What is a Design-Build Firm and Should You Work With One?

There are architects, and there are contractors – two separate functions that must work in synergy with each other, and who must also serve as checks and balances against each other.  It seems to make sense to combine both functions under one roof – and this is popularly referred to as a “design-build firm”.  So why wouldn’t you simplify your life and work with one?

 

Conventional wisdom dictates that you should always work with a separate architect and contractor, the reason being that the architect works as the client-advocate overseeing the contractor.  The assumption is that contractors are as trustworthy as mechanics and used car salesmen and will take every opportunity to gouge the customer.  And there’s enough anecdotal evidence out there to justify this stereotype.  After all, construction is a mystery to most people and you have little choice but to believe whatever your contractor tells you.  So with a design-build firm, the assumption is nobody’s looking out for you – therefore, design-build firms inherently pose a conflict of interest.  There’s even some debate as to whether they are ethical – or even legal.

 

Having worked both ways, here’s my take on the matter.  In theory, the architect-as-client-advocate sounds great, but from my experience, few architects are effective in that role.  Architects are artistes and ego driven.  They want their vision built no matter what.  They are often ignorant – and sometimes completely oblivious – to cost of materials and labor.  When I’ve worked with separate architects and contractors, nobody was my advocate.  I had to maintain tight control over the budgets and often mediate spats between the two parties.  Each came to me complaining about the other and they resisted direct contact at all costs.  I rationalized this as “healthy tension” that I believed was benefiting the project, but I can assure you it also created its share of problems.

 

In contrast, working with a single design-build firm was a bit easier, but posed its own set of challenges.  With the architect and contractor partners in their own business, they have a shared interest in benefiting themselves.  Nobody was looking out for my best interests and I had to be even more vigilant, exercising even more control over the budgets, questioning every dollar spent, and second-guessing every recommendation.  Differences between the architect and contractor were settled at their office, not in front of me, and didn’t require me to serve as referee.  Architect and contractor spoke with a single voice and a shared vision, and that made my life a whole lot easier.  But it brings us to the trust factor.

 

It helps that I’ve had a long relationship with my design-build firm, having used them as contractors before.  They have earned my trust, I know how they work and what to expect of them.  We’ve become friends outside work, attending each other’s weddings and children’s birthdays.  They’ve built their company on the work I’ve given them so I know my jobs will always take priority over their other clients.  I know they would never jeopardize our relationship.  I would not have been so confident working with a design-build firm I didn’t know as well.

 

There’s also the budget consideration.  Don’t forget that the architect and contractor each take a percentage of the overall construction budget which could be as much as 20% to each party.  Working with a single design-build firm makes it easier to negotiate a package deal at a much lower percentage.

 

The bottom line – there’s no clear-cut answer.  It depends on you, your situation, your knowledge level and your confidence in undertaking a major project.  If you’re uncertain, I’d suggest starting with an architect you like and trust and letting him/her guide you in your search for a separate contractor.  But if you know what you’re doing and intend to be heavily involved in the day-to-day process and don’t feel a need for an advocate, then a design-build firm may be the best way to go, as long as you know the benefits and pitfalls.

 

In separate postings, I will talk about how to find and hire a contractor and the value of working with an architect.

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Ban the Squeegee!

Asking for trouble!

Asking for trouble!

I just had frameless glass shower doors installed in a high-end hilltop home I’m renovating and learned something from the installer that rocked my world.

 

The master shower is in a dramatic corner glass floor-to-ceiling window with views to the ocean and sunlight streaming through all day long, making it essential to keep the shower glass perfectly clean.  When I reassured him I would squeegee it after every use, he told me that was the worst thing I could do and to throw the squeegee away!

 

He explained that glass is porous, and squeegees only push soap-scummy water into the pores of the glass making the glass cloudy over time and impossible to clean.  Furthermore, the surface of glass is extremely delicate and easily scratched.  The slightest impurity on the glass surface may scratch if dragged across it by the squeegee.

 

Instead, he told me to spray Pledge furniture polish directly onto the glass and buff it till it’s clear.  This should be done three times before first use, then once every three or four months after that.  Water will simply bead-up and roll off with each shower.  To get any remaining droplets off the glass after a shower, gently dab it with a terry towel.  I tried it – and he’s right.  Amazing!

 

 

Vintage Furniture – Real or Fake? Corbusier’s Grand Confort LC Series

Interest in vintage furniture is at an all time high with shows and auctions commanding top-dollar for your grandmother’s tired old Danish modern dining set. Scores of national chain retailers such as Design Within Reach, Modernica and Room & Board offer good replicas of many pieces, or contemporary licensed “originals”. But when buying vintage – whether from a dealer or an individual – how do you know you’re getting an authentic piece? A trained eye knows how to spot the details.  

Le Corbusier LC2 chair

Le Corbusier LC2 chair

There are too many designers and styles to deal with in a single post, so today I’ll deal with Le Corbusier’s LC-series chairs – the ever-popular cube-like chrome and black leather LC2 and LC3 “Grand Confort” chairs.  Originally designed in 1928, these pieces have stood the test of time and feel as contemporary today as the day they were first concieved.
 
 
The chair comes in two sizes, the more iconic Grand Confort petit modele measuring 30″ wide by 27.5″ deep and 26.4″ tall; and the Grand Confort grand modele with the longer, lower, sleeker profile of 39″ wide by 28.7″ deep and 24.4″ tall.  Both are accompanied by two and three-seat sofas that share the proportions of the chairs.  Note: the chairs are often referred to as the “Petite Confort” and the “Grand Confort” but this is innacurate – both are “Grand Confort” with one being petite and the other grand, kinda like the cup sizes at Starbucks.  
They may seem ubiquitous because they seem to be available everywhere at every price point. And that’s because anyone can make a chair that looks like a Corbusier as long as they vary it just enough to not infringe on the trademark. They can vary the dimensions, throwing the proportions off. Or the termination of the legs may be different. The welds will almost always be visible and rough. And if it’s vintage and shows any rust, it’s most certainly not the real thing as they never, ever rust.

 

If you’re buying new, there’s only one source for an original – Cassina. They’ve held the exclusive worldwide rights since 1964, granted by the Fondation Le Corbusier.  Cassina has their own stores in select cities and sell through other retailers everywhere. So if you want the real thing, just ask if it’s made by Cassina and check the tag and paperwork that comes with it. But if you’re buying vintage, know what to look for and never take the dealer’s word for it – it’s amazing how often they’re wrong.

 

 

 

Here are my rules for buying a vintage Corbusier LC series chair:

 

Rule 1: If it’s cheap, it’s fake. An authentic LC2 or LC3 Grand Confort chair starts at $3,200 new and prices range from $2,000 and up for good vintage pieces. If you think you’re getting a bargain for much less than that, the joke’s on you.

 

 

Rule 2: Just because it’s expensive doesn’t mean it’s real. There are a lot of good fakes – some are even better-made than the real thing – but they are not going to retain their value like the real thing. And ignorant (or ambitious) sellers can ask outrageous prices.

 

 

Rule 3: Know where to find the serial number. On Le Corbusier’s LC2 and LC3 chairs, feel under the upper-most chrome bar on the left arm of the chair. Authentic chairs have a serial number etched into the chrome – you can feel the bumps with your fingers. On some vintage pieces, the placement of the serial number may vary – sometimes it’s behind the backrest or on the right arm bar – but most years it was on the left side.

 

 

From the Cassina website: “According to the designer’s heirs “all pieces of furniture which do not bear the logotype Cassina, the signature of Le Corbusier and the production number are counterfeits”. All authentic Le Corbusier furniture is indelibly marked with the indicia shown below.”

 

A great side-by-side analysis of the real thing vs. a knock-off can be seen here.

 

 

If you can’t afford the real thing but want a good fake, look at the weld seams and the legs. The legs should end cleanly with a chrome end-piece – not with a rubber cap and not with tapered ends.

 

 

Learn about how to tell a real Eames Lounge Chair 670 and Ottoman 671 here. And in future postings, I will write about Mies van der Rohe’s “Barcelona” chair and ottoman, Noguchi’s coffee table, Arne Jacobsen’s “Egg” and “Swan” chairs, and other iconic – and often imitated pieces.

 

 

Read about recent sale prices at auction here.  And don’t miss the smart way to buy quality furniture whether your buying for yourself or staging a house for sale here.

 

 

 

 

 

Bad Design is Bad Economics

  

You’ll see me harp a lot about design issues in a blog about real estate flipping, but design is what makes or breaks a house when you’re selling it.

 

This may strike you as obvious, as it does me, but it’s not obvious to everyone.  The wide proliferation of ugly spec houses throughout L.A. attests to that.

 

I know a team of developers who once showed me a high-end multi-million dollar house they were flipping in the Hollywood Hills.  They bragged to me about the deals they got on materials and how they bought overstocked flooring, doors, hardware, vanities and fixtures at huge discounts off Craigslist and eBay.  There was hardwood flooring of one color in the sunken living room, another kind of wood on the stairs to the dining area which had cheap-looking engineered flooring of another color.  There were at least six different kinds of doors in the house – solid flush wood stained, solid flush wood painted, doors with clear glass panels, doors with frosted glass panels, louvered closet doors and mirrored closet doors.  There was different door hardware in every room – some knobs, some levers, some chrome, some brass.  There were even windows of aluminum, black anodized, and white vinyl clad.  Outside they had aluminum railings, white light fixtures and a faux gold-leaf door.  And some of their ideas were just plain asking for trouble – a faux-concrete finish over drywall in a shower?  A large wood-framed window in another shower?  Both disasters waiting to happen.  The place was a mess.  It looked like the showroom at a bad Expo Design Center.  Think I’m exaggerating?  I’m not.  And these guys were both real estate agents who thought they knew their market.  What they didn’t know was anything about design or the value of working with an architect. 

 

The end result?  Their house sat on the market for almost a year with repeated price reductions and eventually sold at a loss for about $450 per square foot.  My smaller house directly across the street sold in 60 days with multiple offers at $1,200 per square foot.  Those guys ended up hiring my architect for their next project.

 

See other postings here about why you should work with an architecthow to find, hire and negotiate with a contractor and the option of working with a design-build firm.

New Porn Site for Vintage Furniture Addicts!

WooHOO!  As if 1st Dibs (and other sites on my list at right) weren’t enough, there’s a new online marketplace for vintage and reproduction mid-century modern furniture, Lushpad.com, from L.A.-based Melanie Carlson.  It passed my test as it includes one of my favorites: hard-to-find dining chairs by Niels Moller (and it even spells his name right, unlike 1st Dibs).  But it’s no bargain.  Prices are as high as they get on notoriously overpriced 1st Dibs.  And the search function doesn’t seem to be working yet – but the site’s still in beta so hopefully they’ll work that out.  Sit back and prepare to lose track of time.  (And don’t forget to get up once in a while to eat, use the loo and stretch your legs to avoid an embolism.)

Lifted from the 8/26/08 Daily Candy

“Like a mod, tightly edited version of C-list or eBay, the site connects North American buyers and sellers whose pulses quicken at the site of Barcelona chairs, Eames tables, and Danish modern credenzas.

And skipping the middleman keeps prices lower than those in showrooms, so it’s not just furniture porn.”

JetSetRnv8r says check it out.

Hiring a Contractor – Fixed-Price or Cost-Plus?

There are two types of contracts when working with a contractor – “cost-plus” or “fixed-price”.  Under cost-plus, you pay the contractor for the cost of materials and labor plus a commission to cover his compensation – typically 20% but it can range anywhere from less than 10% to over 25%.  Of course both parties work to a pre-determined budget so you have a pretty good idea of what the total job will cost.  With a fixed-price contract, you pay a set amount and it’s up to the contractor to make it work – if he’s over budget, it comes out of his pocket and the more money he saves, the more he makes – you pay the same either way.

 

A recent article in the Los Angeles Times Sunday Real Estate section [“Digging – It’s Your Job” 7/13/08] suggested always negotiating a “fixed-price” contract, never a “cost-plus”.  Their reasoning was that it left it up to the contractor to lose money or turn a profit.  I couldn’t disagree more.  What contractor is going to choose to lose money?

 

I always work on a cost-plus basis and here’s why.  I want to know what I’m paying for, and I want control over my budget.  The estimated cost of the project is just that – an estimate.  Every job is full of surprises and budgets need to be flexible.  You never know what you’re going to find when you’re opening walls or removing flooring.  No contractor is going to want to lose money and with a fixed-price contract, he’ll do everything possible to cut corners including using inferior materials or skipping important steps to maximize his profit.

 

If you want to know exactly what you’re paying for what, negotiate a cost-plus contract within a set budget and insist on detailed invoices with back-up.  My contractor’s invoices generally have up to five or more pages of Excel spreadsheet showing over 200 or more line items detailing what’s being billed against the original estimate.  Changes to the original estimate are discussed in advance, solutions worked out between us and billed separately as a change order.

 

The only time I might make an exception and opt for a fixed-price contract would be for a small job like a closet make-over, a bathroom remodel or maybe even a kitchen – but never for a major house remodel.

To learn more about finding and hiring a contractor and why to work with an architect, read “How to Find and Hire a Contractor” and “Architects!  Who Needs ‘Em?” here.

Bravo’s “Flipping Out” – Real or Fake?

Whenever I tell people at parties that I flip houses, they inevitably ask if I watch “Flipping Out” on Bravo and what I think about it.  And the job supervisor at one of my houses kept telling me I reminded him of the guy on the show (I’m equally obsessed with details).  So I finally had to watch it. And like a train wreck, I can’t take my eyes off of it.

 

 

“Flipping Out” is about as close to depicting the life of a real estate investor as “Green Acres” was to portraying the life of a farmer.  Jeff Lewis’ life is nothing like mine.  He wears designer clothing which never get dirty, drives around in one of two $100,000 cars (which also never get dirty), employs a huge staff to do non-essential work such as fetching coffee (140o!), getting someone on the phone, or cleaning-up after one of his dogs.  He drives from Los Feliz to Encino and back in record time, and enjoys leisurely lunches at home with his staff every day. 

 

My days, on the other hand, are spent running around with my hair on fire – going to Home Depot sometimes twice a day, any of a half-dozen specialty lighting stores, electrical wholesalers, plumbing supply stores, hardware stores, furniture stores or meetings with contractors, sub-contractors and other suppliers and vendors.  In between all that, I’m making the rounds looking at houses on caravan days (when realtors hold open houses for other realtors) looking at comps (similar homes) for my projects and keeping an eye out for my next project.  I drive a beat-up SUV I can’t keep clean because it’s always loaded with building materials or my dog. 

 

I wear shorts, tee-shirts and construction boots and am lucky if I can bathe once a day and shave once a week.  If I get around to having lunch, it’s usually at 4PM and might be a 3-day old sandwich from a gas station mini-mart – or it’s off the “roach coach” at a job site.  I can’t afford to employ a personal staff since every penny I have goes into each project and I don’t have the margins for such luxuries.  And my evening hours are spent at my desk crunching numbers, reviewing budgets, reviewing and paying invoices, creating punch lists and schedules and emailing photos and teasers to realtors, journalists, TV producers and other people important to my business.  When other people might kick-back and watch TV, play video games or surf the web, I spend my idle moments scanning the MLS for sales trends and comps, or mining the furniture websites for prices on vintage pieces and furnishing ideas.

 

I only wish I had the time Jeff Lewis has to wreak havoc with other people’s lives!

 

 

Real Estate Sales Trend Report — Beverly Hills

August 24 2008   Despite the daily drumbeat of grim news about the real estate market, a bright spot remains in Beverly Hills.  While researching comps on one of my houses, I was startled to discover the following trends from the past 12 months:

 $ Although the number of sales were down, the median price was up.

 $ The average price-per-square-foot increased.

 $ Among houses selling at or above full asking price, the price-per-square-foot increased substantially.

 $ Average days on market (DOM) was virtually unchanged.

 $ Among houses selling at or above full asking price, the DOM decreased.

 

There were some less sunny trends:

 $ The number of sales at or above full asking price declined from 20% to 17% and out of those, the number that reduced the list price (LP) from the original list price (OLP) increased from 17% to 24%.  Not surprising.

 

Here are the numbers for the 12 months ending July 15, 2008:

 

 

2008

2007

2006

Number of sales in Beverly Hills:

190

264

 

Median price:

$3,625,000

$3,115,000

 

Low

$749,000

$769,000

 

High

$23,000,000

$35,000,000

 

Number of sales at or above full asking price (LP):

33/17%

52/20%

 

No. of sales at/above LP reduced from original price (OLP):

8/24%

9/17%

 

Average days on market (DOM):

89

85

 

Low

0

5

 

High

447

309

 

Average days on market (DOM) at/above LP:

43

59

 

Average price per square foot:

$906

$889

 

Average price per square foot at/above LP:

$1,001

843

 

Low

$436

$456

 

High

$1,981

$1,483

 

Contemporary/mid-century/architectural sales at/above LP:

10

7

 

 

 For more about the high-end market in Los Angeles and investing in the current tumultuous market, read “What Does the Wall Street Bail-out Mean for You?” and “Amid the Chaos, Is This Any Time to Invest in Real Estate?“.

Staging a House – Rent or Buy?

Everyone knows that houses show best when staged – and staged homes stand a better chance of commanding a premium selling price.  But with staging companies charging thousands of dollars up front and thousands every month, staging can be expensive and eats directly into your profit.  But it doesn’t have to be that way.

The $25,000 it can cost to stage a typical home for the months it takes to sell can be better spent buying the furniture yourself – then selling it at the end of the project (or storing it for re-use in your next project.)  The cost of ownership will be minimal.  And, if you do it right, you might even be able to make it a profitable side business.

Here are twelve tips for staging a house:

 

1.   Never pay full retail.  All prices are negotiable.  If a dealer can give 20% off to the trade, they can give it to you too, so start all negotiations from 20% off the asking price and go from there.

 

2.   Look for clearance sales.  Get to know the dealers you’re interested in to get tipped off to the sales in advance.  Then check out the items you’re interested in and see if you can get an early sale price, or have your items set aside for you till the sale.  Get to the sale early to get the best pick of the best items.  Then return during the final hours of the sale to scoop up any left-behind bargains.  They want to get rid of their inventory and might accept an even lower price than you normally would have offered.

 

3.   Buy floor models.  Retailers slash prices on floor models when they’re ready to sell them.  They may be “used”, but they’ve been meticulously maintained.  They might have a few dents or scratches but most damage can usually be easily repaired or cleverly hidden with a strategically placed vase.  And minor damages will never be seen in your photographs.

 

4.   The retailer is your friend.  Let them know that you’re a real estate developer staging your own houses and they’ll bend over backwards to get your business.  The next thing you know, you’ll be getting invited to private receptions to see a new line or meet the designer and you’ll be courted by every furniture store in town.

 

5.   Buy in volume.  Buy as much from one dealer as possible to negotiate the best discount.  Eventually limit your shopping to the few dealers you know best and cultivate a relationship.  Invite them to the house and solicit their suggestions.  They might have access to furnishings not displayed in the store – or they might even offer to help stage the house at discount. 

 

6.   Partner with the furniture store for freebies.  If they know you’re staging a house to be offered furnished, many retailers or vintage dealers may offer to furnish your house on consignment – at no cost to you.  Then if your buyer decides to buy any of the furniture, you may even earn a commission.

 

7.   Hang the house with good art.  Buyers of high-end luxury homes often have high-end art collections and they want to know how they’ll look in your house.  Partner with an art gallery to hang your house for free and offer the art for sale to your buyer.  Negotiate a commission with the gallery for anything that sells to your buyer.  As an added incentive, allow the gallery owner to have receptions at your house.  That will bring in the right kind of people who may end up sending you your buyer.

 

8.   Buy from designer showcase houses.  I once went to a model home for a stylish development which was furnished by a high-end retailer as part of a sponsorship.  The furniture was perfect for a house I was finishing at the time.  I figured the retailer wouldn’t want the furniture back since it was now used, so I offered to buy the whole lot if I could get a good price.  The retailer offered 60-70% off any items I wanted and threw in free delivery to my site over 100 miles away.  I ended up selling much of it to the next buyer – and the rest on Craigslist – for about 20% off full retail making a tidy profit on each piece.

 

9.   Offer services in trade.  Is your house going to be published?  Will it be on any design tours?  Offer furniture dealers promotional consideration in exchange for any free stuff.  (That means publicly giving them credit in any articles or presentations.)  If you’re not on design tours and have no publishing commitments, offer them use of the house for their own receptions or trade showings.  The more exposure your house gets, the better for you.

 

10. Buy low and sell high.  Think of your furniture as a potentially appreciating asset and seek-out good vintage or antique pieces that will retain their value – or even appreciate.  I once bought six cool-looking mid-century chrome dining chairs in a reputable but off-beat vintage shop for $100 each.  I spent another $100 having each one reupholstered.  By the time I was done with them, their designer, Milo Baughman, was having a resurgence of popularity and I was able to sell the set for $7,200 ($1,200 each) to a collector on Craigslist.  Another time I bought a house-full of furniture for $10,000 which included a granite-topped dining table, a grand piano once owned by a celebrity, and five Danish modern dining chairs.  The chairs turned out to be rare Hans Wegner “Chinese Chairs” which I discovered were worth as much as $3,200 each full retail.  I held a virtual auction among dealers throughout the country and ended up selling them for $2,500 each to a dealer in New York – who even paid for “white-glove” shipping.

 

11. Buy and sell through auctions.  Get to know the auction houses who deal with the kind of furniture you’re interested in.  If you know what you’re buying and have researched the prices, you can get some great deals on high-quality collectible furniture at auctions.  Then when you’re ready to sell it, you might get top prices from those same auction houses.  But be warned – you need to be educated and have calm nerves to play this game, and don’t forget to factor-in the auction house’s commissions on both ends of every transaction.  Look for a separate entry here about auctions and research sources.

 

12. Research, research, research.  Frequent furniture stores even when you don’t need any so you’re up on prices and sources for when you do.  Scour the internet scanning prices on the auction and vintage sites (a list of the sites I use is at right).  When you’re ready to buy, whether it’s from a store or at an auction, you’ll know exactly what price to pay to feel confident you’re getting a good deal.

 

Read about how to tell the real thing from a fake when buying classic vintage pieces like an Eames Lounge Chair 670 and Ottoman 671 and a Corbusier LC Series chair.