We take up from where we left in the last Blog post.

3) Site Costs

This is a favourite cause of frustration from all the feedback we have received so far. How do you account for site costs? In our books, there is no easy way to do it.

In simplistic terms there are two major variables that affect site costs – the slope on the site, and the effort required to reach stable soil. Engineers and builders could tackle these two variables from a wide range of approaches. They are the ones guaranteeing your product, so rule 1 is that they should be comfortable with the approach. Each approach would have its cost, and it may not be the same.

As a Builder, we often have access to engineering reports from new estate developers. These reports do give limited information that is useful for limited estimation of the site costs – slope, fill etc. But the only way to get the correct estimate is to do a comprehensive soil test and contour profile on each plot. For peace of mind it may be worth your while to spend a few hundred dollars on these reports, so that the builders can cost you accurately.

We have heard of some Builders offering fixed site costs without the soil test and contour report. In our opinion this is best described as hedging your bets – some you win some you don’t. Or in other words, the majority of customers are paying more to subsidise the minority who require expensive site works.

It is also very advisable to look at total costs. Over the years we have been exposed to many site works – other builders of Course , that make us scratch our heads (putting it mildly). One standout case involved completely cutting out a slope about 3 meters away from the road. The customer then ended up with a driveway 3 meters deep, and large costs for retaining walls (these retaining walls fell very conveniently into landscaping costs and are not normally part of the building contract). It is highly recommended that you discuss the approach that your builder is taking, and feel comfortable in all aspects of this approach.

4) Customisation

In the end all houses have a very similar theme- so many bedrooms, a kitchen, some living areas. What really sets yours apart is the customisation that you do to make it perfect for you. It may be as minor as colours, or as major as structural works. But in the longer term, without these customisations, your house would be a bigger compromise that it needs to be. So make sure the product or design that you shortlist ticks all the boxes you think is important. There are far too many people with regrets, when all it required was a clear head, at the beginning of the process.

And accept the fact that there are going to be variations – it is just human nature. It is impossible to think of everything right at the start. It may be an idea to consider working with a builder who does not consider a variation an opportunity to plunder the customer.

And do not hesitate to think outside the square. Will automation help your lifestyle? Is connectivity important? Is mobility going to be an issue? Thinking of these things may just help you enjoy your house that much longer.

5) Profit Margins

A few clients have told us that they believe that all builders make at least 30% profit, and therefore there should be a lot of room for negotiation. Considering that there are over 2000 builders in Victoria alone, there is a possibility that this could be true for some, but not any that we have met.

Most builders would have 3 components to their price: X (Cost of Build) + Y (Overheads) + Z (Profit)

X is the total of materials and subcontractor charges, Y is where the payments for salaries, advertising, office overheads and the BMW’s come from. Z is generally the small profit margin that will ensure that the business will remain a viable business in the years to come (and support your warranty claims if any).

Larger builders are generally able to achieve a smaller X (volumes and buying power), but have a larger Y (more staff and costs). Smaller builders have a more efficient Y, but often pay out more in X. We have only heard of examples and case studies of Builders who give up on Z, just to generate work, but it often comes at a disastrous cost.

If any builder is able to generate a 30% profit, they are in a very lucky place. When this figure includes both Y & Z components, it starts making more sense – for certain builders.

 

We hope, that we have cleared up at least some points for you. Feel free to call us on 1300 722 703 if you need any of these points to be further detailed. And come visit us at the InnoHomes display home at 4 Clovelly Way, Officer, Vic. 3809 to see what this new approach to home building is all about.

 

A common theme that emerges from our visitor feedback, is the understanding of why pricing seems to be so varied between Builders. This is our attempt to clarify a few common aspects about the sales process:

1) Pricing the house on a per-square rate.

This strategy probably works best as a rough guide only. The two major cost elements into your house are the structural items and the inclusions. The inclusions are visible, so price comparisons can be fairly transparent and accurate. The structure not so much. Standard designs from major builders will have a very lean and efficient structure, to keep costs down to a minimum. Block on Block designs, single roof design, etc. all contribute. This is where custom designs may lose out on. To achieve the design modification that you consider perfect for yourself, we may have to include structural elements like Iron Beams, Complex truss designs etc. This cost is not easily visible to the customer, hence the price per square rate strategy may not apply.

2) Bait Pricing

This is a strategy used to attract customers by luring them with the thought that they will have to pay less for something that costs more. This is often achieved by stripping the house down to the bare minimum needed for an Occupancy Certificate. Although there may be customers who are looking to buy such a product, we haven’t come across very many.

Most builders will price their houses at this minimum, so that they don’t lose out in a basic comparison. If the customer gets it in their mind that the builder is too pricey, it is never a good start. Most builders will then have an inclusion list that the majority of their customers will be happy with. This is probably a better start for comparisons. Also it is very important to factor what is not included. An advertised special may list all the wonderful items that are included, but the bite most certainly is in the items that are not. We have had feedback stating the major cost factors to be in site costs, driveways, cooling, minor customisations, etc. We have also seen quotes from other builders also charging extra for construction costs (scaffolding and temporary fencing!!). The only way to then realistically know what your true costs are, is to get a comprehensive quote on the product. Naturally this is going to be time consuming for both you and the builder, so it makes sense to go through this process if you are interested in the product offering.

In our next blog we will go through a few more of these points, to try and clarify them for you. Feel free to call us on 1300 722 703 if you need any of these points to be further detailed. And come visit us at the InnoHomes display home at 4 Clovelly Way, Officer, Vic. 3809 to see what this new approach to home building is all about.

 

 

 

When it comes to roofing materials in Australia, two types are considered more popular than other. These are concrete roof tiles and corrugated metal roofing with a bonded paint finish. The latter is typically known as Colorbond or CB in the country. Both are weather resistant but the homeowner’s taste, needs, and budget also play a very important role when a purchase decision is made.

Concrete roof tiles have been used in various Australian cities for more than 75 years. Colorbond may be newer, but just as popular. However, there are some key differences which are worth considering when choosing one over the other.

Architectural Merit:
The concrete roof tiles have come a long way from being just a standard half-pipe tile.  While maintaining a traditional look, these tiles are available in a variety of colours. Colorbond has a modern stylish look with clean lines and are also available in a wide range of colours.

Noise:
Colorbond roof is not known for its sound proofing quality. Tile roofs are admittedly much quieter. While you can lay additional soundproofing to dampen the sound of rain and hail on a Colorbond roof, you cannot really get rid of the noise.

Weight:
Colorbond is much lighter than tile roof. Thus, your roof framing is much lighter; rafter spacing can be wider.

Resilience:
Colorbond is more resilient than concrete roof tiles.  So, in case you need to climb on the roof for maintenance work, be more careful on tile than on Colorbond.

Maintenance:
While there are reports that say Concrete tiles crack easier than Colorbond, it is almost always due to misuse. Also concrete tiles would be the preferred option if you wanted to modify portion of the roof later, for example installing a skylight.

Cost:
While concrete tiles are cheaper than Colorbond, the total costs depends on the roof design,  which includes the trusses, insulation etc. The total costs are normally not significantly different for each of them.

Siting:
Concrete tiles may be a better option in corrosive environments such as areas near the sea etc.

They are both excellent choices, and is truly determined more by personal preferences than any other criteria.