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2019-09-17 Property Tips
Author: Satterley

What are the hidden costs of building a house?

The land buying, home building journey is both exciting and deeply satisfying. However, for some the journey can come with uncertainty.

The good news is some of the common pitfalls of building a new home can be avoided with careful planning. So what traps should you look out for, and how do you navigate around them? We asked Wendy Shenstone, marketing manager at Western Australia's Homebuyers Centre. Here are her tips:

Plan your finances

"If the deal seems too good to be true, it probably is," said Ms Shenstone. Yes, incentives could be exactly what they claim - a good deal - but Ms Shenstone told us that choosing a home because it's the cheapest could lead to sacrifices in service, quality or time, depending on why the house is such a low price.

Additionally, one of the most common things the Homebuyers Centre team sees is eager first-time builders not understanding their finances before making big decisions. For instance, some customers look at available land and house designs before sorting out what they can afford to borrow, which can cause disappointment when what they expect isn't what they can afford.

So how do you avoid these pitfalls?

Finances should be the first thing you discuss on the home building journey. What can you save, what can you afford to repay? Can some compromises be made to get more from another area, i.e. a smaller house in a better community?

Bearing in mind that saving for a higher deposit doesn't necessarily mean you'll have stronger borrowing power - indeed, Ms Shenstone said that sometimes when customers take longer to save, house prices rise in that time, meaning they're worse off than before (despite having a higher deposit amount).

If your finances are figured out, you'll be confident in building the home of your dreams on your new land.

Plan for your builder

It's never a nice surprise to experience hidden costs, and researching your builder is one way to mitigate some of these.

For example, 'siteworks' and 'provisional sums' are two terms you may hear from your builder, and both of them can cause sudden expenses.

  • Siteworks refers to the work needed to be done on the land so a house can be built (including soil reports, contour surveys, etc.). If this isn't 'fixed' before you sign, extra costs may pop up when it comes time to lay your home's slab. This is one reason why buying land in a masterplanned community is often safer than purchasing a vacant lot in the suburbs - lots in a strategically developed community sometimes receive at least basic siteworks before being sold. That said, things can still pop up so always get a quote from your builder before making key decisions.
  • Similarly, provisional sums are the industry's way of saying 'estimate' on a contract. When there isn't enough information to make an accurate quote, a provisional sum may be inserted and if it underestimates the cost of work, you may be stung with a higher invoice later on.

Additionally, Ms Shenstone advises aspiring home builders to be wary of choosing a builder that has a poor reputation, either for quality, time or cost. Any of these can create additional strain on your home building experience.

Pull quote: Knowledge is power, and you can never ask too many questions.

So how do you avoid these extra building costs?

In Ms Shenstone's words: "Don't be afraid."

Knowledge is power, and you can never ask too many questions of your builder. How many years have they been building? Can they assist you with finances, and if so, are they partnered with a reputable finance company? How many homes have they built, and can you view any or talk to previous customers for their review?

In terms of design and costs, can your builder provide a list of what is included in their service? Do they have fixed siteworks? Do they build provisional sums into their contracts?

"People are often dazzled by promotions or deals that are advertised," said Ms Shenstone. "But remember that building a home is one of the biggest achievements of your life; it is important to focus on what really matters - quality, reputation, trust. These are the things that will make building your first home an enjoyable experience."

Construction tips for first home buyers

About Homebuyers Centre and Satterley

Homebuyers Centre is one of Western Australia and Victoria's most trusted home builders, having helped over 30,000 first-time buyers into their dream home. Plus, they only work with the nation's best community developers, like Satterley.

Satterley has been in business for over 35 years, creating masterplanned communities for more than 250,000 residents across the country and taking home over 100 industry awards in the process. To find the perfect community to build your new home (pitfalls not included), check out our lots for sale today

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