smartbuild · 2017. 4. 12. · manage current jobs while pricing new requests. however, they are...

You’ve decied to take a journey to build your dream homeCongratulations on making the move to create your ideal place of residence. Yes, there is risk associated with this exciting responsibility but Smartbuild South coast is here to guide you through every step of the process. As the Illawarra and South Coast’s leading custom-built homes specialist, we take pride in educating and supporting you through the creation of your future.

Where do you begin and what should you avoid?

It starts with selecting the right type of builder

Selecting the right builder is by far the most important decision you have to make when it comes to constructing your house. Some builders have outstanding reputations while others are the cause of great financial ruin. We have witnessed many clients, prior to working with us, who hired the wrong builder and are still paying for the mistake. If you want to create a custom-built home, it can take a long time so you must select a builder you can trust.

Different types of builders are available to serve clients. The industry can be split into project home builders and custom home builders.

SmartbuildS o u t h c o a s t

SOUTH COAST’S CUSTOM HOME BUILDING SPECIALIST



SOUTH COAST’S CUSTOM HOME BUILDING SPECIALIST SOUTH COAST’S CUSTOM HOME BUILDING SPECIALIST

PROJECT HOME BUILDERSProject home builders are typically companies concentrating on large volume. Customers make a selection by either visiting a display home or browsing through a set of ready-made designs. This method suits people who do not want go through the design process and are satisfied with compromising.

The final figure paid will depend on the inclusions selected. If you wish to customise one of the project home set designs to match your needs, often the project builder will not provide a price adjustment until you sign a contract.

Your experience with the build will depend on the supervisor allocated and generally, you won’t be offered a chance to see your house or hold a site meeting until construction is almost finished. It’s also important to note that most project home builders do not take on complex jobs, e.g. sloping site, irregular shape, more than two levels.

CUSTOM HOME BUILDERSCustom home builders are usually smaller companies who will build a house to your brief. They service a market larger project home builders simply can’t and won’t cater for. Most custom home builders will personally run your project with a flexible approach to meet your needs.

The house can be designed to suit you and importantly your block of land with features such as windows placed strategically to maximise natural breeze and view. You can be involved in the entire process, from the first meeting with the architect to material selection. The builder will maintain a close relationship with you until the project is completed.

A custom home builder will also accommodate a change of mind mid-construction. Let’s face it, most homeowners can’t read a plan and aren’t 3D-literate. This gives you a chance to improve the design as it materialises which ultimately results in a superior dream home.

SELECTING YOUR BUILDERYou have now made up your mind on which type of builder suits you. In the following sections, we will focus on custom builders.

Let’s look at how to select your builder.

There are many builders available to hire but not all are good operators. In recent years, we have seen too often builders who take your deposit as a cash-flow income to subsidise other jobs. Eventually, those builders go out of business leaving behind a string of unpaid subcontractors and homeowners in a financial mess. In NSW, homeowners are covered by an insurance scheme however victims ultimately still suffer through delays and financial losses. They are also then assigned a builder through the insurance company.

A good builder has the following attributes:

• Excellent written and oral communication skills• Sound organisational skills• Trustworthy• High attention to detail• Honesty• Specialist skills

Simple checks you can do:

• All builders have to be licenced. NSW Building and Construction Department of Fair Trading offers an online licence search which shows what type of licence your builder holds and any history

• Verify a builder’s reputation by going through their past work and speak with past clients

• Check if the builder has won any industry awards

• How long have they been in the business? Some builders offer a 50 year guarantee on their structure but will they still be in business tomorrow?

• Ask to see their quality control measures

• Identify their insurance level

• Find out what type of contract they use. Master Builders or HIA contracts are good, but a contract drafted by the builder will be heavily biased toward the builder.

• Finally, ask yourself - can I work with this builder?




WHAT TO AVOID

AVOID FOCUSING ENTIRELY ON PRICE

This is the most common mistake homeowners make. You must compare apples with apples. You need to understand what is included in the price and just as importantly, what the builder has excluded from the quote.

What does it cost to build a house in NSW? Some background information will help you understand where your money is going.

• Most people will have committed a budget to building a new home but how far will that budget stretch? Let’s examine how the power of your budget diminishes due to Government regulation and taxes even before construction work begins.

Let’s say you have a $700,000 budget to build a house. The following non-constructive costs will be dispensed before a building approval takes place (assuming there are no other issues e.g. town planning approval, building over or near a sewer, stormwater etc.):

Total budget $ 700,000.00Less 10% GST -$ 63,636.36Less compulsory insurance -$ 5,347.59 Less compulsory levy -$ 3,325.00 Less typical documentation feeArchitectural design fee -$ 31,500.00Soil test, surveyor -$ 2,200.00Engineering design -$ 2,000.00Plumbing approval -$ 808.00Building certifier fee & energy report -$ 1,980.00 $ 589,203.05

As you can see, a large amount of money has already been allotted without yet considering the builder’s time and cost.

• A majority of builders in the industry are running on close to zero margins. This is extremely alarming. On the surface, it seems like you are getting a great deal but in reality, the builder could be just a few months away from bankruptcy and relying on your 5 per cent deposit.

Most builders genuinely have their client’s best interests at heart. They are extremely good at construction but struggle with handling paperwork and numbers. In the past, Smartbuild South coast has been called in to help homeowners clean up the mess left by other builders. In cases where homeowners are financially healthy, they can afford to have the job completed by another builder. Sadly, it’s all too common for a homeowner to have overpaid the first builder leaving little in the budget to finish the job. Costs rise, projects stall and some cases end up in court. In all industries, there are cowboys negligent in their practice whereby harming clients. You will only know you’ve come across one when problems start occurring.

• The materials paid by builders are all very similar, some might get a fraction more discount but it is not going to make or break the project. Additionally, all builders have to pay for accountants, administration, legal costs, supervisor wages, superannuation etc.

• A large difference in cost can be tied to the tradesmen a builder employs. If you pay peanuts, you will get monkeys. The most successful builders will not pay peanuts as they know their reputation is too precious to jeopardise. A good builder will rely on handpicked tradesmen to deliver quality and craftsmanship.

Remember this when comparing prices - ask what is included and do not base your decision on the cheapest quote.

AVOID GETTING TOO MANY QUOTESSeeking multiple quotes is common as many homeowners are weary of builders milking their precious savings. Keep this in mind, most builders are busy and so are their tradesmen. Most tradesmen own small family-run businesses and simultaneously manage current jobs while pricing new requests. However, they are not going to complain about providing quotes when those quotes have the potential to generate work.

A detailed quote typically takes four weeks to compile and involves input from the builder, multiple tradesmen and suppliers. If the builder believes they are only being contacted as a price check, naturally they are reluctant to dedicate time. Often builders do find out if the homeowner has multiple parties quoting the same job and many won’t hesitate in working anyway.

Do your research first and only select builders you feel will be the right ones for you. If you do not intend to work with that builder, please refrain from asking for a quote because that price is irrelevant.

Many reputable builders will charge a fee to prepare a quote for the homeowner. This fee is typically a fraction of the cost to prepare a quote. It ensures the clients are genuine and the quote produced will be accurate and useful.

AVOID BEING UNREALISTICMedia are partly to blame when a homeowner is disappointed with the builder’s quote. Many advertisements are deceiving in listing a minimum price while illustrating the full option.




Often the expectations of a homeowner don’t match what is achievable with their budget. It is in your best interest to be honest with the builder when explaining to them how much money you are hoping to align with your project.

If the quote is too high, consider removing certain features of the house or whether extra space is necessary. In our experience, it is far better to spend money on making a room feel right than to have a larger space which feels empty.

AVOID SKIMPING ON DESIGNFor a custom-built home, it is a sin to skimp on the design fee. You can employ the best builder to craft you the best house but it won’t function properly without a smart design. A well-designed house will enhance enjoyment for the homeowner and add value to the property at resale.

Options to designing a house include engaging a draftsperson, a building designer or an architect. There is ongoing debate as to which one is better and we will not try to end it here. Their fees vary with architects charging the most but once again, cost varies depending on scope and the value you are seeking.

It is much cheaper to correct a mistake on paper than during construction and having a 3D model created will eliminate most of the risk. It is however almost impossible to build without variation during the process. It is important that the builder is flexible and is willing to work through any changes you wish to make as the project progresses.

Another common problem for homeowners is when their fantastic architect-designed house is priced at twice their budget. Architects and designers are extremely talented in creating great designs but on some occasions they can fail on costing.

A good Architect will usually get the builder involved during the planning stage, this is very important that both the builder and Architect can work together on ensuring the budget is realistic with the design and scope of work at hand.

ENGINEERINGOnce you have decided on the design of your custom home, engineers need to work out how the structure is built. They need to be engaged to design the house footing, slab, walls, floor systems and roof. On sloping sites, engineers will also design the retaining wall system.

At a minimum, the builder needs both the architectural drawings and structural engineering drawings to form a detailed and accurate quote.

TYPES OF BUILDING CONTRACTSOnce plans are finalised, a budget is locked in and you’ve decided on a builder, you will need to sign a residential building contract. Beware if a builder uses their own ‘custom-made’ contract. Housing industry bodies including the Master Builders and Housing Industry Association (HIA) have standard contracts for their members to use which protect both the builder and the homeowner. Their documents have been drafted by lawyers and updated over many years in accordance with legislation changes.

The two common contract types are a Fixed Price Contract and a Cost Plus Contract.

Fixed price contract: This option is for clients wanting a quote from a builder where the payment doesn’t depend on resources used or time. You must make sure everything has been included or at least ensure there’s a provisional sum provided for unknown items. Finance companies prefer this type of contract if the client is financed and knows the price. Negatives arise if the client wants to make changes mid-process as this incurs variations to the price and results in administration costs.

Cost plus contract: This is a flexible contract which can be set up in a variety of ways. This type of contract can receive poor press when dishonest builders supply an unrealistic budget and/or charge retail rates for supplied items. In good hands, this is a very flexible and workable way to build. Most finance companies will not finance on this type of contract.

a) Cost plus a set margin on all expenses: You will receive an invoice from the builder, generally every fortnight for the cost of all materials and labour. A margin is then added which is usually between 10 to 20 per cent depending on size and what is included. The margin charged will be less than a fixed-price contract. The reason for this is the builder has good cash flow being paid every fortnight and here is the big one, the builder is not responsible for the end price. For this type of contract to work well, you will be in regular close contact with the builder and he will need your constant feedback. Some clients love being involved at this level however if you don’t, I would not recommend selecting this type of contract.




b) Project management: This is when the builder has a fixed price for his services which should include all supervision, organising trades and materials, administration and overheads attributable to the construction. Your builder will need to do an accurate estimation of costs and supply you with updated figures along the way so you can see if you are ahead or behind budget. I find many clients, when presented with options of upgrades and the difference between the options, inevitably upgrade and go over budget. This is fine as long as you are made aware when expected costs for that item or trade have been exceeded. Your builder should provide all supporting invoices so you should be paying trade prices (i.e. what the builder gets it for).

KNOWING WHAT YOUR BUILDER IS NOT INCLUDINGYou must check to see what you are responsible for and know exactly what the impacts will be, as this could be quite costly and quickly cut into budget contingency funds.

What you should check:Some things you should look out for are:• Removal of leftover soil from excavations may

be excluded from the contract and this process can be very costly.

• Retaining walls are often excluded from the list of builder’s responsibilities which can leave you underfunded with very little access to build the retaining wall.

• Inclusions such as floor coverings, light fittings, bathroom accessories, paths and driveways which you would consider mandatory are often forgotten.

• Fencing and gates are often omitted from contracts but need consideration.

• Site cleaning is a must for most diligent builders but can catch out the unwary client, which means a sizeable wastage and truck hire bill.

• Landscaping is sometimes an assumed inclusion with a new home but you need to double check this and have a contingency sum.

KitchensThe kitchen is the heart of every home. Your day begins here, families gather here and parties usually end up here. The best kitchens are the ones designed for cooks and families. They need to blend seamlessly with the rest of the home. Selections for a kitchen require expert advice and I find clients really like being involved. The architect or designer may be vital when it comes to designing your home but the kitchen requires a specialised professional equipped with knowledge of the latest trends and technology.

FurnishingHave you ever wondered how properties featured in magazines look so charming? It’s connected to the way a home is decorated and furnished. When your custom-built home is created, the hard surfaces are complimented by the introduction of soft furnishings with the end result being a comfortable living space.

Interior decorating is an art form and if professionally done, your home will shine. More importantly, it will draw people to the enjoyable space.

When homeowners attempt to decorate without the guidance of a professional, they can be overwhelmed with the task and a disconnected theme becomes apparent. A professional interior designer creates harmony in the home while saving you time and energy.

Home AutomationImagine if you could switch every light in your house on or off, control your home theatre system, water the garden, close your blinds, turn on your fireplace, manage your home security, control your pool equipment and heated floor system all from one touch screen or remote control…. This is home, automation. Automating your home gives you flexibility that standard electrical


SOUTH COAST’S CUSTOM HOME BUILDING SPECIALIST

wiring cannot. It also offers you energy efficient lighting and electrical options, which again are unavailable to you in a standard wired home.

Home automation is limited only by your imagination. It allows you to link together various components of your lighting and electrical system to make life easier as well as save energy and money. Imagine grouping lights together to achieve a party theme, switching on your entertainment system, sparking your gas fireplace, closing your blinds and dimming your lights, all from the comfort of your lounge. Automation offers you a large range of options.

You can control the air conditioning from one central point, this alone is a cost saving feature that will also address environmental concerns as you minimise your carbon footprint. Similarly, imagine being able to water your plants at the touch of a button. Not only is this a water- saving feature, it will enable you to keep your garden in pristine condition at all times.

Smart wiring enables the combination of many

different types of wires used around the home into a single platform. This allows for the integration of numerous smart home systems and sensors throughout your home and the capacity to add more at a later date if you want to do so. A smart wiring platform can include wiring for lighting, internet, security systems and home entertainment systems.

The investment return if you ever sell your home is well worth it.

YOUR NEXT STEPYou are now equipped with the right knowledge to take the next successful step on the path to custom building your dream home.

Be assured that Smartbuild South coast is here to assist you at every stage, from site acquisition to the final furnishings.

We understand the process can be emotional and our winning team of architects, designers, suppliers and trades can be trusted to deliver an extremely satisfying result.

smartbuild · 2017. 4. 12. · manage current jobs while pricing new requests. however, they are...

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