When building materials are traded for more than $1 million, you should know what you’re getting
BUILDING MATERIALS ARE COMMODITIES OF INTEREST WHEN BUYING OR DESTROYING THEM ARE COMMONLY TRANSFERRED FOR MORE THAN $1 MILLION.
A new report by the Center for Responsible Investment says it’s a common practice, and if you’re looking for the lowest price, you’re going to find it.
The report found that in 2016, more than 1,300 companies transferred nearly $10 billion worth of building materials to companies that have the highest annual revenues.
Some of the biggest recipients of this kind of material include builders, architects, and homeowners who often get their work done on a very tight schedule.
For example, in the case of a builder with 1,800 employees, the company could be receiving materials from several sources including a contractor, a contractor’s company, and the building contractor.
That contractor could be moving materials from one building site to another or from one job site to the next, with each job site receiving materials at a slightly different price.
The Center for Research in Real Estate found that this type of material is commonly traded for cash.
It said that “a buyer of a home that has an existing building site may find that a buyer of the new building site is able to offer a larger contract offer, or that a builder may be willing to provide more material to a builder to build the building site.”
The report said that buyers who are seeking to buy materials can also purchase them on the open market, either through brokerages, auction houses, or through companies that accept the materials as part of a sale.
That’s because the brokers charge brokers fees that can be higher than the actual price.
For some sellers, the price that they’re paying for the materials can be even higher than they’re expecting to pay for the building materials themselves.
“The broker or seller will often offer to purchase materials for pennies on the dollar,” the report said.
“A seller may not realize that the broker or the seller will charge an additional $10,000 fee for the actual material and $1,000 to $2,000 for the broker fees.
The broker is not paying for materials, but the broker charges for materials.”
The Center said that some brokers also charge a broker commission for selling the materials, and that brokers often charge a higher commission for “high-volume” buyers.
“High volume” buyers may not be aware that the fees they pay are being added to the final sale price, the report found.
And the brokers may charge brokers additional fees to collect payments for materials.
“Brokers and their clients can charge brokers commissions that are higher than what the buyer will actually pay, and a buyer may not know that the money is going to a broker,” the center said.
When a buyer wants to move the materials to a different building site, they have to pay a separate broker commission to move materials between sites.
The center also found that broker commissions often increase after a buyer has sold the materials.
If you are a buyer who wants to sell building materials or move them to a new location, you may want to consider getting a real estate agent to help you find the lowest cost seller for your materials.