Browse Forums Building A New House 1 Mar 24, 2007 10:31 pm Hi all,
I am planning to build for the first time and know very little about the process (hence dumb questions below). Am I right to understand (from reading on this forum) that building with a project builder will cost more than a private builder? (Due to their mark up e.g. externally quoted $5000 - builder quoted $5500 etc). Also, do project builders put mark up on ALL of their inclusion, before or after signing of contract? Now the really dumb question.. what is a project builder (as oppose to private builder)? I recently talked to a builder (Classic Construction) and they offered me a number of their standard designs and inclusion lists, which included things like site clearing, surveying etc. The contract is a fixed price contract, i.e. if I don't change anything on the list, then the quoted amount will be what I pay. Is that an example of a project home builder?? (btw.. I came across this site as part of my research and found it to be execellent! very informative ) Re: Project home builder vs private builder?? 2Mar 25, 2007 7:13 am Hi Bernado
I guess like all things in life you get what you pay for,there are no free meals. I would imagine all builders work on margins.If they can make 100% profit on a job that's good for their bottom line,if they end up with 30% then the trip to Club Med and and the kids braces might take a little longer to achieve. I would be surprised if anybody can truly say one builder is better or cheaper than another because there are so many variables in the different packages. I think generally speaking some project builders may be cheaper than say one- off builders because of ability to bulk buy material at a discount,to hire subbies at a lower rate etc etc,but really difficult to tell . In hard times like now the bigger project builders shave margins by throwing in extras to get punters through the doors and then make up the difference with display home additions with appropriate markups. The display home concept is to market a dream,that is the potential buyers dream...to have everything the same as the display home which of course has the full package of extras...including the pool and specially designed furniture to make the place look bigger. For you nothing is going to beat leg work. If your in Victoria the market is very competitive at the moment so if you fancy yourself as a arm twister,read up,do your research,and haggle like there is no tomorrow...Being prepared to walk away right up till you have signed on the dotted line. Take your time. btw Fixed contracts are pretty normal but some builders allow variations after contract is signed more than others. Re: Project home builder vs private builder?? 3Mar 25, 2007 12:13 pm Thanks for that
Generally speaking, if we use a $600,000 house as an example, which of the following options would be cheaper? + Buy it from an agent (provided they have such a house for sale of course)? + Buy land and build it with a big time builder using a fixed price contract? + Buy land and build it with a builder using a "cost as you go" contract (dont know the proper term - but what I mean is contract where you specify the inclusion as you go along)? With the buy land & build options, I can see that there is a stamp duty & agent fee advantage. I was worried however whether the builder's mark up would actually cancel those advantages out, or even make it more expensive. We're not considering the owner-builder option because we don't have the time or the skills to do that . Re: Project home builder vs private builder?? 4Mar 25, 2007 9:07 pm Just a few thoughts.
Stamp duty on an $85,000 block in Victoria...about $2,000 On a $300,000 house and land already built...say $13,000 Off the plan on your land or the builders,block price $85,000 with a $200,000 house built on it to standard spec ...about$2,000 So a potential saving of $11,000 dollars to buy the land and then build over the starting price of an established home. Another thing worth remembering is we tend to load up the first home with everything we can least afford as though its the last home we will ever live in yet statistically we Australians move every seven years or less. Perhaps start basic and build again and again later. Fixed contracts cushion you from potential horrendous cost blow outs down the track. Re: Project home builder vs private builder?? 5Mar 25, 2007 9:45 pm Bernado - When we were looking around, our decison was based on what we wanted.
We looked at buying established, and quickly realised that we would prefer to have a new home. That's the first decision. We made a list of what we wanted - for example, 4 bedrooms, theatre room, study, al fresco, single level, etc. Based on that, we went through web sites and worked out which builders had homes which matched. If you have already found some land, then some homes may be ruled out due to size. If you are serious, you'll probably have a budget in mind (maybe a range) then some homes may be eliminated because they are out of the range. With some luck, you'll have a short list you can go and look at. Finally, research, research, research. Look through all the info you can find about a home and builder. Read the good stories as well as the bad. Remember that what is good for someone else may not be good for you, and vice versa. After all that - gut feel counts for a lot. If it feels bad, then it probably isn't for you. We have decided to go with a larger builder, who only starts 20 homes a month. For us, we felt more comfortable with their story, and the feedback I read here and other places about them. It's exciting, and frustrating. Good luck with your adventure! Perry Re: Project home builder vs private builder?? 6Mar 25, 2007 10:14 pm I have to say all the stories I have read so far on here seem to be bad ones.. and that makes me even more worried.
I was worried that the builder's mark up in the end may cost us more than purchasing a home. If somebody can tell me this is generally not true then I will be happier to proceed (understanding that the cost depends on what we want - but on the other hand I don't think we'll want something that's too far out of the ordinary). We have a budget in mind, and have drawn up a design. I guess the next step will be to meet with the Draftman and decide on the inclusion list to get a rough idea of how much it will cost. I am also worried about this because it will cost an extra $1000 - but I guess this is a cost we'll have to wear as part of our research. I am from the ACT by the way (and if we can help it - we wont be moving again after this one) Re: Project home builder vs private builder?? 7Mar 26, 2007 12:18 am Bernado I was worried that the builder's mark up in the end may cost us more than purchasing a home. If somebody can tell me this is generally not true then I will be happier to proceed (understanding that the cost depends on what we want - but on the other hand I don't think we'll want something that's too far out of the ordinary). Our land was the one thing that made our house roughly comparable (or slightly more, actually) in price to purchasing an existing house. If we built the same house on a cheaper block of land, it would have been way cheaper than purchasing an existing house. Plus we got to put everything we needed/wanted in it as well. And most existing homes wouldn't have had everything we put in...so it would have cost us extra to install those in an existing home. At the end of the day, only you know what you want in a home. Have a look around existing houses for sale. Compare them to what you can build in your area & go from there. Re: Project home builder vs private builder?? 8Mar 26, 2007 11:43 am Hi Bernado,
Here is the way I think of it. I buy a block of land for lets say $150 000 I build a house on it for lets say $150 000 Am I going to sell it for less than $300 000 after all I have been through to build it in the first place. No way, I am going to be expecting at least $350 000 and in a good market at least $400 000. Most people do not want the hassel of building a house and the risks and most important the delay so they pay a premium to avoid this and get a ready built house. Having built twice before (and currnetly on my third), I have found this to be true. One thing to note though is that the house must be truely fininshed off for the above to apply. A newly built house with no garden, floors, curtains etc will probably not achieve much premium at all. Your careful research, competitive quoting and good taste/design style will make a big difference to the final value and return. As for negative stories, they are the ones that intrest most, not the sucess stories. Expect that in any sphere of life. Take any model of appliance in your home, search the internet for an appropriate forum and you will no doubt see negative comment on that appliance. Finally as far as "builders mark up", that applies to any home since all homes were built at one time or another and even in the rare case of owner builders, they simply take the mark up for themselves. In this case however, you cut out a middleman (the previous owner) so you do save. Hope this helps you with your descision. Regards 3xb Re: Project home builder vs private builder?? 9Mar 26, 2007 2:26 pm That brings up a good point - bear in mind that sometimes a larger builder can do things cheaper because they receive a large discount on their purchasing.
This means that in some caes you may actually get a house built for less than what it would cost you to do it yourself. I wouldn't be too concerned about markup - rather, I'd be looking at whether you get value for money. Cheers Perry Re: Project home builder vs private builder?? 10Mar 26, 2007 9:08 pm I have to agree - our main concern after getting a house of our own, is being logical about it and making sure (as much as you can) that what we outlay we would recoup if we had to sell at day dot. Think about where you would build... look at similar houses in the area, from the smallest to the biggest, and compare what their asking price is compared to how much it would cost you to buy the block, build the house and establish it (curtains, floor coverings, gardens, fencing, clothes line, garden shed, drives, paths, etc, etc, etc, etc, etc). Ask builders for quotes, find out how much extras cost (all the bits you'll fall in love with in the displays), then add some and you'll have some idea of what you'll be up for.
If you are sensible, you can make a nice little sum. Oh, and always be on the lookout for mortgagee sales - the banks want their money and they don't care what it sells for as long as it covers their costs. I've seen quite a few bargains, and if interest rates go up again you can bet there'll be more. Often they are 1-2 year old places that may need some finishing off (i.e. unfinished floors, no garden, etc) but with a little effort will make a nice home and build your equity. ~Ray. Second Time 'Round Re: Project home builder vs private builder?? 11Mar 27, 2007 1:14 am Great Thread Folks with plenty of food for thought. I have found that sometimes the heart rules the brain. I mean , suppose I wanted to build in the "back of beyond" where house prices are low. But we want a full brick home with all the trimmings. Obviously it doesn't make financial sense but as the house is for us do we go ahead anyhow ? On the other hand how would you make sure you don't Build a $500,000 home in a $300,000 area ? Would it be best to approach a local Real estate agent and ask what such a house would be worth in the area ? (Is my lack of knowledge showing through yet HAHA) any suggestions welcome "MO" Its better to regret things you,ve done, than things you haven't. BUT Never regret growing old because some people never have the privilege. Re: Project home builder vs private builder?? 12Mar 27, 2007 9:42 am Hi Montbrehain,
Actually what you are saying makes a lot of sense. No point building a $1 000 000 home in an area where there is no house more than $300 000. (yes I have seen that) In the previous 2 houses we have built and even in the one we are about to build, we have chosen an area with a wide band of house prices. In the last place we built, there was a $2 million house just around the corner and a $350 000 2 doors down. Anything we built between thos 2 values was a pretty safe bet. Many suburbs have a much narrower band and I suggest working that out and building to that price range (remembering we are talking about sale value here, not land/construction cost). One other thing I would like to suggest is that you always keep one eye on resale value even if you are intending to stay in the same place for 40 years. You circumstances may change and if your $500 000 house is in a $300 000 area, you may be forced to take a drastic (and really unfair) cut in the resale. Regards 3xb Re: Project home builder vs private builder?? 13Mar 27, 2007 10:09 am I have heard that the new house price should be about the same as the cost of the land. What do you think about that?
Also, I think that it is only in a new area that you could re-coupe (sp?) the cost of your land and building. Land is expensive in established areas, usually close to the price of an existing house and land. No way you could build a new house and get your money back in the short term. Re: Project home builder vs private builder?? 14Mar 27, 2007 4:53 pm Bud977 I have heard that the new house price should be about the same as the cost of the land. What do you think about that? Also, I think that it is only in a new area that you could re-coupe (sp?) the cost of your land and building. Land is expensive in established areas, usually close to the price of an existing house and land. No way you could build a new house and get your money back in the short term. I disagree. It is often easier to make a profit of 200k or more by building in an established area. A brand new house in established areas of Melbourne would often cost 1.2mil plus. A block in the same suburn would cost around 600-650k. Or if you bought 2-3 years ago, as low as 500k. The only catch is if you want to make money on building in established area, you need to build a quality home with no short cuts. Then you will make money. In new areas it is often difficult, because the house prices don't rise quickly in new estates, so if you buy a block for 150k, and spend 350k on building, you've already spent 500k, and after you do all the little things like landscaping etc, you'd need to get over 600k to make any money, yet in those new areas such prices just aren't there. Re: Project home builder vs private builder?? 15Apr 11, 2007 1:33 pm I'm not actually replying to your orignal question, don't have much info to pass on. But, I'd like to know if you decided to go with Classic or with another builder. We're going to build in Canberra in the next few months, just hoping you can suggest good/bad builders in Canberra. Thks. Re: Project home builder vs private builder?? 16Apr 11, 2007 8:58 pm Hi Sandra,
We are still in talk with Classic. Haven't signed anything yet but so far they seem reasonable. As for good builders in Canberra, I have heard good things about Classic, Rawson, Hotondo and Blackett. Re: Project home builder vs private builder?? 17Apr 12, 2007 9:19 am Hi Bernado,
Thks for your reply. We have spoken to Classic too, we were thinking of going with the Sorrento. Not sure though, they seem reasonable, but, we haven't decided yet. We're also considering custom home builders. All the best with your home. - Sandra Re: Project home builder vs private builder?? 18Jul 23, 2007 12:46 pm Hi Sandra and Bernardo,
I am too in the process of building my house in Franklin. We are currently talking with four builders. Three of them have displays house. Have you heard any comments on them? I went to an architect to draw up a plan, but now have problems with "inclusion lists". I want to draw up a detail list of inclusion to give to those builders so they could give me a quote. But what i am currently have is a "general" inclusion lists. For example builders do not mention model or brand but just "spa bath" or "dux proflo heating" or "ducted vacuum". Do you have any detailed inclusion lists that you could share with me? Thanks ozn Hi all, Been browsing project builders' website and saw Masterton with attached granny flat design Seeing bad reviews from masterton in this website/facebook, does… 0 18306 If you already have a contract, is the inspection cost stated in there? If not they would be forced to issue you a variation which you could of course object to. 12 25870 As a tradesmen get a private inspector although I don't think there worth it in their profession themselves the reminder they serve to the tradesmen doing the work is… 3 27373 |