How to avoid cost blowouts in building your new home
I’d like to tell you about a big mistake many home owners make.
After spending hours and hours choosing the inclusions for their home, some people are disappointed to find the builder has made substitutions along the way. In other words, the bath they fell in love with in the showroom is not the actual bath that has now been installed in their new home.
There is a simple way you can ensure this doesn’t happen to you. It’s called…
The problem is, many builders only produce short contracts with very little detail.
Warning: If the model name and number of the bath (or toilet or bench tops etc.) you want is not in the contract you may find your builder installs something different.
That’s why our contracts are so long – often 3 or 4 times longer than other builders. We include all the details so you can be sure you’re getting EXACTLY what you are paying for.
For example, we don’t merely list the colour vanity for your bathroom, we include the exact model. Same with the taps, shower head, bath — everything. You may have chosen a particular style front door – one with a glass panel and some extra design detail. We don’t merely include a description in the contract, we detail the exact model so you get THAT EXACT DOOR.
Failing to get all these details in the contract is not the only ‘contract’ mistake people make. Next week I’ll explain another (very common) mistake that can cause big budget blowouts talked about the building contract. And the importance of getting all the inclusions listed in the actual contract.
Contracts often include ‘industry terms’ that may be unfamiliar. For example, the term ‘Provisional Sum’ is often used when a particular aspect of the work is undefined and not fully costed. Another term, ‘Prime Cost’ refers to items that have an allowable budget but may be interchangeable (things like vanities, baths, doors etc.)
What these terms really mean is…
The Price May Change
For example, if earth-works is listed as a Provisional Sum item, you may end up paying way more than the base rate (depending on the difficulty of the work).
Or if certain elements of your design (e.g. bathroom basin and plumbing) are listed as Prime Cost items, they too may increase in cost depending on the market price and availability of stock.
Think about why many builders do this: If products become difficult to source during the building process, they can make substitutions without your consent. If a substitution costs more, it doesn’t affect them – you’re the one who pays.
This is perfect for the builder. But it can be disastrous for you because you may end up paying way more for things you don’t really want.
So be sure to…
Read and Understand Every Word of Your Contract
Especially any ‘industry terms’ that are unfamiliar to you. If you’re not sure about something – ask. And don’t sign anything if it does not specify exactly what you want your home to be. That means no Provisional Sum or Prime Cost items.
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