You may have just received a quote from Homes by Dalessio to build your home and you’re reading through it. It’s quite a long document with plenty of information, pricing options and possibly some comments about design. Obviously the main factor of looking at the quote is the bottom line – the price. It’s human nature that we all want to get the best deal and unfortunately the strategy of many building companies when presenting their quote is to show a figure that is as low as possible to entice clients, whilst omitting some items that are in other quotes.
Over the years I’ve seen quotes that have been ridiculously low and when delving deeper into them found many items that were simply not included though may have been specifically asked for by the Architect, Designer or Building Broker. This ultimately skews the prices and does not allow for an accurate comparison. Unfortunately I’ve also heard of numerous people who have committed to a builder based on their initial quote being the ‘cheapest’, paid a substantial deposit, and then find that the quote did not include many items they had assumed were included. Rather than lose their deposit they stay with the builder and end up paying more – sometimes higher than the other builder’s prices that were originally deemed to be too expensive.
I want to highlight to potential clients who are looking at my quote that this may explain why another quote may be less than mine and to be mindful of what is (or more importantly isn’t) included. They need to cross check items to see that they are comparing similar allowances. Some builders will not state the allowances of the bigger ticket items such as cabinet work, ceramic tiling, stone tops, plumbing fixtures, extent of electrical or balustrading for example. My quotes always detail what these are. If I’ve allowed $30,000 for cabinets and $15,000 for stone tops and another builder has only allowed $15,000 for cabinets and $5,000 for stone tops it is quite obvious that you will be getting more with the higher allowances. This may mean a larger extent of cabinets, better quality fittings , more drawers or overhead cupboards, a better handle allowance and so on. All these extras, if you want them in the lower price, will cost you more at ‘pre-start’ and often you won’t know about these variations until you have already signed a building contract. I would encourage everyone to ask builders to list these type of allowances in their quotes. If they are not willing to identify these I would be questioning why? You need to know to make an informed decision. You can certainly tell the difference between a $15,000 and a $30,000 kitchen. You don’t want to scrimp on an area like this, from not only a long term resale point of view, but the kitchen is a focal point of a home and an area we spend time with family and friends.
Another aspect of the quote to consider are the structural (Engineering) requirements. Often the initial quote are based on ‘sketch plans’ and not full architectural and engineering working drawings. Many builders make assumptions at this stage on items such as footing sizes, slab thickness, extent of trench mesh, columns and beams. I have seen other builders who estimate based on the smallest possible footings without trench mesh, weakest slab reinforcement, smallest thickness of slab, no beams and no columns. The bottom of the quote will then read “Subject to Engineer’s plans.” Their quote will generally be cheaper as they have opted to price less concrete, less reinforcement, less formwork etc. It’s not until you, as the client, have paid your money to get to working drawings that the builder will get Engineer’s plans prepared. Once they are completed and they find that they have to allow for items like 3 course slab areas, concrete beams, cavity columns and additional reinforcement, the builder will tell you that there is now an additional cost. I know from experience if a house will require a 3 course slab in a certain area, a concrete beam or a particular structural steel detail and I will include this in my initial price. If a builder is professional and experienced enough they should know this and allow for it. Why not include that up front? My quote will still say “subject to Engineer’s plans” but generally I’ve foreseen most of what they will identify.
Electrical items are another area that a builder might not include enough in their quote. You can spend thousands of dollars on upgrading numbers of power points and down lights. It’s not uncommon these days for a home to have 75 – 100 lights in the home. Most lighting shops will up sell the number of lights you realistically need. I remember in the homes that I grew up in we had one light in the middle of each room – now we can have bedrooms with 4 downlights and living rooms with up to 8 – 10 downlights. You also only have to drive around new housing subdivisions at night to see the number of external lights that are now common on new homes. The lighting layout can be an excellent enhancement of a home but you must be aware that every electrical point has a cost associated with it.
One of my previous bosses used to say “there are no magic formulas to building a house.” One builder can’t build a home for less number of bricks than another or less number of door frames from what is shown on the plans. There are basically only three ways of reducing the price of a home assuming the same specification – to pay lower labour rates (eg. bricklayer, plasterers, carpenters etc), to lower overhead and profit margins or to have a better buying power on materials.
Labour Rates – a builder essentially co-ordinates the relevant suppliers and sub-contractors in order to have available the correct materials for the sub-contractors. A builder therefore is only as good as the quality of their sub-contractors. It is very important then for a builder to have a dedicated team of quality focused and detail orientated sub-contractors who enjoy working for the builder. Some builders will drop sub-contractor rates at every opportunity in order to gain market share. This though can have a negative impact on the quality of the workmanship as less money is available and therefore ‘rushing’ a job is inevitable to recover the loss due to the reduced rates. Whilst I need to make sure what I pay my sub-contractors are within market rates I will not sacrifice quality in order to reduce payments to a bricklayer or carpenter for example. I have a core group of tradespeople that I work with and will wait for them if they are working on another job. Whilst sometimes clients do not like to see nothing happening on their home when I ask them if they would like me to get someone out of the local newspaper that I have never worked with before, or wait a few days for my team who I have worked with for over 15 years, we always end up waiting. The adage of ‘you get what you pay for’ is also very applicable in the building industry.
Lower Margins – every business has different overheads and this will influence what margins are applied to costs. Homes by Dalessio is a family owned and operated business with low overheads and this allows for margins to be very competitive. Building a limited number of homes per year also means that I do not need to spend thousands of dollars on marketing which increases overheads.
Buying Power – a downside of not building hundreds of home per year is in negotiating with suppliers on purchasing rates. Project home builders do have the ability to purchase certain products at higher discounted prices than a smaller builder but if you are looking at one of my quotes it is more likely that you do not want to have a project home experience and are wanting a more personalised approach to the building process. There are a large number of smaller builders operating in the Perth metropolitan market now and many suppliers are recognising that we are becoming an influential part of the market so capturing our business is important.
If you are looking at 2 or 3 quotes from other builders it may be overwhelming to establish an accurate comparison between them. I would encourage a comparison schedule like shown attached below be prepared to assist with getting to an ‘apples for apples’ comparison. This may be able to be done by an Architect, Designer, Quantity Surveyor or Building Broker. You can see from this real life example where my initial presented price was not the cheapest but when the comparison was done I actually was.
Please feel free to contact me directly to discuss any aspects of my quote to enable you to make an accurate and informed decision.