How Do I Ensure I’m Not On The Hook For Hidden Charges By The Builder?
One of the most frequent complaints made about purchasing new homes off-the-plan is that the buyer had to pay extra for things that they thought were included.
This is actually a problem that is easily avoided, saving you endless headaches, a great deal of money, and giving you the home that you want for a price that you can afford.
If you don’t get it right at the outset, you can find yourself in a situation where you have to go back to your lender to secure further finance or dip into your savings in order to cover the difference between what you thought you were getting and what you have actually signed up for.
Extra, Extra—Read All About It!
If your builder is only contracted to provide a certain level of service, you may find that, once the work is finished, the property is still not ready for tenants to move into.
You could find that there is a mound of earth in front of the garage, making it impossible to park your car. There may be no window furnishings and no carpet. So, even though the builder has finished, you have to go and find the money to have all of these “extras” sorted out.
During this time, you're losing income because you can't put a tenant in until this work is complete.
The problem with this is that, in some cases, the bank will have loaned you money based on the contracted price of the build. If you have extras that are not included in this initial price, then the bank may not be prepared to increase your loan to cover those extras.
Let’s say you find that fencing is not included, and it’s going to cost an additional $10,000 for the fences. The fencing is not going to add $10,000 of value to the house. This means that the bank may be unable to lend you any more money because it would take you above the 80% mortgage lender’s insurance.
What’s the solution?
Fortunately, it’s extremely simple. When you are purchasing a new home off-the-plan, it is important to ensure that the property is turnkey. This means that everything is included in the price, and that, once the build is finished, all you need to do is turn the key in the door and it will be ready for someone to move in.
Turnkey Quote Or Just A Turkey?
To the uninitiated investor, some of the marketing material provided by some builders looks pretty enticing. But when land prices or house and land package prices seem too good to be true, then the internal alarm bells should start ringing! What appears to be great value or even an absolute bargain can be fraught with hidden costs.
Have you ever seen a completed house where the occupants have moved in, yet it doesn’t quite appear to be finished? The likelihood is that the turf, landscaping, and even the driveway were not included in the original quote.
Let’s start with the initial glossy brochure. Does the “too good to be true” quote include site works? If not, add up to $40,000 if something hard is struck while digging for the foundations or if the land is sloped.
Driveways seem to be optional in a lot of quotes, too. I don’t understand this, but it is often the case. However, there’s little point in having a dream double garage that can only be accessed by a 4x4!
The list goes on! Light fittings, blinds, floors, finishes… and don’t fall into the trap of thinking that the house they showcase is their standard fare. In most cases the show home will be fully optioned. This means that it will cost up to 30% more to construct than the standard fare.
You need a full turnkey quote when you build a home. This means that there really is no more to pay, as site costs, blinds, floor coverings, lawn, fences and even the letterbox are included.
To your success,
Australia’s Authority On Real Estate Investment For Busy Professionals
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