Questions regarding Tender and Contract Appointments

sneakersss · Nov 22, 2006 11:38 pm

Hi Everyone,

I'm a semi-long time reader of these forums and a first time poster. And with that having been said I'm also a first time home builder (and purchaser). So, if my questions seem somewhat silly please excuse my lack of knowledge.

My partner and I have just begun the whole building process, or rather, are currently going through the motions before the building can start. Our land is located in the western suburbs of Melbourne and we will be settling that around mid December. Assuming, of course, that the bank doesn't do anything else to delay us.

But now for the question(s)...

We will be attending all our selection appointments over the next few days and then going to our Tender appointment on December 4. Now, the builder we are going through state to us that upon their presentation of the fixed price tender, if we then sign, we need to pay the 3% deposit. I'm essentially confused about this - are we supposed to then pay them over 7k (which is roughly 3% of the initial quote we got) right then and there? Or are we able to walk away with an unsigned tender, present that to our bank to get an approval and then we can tell the bank to release the 3% and give that to the builder? Having asked that, if we decide (or maybe we shouldn't?) to sign the tender on the day are we supposed to sign it subject to finance like we did when we were first purchasing the land? Or, is the tender not as binding as a contract?

Again, I apologise if my questions are quite silly (with answers I should already know) but I don't know many people who are building brand new houses. And one of the main things my partner and I have decided on is to that we wanted to research and be armed with as much information we can before embarking on this journey because we didn't want to be in a 'surprising' situation and looking back and saying, "Oh my, we should've been more prepared!" We've definitely prepared as much as we can and we both thought that if something 'bad' happens it would be our lack of preparation. But to date, we've only had glitches arise due to the fault of other parties - namely the agent at the land sales centre and kind of the land valuator. But I've made my peace with them. Haha

And my final question...

Should I be getting a solicitor/conveyancer to look at the tender documents or would that just be at contract stage? While I'm at it, can anyone recommend a solicitor/conveyancer that I can call upon? Our current conveyancer only specialises in land contracts so I'm afraid we won't be needing her services after settlement.

Thanks in advance!

intoxicated · Nov 23, 2006 11:56 am

from my experience (with PD) and my limited knowledge, i can say that

- yes, you need to pay 3% of whatever the quote is.

- you don't have to pay it on the spot. the guy that we had in tender appt mention that we can take time to think about it, but it could delay the process. and the 3% deposit is for them to do the plan drawing and other stuff ( i can't remember). so without your siggy and 3%, they can't move forward.

- as far i'm aware of, the tender is not as binding as the contract. I think the guy said that if we sign and pay the 3% and then change our mind, we would lose our 3%

regarding the solicitor, i can't really help you there, because we've decided yet to use any and i don't think we would use any.

sneakersss · Nov 23, 2006 12:27 pm

Hi intoxicated,

Thank you for your reply. I was actually able to get hold of an old friend of mine who is also building with PD (we are building with them aswell) and they did have to come up with the 3% themselves.

I suppose it does make sense that the procedure is that way. I'm still going to hope that our broker will call to say he can make a miracle happen! Hehe And I wouldn't be as worried of coming up with a deposit to give to PD had our bank not wanted a bigger deposit on the land. But, such is life, ey?

So, which house are you building with PD, if you don't mind me asking?

intoxicated · Nov 23, 2006 4:37 pm

it's the hamilton. we want the 2 storey, but too bad we can't afford it

which house are you building btw?

a little pointer before you going for the tender appt, go to many shops like Reece plumbing, tradelink etc and ask for quote for many things that you like for your house. they won't tell you straight away, but will only tell u the cost on the tender. the reason i suggest you to do this is because we found that they have this "policy" to not tell the cost straight away and wait untill they meet us and put the more pressure to us to make decision on the spot (even though we don't have to)

sneakersss · Nov 23, 2006 10:38 pm

Well, whaddaya know, we are building the Hamilton, too! We originally wanted the Hamilton 34 but it was just that bit too long and won't fit on our block - damn building envelope! So, we settled for the Hamilton 29. We figured we were just being greedy by wanting the 34. We also then justified it by saying we could spend that 10k price difference on other things. However, before we actually jumped on the PD boat we were going to jump on the Henley boat but we came across some glitches (non-Henley fault) that prevented us from proceeding with them. We are glad with our PD decision because everyone has been helpful as of late.

So, when you point out visiting other retailers prior to our tender appointment, what exactly would we be able to achieve? Do you mean that because we know what other retailers are selling their products for that we can then bargain with them to lower or at least match prices? If such is the case, I will definitely be visiting other retailers!

Also, at the moment, my partner and I have decided that we will not let them pressure us to sign the tender on the spot because we want to read through it thorougly and make sure everything is right, exactly as we want, and at an agreeable price. By the way, in what instances have they pressured you to make a decision on the spot?

intoxicated · Nov 24, 2006 10:26 am

hehe i shouldn't not wording it like that. it's not that we're being pressured by them, but it's just us. we got shocked when we knew the prices. for example,we want double full bowl sink and since we're asian and use wok mainly for cooking,it has to be deep enough as well. so we ask them to quote few sink for us and once they told us the price, we got shocked and go for the cheapest sink. further investigation, we found that it's a fair price and in fact we are now thinking to get the next one (which mean bigger and a bit more expensive).

actually, they don't really care with our decision with the sink, tapware etc as it can be change later on anyway. what they really care during the tender is the structural plan. so make ur decision way before the tender. don't think to much about the bit and pieces and focus on the building.

regarding visiting other retailers, I recommend that so that you have other options and have idea of the fair prices.

btw are you going to take the caroline spring's bathroom options? if not, check it out, it's so nice. if you do, maybe i should let you know that by removing the frosted glass, changing the window to smaller one and remove wall void and also the mirror feature, you could save up to 1600.

be creative and who knows, maybe u could save

sneakersss · Nov 24, 2006 11:37 am

Hehe As long as we both understand each other now then it's all good.

Kitchen sinks...we actually want one of those undermount sinks that look oh so spiffy. I've emailed our customer service person yesterday about giving me a rough quote on that but reply as of yet. I hope I don't get shocked by the price but as per your advice, I'll definitely visit other retailers to gauge the prices.

Ensuites...we are not going for the 'Por.n Star' bathroom as they call it. However, we did ask for the ensuite to be modified as per the display at Craigieburn which is essentially the same, but with a corner spa bath rather than a freestanding spa bath.

Structural changes...we haven't really made that many request for changes to the house structure. We've asked for the alfresco to be extended, underbench cupboards in the pantry and some window placing changes in the rumpus and internal garage door. Which brings up the question - i'm a little worried that the Sales Consultant (who did our walk through with us) might not have quite understood what I was saying when i was asking for certain windows to be moved/placed in the rumpus. At what point do we do this? And, I'm thinking that we are able to choose exactly what kind of windows we want. And by that I don't mean the colour but rather the style.

So, what creative things have you put in your house (that I can *ahem* maybe steal - just kidding!) and get inspiration from? Are you having the 'Por.n Star' bathroom? And I'm guessing you got the freestanding cooktop/oven with the wokburner or at least the benchmounted cooktop with a wokburner? Hehe And don't worry I'm asian too - I know how important a wok is and having a sink that fits it!

Homeboy · Nov 25, 2006 12:56 am

Hi YSSM and Intoxicated. We're also thinking of building with PD and I was concerned about their procedures of signing. I spoke to a solicitor acquaintance who says I should ask PD to allow me to take away Contract and relevant working drawings ( the ones you pay 3 % for at the tender appt, and plans, so I could get it checked out by a solicitor before signing anything..
But when I asked PD consultant about this, they said it's PD policy not to release drawings until we sign contract, They said that we'll get a copy of standard HIA contract at Tender appt. When I probed, consultant said that this version of contract will be just the same as final version apart from not including our names and costings.
I was thinking that the final contract together with other relevant documents ( plans, specs, working drawings) could be examined together, in advance of the contract signing appointment. But unfortunately not the case.
I'm concerned that we'll be pressured into signing a contract we don't quite understand.
Don't know any way around this apart from taking solicitor along to contract appt. What do you think?
Don't know if anyone who has gone through the process with PD has had a problem with contracts.

sneakersss · Nov 25, 2006 11:32 pm

Just a short reply (because I lost the reply I was just typing - grrrr!)...

I've read your other thread regarding pre-contract signing tips and I agree with one of the other members who replied. Don't sign it until you know exactly what it says and you've had someone qualified to look at it.

My partner and I have decided not to sign the building contract until we've had someone look over it first. Both the document and the drawings.

And we made this decision because prior to going through with a PD house, we were originally going to go through with another buildder. They didn't do house and land packages so we had to purchase the land first.

Anyway, to cut a long story short we basically visited the estate several times looking for the right block and also making sure that the floorplan we wanted would fit on the block. We even got the sales agent to make sure which she did. Calculator, ruler - the whole shebang!

Day it came to sign the contract (and pen was in my hand about to sign), she informs us that there's a 3m rear setback. We only had 2m left so effecively it meant that the house would not fit. We were very frustrated because we asked her to make sure it would fit. And she told us it was. Again, she used her ruler and calculator! We were also allowed to take away a copy of the contract when we initially put a holding the deposit while we sorted out our pre-approval and she even told us we could get our solicitor to look at it fist if we wanted. However, we didn't and I read it myself. We just thought it was okay if our solicitor looked at it after. But that's beside the point.

So, there we were telling her she didn't tell us there was a rear setback and that she told us the house would fit. I told the rear setback wasn't mentioned anywhere in the design guidelines document. She looked through and didn't find it either. Her next statement was that it's in the contract. I again told her it wasn't because I've read it myself. So, she looked through and whaddya know, it's not there.

Turns out the contract had been prepared incorrectly and the wrong ''Memorandum of Common Provisions' was inserted. Small mistake? I think not! These contracts are after all prepared by qualified solicitors - there shouldn't even be one spelling mistake in it! In relation to the house fitting on the block she told us we could ask the builders to modify the plan and shorten it by a metre. A metre? And exactly who would pay? A few millimetres I understand but a whole meter? Now even I know that means a lot more work because the roof pitch and trusses would have to be altered.

Moral of the story - anybody can make mistakes. No matter anyone's sweet talking and pitch to try convince you that everything is all good - you can never really know. And like they say - if in doubt get a second opinion. So, don't let them force you to sign the contract unless you are happy to.

And a couple of links I found to help you out...

http://www.mbav.com.au/vpLink.aspx?ID=8300

http://www.realestate.com.au/cgi-bin/rs ... ng&ag=&cu=

Homeboy · Nov 26, 2006 1:14 am

Thanks for the Links Yssim.
Good luck with your house.

squidhed · Nov 28, 2006 5:35 pm

Hi everyone,

I'm also building with PD and guess what its a Hamilton.

We ran into the same problems at tender and then at contract. We were assured at tender that we where still able to make changes up until contract other than structural. This was not the case. When we got to contract we asked about the changes and were told no this is just to sign off on the contract nothing to do with changes. They offered to do them as Post contract variations after the signing of the contract. The problem with this is that they then change the contract price.

What we did is walk away from contract without signing. We asked to take away the contract to review and where told no. It was implied that we may take it to another builder and that is why we could not have a copy until signed.

I offered to sign a non-disclosure agreement but that was not suitable.

we eventually arranged by going further up the chain at PD to have the contracts and read through them to identify all errors and return them. At final count there where close to 30 changes that had to be made.

The moral of the story is sign nothing until your happy with it.

We should not have signed the tender document without them first making the changes that we requested to it.

regards
squidhed

sneakersss · Nov 28, 2006 7:37 pm

That's really sad to hear about all the trouble you're going through.

What are then the purpose of having administrators if they can't do anything to help you at all? Are they merely just a channel of communication whereby one thing goes in one ear and out the other?

Anyway, so what is happening with you guys now? Have you got the contract yet and are you reading through it? Or have you been-there-done-that? Are they then making the right changes so you can proceed to the next phase?

squidhed · Nov 29, 2006 10:34 am

And the story continues to unfold...

We got all the large errors rectified so all up about 23 of these where corrected in the next draft of the contract. This did take my wife and I sitting down and reading through every page of the color selection, tile selection, tender and contract (about 4-5 hour each)

The remaining issues are small enough that they will not impact the price (incorrectly located feature wall etc.) these we have consented to as Post Contract Variations (PCV).

But we hit another snag the day before site start that is still in the process of rectification.

It is interesting though since this snag they have put the build on hold. This snag is to do with the interior so nothing that would prevent the pouring of the slab and frame going up.

I am disappointed in their approach. They seem to be using heavy handed tactics relying on the fact that most people have so heavily committed themselves financially that these sorts of delays will persuaded them into making decisions faster.

hmm is this a form of extortion? I wonder. Either way I believe it to be unethical.

I'll update on this one once it is sorted out.

regards
squidhed

intoxicated · Nov 30, 2006 8:42 am

now i can tell what's my experience during contract stage

yes, they did want us to sign the contract on the spot, but we managed to get them to allow us to bring it home and take it to our solicitor. btw, the contract was well prepared apart from small typo. our solicitor, reckon there's none to worry.

yes, they did allow us to do the post variation. as long as the variation does not exceed 2% of the contract, they would allow it ( my partner will remember better regarding this part). We haven't done this part yet but. We'll see how flexible they can be in about six week time.

Homeboy · Nov 30, 2006 11:09 am

Hi Intoxicated and Squidhead.

How did you manage to persuade PD to allow you to take away contracts and drawings prior to signing?..I'm having no success in my attempts to do this.

Joan · Dec 01, 2006 7:24 pm

We've built three times and my brother built with PD. All I can say is get everything checked by a legal person every step of the way. Be very careful of all the big companys but really with PD.

sneakersss · Dec 02, 2006 12:43 pm

Care to share about who you built with and the issues your brother had with PD?