There are a few skills you’ll need to develop when building a new home – the first of which is knowing how to compare building quotes. All too often, people choose a builder based purely on the price of a quote, but it’s important to look beyond this.
Comparing quotes is about investigating the details and looking at what’s included and more importantly – what’s excluded. Continue reading to discover how to accurately compare quotes from builders.
It’s All in the Detail
A building quote should be a highly detailed document, with at least 10 pages of detail. In it, your builder should account for every single detail of your new home – from the flooring to the tapware.
Keep an eye out for items that aren’t specifically listed as this means they won’t be included in the estimated cost and you’ll likely have to pay extra for them down the track. Similarly, ensure your builder has listed a summary of all items with specific details. Ambiguous quantities and costs can have significant impacts on your build and lead to potential budget blowout, so it’s important to iron this out early.
Be Wary of Prime Costs and Provisional Sums
Prime Costs and Provisional Sums are estimates used in a building contract when the actual cost of a service or item cannot be determined. While these are not red flags on their own, some builders will low-ball these figures to make a quote look cheaper.
Always check that prospective builders have allowed for the same or similar amount in your quote – anything extremely cheap or expensive may be cause for concern. Similarly, if there are an excessive number of Prime Cost items or Provisional Sums, your quote will be more susceptible to unpredictable fluctuation, which can lead to budget blowout.
It’s also important to look for Prime Cost items listed as “items from builder’s range,” as this may signify your builder allowing for cheaper selections over brand name products. Should you wish to choose brand name appliances or mid-range tapware when it comes time for selections, this may add unexpected dollars to your contract cost. It always helps to have an idea of what you’re after when comparing quotes – if you know you want to splurge on high-end kitchen appliances or bathroom fittings, speak to your builder early so they can allow for this in your quote.
Accountability and Accuracy
Always make sure you’re comparing “apples with apples”. Ensure every quote you obtain uses the same items, variation margins, warranties, and allowances for provisional sums. It’s also important to clarify whether your builder expects you to supply any items, as this can often go under the radar.
To avoid a second-rate quote, ensure your builder has completed research and detailed documentation on your specific build. Those who haven’t will have prepared a simple estimation, which may be overpriced or include an excessive number of Provisional Sum items.
A professional and accountable builder who communicates clearly from the beginning is more likely to run a professional and efficient building site, making for a more enjoyable building experience for you.
Look Out for Deceptive Offers
Be wary of builders pushing sale offers, like ‘free upgrades’ or ‘cash back’ schemes, to try and sell their products. While this may seem like a good deal upfront, there is no guarantee and any diversion from a fixed price quote can lead to higher costs and budget blowout down the line.
Consider Your Warranty
When comparing contracts, be sure to look at the warranty for your new home. All builders will provide a six-year warranty for major defects, and two-year warranty for minor defects (anything less than this should be an instant red flag). If these periods don’t suit your needs, you can request a longer timeframe and choose a builder who can provide this service.
Profit Margins and Variation Costs
The final step when comparing building quotes is to examine whether the builder’s profit margin applies to variation costs. Some builders will purposely set their contract prices low to secure your business and only then reveal excessive variation margins. If you’re unsure, 25% is generally considered a reasonable rate for variation margins.
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Want to know more about what should be included in a building quote? Get in touch with the friendly team at Pilot & Pine Homes today.
