Kevin Russell, president of Chesterfield-based Construction Management Solutions, launched Homebidders with partner Jeff Smith, seeking to connect buyers with builders.
Instead of going directly to builders, Russell wants customers to plan the house they want with him and then he will bid the project out to several construction companies, including Homesmith, Napier Signature Homes, Dunkum Inc., Capital Builders, Ridgeline Construction, Stone River Builders, Bel Arbor Builders and Hayden Homes.
“We can save a significant amount of cost by providing services up front. Buyers know what they are buying, and the builder knows what they are building,” Russell said.
Russell said that he is interviewing additional builders but that they must agree to use the company’s accounting software.
Russell said his fee will amount to between 2 and 4 percent of the final contract price on the house, depending on complexity of the project. But by working with the twosome, buyers could save two or three times that amount because of increased competition from builders.
Russell said having multiple builders bidding on a single project will help reduce the overall price. Russell also said he has access to about 200 lots that he can buy from builders and banks at a discounted rate.
“If a builder bought a lot two years ago, they overpaid by 15 to 25 percent. That factors in to the cost they would charge you,” said Russell. “I can buy that lot for less than he paid for it.”
Russell said margins for builders range between 5 and 20 percent. “The average is maybe 12 percent if they are lucky. We can generally cut that by a couple percent.”
The new company will work closely with Russell’s other company, CMS, which provides back-office services to construction companies. Smith is an accountant who has worked for CMS since 2001.
Russell said that he isn’t hiring new employees yet but that he will if the company takes off.
“My expectation for Homebidders is a very busy spring based on calls and folks we have spoken to,” said Russell.
He expects construction in the Richmond area overall to pick up in the spring because of pent-up demand caused by bad winter weather.
Jim Dunkum, president and CEO of Dunkum Inc., has been a client of CMS for a number of years and says he looks forward to participating in Russell and Smith’s new venture.
“The jobs in general are fewer and harder to come by in the last few years,” said Dunkum. “I am certainly looking for more work, and this is another good option.”
Dunkum builds three to four houses a year, in the $1 million to $4 million range. He said he has been busy, but no longer has a backlog of projects like he has in years past.
He said Homebidders is a good concept for buyers because they have an expert to navigate the buying process.
“Home buyers don’t typically know what they are looking at when they get bids from contractors,” Dunkum said. “Having someone to do that and compare bids is good thing to have.”
Read the BizSense interview with Russell from last year here.
Al Harris covers the homebuilding industry for BizSense. Please send news tips to [email protected].