The questions you should ask your builder to avoid hidden costs
When you’re looking for the right builder for your new home, it’s crucial to make sure you’re comparing apples with apples. And one of the areas where builders differ most is with their inclusions.
In this news post, the GW Homes team take a look at the common ways builders calculate a price – and give you some pointers on how you can choose the best method for yourself.
The difference between “turn-key” and “base price plus”
Spend any time talking to builders about their prices or quotes and you’ll likely hear the terms “turn-key” and “Base Price Plus” being used.
Before you lock in one option or the other, naturally the first step is to work out which method will be best for you.
But what does turn-key really mean? And what can you expect to have included in your home if you opt for a turn-key package?
Well, as its name suggests, a turn-key package should really be an “all-in” package, that comes complete with everything you (or your tenants if you’re building an investment property) need to simply open the door and move in. In most cases, that includes things like:
- Floor coverings
- …and more.
If you are building as an investment, you can see how a turn-key package home lets you start earning a return immediately.
At GW Homes, we believe that even with a turn-key package home, you should still have flexibility – and be able to swap out features for other makes or models that suit you better.
But if you’re looking for even more flexibility, a “base price plus” contract may fit your needs better.
What to look out for with a “base price plus” quotation
If you’re looking for a totally customised home designed completely to your requirements, you may wish to consider a ‘base price plus’ quote.
With this method your builder will give you a base price to build a home with a set basic inclusions list. You are welcome to add to them – that’s where the “plus” comes in.
At an inclusions meeting you can decide for yourself what you’d like to add (or remove) to this inclusions list, to make the home perfect for you and your family. This helps to get rid of the grey areas around your quotation.
The one question you must remember to ask your builder
Whichever quotation method you choose, the key thing to ask your builder when you’re presented with a quotation is:
“Is that going to be my contract figure?”
Why is that so important? It’s because some builders provide initial quotes that don’t include some items which are mandatory when you’re building a home.
These include QBCC insurances, the QLeave levy, Building Approval and Development Approval fees, costs for any council relaxations, and more – all of which are set out in the National Construction Code.
Some building companies use this as an excuse not to include them in their quotations – yet you’ll always have to pay them anyway. To save yourself a surprise, check that these mandatory items are included in your contract figure.
What you need to know about Provisional Sums
If you’ve ever had a good look at a builder’s contract, chance are you would have seen items labelled, ‘provisional sum’.
While that name might set off warning bells for you, in fact provisional sums aren’t necessarily to be feared. It’s just a matter of understanding them and making sure they work for you.
So what is a provisional sum? Basically, it’s a cost that’s included in a building quotation as a token amount, allocated to a particular item – let’s say $5,000 for carpet. This provisional sum helps give you an initial idea of your costs.
Then, once the actual item has been chosen, these provisional costs will be firmed up. The builder passes on the cost of the item to you, along with a margin to cover their time and labour. At GW Homes we add a margin of 10%, while other builders add up to 20%.
At this point one of two things will happen:
- If the actual cost is over the provisional sum, you will need to budget for the additional cost
- If the actual cost is under the provisional sum, then you should receive a refund for the difference from your builder.
To ensure transparency with provisional sums, your builder must retain and present any invoices and documentation around these costs.
Note that ground works, because of their very nature, will be listed as a provisional sum since they deal with things underground and out of sight.
Like to get an idea of your home building costs? Talk to us
The GW Homes team will be happy to talk through your building quotation possibilities, to make sure you select the right option for your needs.
To find out more about home building contracts, call our friendly team on 07 3393 1399 or get in touch with us online.