time on the schedule in the next five days. Right. So then the office is going to say, okay, I’m going to prepare this, you know, this this change, not change it done, but the information for the price request. Yeah. And it’s going to have a finite date because otherwise we’re in limbo. Right? So once that five days goes by, we’re back off to the races. We’re not holding up the House or we’ll never get anything done.


[00:25:25] Speaker 1 And I think the PM being involved is really very critical because I think, Michael, you’ve used the example of countertops many, many, many times, right, where a buyer’s chosen their countertops and then they start thinking about, well, maybe they’re changing their mind and they want something else and then they don’t say anything to the PM and then the PM orders the countertops, right? And then a week later the homeowner says, well, we’ve been thinking for two or three weeks about change in our countertops. And Brian says, Well, I just ordered them so. So it is really the communication.


[00:25:56] Speaker 2 And Brian probably would go over it. But there are yeah, there’s so many. So how houses are built with hundreds of thousands of parts and pieces. Right. And Brian’s probably not going to the customer say this week I’m ordering five floor hangers for floors. Right. I mean, it’s just certain things that just like it’s so far outside the realm of what they need to know or what they even care to know. But those little things that Brian may be doing in the background. Right. May have impact on the customer. Right? Like especially, you know, take plumbing or electric. Right. So Brian’s got a rough in for plumbing customer is says something to Brian plumbers already left the house now we got trip charges and I mean it just.


[00:26:46] Speaker 3 Yeah we we we can’t read your mind what I tell you. Yeah yeah. You know we can’t, we can’t read what your, what you’re considering doing. So you need to communicate that to us so that we can let you know whether or not we can still do these things right. And if we, you know, typically we can still do it. It’s just it sometimes it becomes a lot more expensive than the customer is willing to accept because of the things that we’ve already done in the House.


[00:27:12] Speaker 1 Right.


[00:27:13] Speaker 3 That are going to have to be redone as a result of adding those things.


[00:27:18] Speaker 1 Yeah, yep, yep. So. So, Brian, do you have some examples? Of change order experiences that you’ve had that are that are positive or challenging.


[00:27:31] Speaker 4 Sure. One of the things like back to what I was saying about like trying to to. Head off any of the changes that we can. We are doing the the a lot of electrical stuff has been used as an example. We’ll try and meet with the customer before we even send electricians in there so we can walk them through and talk about plugs. We do do a electrical layout that we we I guess they sit down with the with them and we’ll lay out the recessed lights and where they want switched plugs and items like that. And after that is drawn up, you know, I’ll meet with the customer and review all that because that’s a perfect opportunity to try and head those things off so that we are capturing them before the electrician starts. Right. And that way we’re not holding up and not slowing the process down because we can add those. I can send it in. We can do the change addendum and then the electrician shows up and they already have the paperwork and everything they need. Right. Add and capture those those changes. But yeah, some of the past experiences with change orders, I mean, I’ve had customers that have had lofts, the loft option and had a beautiful view of the mountains in the background and were like, What would it take to open these trusses up and put a big dormer out the back? And, you know, that’s one of those instances where you’re going way, way back into engineering. Right. Running it through the county. And obviously they did not do that because once we started talking about how much that would impact the time frame and how much it would cost, it was is pretty significant. So we do get some kind of crazy ones, but a lot of them are just. Yeah. Pretty. Yeah. Run of the mill.


[00:29:16] Speaker 1 Yeah. Yeah. But it’s free to ask at the weekly meet. It is you know it’s and we always encourage that.


[00:29:23] Speaker 2 Yeah. Yeah. I mean we do, you know there’s a lot of not a lot but, you know, shower sprays and things of that nature. I don’t know if you have any good examples of I.


[00:29:35] Speaker 3 Actually.


[00:29:35] Speaker 4 A lot of times back even with the electric walk, even with the plumbing, if if they have I mean, we obviously we do these showers that are. Eight, ten feet. Long and it’ll have one single showerhead. And obviously that’s up to where I suggest. Maybe you want to think about adding something else to this. You’re going to have a party shower. Yeah, make it a party.


[00:29:58] Speaker 2 Yeah. And the office would have probably gone over it. But you know, Bryan, who sees this day in and day out, is like, let me just double check with them one more time, see the space. Are you sure you just want you want to rain can or something.


[00:30:12] Speaker 3 Yeah. Yeah. And it, like I’ve said in previous, you know, previous conversations, we’ve had the PMS get to know the customers.


[00:30:24] Speaker 1 Right.


[00:30:24] Speaker 3 Pretty well. Right. So that relationship is kind of it builds as you’re going through the process and you can recognize some of the things not always, but just in having regular meetings with people and interacting with them on a regular basis, you get to an understanding of what’s important to them in the right.


[00:30:43] Speaker 1 They’re hotspots.


[00:30:44] Speaker 3 They’re hotspots. And it’s not not everybody’s the same. So, you know, when you get to delve into that and you start experiencing those things, that gives us the opportunity to kind of make some of these suggestions. Right. You know, and talk to people about, hey, you really want to consider this? I’m not saying you have to do it, but you may regret not doing it. So this is the time if you want to do something like this to do it.


[00:31:06] Speaker 1 Right, right. It’s good. That’s good. So, Michael, anything else you want to add?


[00:31:10] Speaker 2 No, I think I mean, I think we’ve got a very good process. Our focus with the change addendums from a customer experience point perspective is. You know, some there’s something out in the ether where builders make all this money with change addendums, right? Bob Cooper And that is not our, you know, not our raison d’etre. Right. All we want to do is get a little bit of money so that if a customer doesn’t want to move forward, we can. And we’re not even covering our back office costs. But it definitely gives the customer a moment to say, okay, do I really want this? Because if they move forward, it’ll that fee gets applied to the to the to the cost or the price of the the idea of the item. So it’s it’s a.


[00:31:59] Speaker 1 So so hypothetically, if we have a $250 for this hypothetical, yeah. Change order fee and they want to buy a facet and the price of the facet is $250, then the 250 gets credited to the facet. They’re not paying another 250 on top of the.


[00:32:14] Speaker 2 Two fifties apply.


[00:32:15] Speaker 1 It’s applied to the item, right? So it’s just a very elementary example.


[00:32:20] Speaker 2 Making anything on the change. So there is no real change order fee unless somebody really. Right. Just wants to start wishing right.


[00:32:28] Speaker 1 Well, we actually call it a change order request feed only. Right, because you’re making a request for a change order. We collect a fee. If you buy it, it gets credited. And you know, we have to do that because what used to happen, Michael, before we did this years and years and years ago.


[00:32:42] Speaker 2 Well, people like to dream. Yes. And we certainly don’t discourage dreaming during the preparation process.


[00:32:52] Speaker 1 Right.


[00:32:53] Speaker 2 But once you start, the dreaming really should be over. Right. But we had a full time employee that continued to chase customers dreams during construction. So, you know, it would be typical customer, you know, hey, I kind of I want to do this now. And we weren’t charging anything, right? There was no like request fee, right? And so we just were spinning wheels and we’re like, okay, this really does not work.


[00:33:23] Speaker 1 Right? You were pricing out all these dreams and nobody was really buying. No, no.


[00:33:27] Speaker 2 There’s got to be some mechanism. Mechanism to make them think it was like a limiter, a filter.


[00:33:33] Speaker 1 Sure.


[00:33:33] Speaker 3 Sure. I think the other thing that’s important to keep in mind, too, is it’s that once you get the construction process moving. To stop and halt and then get it moving again is difficult, right? You know, the term or the correlation I always use is it’s like an ocean liner moving through a body of water.


[00:33:55] Speaker 1 Mm hmm.


[00:33:56] Speaker 3 Once it gets up to speed and gets moving and going in the direction you want it to go, everything’s going fine. But you have to stop the ship all of a sudden and get it going in a different direction. It takes time to do that, to get once you get idle in the water. And the same thing with construction. It’s not that we’re trying to discourage people. It’s more like. They have an end date in mind to that. They want to get in this house and they’ve made plans. We don’t want to continually start and stop and start and stop and start and stop over and over again. And even if they even if it’s a quick hey, we’re going to add this. We got it priced out. We’re moving forward with it. It takes us time to get it added to the contractors contract, get them scheduled to do the work, get them out to the site. It’s not just, okay, you sign on the dotted line and we process to change order. They’re going to be out that afternoon. Right. And that’s sometimes what people anticipate or expect. And it’s like, okay, we’ve got to update the contractors contract to include this option. Then they can come out and do the work. But they also have to get somebody scheduled to come out and do the work. And they’re scheduled they’re already scheduled out for the next two weeks. So even if it’s something that’s really simple and easy, if they’re not out there working on the house or have not already been to the house. We’ve got to get them on schedule to come and add that stuff. So it could delay things as well.


[00:35:21] Speaker 1 Yeah. Yeah. So there’s a lot that goes on. Yeah.


[00:35:24] Speaker 2 To. There’s a ton. Yeah.


[00:35:25] Speaker 1 Yeah. So, Brian, anything you want to add? Solid, Pat. We good? We’re good, Michael. I think we’re good. I think that’s. Yeah. So in summary, before the start of construction, there are no change order fees. Once construction starts and you’re in the customization program, then you have the change order request fee that’s credited to the to the program. And I think in closing, generally, if you’re not customizing if you’re if you’re choosing the path to buy one of our homes and we say build off the shelf, but you’re just building a two hour plan, it is still possible to change an outlet or something like that. So there could be a situation where you may have a change order request fee during construction, but it’s very rare. Is that fair? Mm hmm. Okay. Very good. That’s the summary. I hope you all enjoyed the conversation on change orders and our process. And as always, if you have any questions about how that works. Contact us through the web or give us a call. And we’re certainly happy to explain it in greater detail. I’m not sure how we do greater detail than what we just did, but if there’s any confusion, we’re here to help. Thank you all for listening. And that concludes another episode of the Go with John Show. Go out there and build something extraordinary.