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Have You Been Burned By Production Builders?

Integrators share their stories of dealing with shady practices by builders.

The latest round of news from the large national homebuilding companies was really bad, with several builders reporting losses for the third quarter of more than $100 million.

Some industry prognosticators are predicting that the housing market will not turn around until 2009.

Why are some integrators not sad, but downright happy, to hear that news?

For some integrators, it's a matter of having been burned by the shady practices of a large builder in the past.

For other integrators, who shunned the production home market entirely in favor of retrofits, custom homes and commercial work, the downturn is an affirmation that they chose the right business model.

"They're all scumbags!" is how the owner of one large Florida-based security company bluntly characterized large production builders recently when we spoke.

He proceeded to tell me several details regarding his dealings with several national builders. For instance, long after contracts had been signed, one builder insisted the dealer provide an extra free alarm keypad for every home in the development.

When the dealer resisted, he was thrown off the job. "And the company they ended up using did everything wrong and many of the systems failed, hurting that builder's reputation," he recalls.

Another dealer told me how a builder had him design and install high-end security systems for the clubhouse/recreational center, sales office and model homes as part of the contract for the entire development.

The builder insisted that its own sales personnel present and sell the alarm systems, but the security dealer became curious when several homes in the development were built without alarms.

"It turned out that the builder had decided not to offer alarm systems at all because he didn't want homebuyers to think that burglaries could occur in the area. Basically, I think he just wanted free systems in the model homes and clubhouse," the dealer told me.

Another integrator in Southern California relayed to me the story of a builder who used the integrator's two-room multiroom audio system design as the basis for setting up an installation crew for himself.

The builder took the integrator's package, which he sold fully installed for $2,000, and approached the manufacturer directly. The company was able to purchase the equipment for $900 and started using its own electrical division to do the low-voltage audio installation.

"I just don't see how he figured that he was going to make any profit," the integrator told me.

It's easy to gloat a little at the tribulations of large builders in this down market. When housing was booming, many builders sidestepped quality workmanship in order to get homes on the market as quickly as possible.

They also ignored the demands of potential homebuyers looking for home technology amenities, knowing that the house was going to sell anyway, even if it did not have a home network, multiroom audio, surround sound, security system or other automation.

They also took every advantage they could with subcontractors to grind out lower prices or a frantic installation timeline.

As one integrator described it: "Whenever I get frustrated dealing with large builders, I remember that most of the guys I deal with at these companies don't even have high school educations. So, you can't present them with logical solutions and expect them to understand."

Are these attitudes sour grapes or are you happy to see some builders get their comeuppance?

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Article Topics

News · Builders · Builders · All topics

About the Author

Jason Knott, Editor, CE Pro
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California.

2 Comments (displayed in order by date/time)

Posted by mike  on  12/13  at  07:58 PM

I purchased by new home from Warmington Homes and years later when I pulled up the carpet I found that Warmington hadn’t even swept up the construction dust including cigarette butts before laying the carpets. I wrote warmington and never heard a word back. class act…not

Posted by Shawn Smith  on  01/14  at  02:44 PM

After reading this article I was tempted to submit some of my own horror stories, but quickly refrained myself from airing dirty laundry and biting the hand that feeds me.  There is no logical reason to burn bridges with the community that I know I will desperately rely on after the housing crises is over.  Then I realized that my stories and those in this article are just sour grapes.  The reality of the situation is these production builders are just better negotiators then we are.  Had you gotten a contract in writing, you wouldn’t have had to worry about giving away free product w/o returns. 

Like it or not production builders are necessary and important part of the channel for sale and delivery of home technology products.

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