While consolidation among the nation's largest home-building firms may grab the headlines, custom builders remain the bread-and-butter of the residential realm. Not only do small-volume companies account for 42% of NAHB's total builder membership, they make up 37% of the customer base of the largest LBM suppliers, according to the latest ProSales 100 research, the largest share by far among all customer types.

Still, dealers tend to be mystified–and in some cases, frustrated–with small-volume and custom builders, those that build relatively few unique homes on speculation or for specific home buyer clients, respectively. Their special-order requests, far-flung locations, drawn-out production schedules, and relatively low-volume purchases for commodity products cause headaches that may not outweigh the higher profit potential of handling their business.

As is often the case, however, those headaches often come from a lack of understanding the motivations and pressures put on custom builders, a far different set of circumstances than what their large-volume and midsized contemporaries face. To provide dealers with a bit of insight, we solicited questions from ProSales readers and answers from leading custom builders across the country, and interjected a bit of context into the conversation, as well.

ProSales: What's your general philosophy about multiple suppliers or shopping around for the best price?

Dennis Dixon, president of Dixon Ventures in Flagstaff, Ariz., has managed the production of 400 projects valued at more than $25,000 (75% of them residential, the largest being a 7,500-square foot, $5.3 million home) in his 24 years in business. Dennis Dixon: For the most part, when I find someone reliable, I stick with them through thick and thin. That's earned us wonderful loyalty and mutual trust with our suppliers. I get approached about once or twice a year from a competing lumberyard that says it can save me 5% to 7% on my lumber orders, but that isn't as important to me as the relationship I have with my lumber dealer now.

Mitch Handman: I like to have relationships with one or two lumber suppliers [per category]. For a large project or order, I'll have both of them give us pricing. For specialty items, I keep a list of suppliers I've used in the past, but usually the architect will tell us who made it, and perhaps where to get it.

Mitch Handman, president of R.C. Legnini in Malvern, Pa., outside of Philadelphia, operates a diverse company involved in custom building, millwork manufacturing, and commercial, retail, and civic projects. Harry Hollub: Our company tagline is "relationship built," so we are very loyal to the suppliers we have now. There are a lot of others that are trying to sell to us, but we rarely go outside our main stream because [our suppliers] bring so much to the table, especially keeping us up-to-date on new products and materials. If we weren't a custom builder and used the same products in every house, we might shop around.

FYI: According to a recent NAHB Research Center survey, custom builders are more likely than production firms to increase the number of suppliers to find the products they need, but are far less likely to look for new suppliers based solely on pricing, value, or selection.

Harry Hollub, president of Hollub Homes in Pinecrest, Fla., near Miami, is a second-generation custom builder. The company has been in business since 1954. ProSales: What is your biggest challenge as a builder, specific or not to materials purchasing and delivery?

Richard Wodehouse: Maintaining a steady schedule is our biggest challenge. As it relates to the supply chain, the big lumberyards are OK, but the smaller cabinet and door shops sometimes get so busy that we can't count on them to deliver on time, which affects the schedule. Or a shipment coming from somewhere else gets held up by [winter] weather.

Hollub: Our biggest challenge depends on the job. It takes a lot of time to manage the information and decisions that go into a custom home, from the home-owners and the architect, and delays can be critical. It's important to get the right information in the right time sequence.

Richard Wodehouse, president of Wodehouse Builders in Aspen and Telluride, Colo., has been a custom builder and occasional multifamily and commercial contractor for 35 years. Dixon: Flagstaff is on its fourth set of building codes [now using the 2006 International Building Code], so there's a lot of confusion in the market among suppliers, subs, and the building department. I rely on my glazing guy to make sure all of those products meet code. Fortunately, he just sold out to my lumberyard, which makes it even easier.

Handman: We run into problems when we allow a lumberyard to do our takeoffs. Generally, they haven't been up to the task, though it would be a nice burden to unload.