Negotiating Special Conditions and Price - New Home Build Contract

summithunter on 09/12/2024 - 16:32
Last edited 09/12/2024 - 19:04 by 1 other user

Hello everyone, has anyone been successful in getting an overall discount on the build contract and changing the special conditions in the HIA contract?

We're doing a knockdown and rebuild. Our price after all of our selections is $1.02 million for a 45-square-foot home (site costs approximately $110,000). I'm not sure about builders' margins, but has anyone been able to haggle and get an overall reduction with a custom builder (not a volume builder like Metricon, Carlise, or Botique)?

I'm particularly concerned about the special conditions and liquidator's damages of $250 per week, which are quite low.

• 

  geekcohen on 09/12/2024 - 16:43

  +5

  Maybe try not to haggle. If you do, then they could have an attitude of, "We need to do this and just get the job done," rushing it and not putting in the effort because there is minimal/no margin.

  Sometimes haggling can turn away builders who don't want your job or they skimp on materials/quality. You want a good job and quality, don't haggle. You can then have a better leg to stand on if issues arise.

  I am no big builder or big business, but as a small business if someone haggles my pricing, they are not a customer I want to deal with.

  • 

    MS Paint on 09/12/2024 - 16:44

    +6

    Does the same rule apply to Day Care Centres? Asking for a friend. 😉

    • 

      geekcohen on 09/12/2024 - 16:45

      hahaha, well the OP will be paying for a service they are receiving.

      • 

        MS Paint on 09/12/2024 - 16:46

        -2

        Day Care Centres make cents. Cheers

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  Drakesy on 09/12/2024 - 16:45

  +3

  All i'd counter with is making sure you put a specific completion date on the contract otherwise they can effectively blow out completion and hit you up for additional costs due to inflation and if they don't reach that completion date say it'll be $xxx.

  Liquidated damages on residential builds can only be brought in if you hold them up and would be hard for them to hold you accountable (unless you prevent access to site, change your plans mid way or don't give them an approval. As long as they give you a schedule to start with force them to stick to it, document any variance on their part i.e missed delivery dates.

  Last thing you want to come across is as a cheapskate. They'll make your life a misery if you try to cut corners. But on the otherhand don't let them walk all over you.

  $1.02 million for a 45-square-foot home

  Did i miss something where inflation hit 1000%?

  • 

    netjock on 09/12/2024 - 18:35

    +1

    LOL it is paved with Bitcoin!

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  Dollar General on 09/12/2024 - 16:45

  +2

  You’re spending a million bucks. You could save money in other ways possibly

  • 

    MS Paint on 09/12/2024 - 16:47

    +1

    Like build a really nice $800k house and save $200k. Future home owners love this one simple trick. Follow me for more great savings ideas.

    • 

      mskeggs on 09/12/2024 - 17:28

      This is probably a waterfront site in Tamarama, no possibility of over capitalising!

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  Master Bates on 09/12/2024 - 16:49

  +3

  Not answering your question, but check out a few episodes of Site Inspections for tips on what to watch for if you're handling stage inspections yourself without hiring an independent professional.

  For more information, visit www.siteinspections.com.au

  Disclaimer - I have no affiliation to this business, just entertained by their videos.

• 

  MrThing on 09/12/2024 - 17:36

  +6

  45 square foot.. is this america or australia?

  • 

    MS Paint on 09/12/2024 - 18:12

    +2

    It's a 1 bedroom studio.

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  vr0ssi46 on 09/12/2024 - 17:53

  Assuming the builder did the design then no you can't really haggle.

  If you commissioned (and own) the design you could tender it out with all the specifications included. From that multiple builders can respond and you can land on the best price. Really the only way to compete in an apples to apples sense.

  tbh doesn't seem like a bad price for that size build assuming medium level finish, single or double story?

  • 

    omguleh on 09/12/2024 - 18:09

    It’s very good price for 45 square house. I’m doing a 31 square double storey house and the tenders we’ve gotten back is around the 1.2-1.4mil.

    One of the builders have been quite open with pricing, for fixed price they add anywhere between 25-40% markup when quoting.

    For cost plus contract they charge between 15-25% from the invoices but the minimum contract price is 1mil.

    • 

      wikimee1 on 09/12/2024 - 19:27

      +2

      You're being ripped off building 31sq for 1.2-1.4mil

• 

  netjock on 09/12/2024 - 18:46

  Get multiple quotes to check who is giving real price or they inflated their price.

  Our price after all of our selections is $1.02 million for a 45-square-foot home (site costs approximately $110,000)

  Lets assume it is 45sqm house. $22k sqm. Nobody knows whether you have a big 1BR with an ensuite and a separate toilet for guests and the fittings you have selected.

  I recently got a quote for a two story 20sqm unit 3BR, 2x ensuite, bathroom, toilet, Lounge, retreat for $0.55m but obviously it isn't paved with bitcoin line yours.

  site costs approximately $110,000

  You probably have a challenging block or some complication with the demolition to cost that much.

  As for the HIA contract. They are standard which you download off their contract portal and fill in the gaps. You can negotiate anything. If you've given the builder plenty of time to complete they would agree to anything I'd guess if they don't expect to go over the allotted time.

  Also don't forget if you have designated a fitting and it takes 6 months for it to come in holding up the whole project the builder doesn't have to pay you damaged unless you agree to a substitute.

  I've done the building course and dealt with builders and sometimes I think it is a miracle that anything gets done. Building is like the early days of the PC compatibles. All these parts that people are trying to put together and it is a miracle that works at all (hence all the leaks and dodgy standing houses).

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  Benoffie on 09/12/2024 - 18:50

  +2

  Yes, you can alter a HIA contract to suit.

  Mine is a cost plus. I negotiated an 8% builders margin not including the insurance (which was negotiated as it's based on contract value not actual value), exclusions as well as end date and penalties.

  For example, I wanted my own sparkie and cabinetmaker, so I had the option of client selected trades written in.

  Also, there's a no overruns clause past 10%? I think from memory. In otherwords, if, at any point, a trade, invoice or stage is going to blow out by more than that percentage, they have to stop and come back to me with all quotes.

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  verio on 09/12/2024 - 20:31

  +2

  When it comes to "special conditions" from a particular builder - look very carefully for something that might be dodgy.

  For instance, check if they are using their own payment schedule instead of the standard HIA one. They might want you to pay 90% of the contract after the lock-up stage, which is not something you should agree to.

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  NevC on 09/12/2024 - 21:45

  +1

  45 square foot? WTF. I'll give you a real good discount for that.

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  Grunntt on 10/12/2024 - 08:56

  tips on what to watch for if you're handling stage inspections yourself without hiring an independent professional.

  Definitely do not do this (doing your own inspections, not the watching the videos bit) - for probably the costliest purchase of your life so far you need a professional involved.

  changing the special conditions in the HIA contract

  Have a lawyer familiar with property contracts look at it before you sign anything.

  One builder I dealt with tried to claim that their contract was a standard one "based on" the HIA one (even though there were 8 full pages of differences between the two) and I should just trust them as it was industry standard. And no, I didn't trust them, and didn't engage them.