Browse Forums General Discussion 1 Feb 13, 2022 8:24 am Hi there, We are looking at building the grande 57 with clarendon and have been advised that there will be a 10% price increase on Feb 21 so to secure our build via a deposit before this time. However Clarendon only lock in the price for 6 months now not 12 and due to us being self employed, we can only go for finance in August, at the 6 month mark. Clarendon are saying to extend the price lock in by 3 months they want an extra 28k.....just wondering if anyone else has had experience of this and weighing up if its worth paying for the extra 3 months as a safe guard against further price increases? Many thanks for your advice Sue 🦋😊 Re: Clarendon homes price lock in 2Feb 13, 2022 9:30 am Hey susieG Welcome to the forum ![]() Hi there, We are looking at building the grande 57 with clarendon and have been advised that there will be a 10% price increase on Feb 21 so to secure our build via a deposit before this time. However Clarendon only lock in the price for 6 months now not 12 and due to us being self employed, we can only go for finance in August, at the 6 month mark. Clarendon are saying to extend the price lock in by 3 months they want an extra 28k.....just wondering if anyone else has had experience of this and weighing up if its worth paying for the extra 3 months as a safe guard against further price increases? Many thanks for your advice Sue 🦋😊 ... Builders businesses are like every other business they rely on CASH FLOW. In a nut shell If there are supply, trade and material shortages resulting in project delays then they don't get progress payments-> Positive Cash Flow. The salesman job is to bring in the deals-> Deposits for the preparation of Plans,CDs, Contracts,etc. by whatever means available for high commissions. In the current climate I am afraid the signup prices may not be the final contract price as the contract allows for builders and developers variation increases which are outside their control Its your call..goodluck Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Clarendon homes price lock in 3Feb 15, 2022 4:57 am Chris I really liked your answer but I just wanted to add some thoughts around this topic as I have been doing some really deep thinking on this subject, and I have developed some theories which I feel are important to share. I will give my answer to the original poster first to prevent everyone having to read what is going to be a long post. I would have no issue locking in a price with Clarendon, I worked with their owners for approximately 6 years and they are very honourable and solid business people and they now have a business which is diversified into land subdivisions and residential apartments so I believe that they would honour any contract you sign. I was with them during the darkest days of the GFC and they made sure that everyone was paid on time. But make your own judgement before spending your money. Oh and I also built a home with them in 2004-2005 and the experience was good. For several months now I have been really beginning to worry about the number of Sydney project home companies that will not survive 2022-2023. My reasons are: 1. Trade pricing has exploded over the last 12 months, firstly this was materials alone but we are seeing more and more key trades price gouge labour rates now 2. Materials simply aren't available, you cant get a timber prefab frame until 2023 if you order today, and basic materials like toilets, taps and basins just aren't in stock. So build times are starting to blow out which is going to affect key stage payment times under the HIA contracts ( I could go into a lot of detail around other items, but the post would be too long) 3. Project home companies are notoriously slow getting their site starts, so jobs can sit in the design & approval pipeline for 12 months or more, so any job that was priced in 2020 or early 2021 and built in 2022 is going to lose money 4. New home builder grants have ended so I think demand is going to slow 5. Interest rates will no doubt have to rise which will affect the sale of house and land packages Project home companies have big overheads and small margins, and their business models rely on selling homes to keep the cashflow coming in. As you all know, with their standard payment schedules you are paying them in advance of the work being done to keep that cashflow coming in. Whilst they have new deposits for your build coming in the door, they can afford to keep funding the projects they signed up last year. If new sales slow down in 2022 this cashflow will dry up. I saw and heard several things over the last few days which confirmed my theory: 1. I saw several ads with builders offering big discounts. I am pretty sure MJH are offering a $50,000 discount. How on earth can anyone be discounting a home by $50,000 in a period of unprecedented price rises? In their defence they may have discovered a secret formula to building homes cheaply. 2. I was in a meeting with a person on Thursday who is well connected to a medium sized Sydney project home company who was saying that their owners have conceded that don't think that they will survive this year as they are carrying too many 2020-2021 contracts 3. We are currently about to start 3 jobs and I spent Wednesday, Thursday and Friday calling suppliers ( including a lot who supply to project home companies) and everyone is saying the same thing about no stock, lead times blowing out till 2023 for some product. We have never seen anything like this 4. I have had conversations with people who paid a deposit in early 2021 and the builders have started excavation and then disappeared with the money ( in one case over $150,000). So my prediction for Sydney in 2022-2023 is: 1. That we are going to see a few well known companies go into liquidation this year unless they can increase the price of the contracts 2. The flow on will be that tradies who are currently price gouging will be hurt the worst when they lose money and then work dries up. Unfortunately a lot of consumers will be affected in the process 3. In the medium to long term trades will need to reduce their extortionate prices to get back on their feet and there will be an easing in pricing. Just don't know how long that will take. So in conclusion, other than doing your homework on the builder you choose, especially if it is one that has deals that are too good to be true, try and pick one that has diversified income streams which can help soften the blow if materials and trade prices keep rising this year. If there is a builder who is being honest and actually putting their prices up, to me that is a good sign that they are doing it to everyone else to do their best to survive and thrive into the future. Include a 10-20% contingency in your budget if you need to build this year. Alternatively, if you are unsure or cant afford a contingency, delay your build until next year to see what happens with the market. I hope this has been a little informative, its just my opinion and I could be completely wrong ![]() cheers Simeon Architectural Homes & Duplexes - specialising in custom designing homes to your budget Get a Free Onsite Consultation Today or send a PM for information, questions or advice. Re: Clarendon homes price lock in 4Feb 15, 2022 7:22 am ashington_homes what are the tyoical industry payment terms for material and contractors for the large volume builders? Re: Clarendon homes price lock in 5Feb 15, 2022 8:22 am ![]() @ashington_homes what are the tyoical industry payment terms for material and contractors for the large volume builders? Kippers It varies builder to builder but an example might be either: Based on a $600,000 contract as an example Deposit 10% $60,000 ( note it is illegal in NSW to ask for a 10% deposit without insurance being provided) Slab 20% $120,000 Frames 20% $120,000 Lockup 20% $120,000 Internal Linings 25% $150,000 Completion 5% $30,000 or Deposit 5% $30,000 Commencement 5% $30,000 Slab 20% $120,000 Frames 15% $90,000 External walls 15% $90,000 Roofing 15% $90,000 Internal Linings 20% $120,000 Completion 10% $60,000 Cheers Simeon Architectural Homes & Duplexes - specialising in custom designing homes to your budget Get a Free Onsite Consultation Today or send a PM for information, questions or advice. Re: Clarendon homes price lock in 6Feb 15, 2022 8:27 am Simeon, thanks for your detailed response. Sorry my question was not very clear. I'm interested in understanding the payment terms that large builders typically have with their suppliers of materials and labour etc. Eg net 30, 60, 90 days from EoM / invoice etc... Re: Clarendon homes price lock in 7Feb 15, 2022 8:38 am ![]() Simeon, thanks for your detailed response. Sorry my question was not very clear. I'm interested in understanding the payment terms that large builders typically have with their suppliers of materials and labour etc. Eg net 30, 60, 90 days from EoM / invoice etc... Gotcha, I can only speak for Metricon and I swear you wont believe me when I tell you it was 5 days. That is not a lie, 5 days! The issue my team had was that if a trade hadn't completed work but had submitted an invoice we had to pay them regardless, so we had no recourse. We would literally get a call from Melbourne demanding that we authorised payments. This obviously causes issues if you need to get the trade back for defects. I have worked for several commercial builders and in that sector it is typically 30 days and we hold retentions In my business, as we are on site almost every day and most of our trades are loyal we will sometimes pay in 24 hours depending on who it is, but generally we do a run everyweek and if we need to hold a retention and or pay part of the invoice we will. hope that answers your question ![]() Architectural Homes & Duplexes - specialising in custom designing homes to your budget Get a Free Onsite Consultation Today or send a PM for information, questions or advice. Re: Clarendon homes price lock in 9Feb 15, 2022 8:48 am ![]() Petfect! Thanks for taking the time to explain. Much faster than many other industries! in the commercial sector, you get paid monthly by the clients so you try and run trade payments concurrently but 30 days in arrear. Also the banks make you sign a stat dec every month confirming the trades have been paid. Architectural Homes & Duplexes - specialising in custom designing homes to your budget Get a Free Onsite Consultation Today or send a PM for information, questions or advice. Re: Clarendon homes price lock in 10Mar 08, 2022 10:26 am ![]() Hi there, We are looking at building the grande 57 with clarendon and have been advised that there will be a 10% price increase on Feb 21 so to secure our build via a deposit before this time. However Clarendon only lock in the price for 6 months now not 12 and due to us being self employed, we can only go for finance in August, at the 6 month mark. Clarendon are saying to extend the price lock in by 3 months they want an extra 28k.....just wondering if anyone else has had experience of this and weighing up if its worth paying for the extra 3 months as a safe guard against further price increases? Many thanks for your advice Sue 🦋😊 Hi SusieG I wonder if the contract provides a lawful mechanism for Clarenden to unilaterally increase the contract price. Over the past year, with material prices skyrocketing and a labour shortage, Builders have been unlawfully trying to unilaterally increase their contract price. Cheers John Get sound legal advice. We manage Building Disputes, Construction Contracts, Security of Payment. PM for queries. https://www.contractsspecialist.com.au/articles/ Re: Clarendon homes price lock in 11Mar 08, 2022 10:37 am ![]() ![]() Hi there, We are looking at building the grande 57 with clarendon and have been advised that there will be a 10% price increase on Feb 21 so to secure our build via a deposit before this time. However Clarendon only lock in the price for 6 months now not 12 and due to us being self employed, we can only go for finance in August, at the 6 month mark. Clarendon are saying to extend the price lock in by 3 months they want an extra 28k.....just wondering if anyone else has had experience of this and weighing up if its worth paying for the extra 3 months as a safe guard against further price increases? Many thanks for your advice Sue 🦋😊 Hi SusieG I wonder if the contract provides a lawful mechanism for Clarenden to unilaterally increase the contract price. Over the past year, with material prices skyrocketing and a labour shortage, Builders have been unlawfully trying to unilaterally increase their contract price. Cheers John Hi John I love reading your posts and insights. Just wondering if you have been involved in giving anyone advice on what to do when builders are increasing prices and if so how are the builders justifying this? I was always under the impression that these were lump sum D & C contracts? Cheers Simeon Architectural Homes & Duplexes - specialising in custom designing homes to your budget Get a Free Onsite Consultation Today or send a PM for information, questions or advice. Re: Clarendon homes price lock in 12Mar 23, 2022 2:11 am A lot of NSW builders using the HIA contract are using Clause 16.2 Substitution of materials resulting in a contract price adjustment, or so I have heard We are Expert Consultant's, and we are here to help. 1 5044 It is Genneral stairs, but they won't deal with anyone off the street. They will only work with clients of project home builders. I tried to but some of these exact… 3 9196 ![]() The two 15mm holes are obviously not compliant. The Dept of Fair Trading would love to see this one! Do the gutters pool water after it stops raining? Although it's… 4 8907 ![]() |