Factory seconds offer low costs and high quality

Homeowners today face the highest building and remodeling costs in history, and interest rates promise little relief. One solution is to use top-of-the-line factory seconds. Since the cost of materials accounts for more than half the total construction budget, with a few alternate buys any homeowner can reduce building cost to as little as $22 a square foot.

What's more, upgrading standard features to state-of-the-art designer models or to higher-efficiency material becomes routine when prices ring in at 80 to 90 percent less than lower-grade versions at retail.

As an example, 21/4-inch tongue-and-groove white oak flooring from the Smith Flooring Company, Mountain View, Mo., sells for 12 cents a square foot, rather than the usual $2.20-per-foot contractor price. That's considerably less than carpeting, linoleum, or even subflooring. Actually, it's less than the Smith mill pays for the raw trees.

Max Donaldson, the plant manager, says: ''It's not good enough for retail, but not bad enough for the wood pile. So we practically give it away.''

The ironic part is that the quality standards of most name-brand products are high enough so that the imperfections usually cannot be detected by untrained eyes. As a result you can expect either full warranties or warranties with slight qualifications when buying from the factory.

Oasis Bath Company of Aurora, Ill., sells fully plumbed double-occupancy whirlpool baths for $675 (retail $1,800), fully warranted except for the surface of the tub, which may carry a small scratch or mar. Even those are ordinarily buffed out before they go up for sale.

In other cases, such as in framing lumber, the appearance is of little concern since it eventually gets covered. Hence, Five-Point Auction Outlet in Edwardsburg, Mich., sells pre-cut Raincoat-treated studs for 60 cents apiece, 10 -foot 2-by-4s for 85 cents, and 8-foot Wolmanized 2-by-6s for $1.35. ''At that price,'' says Big Willie Reese, who shares the business with his son, Little Willie Reese, ''a scrap of bark showing on some edges hardly deserves a glance.'' Frequently there won't be any defects at all.

Comfort Glass of St. Louis, Mo., manufactures windows for Pella and has an entire warehouse full of Thermopane windows for $1 a square foot. According to Mark Comfort, the third-generation proprietor, contractors overorder by 5 percent on large commercial jobs to accommodate possible breakage during installation. The surplus often comes back.

One way or another, most production plants are eager to move items that don't get past the white glove, but they usually have neither the program nor the desire to advertise such merchandise. Consequently, there's a lot to choose from. It becomes simply a matter of tracking down a product - a not-too-difficult task.

Begin by getting in touch with the companies, not the dealers, that manufacture the product in which you are interested. Stick to the major expenses , such as framing materials, windows and doors, bathroom and kitchen fixtures, floor coverings, and siding. Generally, brochures will carry the address and phone number of the home office.

Contact the company and ask who handles factory seconds. They may be handled by the central office, locally at individual plants, or even through outside companies. Oasis Bath Company, for instance, has contractual agreements with the distributor forbidding direct sales of any equipment ''except factory seconds.'' So the company does business right on the premises.

Morgan Door Company, on the other hand, transfers all excess material to an unrelated Oregon Home Building Center in Oshkosh, Wis., where $400 and $500 carved entry doors sell for as little as $34.

Naturally, you won't score with every contact. Some companies may claim they are out of stock, are not interested in making individual sales, or do not even want to sell the surplus. If this happens, all you've lost is a phone call or a stamp. Simply go to someone else.

An alternative to going directly through the manufacturer is to purchase through middle men who buy by the truckload and resell at prices close to that of the factory. The advantage here is that disparate building materials can be obtained from one source.

One such outlet, Schettl Freight Sales in Oshkosh, Wis., boasts ''close-outs, rejects, seconds, obsolete and damaged housing supplies,'' although the coinage is somewhat misleading. Everything from preformed countertops at $1.60 a foot to carpet at $3 a yard, and stucco-board siding at $6 a sheet, make their way through this five-building complex. Little of it is actually damaged or obsolete.

Schettl buyer Mike Beier says: ''Companies don't like to pay tax on surplus stock, end-of-line products, or discontinued models sitting around in inventory, so we truck it in from all over the country. Nine-tenths of it arrives dusty but undamaged.''