Browse Forums Building Standards; Getting It Right! 1 Jul 13, 2015 8:54 am One of the most common issues in inspecting off the plan properties prior to settlement is cost stripping. Developers typically will try to minimise the cost of development. Why? Because profit is sales-cost of sales All builders do it but some go too far and some are brazenly che@ting. I will give you example: Some time ago I inspected unit in 40 unit residential development. The complaints mainly related to leaks and poor finishing but when I got there we just grabbed Tiger by the tail. Balconies were way,smaller than on the plan, handrails instead SS were some cheap balustrades, two story brickwork was only one storey with foam walls over, landscaping was not there, sheds were not there, gates missing, paving cheap not stone as per plan. Quality and finish were dreadful ( what quality?, gimme a break it costs money), roof leaks balcony leaks (Back and front) What happened? After units were sold off the plan developer embarked on cost cutting, substitution or just plain omission. So the people who bought were not getting what was represented to them. But wait! No one woke up to it.Why? Because no one thought it prudent to spend several hundred dollars for pre settlement inspection. My rough estimate was that developer stripped 40K /unit = 1.6M not a bad bonus! It will buy a couple of bentleys and a beach house. The above is by no means an isolated incident, just recently I found similar issues on 24 unit development and cost stripping is as common as chips. So as you can see we have society that has bred (some) builders with bi-polar disorder, supremely talented at cost stripping and making money regardless of ethics and wonderfully inept to deliver on the promises. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Beware of cost stripping 2Jul 13, 2015 1:02 pm building-expert No one woke up to it.Why? Because no one thought it prudent to spend several hundred dollars for pre settlement inspection. Several hundred? Gee, i do my own for $0. Anyone on the ball would have picked this up. Re: Beware of cost stripping 3Jul 13, 2015 4:11 pm I think you are missing the point. Most people if they have not been trained in building have trouble visualising building drawings and interpreting drawings, many are naive and many suffer from blind trust. Surely I would not have given up five years of well paid work as builders labourer to do a degree in building if I had your talents. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Beware of cost stripping 5Jul 22, 2015 11:37 am building-expert I think you are missing the point. Most people if they have not been trained in building have trouble visualising building drawings and interpreting drawings, many are naive and many suffer from blind trust. Heed those words. They are far too true and common Re: Beware of cost stripping 6Jul 31, 2015 7:40 am As an engineer who takes part in the design of some such buildings I know what you mean. The whole process of "design and construct" contracts actually encourages the builder to cheapen the design. It is a disgrace. Then you go even further down the quality spectrum to projects where the builder and developer are the same people (not always of course, but has been my general experience) At least when there is a developer with a decent reputation to protect, they employ their own architect and engineering firms, who keep a close eye on the builder to make sure what's in the sales contracts and marketing plans actually gets built... Re: Beware of cost stripping 7Jul 31, 2015 9:16 am Very interesting to hear this BE. I'm not surprised at all. Re: Beware of cost stripping 8Aug 21, 2015 7:01 am How's this for making extra bucks? https://sourceable.net/mega-wedding-gro ... artments/# Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Beware of cost stripping 9Aug 21, 2015 9:11 am The below was amongst the comments: The contract that the purchasers signed stipulates, "the contract they executed with Mehajer's company states stipulates that apartment sizes can be altered." By signing, the purchasers agreed to this condition. Absolutely nothing illegal, misleading or deceptive in that. Buyers must read the contract in detail. The lesson I would draw from this is that buyers would do well to regard every contract they are asked to sign as an attempt to gain their consent to deceive them. At least then they will be on their guard and can take all appropriate measures to protect themselves. The people behind this contract obviously live by the adage that "there's one born every minute" and most people's default position, rightly or wrongly, is to trust other people. You wouldn't even drive a car if you didn't. Re: Beware of cost stripping 10Aug 21, 2015 3:50 pm Too many people still don't understand that pre contract review is their most important inspection and sign away in blind trust thinking less than buying shoes. Its hard to help them then. The above case I know nothing about but it seems to me that developer would have had to amend planning permit and if enough off the plan purchasers objected maybe they could have sunk it. To me advertising 150m2 unit then taking money and reducing it to 100m2 is misleading advertising, perhaps it comes under TPA but then hey I am not a lawyer. This is why I have the best job in the world, I deal with lots of problems but nothing's my problem. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Beware of cost stripping 11Aug 22, 2015 8:07 pm BE - if it makes you feel any better (probably not) I amazingly see the same level of contractual naivety with some clients signing contracts for tens of millions of dollars for commercial buildings and high rise residential. Scary stuff. Building Services Engineer Renovating our 1960's modernist home in Brisbane https://forum.homeone.com.au/viewtopic.php?f=53&t=82091 Re: Beware of cost stripping 12Aug 22, 2015 11:16 pm 1960sModernistHome BE - if it makes you feel any better (probably not) I amazingly see the same level of contractual naivety with some clients signing contracts for tens of millions of dollars for commercial buildings and high rise residential. Scary stuff. Yes perhaps it does a little because in a commercial situation it's play money and they can probably afford to lose it but when you see total devastation of family assets in a home and how it impacts on people's lives its a lot harder to take it. In the end you do what you can, and you can't help everyone and some are their own worst enemy. It's just the way it is. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Beware of cost stripping 13Aug 23, 2015 7:39 pm BE - would a building inspector for residentail homes typically, when employed for various stages of build (i.e. slab or brickwork/frame up, roof carpentry, final lockup etc) typically go over your drafted plans as well as standard specifications contract prior to reviewing the build? Is this standard with building inspectors? Or do most typically go through said houses looking for compliance to National Building Standards first, and only a few great BI compare to signed contracts? Re: Beware of cost stripping 14Aug 24, 2015 8:41 am I guess the old saying "a fool and his money are easily parted" is a little harsh as most people have no clue about the building process, but if I was in the position of outlaying a few hundred thousand dollars on something I would make damned sure that I was diligent throughout. Building Services Engineer Renovating our 1960's modernist home in Brisbane https://forum.homeone.com.au/viewtopic.php?f=53&t=82091 Re: Beware of cost stripping 15Aug 24, 2015 9:57 am SaberX BE - would a building inspector for residentail homes typically, when employed for various stages of build (i.e. slab or brickwork/frame up, roof carpentry, final lockup etc) typically go over your drafted plans as well as standard specifications contract prior to reviewing the build? Is this standard with building inspectors? Or do most typically go through said houses looking for compliance to National Building Standards first, and only a few great BI compare to signed contracts? Good question and the first answer is no. Building inspector in Victoria is someone doing statutory mandatory building inspections required by building permit. The function of statutory inspection is to ensure health safety and amenity and nothing else. This means that your house could be out of level, out of plumb, badly finished and stripped of value and they wouldn't care so long as no one gets hurt. They are there for statutory administration and NOT FOR YOU. Secondly, building inspectors have limited qualifications, it used to be just a certificate but now it is a diploma and they may have never built anything. They are qualified for what they have to do but nothing more. If you read your occupancy permit it will tell you that it is no evidence of compliance with act or regulations. Building inspectors under statutory inspection dont't care about: 1 Quality 2 Conformance 3 Compliance (other than health safety and amenity) 4 Unfinished work 5 Defective work 6 Contract administration 7 You That mens you are ON YOUR OWN, There are many building inspectors who do have additional qualifications and experience and do care but they are no longer just building inspectors , they are building consultants. So if you want proper job done you need to engage someone with lots of qualifications and experience to look after you and guide you. WARNING, building consultants are not regulated and there are no standards, do your homework and choose wisely. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Beware of cost stripping 16Aug 24, 2015 7:49 pm Hi BE so if building inspectors only provide services for occupancy certification what sort of title professional would i refer to when trying to find someone who will do all of those excluded items you mentioned, namely check to see if regulations and act are met as well as go over the build with a toothcomb to cover as many as those 7 points as you listed as possible? Namely quality, confmance to drafted plans and drawings etc? How best would you incorporate the legal and contractual lawyer side in with someone from the building side to assess compliance with contractual rights and amending and variations to contact where the builders hia contract unfavourably shafts you? Sorry abit green behind the ears Re: Beware of cost stripping 18Sep 11, 2015 9:32 am Another thing to be aware of with off-the-plan apartments - the "sunset clawback". Apparently in some states current laws allow developers to take deposits for off-the-plan apartments, hold the deposits almost indefinitely and then rescind the deal when the project is nearly finished so that the developer can take advantage of property hikes and can sell them to somebody else at a higher price! http://www.abc.net.au/worldtoday/conten ... 309880.htm Re: Beware of cost stripping 19Sep 28, 2015 8:38 am Liliana Another thing to be aware of with off-the-plan apartments - the "sunset clawback". Apparently in some states current laws allow developers to take deposits for off-the-plan apartments, hold the deposits almost indefinitely and then rescind the deal when the project is nearly finished so that the developer can take advantage of property hikes and can sell them to somebody else at a higher price! http://www.abc.net.au/worldtoday/conten ... 309880.htm Wow, great contribution Liliana, I am a developer and did not know about this one. It's just dreadful, surely it must be unconscionable conduct but it drives point home that if you sign off on a bad deal no one can help you. As property inspector I cannot stress more that buying off the plan is one of the most dangerous transactions you can make, you are really buying cat in the bag but in this case the bag is carried by Wolf. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Alternatively, you can sign a contract with pre-defined known amount you pay to the builder for management and warranties and then you just pay the invoices their provide… 2 5256 Hi Marko The best thing to do is to have a look at your contract and see how the variation clause is worded. We use the NSW Fair trading contract and the way that is… 1 5076 |