Homebuilder's Approximate Profit

[Suhas T.]

We are looking to build a home in Massachusetts area. What might be the approximate profit that a homebuilder makes in a $750K, 2800 sqft new construction ($100K for land acquisition included in the deal)? Home builder who I contacted was transparent and expects they will make about $100K of profit and the rest of it will be spent in the construction process including charges for architect, permitting, building, finishing, landscaping etc. So the homebuilder's profit will be about 15.4% (100K out of $650K excluding land). We can assume decent construction quality...do you think this homebuilder's profits are high or low given these details? 

[Henry Clark]

You have to answer

1.  Is your funding solidly in place?     

2.  Is the lot and access to it normal?     

3.   Are the house plans set.  Or will you make a lot of changes along the way?  
 
4.  Last year or two years ago I would say he is going to get butchered .  Material prices doubled after he signed the contract.     

5.  Someone has to GC the project and deal with vendors, subcontractors, City, and the customer.  So that portion of the deal to me is not profit, it’s getting paid for services.  How much would you be willing to pay someone to manage your project?  To me $50,000 on this project is fine.    
6.  Another $50,000 for his equipment, knowing contractors, taking deal risk, etc. Sounds good. 

Are you questioning their value?  

What do you think?  To high or to low?