Deposits via cash or bank loan, what is the difference?
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The deposit where you commit to the builder runs from $2000 to $5,000. Then each builder has different ideas despite the fact they all in WA claim to be using the "standard HIA" contract. "Housing Industry Association", a gov. body and one builder claims that HIA contract lays down the law re deposits. That builder wants 6.5% before he even starts after a $3,000 deposit, this means with my $15,000 I am pre-paying the site works plus drive way, insurance and engineering, shire fees, etc. and no slab to be seen.
However, my mistake was to say "cash" as I cannot see the banks pre-paying a builder anything as they like to go broke. Another builder wants $5,000 and 10% on slab down, but productreview.com.au tells me 10% of the count of 5-star glowing reviews give that builder a "do not build with him" 1-star review!
The government tells me one should definitely not pre-pay a builder anything and I suspect the magic word "cash" in my case made the salesman too cheeky. My architect justified his horrible charging by saying those sales persons/designers receive a 3-5% sales commission; is he correct?
What normally happens is the second progress payment (slab) is only 2 - 3 weeks after the deposit.
A builder cant ask for more that 6.5% deposit payment (as the first progress payment) that is written in the building contracts act in WA.
That 6.5% would only just cover what the builder has spent up to that stage. There is normally 6 progress payments in a standard single storey build unless it a key start loan and that would be 3 payments
" In short, deposits are limited to 6.5 per cent of the total amount payable and progress payments must represent a ‘genuine’ payment for work already performed or materials or services already supplied. In other words, you pay for what you have received, not what might be supplied in the future." End of quote.
In order to get quotes I had my own plans drawn up, have a contour/features survey and soil report/footing detail and I know how much site works cost plus the crushed limestone access road. And I am certainly not prepaying anything with cash, which has not been supplied.
Seeing that you are in the trade, tell me what the BANKS expect to pay after the initial $2,000 to $5,000 deposit?
15% Slab
25% Plate Height
20% Roof Cover
18.5% Lockup
15% PCI
Just getting quotes from builders and also ask them the questions re initial deposit followed by percentages of build price and the results vary.
The deposit where you commit to the builder runs from $2000 to $5,000. Then each builder has different ideas despite the fact they all in WA claim to be using the "standard HIA" contract. "Housing Industry Association", a gov. body and one builder claims that HIA contract lays down the law re deposits. That builder wants 6.5% before he even starts after a $3,000 deposit, this means with my $15,000 I am pre-paying the site works plus drive way, insurance and engineering, shire fees, etc. and no slab to be seen.
However, my mistake was to say "cash" as I cannot see the banks pre-paying a builder anything as they like to go broke. Another builder wants $5,000 and 10% on slab down, but productreview.com.au tells me 10% of the count of 5-star glowing reviews give that builder a "do not build with him" 1-star review!
The government tells me one should definitely not pre-pay a builder anything and I suspect the magic word "cash" in my case made the salesman too cheeky. My architect justified his horrible charging by saying those sales persons/designers receive a 3-5% sales commission; is he correct?
The deposit where you commit to the builder runs from $2000 to $5,000. Then each builder has different ideas despite the fact they all in WA claim to be using the "standard HIA" contract. "Housing Industry Association", a gov. body and one builder claims that HIA contract lays down the law re deposits. That builder wants 6.5% before he even starts after a $3,000 deposit, this means with my $15,000 I am pre-paying the site works plus drive way, insurance and engineering, shire fees, etc. and no slab to be seen.
However, my mistake was to say "cash" as I cannot see the banks pre-paying a builder anything as they like to go broke. Another builder wants $5,000 and 10% on slab down, but productreview.com.au tells me 10% of the count of 5-star glowing reviews give that builder a "do not build with him" 1-star review!
The government tells me one should definitely not pre-pay a builder anything and I suspect the magic word "cash" in my case made the salesman too cheeky. My architect justified his horrible charging by saying those sales persons/designers receive a 3-5% sales commission; is he correct?
Looks like most of your questions have already been answered but in terms of sales commission, yes they get paid a commission but its more like 2-3%, however that is generally all they get paid, ie. no sale, no pay at all, no salary, no holiday pay, no sick pay, nothing but that 2-3% commission, so yes they get paid quite well for each individual contract but they do countless hours for other clients that never go ahead & essentially don't get paid a cent for that time.
Related
28/09/2023
2
Thanks. I called VBA today and they said it was a Consumer Affairs issue, the old handball. Seems like the government organisations don't want to do their job at the moment.
30/08/2023
5
How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan?
21/09/2023
2
The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.…