Home Builder Bait & Switch

freakatronic on 23/08/2017 - 14:45
Last edited 24/08/2017 - 11:35 by 1 other user

I have signed for a house and land package with a builder. I paid a small deposit to the builder and a 10% deposit now to the land developer. When I began talking to the builder, they showed me some options and so forth. I settled on a package with a home design and a block on which it would fit.

Now that deposits are paid, the builder has come back saying the living area of the house will have to shrink by roughly 1.5m² to fit the house on the block. They have offered me a paltry compensation for what I see as a significant loss. I reject their changes and compensation, saying to them that they had plenty of time to figure out what size the house would be before advertising it to me. This screams false advertising to me.

What can I do?

—++Edit++—
Thanks everyone for taking the time to give me your advice and perspectives, even though they all sound like bad news for me.

Home & Garden

Comments

  • oscargamer on 23/08/2017 - 14:56
    +14

    put your rejection in writing

    wait for their written reply

    seek help once you have their written reply

    99.99999% likely you are going to have to live with the shrinkage
    99.99999% likely you can't get out of the contract (HAVE YOU READ THE CONTRACT?)
    99.99999% likely you'll get a small reduction on the price with a 100% likelihood the builder will recover this amount (and more) with variations

    you probably want to choose the path of least resistance, otherwise you will have an awful time during the build, where you will have constant problems with the builder and you may even end up hating the house because of the stress.,…..

    good luck

  • geech on 23/08/2017 - 15:18

    Do you have a build contract? Sounds like it was just a preliminary deposit that you paid to the builder. Personally I'd not push the point, as they'll likely just recover the costs somewhere else when it comes time to drawing up the actual contract.

    Seems kind of silly to be squabbling over such a minor reduction in space - but you might do better asking them to include something else instead of asking for a price reduction given the fairly insignificant decrease in size.

    • freakatronic on 23/08/2017 - 15:21

      Wouldn't you want what you bought? You sound like a dream client.

      • oscargamer on 23/08/2017 - 16:19

        they are a realist…..

        what compensation has the builder offered at this time?

      • geech on 23/08/2017 - 16:26
        +2

        No, I'm just going through the process of building a house myself - and am realistic. Personally, I think it's more important that I have a good relationship with the person responsible for building my house.

        If they slipped up and "forgot" to include the air conditioning unit or did the usual shonky builder thing of not charging me extra for a driveway, it'd be a different story.

        Having to shave off my dog's bed worth of space from a room to fit site boundaries is something I can live with.

        Call me a pushover all you want, but personally I think this sort of gripe is akin to the recent posts of "Where's the cheapest place in X for me to get a vasectomy?". I choose the areas to save money and argue costs wisely

  • bobbified on 23/08/2017 - 15:19
    +1

    Just curious - how big is the overall living area? I realise it's not what you agreed on, but what proportion is 1.5m² of the area?

    • freakatronic on 23/08/2017 - 15:23
      +1

      160m² so probably a 1% reduction. The builders haven't offered 1% compensation though.

      • bobbified on 23/08/2017 - 15:25
        +1

        Your living room is 160 square metres?? that's huge!

        I honestly don't think you'd even notice the 1.5m² missing if they didn't tell you. Especially if they've shaved off 10cm along a 15 metre side of a square-shaped room.

        Personally, I wouldn't make a big deal out of it simply because it doesn't seem like a lot and I'd prefer not to piss the builders off for something so seemingly insignificant - but this one is not my house. haha

        • freakatronic on 23/08/2017 - 16:03
          +2

          Hah noooo. The whole house is 160m² including the garage. Still a humble sized place.

  • Clemfandango on 23/08/2017 - 15:21
    +1

    I think 1.5 sqm is not enough to be inferring false advertising. I mean if you are talking something like a 250sqm house, would you have not bought it if it was 248.5 sqm? It's quite a small alteration compared to many I've heard of, especially on new builds and releases where the land may not even have been registered initially.

    I'd say the contract covers this kinds of alteration and you need to accept it. The other option would be to push for some additional inclusions to compensate. You may get more value out of that then just cash.

    • freakatronic on 23/08/2017 - 15:24
      +5

      Why's everyone here so laissez-faire about not getting what they paid for? I thought this was Ozbargain, not OzPushover.

      • Clemfandango on 23/08/2017 - 15:26
        +4

        Just experience. When if comes to deals like this what you paid for is defined in the contract, never by what the salesman shows or tells you.

        • freakatronic on 23/08/2017 - 15:41

          You're probably right. Damn.

      • stirlo on 23/08/2017 - 15:43
        +2

        You seem like a pretty unreasonable client TBH, it's not about being a pushover its about the reality of the situation. The block isn't large enough (by a tiny bit).The deposits have been paid so you can't get out of it. Take it on the chin and move on. Don't start a fight you can't win and maybe ask them for an extra skylight/fancier bathroom/extra aircon or something small like that.

        • freakatronic on 23/08/2017 - 16:06
          +1

          Your final suggestion is the way I'm leaning right now. I still can't see what's unreasonable about getting what I was sold though.

  • djkelly69 on 23/08/2017 - 15:35
    +3

    What does your contract say about variations?

  • kctt on 23/08/2017 - 15:45

    What oscargamer says is 100% correct from my experience with a quite popular granny flat builder.
    Builder becomes your boss the day you sign contract and pay deposit.
    You do not get paid but you pay them instead whenever they ask (according to contract and a bunch of surprised variances).

  • TheBilly on 23/08/2017 - 15:47
    +5

    How much did they offer back to you?
    How much is the value of the entire build?

    A reduction in size is not directly proportional to a reduction in cost - It just doesn't work that way. I cannot be bothered explaining the science behind it, because I don't think you are the type of person that would care anyway. But there are just some things you cannot deduct like preliminary costs, management costs, temporary facilities, establishment costs etc. These cost will be fixed and can only go up depending on how long/big the project is.

    But here is an example for you; Most standard brick veneer project homes are built at a rate of say $1,200 per square meter, Most Granny Flats are limited to 60 square meters, So by your logic they should technically only cost $72,000 to build. However why is it you could never find a builder to build you a brick veneer granny flat for $72,000? It just doesn't exist. because it is not a proportional science.

    • freakatronic on 23/08/2017 - 16:02
      +2

      Sad as I am to read it, thanks for writing it Billy.

  • dcep on 23/08/2017 - 16:19
    +10

    General advice below. Be ready for more headaches & sleepless nights + stress ahead.

    Building with project builders can be a nightmare with sleepless nights. I've contemplated before, but decided not to , after reading all those nightmares posted on whirlpool.

    But if you decide to go ahead then homeone forum is your best guide. Make sure you do your homework and read all the threads in homeone then ask your questions there before committing yourself / signing the contract.

    Primary stuffs to note :

    1) Whichever builder that you're going for, just opt for their standard design. Don't change anything, else there's bound to be variation costs down the line. Sales team will say yes to anything but the project manager will say no (that your design change has affected this and that, and this and that are extra works deemed as variations from contract)

    2) Stat all your 'wants' in black & white, including all crucial details during your correspondence with the sales team. Anything not in writing, does not count even if it was promised by the sales team. Remember, sales team will say yes to anything even if it can't be done. Later, you can't hold them responsible cause it's not in writing.
    And, your partner's 'wants' will always triumphs your 'wants', so prepare to compromise yourself for her.

    3) After signing your contract, don't even think about changing or adding anything. Eg, If later you found out an extra GPO is required in garage, they'll ask for $500 to put a single powerpoint as variation. And, they'll only give you $50 credit if you decide to reduce 1no. of lighting.

    4) Builder will milk you from provisional sum, cause they're not fixed costs. Eg, Ground condition (hardsoil / rocks encounters), footing depth, ground leveling, retaining walls. Some even charge you $500 to cart away extra site soils, else they'll just leave it there. So, make sure everything is account for including initial site clearance until final cleanup.
    Prime cost sum, expect lowest quality craps have been allowed for. Eg, crap taps, plastic crap, etc. Your partner want chrome lever tapwares of her choice? Add extra over $500 ea.
    Or you want to ozbargain hunt & supply your own fittings/fixtures? They'll give you credit $50 or something.

    5) Landscaping, driveway, fencing, not included. Expect another min. $30k for your 600m2 land. Else they'll leave it as mud land.

    6) Close 1 eye. Or close both eyes if you want to have a good sleep at night during the whole construction period. Let your partner deal with all the details since you're so trustful that you let her be the sole owner of your property. Expect some hard times with heated arguments between 2 due to stress overload and hope she doesn't leave you. This lifetime experience will test your relationship limit to the absolute max , so remember to have more sex to cool things down.

    7) Expect delays. Pray that you'll get a responsible project manager assigned for your build else you'll be dealing with devil. You might wonder why your site is still vacant even after a few months has passed. Remember to set a completion date with delay damages in your contract. Else you won't get a house to live even after 2 years or waiting. And, finally after you've moved in, remember to prepare yourself for defects list longer than a toilet paper roll. Leaky toilet/shower from upstairs, cracking driveway, wall/ceiling settlement cracks, patchy paint job, chips/marks here and there, leaky roof, freezing/burning winter or summer because some guy didn't place the insulation blanket properly above your ceiling. Let your partner to chase up gazziliions times waiting for the builder to repair all those defects again and again. Prepare to take time-offs from your work to deal with all these craps until you're running out of annual leave.

    8) Lastly, at any point of time you might regret that you've gone down this path and not worth all the hassles, but don't give up because you can't because giving up is not even an option. You'll just have to deal with it until it's done and tell yourself this will be the 1st and last home that you're building.
    Or, it could all be happy, carefree & smooth building process that encourages you to look forward on building your next dream house in near future. (Just like in fairy tales)

    • freakatronic on 23/08/2017 - 16:39

      0_0

      Thanks Phunky. I wonder how to sleep now.

  • narbe on 23/08/2017 - 16:37
    +2

    Building with a project builder at the moment.

    I think the best advise I can give you is to make a meh situation into a good situation.

    How? Well, 1.5sqm isn't really that much to be honest its not going to make or break the build. However the builder cannot just add 1.5sqm due to council regulations ie. most places is 50% of total land size or 60% for small lots including alfresco.

    Either way what they can do for you is give you $$ or better ask for free upgrades. Let's say 1.5sqm is worth 1.5sqm x $1200 = $1800 ; ask for a stone bench or some fancy taps whatever you want.

    They will be more accommodating because its really not alot to them and its something within their powers. Breaking council rules is not within their power, they would need to apply for a relaxation and where I am , I'm applying for 2.5% more site coverage :the application itself is $1200

    So there you have it , push for more and you'll get more, but dont ask for what they cannot give….

    • freakatronic on 23/08/2017 - 16:40

      Thanks Narbe. That's a good suggestion.

      Do you find yourself losing much sleep as your build progresses?

      • narbe on 23/08/2017 - 16:45
        +1

        I am currently building have not signed the build papers, just some preliminary tenders.(soil test deposit only)

        I have about 15-16 Revisions of the prelim tenders. Why? Because once you sign the real deal… the variations like the above posters say. You'll get raped each and every variation. It's like almost a certainty.

        I have gotten a few thousand off this and that. Sorta like buying a car, give me some free leather seats, parking sensors ect.

        It can't hurt to ask for free stuff , the worse they can say is no. My situation is unlikely similar to yours though I have been signed on before I even bought the land and I've been going back and forth with the builder(8months) while waiting for my "ideal" piece of land.

        EDIT: realized i didn't answer your question… lose sleep? no. why would I , go in with the expectation you'll get screwed, and research research research and then bargain bargain bargain

  • yolohobo on 23/08/2017 - 20:17
    +1

    This exact situation should be covered in your contract.

    There should be a 'Variations by the Seller' section, which should note the percentage by which they are allowed to vary the property by, as well as what happens if they exceed that percentage.

    • coxjon on 23/08/2017 - 22:32

      We had his happen to our block - one fence (a tall retaining wall) has pillars ever 2m that meant we had to shift the house over and cut down the theatre. We wanted to argue that the block was smaller since we couldn't realistically use the space between the pillars but the contract said the developer could change the block size ±2.5% without breaking the contract.

      Our house was already designed and planned and when the builder went to look at the block we had to move the house - no one's fault, these things happen.

    • freakatronic on 24/08/2017 - 06:55

      It is vaguely covered in the contract but there is no limitation on how the builder can alter the house from the plan I was shown. I get that this is a standard practice, but everyone seems to have missed the part where the builder has this house design, for this lot (both set sizes that could be easily understood) for sale as a package. For them to need to alter it immediately after signing contracts is either incompetence or dishonesty.

      • AJW on 24/08/2017 - 09:55

        Actually, you seemed to have missed the part where everyone say "builders can be shonky so be prepared"…
        People aren't saying they are push overs and would let a bargain slide…they are being realistic.
        People are only saying they would agree to changes because there is no other option unless otherwise written into your contract. Take their advise and try and get something added that maybe you realised you want or need now, but don't want to pay exorbitant revision fees.

        If you had a square house it would have been 12.65m x 12.65m (@ 160m2), now it will be 12.59m x 12.59m.
        How does it affect your dimensions - 5 or 6 cm less on your back door and one side of the house?

        You won't miss it, don't let it spoil one of the biggest undertakings of your life :)

        • freakatronic on 24/08/2017 - 10:53

          Thanks for your take on it anyway.

      • yolohobo on 28/08/2017 - 15:57

        Ah ok. Yeah that does sound a bit dodgy.

        If it's literally a case of:

        Week 1 - Shown plans / Sign contract.
        Week 2 - Plans altered.

        Then I'd say you have a strong case for voiding the contract and getting your deposit back.

        The longer the period of time the weaker your case though.

  • dayta on 24/08/2017 - 12:27

    1.5 sqm from a living area costs them practically nothing, so it's not really surprising that you're not getting offered much. The average per square meter cost is inflated a lot by wet areas and the kitchen - bedrooms/garage/lounges are very cheap by comparison. I couldn't see any mention of what they offered, but their cost for that area is probably only a couple of hundred dollars.

    I agree that they should have worked that out before it got to this point… is there a way you can modify the plan to push the area somewhere else (master bedroom or something)? I think your best option is to try and get like-for-like value somewhere.

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