This Guide has been prepared by John Lianos, a licensed builder and independent client-side project manager with over 20 years’ experience in project and architecturally designed custom home builds as well as major alterations and additions in the Sydney region.
The purpose of our guide is not to scare you out of building your dream home. It is intended to inform you on how to alleviate risks and avoid potential pitfalls. Our guide should enable a smoother building journey where you the home-owner are more protected.
Let’s look at some potential risks that may arise, and then how to overcome them.
If you are looking for a partner you can trust that will have your interests at heart, feel free to get in touch via email to john@homebuildingadvisor.com.au
Servicing Sydney’s Inner West, Eastern Suburbs, Northern Beaches, Inner City, South Sydney (Bayside Council), North Shore and The Hills Shire.
What can happen if you choose the wrong builder
- Cost blowouts and excessive variations
- Time delays on construction
- Poor quality workmanship
- Unreasonable cost escalations on fixed price items before and during construction eg. Excessive price rise before you even start building
- Builder has deliberately excluded key items from their scope of works or not informed clearly what has been included or excluded from the home building contract
- Builder has deliberately understated their Provisional and Prime Cost items to make their price appear favourable eg. Has only included an allowance of $5,000 for your kitchen when it will actually cost $25,000 to get the kitchen you want.
- Builder has little experience with your type of project ie. new custom home build with a sloping site in Sydney’s Eastern Suburbs vs first floor addition in the Inner West of Sydney with little access vs duplex vs multi dwelling townhouses or apartments
- Builder does not execute the critical stage inspections as required by the Private Certifier and other consultants which means you cannot get your Occupancy Certificate which means you cannot move into your home.
- Home not built to plans and specifications
- Home not built in accordance with Council requirements
- Home not built in accordance with the Australian Standards and Building Code of Australia (BCA)
- Lack of supervision on day-to-day tasks on site
- Builder over-claims on progress payments
- Poor communication – Builder ignores your calls and emails
- Builder avoids or limits meetings with you on site
- Builder has taken on too many projects and does not commit to yours
- Builder does not have access to a range of suppliers and favourable pricing on Provisional and Prime Cost items eg. Bathroom-ware etc
- Builder does not administer the contract fairly
- Builder does not obtain all relevant certificates from their trades and consultants as required to obtain the occupation certificate.
- Builder causes excessive damage to yours or your neighbours property in the course of works and will not take responsibility
- Builder is dishonest with claims under a Cost-Plus home building contract arrangement
- Builder does not adhere with the appropriate Work Health and Safety regulations that puts others and the environment at risk
- Builder will not return to site to rectify defects after completion of the home.
- And lastly most people’s biggest fear. What happens if my builder goes broke?
It is important to point out that home builders are not the “bad guys”. When taking on a contract, a builder takes on as much risk as the home-owner, and does all they can to prevent financial loss. We are home building advisors and client side project managers and our primary goal is to mitigate risk, loss and heartache from the clients point of view.
Whilst I understand that undertaking a home building journey may be overwhelming, it can also be an extremely rewarding journey when it is done correctly. All you really need is an upfront, honest and professional team that can all work towards the common goal of delivering your dream home.
How to choose the right home builder in Sydney
Firstly, you need to identify the following:
- Where are you building?
- What is your land slope and orientation?
- What is your budget?
- What type of home design do you want?
- Do you already have a design?
Understand the different types of home builders and how they relate to your project
Project home builders
$400,000 – $800,000 build cost, standard design, generic inclusions.
Custom new home builders
$800,000 – $2,000,000 build cost, custom design and higher level of features and inclusions
Architecturally designed luxury new home builders
$2,000,000 + build cost, architecturally designed, highly customised inclusions, features and finishes. Detailed and complex construction.
Renovation, alterations and additions home builders
$300,000 – $2,000,000 build cost – major subfloor, ground and upper level additions, complex structures, Heritage, Bushfire or specialised building knowledge, bespoke and detailed internal finishes.
Hidden traps in Home Building
Project Builder Hidden Traps
Project building companies marketing geniuses and really know how to sell their product. The salesperson at the display centre may not always have your best interests at heart, as a significant portion of their income is reliant on commissions. They earn these commissions only if they successfully enroll you in one of their designs, which could lead to a situation where the chosen home design may not be suitable for your land orientation.
Most customers fall in love with the finished and upscale display home with the lowest base price set in their minds. What you see in a display home may not accurately represent the standard offerings. Typically, display homes showcase all available upgrades to enhance their appeal, often featuring extravagant features that can be very expensive.
The base price of a new project home generally covers only the essential elements needed to reach the lock-up stage and handover. This often excludes items like flooring, tiling, air-conditioning and fans, which are considered optional add-ons. It seems perplexing that many of the essential features are not automatically included in a new home.
Understanding what you truly need becomes challenging when you’re unaware of the available options. Many additional inclusions may be unfamiliar to you, some of which are crucial and, in my opinion, should be standard in a new build. An illustrative example is roof sarking that is used to prevent water from entering the roof cavity and ceiling. Surprisingly, some project builders reserve such necessities for their “premium” inclusions packages that cost extra.
The base price also typically excludes site costs and Basix. Site costs involve preparing the land for construction eg. Demolition and excavation, while Basix encompasses the materials and procedures required for compliance with industry energy, water and thermal standards.
Custom or architecturally designed new home builders hidden traps
Engaging with custom builders can sometimes pose higher risks. This is especially true for smaller businesses without the backing of a larger organisation, often lacking adequate resources and personnel for efficient project completion. Many custom builders operate without official websites or pages for customer feedback, making it challenging to assess their reputation and past issues.
The primary risk lies in the lack of available information regarding the builders’ experience and past projects. The builder may also have a poor work history and others may be relatively new to the building industry, potentially making you their first client. While every builder needs to start somewhere, being an inexperienced builders first client for a major new build may not be ideal. Another risk is the builder’s failure to manage the Development Approval conditions, relevant inspections and final certificates which means you can often struggle to obtain your final occupation certificate if anything is missed.
Custom builders with little support staff can also lead to poor selections and financial management of the project. When it comes to selections, you often don’t get a clear picture of what the builder has originally allowed for by way of Provisional and Prime Cost Allowances and what was actually installed.
Communication issues are prevalent with custom builders, often stemming from the builder handling too many clients without sufficient support staff. This results in poor post-handover communication and commitment to defects rectifications.
Perhaps the biggest risk with custom builders is their list of exclusions. It can be difficult to quantify how much extra money might be needed to complete a project if an excluded item is actually required.
Feel free to get in touch for if you need help in selecting a Builder for your new custom home or home addition in Sydney’s Inner West, Inner City, Eastern suburbs or Lower North Shore. I run a comprehensive tender process that will ensure you get what you are paying for. Contact me on john@homebuildingadvisor.com.au
Renovation, alterations and additions home builders hidden traps
The risks that come with the renovation, alterations and additions builders has less to do with the builder themselves than the type of project. As a client, you don’t know what you don’t know. Many of these builders do not spend enough time to accurately assess and detail what should be included within the contract lump sum price. As a result of having a large number of unknowns, you often find that these builders tend to have larger contingency sums built into their contract price.
In order to make their prices seem more competitive, the cheeky builders out there may deliberately exclude certain ancillary items from their project preliminaries or scope of works knowing that they are actually necessary to complete the works. The item may not even be written in a list of exclusions, it is just never mentioned anywhere and therefore, not included as part of the contract.
A poorly written scope of works by a builder to undertake an alterations or additions project is a major risk. It is easier for a builder to claim “I haven’t allowed for that” if it hasn’t been clearly shown on a plan or written into a contract document.
How to avoid the traps in home building
- Appoint an independent licensed builder to write up the scope of works and inclusions in your favour to ensure that what you need has actually been allowed for.
- Have a clear understanding of “what is” and “what is not included” in the build tender
- Assess the builders provisional allowance estimated values and if they are realistic. There’s not point for a builder allowing $5,000 in their price for a kitchen when it may actually cost $50,000 to get the kitchen you want.
- Appoint a client-side project manager check or prepare the home building contract from your point of view
- A building broker can be a good way to source a reputable builder. They have established relationships with builders, are familiar with their work history, complete the relevant insurance and license checks. They work much like a mortgage broker that finds the best loan for their clients.
- If you think you’ll move ahead with a project builder, check that the design suits your block, orientation and that site costs are included. Ask how much it will cost to release the design if you decide not to proceed after tender.
- If specified in the quote, check what fixtures and fittings that have been allowed for and the cost if you wanted to upgrade
- Ask the builder for a construction timeline with a start and finish date
- Include a liquidated damages clause within the building contract
- Include the builders schedule of rates for variations to be included within the contract
- Look at the builders’ references and past projects
- Ask the prospective builder if you can talk to one of their previous or current clients and visit a past project
- Perform a NSW Department of Fair trading license check to see if they have any poor history of warranty claims or builders license cancellations.
- Check the builders business set-up ie. how they operate, how many staff, who will be on site for your project
- Check the builders availability to build your home and confirm the on-site start date
Feel free to get in touch for if you need help in selecting a Builder for your new custom home or home addition in Sydney’s Inner West, Inner City, Eastern suburbs or Lower North Shore. I run a comprehensive tender and builder selection process that will ensure you get what you are paying for.
Contact me on john@homebuildingadvisor.com.au
Happy Building!!!
