Cancelling building contract due to under valuation?

Hey guys I'm a new member to the Homeone forum, love following people's new builds and have learnt a lot from reading articles on this great forum.
But alas, I am need of some help. My partner and I are building our first home, and have an amazing block of land in the Oceanside estate of Amberton.
We chose a builder ( who I won't mention ) and they told us everything we wanted to hear and I drew up a custom design as our block is a 15x25. They were impressed and said they could do this design, great.
All was going swimmingly until it was evaluated, it was 17k less then what we were paying for the build.
We are getting finance through key start so couldn't get another evaluation done from another bank.
The Building company couldn't budge on price and either could the land developers, so we were in a pickle.
The building company offered to drop the 17k "on paper" but have us pay them $5,500 under the table to them and sacrifice our pre-start allowance of 5k then use our $7,500 land rebate to meet the valued price.
We weren't happy with this as we really needed that pre-start allowance and the other $5,500 was just another unwanted cost.
We assessed our situation and decided to speak to another builder to see what they could do, in 3-4 days they were able to give me a quote on my design and explain to me all inclusions etc.... They could do the exact same design with extra inclusions for the price we needed.
I spoke to our original builder about this, explained that this otHer company could better them on price and inclusions. So the ball was in their court, they got back to me late Friday afternoon ( pre-start booked for Monday ) and told me yes they could do the build for $206,000. Even cheaper again, very pleased and excited we show up for our pre-start meeting Monday morning full of joy and eager to make this house our own.
Half way through the process we are approached by the GM & finance man.
They explain that yes the build could be done for $206,000, but that doesn't include site costs etc... So total price was back to what it originally was!!! And again they explained that we can slip them $5,500 out of our pocket and lose the $5,000 pre-start if we'd like to continue.
We continued with the pre-start so we could get an idea on costs if we were to go ahead, throughout the process, numerous things the sales rep had promised us, were not included and had extra charges involved, we brought this point up only to be told we would have to sort it with the Rep once finished.
We completed our pre-start, making sure to add all the things we were promised. Total of pre-start came to $20,000!! Our flooring we were promised from the start totalled a massive $6-7k
We left the building frustrated and angry, feeling like we have had our pants pulled down over this. We signed nothing after pre-start and spoke more with the other builder who we have now decided to build with.
We had paid an initial $2,000 deposit with the first builder, which we were willing to lose.
They have now sent us a cancellation bill for $6,200!! Our current builder had said not to stress, it is all smoke and to stand our ground.
Wondering if anyone else has been in this situation and what would be the correct way to go about contesting this bill?
Cause I'm sure me telling them to jam it where the sun don't shine will not go down too well.
Any help and or advice would be amazing.
Thanks in Advance
Rob n Char

Have you signed an actual contract and if so, what does the clause about cancellation say?

Seems like they're being fairly unscrupulous asking you to ignore the contract by paying money outside of it so why should they rely on it now? Sounds ******* as, I think you missed a bullet there.


Custom knockdown rebuild Newcastle NSW
viewtopic.php?t=78271

You'll probably find in the fine print of the prelim contract / deposit you paid of $2k they are totally within their rights to invoice you for the value of work (time and effort) put in to the point you pull out. As unfortunate as that is for you.

Maybe, but they were willing to ask for payment off the contract in order to deceive the bank. The cost recovery only came after the op refused to do as such.

If they keep going I'd put that in a firmly worded letter from my solicitor and I doubt you'd hear from them again.


Custom knockdown rebuild Newcastle NSW
viewtopic.php?t=78271

Even so, you shouldn't lose anything they haven't paid out. For example, you will need to pay for soil tests if they have done them as agreed with you (though you should be able to get copies as you have paid for them).

But you shouldn't be paying for the time of their sales people. That's a cost of doing business.

Ask for an itemised account if they pressure you.

Just a stupid question - was the contract subject to finance? If so and the finance was refused which appears to be the case - then the terms of the contract haven't been met.

If you engage a lawyer chances are it will end up costing an awful lot either way. What they invoice for isn't sales. Singing PPA you're beyond that. It's their consultants, pre start, any site survey or soil testing etc. I'd go back and carefully check wording in what you signed and forget about what was "said". Maybe even do before you speak to your lawyer so you don't have to pay them to do that for you.

Yeah that's true, though it's something a longstanding one might give advice on without charging or a min cost to have their junior write up. You're totally right though no point doing it if not needed but if they get nasty.


Custom knockdown rebuild Newcastle NSW
viewtopic.php?t=78271

when i first choose a builder i choose a block of land that was in the end a piece of crap by the end and the council wouldn't let me build the house i wanted on there they wanted it split level retaining walls moved up here and down there ect wasnt worth my time continuing in the end i was stung for 7grand to cancel the contract which i dutifully paid as money comes and goes stress and worry isnt worth it now the second time i have a great house on good land all came in under budget so was really a blessing in disguise i haven't thanked the council for being stubborn and unhelpfully but they really helping me out in the end.