You might’ve been told that you shouldn’t reveal your true budget to a builder because, even if they can do it for less, they’ll always take your figure and make up the difference by increasing their margin or adding items that you don’t actually need.
However, this is a myth because market forces keep builders honest at this stage of the process so you needn't worry about being overcharged.
Truth is, at this stage of the process, you are not negotiating the price of your contract, you are simply attempting to establish what can be built for your budget… And the only way to do that is by being open and honest about your budget with a professional builder before the design is started.
Building a relationship with your builder from the start will help you gain confidence that you’re getting what you pay for and that disclosing your true budget won’t disadvantage you.
A recent study by Lifestory Research found that 77% of new construction buyers consider trust as a crucial factor in judging the merit of a home builder. So if you feel like you can’t trust your builder, you’re probably talking to the wrong one…
Average builders just want to hurry you through the process and get you to sign the dotted line. They don’t work with architects to make sure the designs created can actually be built without blowing your budget. Instead, they’ll give you a lowball quote on your architect’s designs and they won’t go through the necessary processes to make sure all of the plans for your new home are complete and accurate.
Without this, you’ll likely end up with a contract riddled with issues. Leaving you to deal with thousands of dollars in additional costs that could have been avoided.
There are a few ways you avoid unexpected costs during construction, here are some of my top tips.
First, don’t fall for the builder with the lowest price. While the lower price might look appealing, it should be a cause for concern.
Therefore, it’s important to dig deeper and not just look at the price… Because the builder with the lowest price has usually made expensive mistakes or missed key elements completely. So take your time and go through your quote with a fine-tooth comb to make sure everything you requested has been accounted for.
And keep an eye out for allowances! If a builder has set very low allowances for any aspect of your build, you’ll be the one that has to pay the difference later down the track. A professional builder will have done their due diligence and provided you with a fixed price for the complete project before you sign anything.
Next, get clear on your builder’s scope of work and make sure you understand everything that is and isn’t included. If your builder is vague about this, or reluctant to provide this information, consider that a red flag.
Finally, make sure you and your builder are clear about your expectations of quality finishes. Quality is down to perception - for example, in the car industry some people might consider a Mercedes as their idea of high quality where others think of a Bentley. If you don’t communicate your perception of quality to your builder, you could end up disappointed with the finished product.
So, it doesn’t matter if you are building your first home or if you have built many times before… Deciding to build a new home can be very overwhelming. The tips I’ve covered here are just a sample of the information I can share with you to ensure you are able to confidently get started on the design process.
You can learn more in the downloadable quick guide I have put together, The 7 Things You Must Know Before Designing Your New Home. It’s completely free, and it will help you stay on budget and avoid those builders who hit you with hidden charges.
Just click on the link below to download the guide now.