5 mistakes to avoid when building your dream home

Guest Post by Hubert Dwight

If you are fortunate enough to have the opportunity to build your dream home, this can be a wonderful experience.

However, it is common for inexperienced homeowners to make lapses in their judgment when they are making decisions that are affecting the build of their home.

Below are a few common mistakes that we recommend avoiding when you are building ‘your dream home’.

Don’t Choose The Wrong Builder

It sounds obvious, but if you start off with the wrong builder, then you are on a course for disappointment.

Make sure you do thorough research on the builder that you are considering going with.

Find out as much information about the licenses that they hold and review the work that they have conducted over the last 12 months.

Find out as much as you can about the builder’s credibility to avoid falling into the trap of some building horror stories.

Additionally, you need to ensure that the builder’s team will communicate strongly with you .

The builder needs to convey that you can have confidence during the building process.

If you feel insecure about making a decision with going with a particular builder, follow your gut feeling and don’t go with them.

Don’t Just Focus On The Cheapest Option

Just as important as not choosing the wrong builder is automatically choosing the cheapest option.

Look into the details provided with the price to avoid any surprise costs that may arise in the future.

When looking into the details, find out as much information about the quality of the materials and building work that will be conducted.

If the quote sounds too good to be true, it possibly may be.

Check the details thoroughly!

Plan The Use Of Space Well

The impacts from the way the space is being used can be challenging.

Even though it may appear to be good on paper or in the display home, when you move into the home you will notice the convenience (or inconvenience) of the layout of the home.

These may include the following:

Kitchen Location

A kitchen that is placed a long way from the front door or garage can cause an inconvenience when the household goes on its routine grocery run.

Rather than making a shorter convenient trip, the kitchen may be placed in an inconvenient location when carrying heavy bags from the garage to the kitchen.

Toilet Location

You don’t want an unwanted elephant in the room (if you catch the drift!) Research and plan the toilet  to offer people privacy and to avoid any unwanted ‘shared experience’ that the toilet may offer.

Locations of Bedrooms

This is crucial if you want to make sure you get a good night’s sleep every night. Think carefully about the placement of the bedrooms in relation to external noise.

West facing bedrooms are best avoided as they can easily overheat on summer evenings.

You may want an infants bedroom to be close to yours, while teenage children may be better at the opposite end of the house!

Plan Natural & Artificial Lighting For A Well Lit Home

There’s nothing more annoying, and depressing, than being inside a badly lit house.

Plan to make as much use of natural light as possible.

Consult with your builder about how you can use windows, shutters  to control the natural lighting of the home.

Furthermore; ensure that the internal light installation will to keep rooms well lit in the evenings.

Should you want to adjust the lighting to change the ambiance, consider installing dimmers for your lighting needs.

 

Hopefully, these tips will help you to avoid making mistakes during the building phase of your dream home and will allow you to move in worry free.

Display Homes – Understanding the Builders Rep

Going into every Display Home the first person you see is the Builders Representative.

When talking to the representative it helps to understand a little about them, so here are some thoughts;

Pay

We all work for money but the Representative’s conditions of employment might be a fair bit different to you.

  • Most Representatives will receive minimal, or even no basic pay.
  • Their commission on each sale will be several thousand of dollar, but they may not get it for months.
  • Although they may get a partial payment for your initial signature they usually won’t be paid the full amount until the slab goes down.

This means their main driver is to get you committed as soon as possible. . . . So don’t be rushed. Take your time to understand exactly what you are buying. (The current ‘Limited Offer‘ will be replaced by a different offer of similar value)

Priorities

Because of the way the rep is paid their main interest will be in people who are committed to buying a house rather than ‘Tyre Kickers’.

If you don’t:

Just tell them “you are starting to look at houses”, take some brochures, and have a look around.

When you have a good idea of what you want, and just as important ‘How Much Can You Afford’ then make an appointment to go back.

It’s probably best to do this midweek when it will be quieter and your children will be at school.

Length of Employment

Because of the lack of a basic wage, weekend work, and the wait for commission, turnover of representatives can be high.

This means that it’s really important to make sure that all offers, and agreements, are clearly put down in writing.

You don’t want to get further down the track arguing for an upgrade that was verbally agreed by someone who you are then told is now an ex-employee.

 

See ‘Choosing a Builder’ for more posts

Or my Guide to Choosing a House which also contains lots of useful checklists for only $4.
 

Quick Build ?

One of the reasons that people may choose a builder is the promise of a ‘Quick Build’ . . . . . but how realistic is that promise?

Getting the house finished quickly might be attractive to you so here are a couple of things to think about before you make a choice.

Is Obtaining Permits Included?

Builders will either want to say they aren’t responsible for any planning/building permit delays of over 1 month, or even exclude the planning/building permit period entirely from the period.

Approvals should be quick for a new major development subdivision and may only take around a month.

If you are building in an established area such as an single block subdivision, or Knock Down Rebuild (KDR), it can take several months.

What Are The Liquidated Damages?

Any ‘Quick Build Offer’ means nothing unless you are compensated for any time overrun!

The way this is done in a building contract is by specifying a Liquidated Damages amount.

Unless this amount is a reasonable sum (say close to what you are paying in rent) the offer isn’t really worth anything!

 

For more information see Liquidated Damages.

 

 

What Is A Project Home Builder?

If you are new to thinking about having a new house built you may have  heard the term ‘Project Home Builder’ and wondered what it means.

Project Home Builders base their business on building large numbers of houses using a limited range of designs.

By cutting down on the proportion of individual design input on each house, and the ability to negotiate bulk discounts, they can build houses at a significantly lower cost than would be otherwise possible.

Because of the cost they are a very popular way of having a house in Australia. I have even heard self builders say they couldn’t build a house as cheaply as a ‘Project Builder’.

Customisation

Although Project builders work on a limited number of designs there is still a fair amount of Customisation possible.

Externally customisation options include:

  • Different facades (Most builders offer at least 2 facades styles for each design)
  • Choice of bricks or render
  • Choice of different Roof Tiles or Metal Roof
  • Handing (Building a mirror image)
  • Changing window sizes

Internally it is normally possible to make some modifications to floor plans such as enclosing rooms, adding doors and making some rooms bigger by making others smaller. Some Project Builders are more accommodating than others when it comes to making internal changes.

Drawbacks.

As each builders offer you a limited set of home plans you may get good reports about a builder.. . .  but if you don’t like their range of plans…you’ll need to go elsewhere.

Project Home Builder’s designs are mainly suitable for flat, rectangular blocks. If your block slopes, or is an awkward shape the costs can quickly escalate. For really awkward sites many Project Home Builders may even refuse to build.

Finding a Project Builder

Just visit one or more local ‘Display Villages’ and you will find several project builders. Just understand when you go around the houses that each ‘Display House’ has lots of expensive extras not included the standard priced house.

For more advice see the ‘anewhouse Guide to Choosing a House’

Cash Jobs

Whether Owner Building, or just having some work done on your new house after handover, you may need to engage tradies to do work.

One question that frequently comes up is “Do you want the Cash Price? or do you want an Invoice?”

Before you go for the discount here are some things to consider:

  • If there is no evidence of a ‘Contract’ there will be no ‘Warranty’. How do you take legal action if there is a problem?
  • If the tradie is willing to do an illegal transaction how sure are you that the work will be done legally and to the correct specification?
  • Electricians and Plumbers should be giving you a Certificate of Compliance. how are you going to get one for an ‘Under the Counter’ job?
  • Is the tradie also ‘forgetting’ to pay his insurance premiums. If he injures himself, or others, you could find yourself liable.
  • By agreeing to pay cash you are conspiring in tax fraud.
  • If the property is an investment property you won’t be able to claim the cost as a deductible expense.
  • Tradies saving on tax means us non-tradies have to pay more tax.
  • The tradie is saving on Income Tax and GST which could add up to 40% of the total cost but probably only offers you 10-15% for cash.

As far as I am concerned I would rather have all the paperwork covered and pay a formal invoice. . . . How about you?

See Choosing a Builder for more posts

 

Virtual Build?

I recently saw an advert for ‘MyPlace’ a ‘Virtual Build Information System’ by Burbank.

What Is A Virtual Build Information System?

MyPlace is a virtual construction site which provides a visual aid in the progress of your home’s construction. It lets you check out what’s happening on-site of your new home without having to leave your couch.

If you build your new home with Burbank home  you will be able to log into ‘MyPlace’ at any time. You will then be able to:

  • Download documents.
  • See photos of your home being built.
  • See updates from the Builder.

Is it A Good Idea

Well it sound ‘Modern’ and ‘High Tech’ but I’m not convinced.

  • I always like to be able to have signed document in my hand, not electronic documents!
  • Is it just a system to try and keep you away from the site, and stop you asking awkward quality questions?
  • How much detail will the photos really show to help you gauge the build quality?

  • Many people building have problems in getting a weekly phone update from the Site Supervisor, so how frequently and up to date will the information be?

I might be interested if I was having a house built a long way from where I lived, but in my mind nothing replaces regular site visits during the build.

If you have used one of these Virtual Build Information System I would like to hear about your experiences.

See: Relations With The Builder for similar posts.

 

Love the Display Home

BUT CAN YOU AFFORD IT?

When you visit a Builders Display home you will probably be given a price list which quotes the Basic Price for the house you are looking at.

Don’t be fooled!……… The feature you see in the Display Home will add much more to the cost.

The following table provides examples of the value of upgrades added to Display Homes around Melbourne.

Builder

House

Base Price

As Displayed

Percentage Increase

Burbank

Prescott 1900

$152,200

$205,489

35%

Carlisle Homes

Illuka 25

$179,900

$248,895

38%

Dennis Family Homes

Hastings 241

$177,900

$251,400

41%

Hallbury Homes

Vogue 39

$314,900

$484,900

54%

Metricon

Delta 22

$169,200

$253,262

50%

Porter Davies Homes

Montague 21

$161,900

$255,563

58%

Simmons

Villa Vitoria

$294,600

$479,038

63%

All figures as published in the Melbourne Herald Sun 17 August 2013

You can see figures for 2017/18 prices here: Display Home Upgrades

Additional Costs

In addition to the displayed costs you might have to pay extra for:

To get some idea about how the costs can add up follow this link: What Will It Cost.

Also see

 

Using Your Own Tradies

When you look at some of the prices that builders charge for things it makes you wonder if you can get things cheaper by employing your own tradies during the build.

Examples are things like:

  • Refrigerated air conditioning.
  • Extra lighting.
  • High end bathroom fixtures.

Unfortunately its not always that simple. Some builder will allow you to bring in your tradies, many refuse point blank, some will allow it if you pay an Admin/Supervision Fee.

Reasons for Refusal.

  1. Safety and Security  The builder is responsible for safety and security of the whole site. Through long contact with their existing sub-contractors they have developed trust. They will have concerns about having someone on their site that they don’t know.
  2. Time delays Because the builders regular contractors depend on the builder for ongoing work he can put pressure on them if things fall behind schedule. The builder is less likely to be able to pressure  independent tradies who could take their time and delay things further.
  3. Loss of Profit Builders like any most business make higher proportion of their profit on extras. if this opportunity is lost their overall return on the job will drop.

Admin/Supervision Fee

The Administration/Supervision Fee is to provide additional supervision, and security, and have an allowance for risk.

As a fee of up to $1,000 per trade is not unusual you need to be saving a lot of money before going for separate tradies for part of your new house build.

Also you may not get the price reduction you thought by deducting items from the contract as there is a Difference between contract prices and retail prices.

Check Early

If you think you may want to go down this route you need to check whether you builder is likely to agree before you get too far along the path to signing a contract.
 

Find out about the issues of Using Friends for Building works

 

Considering Owner Building?

Are you considering owner building to save money? Is it the only way you can afford your dream? Perhaps you want to be able to have more choice with fittings and appliances.

Well I have almost 40 years in Construction engineering and I have been happy to use building companies for my three new houses. I wouldn’t contemplate owner building unless I won Tattslotto and could give it my full attention. Here are some reasons why:

  1. Having a house built for you and building one yourself is very different. There are literally hundreds of decisions that are made by supervisors and builders during a build that you would never be aware of as the owner.
  2. You may know a number of tradies but how good are they? Would they take short cuts if you weren’t around to keep an eye on things.
  3. I’m skeptical about how much money you save. You may be able to call on your friends to supply & install for cheaper but you won’t get the discounts that a big builder can negotiate.
  4. Yes you can save by putting time in yourself but you are not going to be as efficient as a tradesman if you costed your time at the rate your employer pays you the saving would be much smaller, if anything.
  5. All the time you put in will be at the expense of family life. I have known a few self builders who have divorced with the main cause been the pressure of the build.
  6. One off projects are hard to budget accurately so you run a real risk of blowing your budget. (You don’t want to finish up with a ghost house).
  7. Anything that goes wrong has to be fixed by you. Going with a builder, anything not to your specifications is their problem.
  8. There is a saying 90% of the effort is the last 10% of a job. Are you going to move into a 90% house and then never going to get round to actually finishing it?
  9. Want to sell in a few years? How are you going to provide a guarantee.

There is an Owner Builder interview and some interesting video links at the Post: Owner Builder Videos

I’m not intending to scare you out of your dream!………….. I just want to make sure you have thought very carefully about the risks ………..otherwise dreams can turn into nightmares!

Good luck with whatever you decide!

 

Want to choose a builder? or just a tradie for your self build project?

Look at Choosing a Builder

 

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