We’ve all seen the recent headlines…
“Perth builder goes into liquidation” … “Family left with unfinished home”
Understandably, the public has plenty of questions and concerns.
Over the last two years, the building industry has been booming. Shouldn’t WA builders be in a strong financial position?
Well, there are several factors that have caused some companies to fail.
- Increase in building materials and labour costs
- Taking on too much work
- Poor financial management
Potentially, it’s a combination of all the above.
For Perth’s more experienced builders, they saw how rapidly the market was growing and made the call to limit the number of clients they took on. While every builder has been subjected to supply issues and cost increases, some have better managed their clients’ expectations and their own finances.
For couples and families beginning their home building journey, they want security and assurances that they’ll get a quality-built home in the quickest possible time. Most are turning to Perth’s trusted building names – those who have been at the forefront of the industry for years.
Let’s take a closer look at the type of builders you should avoid and how a wrong decision could cost you thousands of dollars.
How to spot a dodgy builder
We’ve always been told if it’s too good to be true then it probably is. A builder that makes handshake deals or doesn’t provide any references is someone to be avoided.
Here are a few tips to help you spot unsavoury operators.
Deceptively low price
It’s the first thing many people look at but buying on price alone is fraught with danger. As we said above, if it’s too good to be true, it probably is. Make sure you do plenty of research and ask questions, lots of questions. If the builder avoids answering anything, that’s a red flag. Remember, you may pay less for your house up front but if the builder is using cheap materials or cutting corners, you’ll be paying for it in the long run.
It’s wise to speak with previous clients of your home builder- it will help you decide whether the builder is best suited to you. If a builder doesn’t want to show you any references, they may be hiding something. When you do get to chat with a reference, ask:
- Were you happy with the quality of the build?
- What was communication like?
- How well did the builder respond when problems arose?
- Would you choose the same builder again?
No written quote & large deposit
All quotes should be written. No ifs, no buts. If your builder doesn’t present a written quote outlining everything involved in your build, it’s time to walk away. Another thing that has featured in the press recently is how much money people lost when their building company collapsed. Your builder shouldn’t request a huge up-front deposit, as per the Home Building Contracts Act 1991. Instead, progress payments are made as your building progresses.
Pushing you to sign a contract
A good builder will not rush you to sign a contract. You should have plenty of time to review any paperwork and run it past all legal parties if required. If the salesperson is hovering over you with a pen while you’re trying to read the fine print, that’s another red flag.
Understand what’s included and excluded in the price
Building a new home is certainly an exciting time and some builders will take advantage of your euphoria and skip over important conditions in your contract.
The golden rule is…. Don’t sign anything you don’t understand.
A building contract is more than just standard paperwork. If you’re not 100% sure about something, ask your builder before you sign… it could end up saving you thousands.
What is ‘Prime Cost’ and ‘Provisional Sum’?
Prime cost is the budget set aside for items in your new home. This can include things like taps and light fittings. If you had a particular style of tap or light you wanted installed but didn’t let the builder know, they may install a low budget product and add that cost (along with a healthy mark-up) to the prime cost.
Remember to state on the contract what items you want installed before you sign. If you don’t, you’ll end up paying for the already installed items as well as any new fittings you want.
Provisional sums can be a costly addition to your building process if you’re not careful. Basically, this refers to the unknown or estimated costs during your build, like excavation. The key is to always have clear communication between you and your builder. More experienced builders will usually be able to give you a closer estimated cost.
Changing the floorplan
For builders like Blueprint Homes, changing the floorplan before you build is not a problem. Unfortunately, that’s not the case with every builder. Again, it’s crucial to ensure you make changes before you sign any contract. Even minor additions or extensions can change the number of materials needed or the labour required.
Remember, when you do make any changes to your contract, be sure to get both you and the builder to initial the changes. If you don’t, it won’t be legally binding. Don’t let the builder tell you ‘they’ll sort it out later’. You have to pay attention to the small details to ensure you don’t get any big surprises.
This can be a touchy subject for both building companies and homeowners. Each party wants to get the home to handover stage but there are often other factors that cause delays. A lot of issues can be resolved with clear and open communication. As we’ve seen, when you have record homes being built in the middle of a global pandemic with material and labour shortages, deadlines are going to be extended. You need a builder that’s upfront and honest with you, not one making promises that never get delivered.
If you want to talk to a trusted WA builder who has years of experience and a swag of industry awards behind them, talk to Blueprint Homes. Blueprint can help you find a block of land, arrange your finance and deliver the home you richly deserve.