Browse Forums Building A New House Re: Expenses acquired during build. What am I in for? 7Oct 22, 2017 12:47 pm rum_home A side question, how does a new house fail bank valuation? I honestly don't know. I was expecting the developer to blame it all on my inclusions. You know, champagne taste on a beer budget thing. But the house would have still failed if I stripped it bare. I know bank valuations tend to be more on the conservative side, because they value it for the amount they would get if they had to sell it immediately to recoup their money if I defaulted. And at the moment the market is really down. Another problem I may face is that once the house is complete and the bank values it again, what happens if they value it even lower still. Re: Expenses acquired during build. What am I in for? 8Oct 22, 2017 2:03 pm MangoLover rum_home A side question, how does a new house fail bank valuation? I honestly don't know. I was expecting the developer to blame it all on my inclusions. You know, champagne taste on a beer budget thing. But the house would have still failed if I stripped it bare. I know bank valuations tend to be more on the conservative side, because they value it for the amount they would get if they had to sell it immediately to recoup their money if I defaulted. And at the moment the market is really down. Another problem I may face is that once the house is complete and the bank values it again, what happens if they value it even lower still. I see you are in WA - this is my worry with the bank valuation as well! We've had the land approved, so they've accepted the value of that - but I do worry that they won't pay out the cost of the house. Currently sitting at around $380k and we haven't been to pre-start yet. Plus the land value we need them to value it at $800k+ when the median house value in the area is $500k... Whereabouts are you building? Re: Expenses acquired during build. What am I in for? 9Oct 22, 2017 3:19 pm nicolac34 MangoLover rum_home A side question, how does a new house fail bank valuation? I honestly don't know. I was expecting the developer to blame it all on my inclusions. You know, champagne taste on a beer budget thing. But the house would have still failed if I stripped it bare. I know bank valuations tend to be more on the conservative side, because they value it for the amount they would get if they had to sell it immediately to recoup their money if I defaulted. And at the moment the market is really down. Another problem I may face is that once the house is complete and the bank values it again, what happens if they value it even lower still. I see you are in WA - this is my worry with the bank valuation as well! We've had the land approved, so they've accepted the value of that - but I do worry that they won't pay out the cost of the house. Currently sitting at around $380k and we haven't been to pre-start yet. Plus the land value we need them to value it at $800k+ when the median house value in the area is $500k... Whereabouts are you building? I'm building in Camillo, right on the edge of Champion Lakes. I went for the cheaper area in the hopes I could spend more on the build. Silly me. Re: Expenses acquired during build. What am I in for? 10Oct 22, 2017 4:51 pm I had a similar issue. I did a lot of upgrades, one of which was through a smart wiring company, that alone was $10,000. The bank refused to cover the total cost so my finance broker did some fiddling with costs. My main tiling is being done after handover which I have had to save up for so that the smart wiring can be completed during the build. I have also been told but not sure if it is true but building companies are desperate for your money so offer deals like ‘we’ll pay your rent for 12 months’. They have to recoup the money somewhere so they add it to the cost of the house but when it goes for valuation it fails because the house is overvalued. @Madora Dreamer Re: Expenses acquired during build. What am I in for? 11Oct 22, 2017 5:54 pm I had a fixed price contract. I didn't pay anything additional to the builder for the build, apart from variations I asked for (e.g. add security system). There were other costs to cover though, electricity, rates, water, then towards the end of the build there was NBN levy, connection fees for internet, etc. I also had blinds installed towards the end of my build, which I paid for separate to the build. Re: Expenses acquired during build. What am I in for? 12Oct 22, 2017 7:21 pm aloenyx I had a fixed price contract. I didn't pay anything additional to the builder for the build, apart from variations I asked for (e.g. add security system). There were other costs to cover though, electricity, rates, water, then towards the end of the build there was NBN levy, connection fees for internet, etc. I also had blinds installed towards the end of my build, which I paid for separate to the build. That's comforting. I have a friend who paid nothing extra either. But I've had such bad luck so far. They found peat in the soil which added $17k to the build. I can't afford for anything else to go wrong or I'm going to bankrupt myself. The alternative is to walk away, but then I lose thousands in deposits. Re: Expenses acquired during build. What am I in for? 13Oct 22, 2017 7:37 pm I didn't have to pay anymore post contract being signed. Before that, my builder added 6k to my build contract after the soil tests were done due to crappy soil results. But once I find, I was locked in. I paid cash for two variations, one to add concrete around the house and one to change the front fence design, approx 7.4k total. I also had a variation for an alarm system but due to building delays the builder ended up giving it to me for free. Wow 17k is a lot Just remember you may be able to delay starting your build (not sure if that would help you financially though). Re: Expenses acquired during build. What am I in for? 14Oct 23, 2017 4:42 pm MangoLover I honestly don't know. I was expecting the developer to blame it all on my inclusions. You know, champagne taste on a beer budget thing. But the house would have still failed if I stripped it bare. I know bank valuations tend to be more on the conservative side, because they value it for the amount they would get if they had to sell it immediately to recoup their money if I defaulted. And at the moment the market is really down. Another problem I may face is that once the house is complete and the bank values it again, what happens if they value it even lower still. Even if the market is down, if the house can be made cheaper then it's made cheaper. So the bank is effectively say the current builder you are using is charging you more than it currently costs to make a home? I'm at a loss. Re: Expenses acquired during build. What am I in for? 15Oct 23, 2017 5:34 pm rum_home MangoLover I honestly don't know. I was expecting the developer to blame it all on my inclusions. You know, champagne taste on a beer budget thing. But the house would have still failed if I stripped it bare. I know bank valuations tend to be more on the conservative side, because they value it for the amount they would get if they had to sell it immediately to recoup their money if I defaulted. And at the moment the market is really down. Another problem I may face is that once the house is complete and the bank values it again, what happens if they value it even lower still. Even if the market is down, if the house can be made cheaper then it's made cheaper. So the bank is effectively say the current builder you are using is charging you more than it currently costs to make a home? I'm at a loss. Yeah that was my conclusion. They have given me a $5k discount, and gave me some spiel about the market being down. But I don't know whether to believe that. Re: Expenses acquired during build. What am I in for? 16Oct 23, 2017 6:06 pm I'm onto my second build contract as my first build contract didn't value up. Now it was a combination of me putting too much into the house and the area not being able to sustain the value of the build contract. I'm in Ballarat. This time around. Hopefully, I can share new plans shortly. I got caught up in the build process. Easy to do. This time I have made only one change to the plan and minimise the upgrades. Fingers crossed. Re: Expenses acquired during build. What am I in for? 17Oct 23, 2017 6:18 pm Even if my house was stripped bare and no changes made to the original plan it would still fail the valuation. Re: Expenses acquired during build. What am I in for? 18Oct 23, 2017 6:36 pm MangoLover - I tried that with my original plan to strip out as much as possible. But then it little resembled the concept of the house I had in mine. So I binned it and started again. I stilll building with same builder, but slightly smaller plan and not so many upgrades. I think I lost about 2K in money spent, but are reducing my build cost by over 50K so will save in the long run in mortgage interest. I just want a house at this stage. My partner will inherit land in due course and then we can build our dream home. Re: Expenses acquired during build. What am I in for? 19Oct 23, 2017 8:02 pm Go to a broker who deals with this situation regularly, banks will always give work to valuers who favour the bank, it's worst case type valuation, I've seen 20% and more in undervalue, a broker will fix this, and you may end up saving your $15,000 leaving you with a emergency fund, change your loan from bank to broker to fix your problem. Re: Expenses acquired during build. What am I in for? 20Oct 23, 2017 9:28 pm icat2000 MangoLover - I tried that with my original plan to strip out as much as possible. But then it little resembled the concept of the house I had in mine. So I binned it and started again. I stilll building with same builder, but slightly smaller plan and not so many upgrades. I think I lost about 2K in money spent, but are reducing my build cost by over 50K so will save in the long run in mortgage interest. I just want a house at this stage. My partner will inherit land in due course and then we can build our dream home. I don't think it would make a difference if I went with another smaller plan. You make the house smaller, then yes the costs go down, but the bank valuation goes down too. Their straight up generic design with no upgrades failed the valuation too. Just to makea point about this, an approach that some people have found sucessful in negotiating these rises down, Is to provide some workings to the builder, specifying… 4 82877 The only thing to add to these comments is that where possible it's always good to try and work with people than just say "no" because you can. Having someone… 4 18097 1 62411 |