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The answer to this question should be really simple – however as easy as this question may sound; it’s a very complex question to answer.
Let me start first with some statistics: according to a REA research, the following are factors that people consider when selecting a builder:
It’s clear that price plays a very important role in a lot of people’s decisions, specially when it comes to selecting a builder. So when price plays such a huge role on people’s decision making process, some builders may make use of some “clever” pricing tactics to lure buyers in.
One place where you can spot these tactics is in the builder’s tender. A builder’s tender is an important document and can tell you a lot about the type of builder that you are dealing with.
You must check that the tender does not contain any language where extra charges are added at a later date.
It’s important that you remember that builders write tenders and contracts in their favor and not yours!
Problem Areas
Below are some problem areas to be aware of. Learning about these potential traps will help you identify whether the builder’s tender is a fixed price or just a made-up document.
Problem Area 2: Customer Reviews like productreview.com.au or google reviews can sometimes be inaccurate. Get in touch with these clients who wrote the reviews to verify if they are actually true.
Problem Area 3: when you pay a builder some money, they must conduct their investigations and obtain some reports. It makes no difference what the sales consultant tells you, if they don’t fix your price in writing then it is a red flag!
Problem Area 4: They usually have a clever way of framing the inclusions’ language to make you think one thing where in actual fact, it’s another.
Examples
Below are some examples that are frankly, unacceptable to have in any tender.
Retaining Walls
“If required, retaining walls are to be done by owner” – so you are telling me that you have obtained my contour surveys, sited my plans and so on…, ONLY to tell me that “if I need it, then I will pay for it?”.
- So do I need them or do I not?
- Will you cut my site too deep to make your price look cheaper (to avoid drop edge beams)?
- Will you provide access to build these retaining walls? Once the construction finishes, it becomes that much harder and more costly to build them?
Service Connections
“Provide service connections up to a maximum of 1.5m deep – this is included at a fixed price”
- how’s it a fixed price if you are only including it at 1.5m deep?
- What if it needs to be deeper for whatever reason? Do I pay more?
Developer Approvals
“Obtain developer approvals if needed” – if you have conducted your site investigations, you (the builder) should know if developer approval is required or not!
Cut & Fill
“Site costs FIXED for up to 1.5m of fall, even cut and fill on block…” – again, you have obtained all the reports so you should be fixing these costs. Fixing it to 1.5m is NOT a fixed price, it’s a flat out lie.
Piering
“Piering is FIXED up to 1m” – seriously though, how can you put FIXED in capital letters and then state that it’s only fixed up to 1m?
Driveway
“Driveway is included based on 5.5m setback” – what if my house is set back more than 5.5m, then shouldn’t you include it as per my design and site?
Niches
“Provide shower niches to ensuite and bathroom” – now notice the language here – it’s for only one ensuite and one bathroom.
- What happens if you have another ensuite / bathroom?
- Do you have to pay more for this?
High Doors Upgrade
“Provide high doors to all bedroom doors”
- So now I have 4 bedrooms with high doors and the rest of home has shorter doors?
- Will I need to upgrade or do I need to downgrade my theatre room door?
- this blog further discusses tricky language around inclusions.
and the list goes on and on…
Finally
It’s critical that you read and understand your tender document. So question everything you are provided as you are the one who will end up paying for it all.
If the builder is reluctant to answer your questions or make you feel like you are asking a lot or makes you uncomfortable, then these are red flags that you should probably look for another builder.
Most people feel pressured to continue with the builder because they don’t want to lose their initial fees. But what’s losing $1,000 or $10,000 even compared to losing 10’s of thousands of dollars along the way…
Finally this blog discusses in a bit more detail on how to obtain a fixed price tender.
