Comparing builders requires looking at various criteria, including portfolio quality, building quotes, building contracts and even communication style. When it comes to building your dream home, choosing the right builder is a critical first step. The process of comparing home builders can seem overwhelming, but with a systematic approach, you can make an informed decision that aligns with your vision and budget. The first step in this process is sourcing a builder.
Step 1 – Sourcing a builder
In order to compare builders, you’ll first need to build out a shortlist. Researching and identifying potential builders who have experience in your desired style of home, expertise in the specific features you want, and a proven track record of delivering high-quality results is essential. Finding the right builder can be done in many ways, each with its own benefits:
Research online: Scour the internet for reliable builders and explore some home building and renovation forums to see what public opinion is. The internet is an excellent way to view portfolios and double-check credentials before approaching the builder. Reviews and portfolio content is typically a good first sense check. However, as an important note, we also recommend reviewing the content on the builders website. Does it show expertise, detail and value? Or simply a sales pitch.
Word-of-mouth: Chat with your family and friends to see if they have any recommendations. This is a great way to get honest feedback from people you trust, as online reviews and portfolios can sometimes be manipulated.
Talk to your designer: If you’re already getting your home designed, you can check with your architect or draftspeople to see if they have any recommendations. This is a quick way to find someone your architect feels can handle their design competently.
Explore your neighbourhood: Take a walk around your neighbourhood and look for renovations or home-builds. If you’re confident, you can approach builders on-site or homeowners and enquire about their build process. This can be a bit of a shot in the dark sometimes, but there are times where a builder may be very entrenched in the community, therefore having a good heartbeat in your neighbourhood.
No matter your method, one thing that is crucial to keep in mind, is to make sure that the builder you engage with is aligned with your goals. If you’re looking for something unique or aspirational, ensure the builder and the business you’re contacting reflects that sentiment.
Once you have found your ideal builder(s), you can move forward to the initial consultation process to find out more. During a consultation, your builder will discuss the nitty-gritty details, such as building quotes, contracts, registration, licensing, insurance and more. Additionally, this will allow you to sample their communication style and gauge if you’re comfortable with them taking on your project.
Step 2 – Understanding building quotes
A building quote is a pricing proposal detailing the project description, materials, itemised costs and schedule. This proposal may be free or come at a fee; it depends on the building company. Quotations are generally 10% of the total cost. The best way to get an accurate building quote is to provide a tender package, which Forme Homes can provide. A tender package can be organised with an architect or building designer before consultation with a builder and outlines the work and materials required. This includes the following:
- Building plan
- Engineering documents
- Soil tests
- Material details
- Fixtures and fittings details
If you are working with an architect or building designer, providing a tender can vastly improve the accuracy of your final quote. A quote will include various details; however, the most important ones to look at and understand are the pricing, project description, timeline and contract type.
Comparing pricing is the first place everyone’s minds go to, although it’s important not to simply gravitate towards the highest or lowest price. This is because there is the potential for inconsistencies in the detailed price explanation. Some quotes, for example, may not include things such as hot water and gas supply, power point location, roof insulation or light fittings in their total price. Additionally, some quotes may not even cover the cost of the materials and finishes you want, opting for inferior, cheaper alternatives to reduce the total cost. Finally, a quote may not even include essential connections such as sewerage. These quotes often hide behind two things: prime costs and provisional sums.
Prime costs are selections such as fitting and fixtures (e.g. taps, tiles, ovens, lighting) that are listed but not priced in the quote. This is often because you or your builder could not pin down the exact details. You can avoid prime costs by including extensive detail on the make, model, colour, style and exact price of the fittings and fixtures you would like included.
Provisional sums are items listed for possible additional work where the builder cannot give an exact cost. A provisional sum is typically used for things like excavation work and can be an unpredictable cost if additional work is required. By acquiring a comprehensive soil report before price estimation, you can avoid unpredictable provisional sums for excavation work.
The building quote should also have a description of the work required. This will show whether the builder understands the project specifications.
Another way to determine if the builder has understood and responded appropriately to your initial brief is to look for a detailed schedule and timeline. Builder’s who can provide a detailed schedule immediately prove their time management, communication and planning skills.
Finally, understanding what kind of contract your prospective builders offer can impact the final quotation.
Step 3 – Reading building contracts
A ‘major domestic building contract’ is an important document used to outline all the building project information. Building contracts are essential for settling disputes with contractors and are required for any work worth more than $10,000. Click here to read an in-depth list of the various renovation, demolition, alteration and building projects that require building contracts as outlined by Consumer Affairs Victoria.
There are two types of building contracts, a fixed-price contract and a cost-plus contract. A fixed-price contract is a contract where the price is a fixed lump sum. This contract is always preferable to any other as the cost will not vary heavily. This is due to the inclusion of allowances for provisional sum items. These allowances ensure that if the amount allowed in the quote is greater than the final cost of the provisional sum items, you will receive a credit, whereas if it is higher, a variance will be made. The second contract is a cost-plus contract. These contracts are essentially the actual cost of the work plus a builder’s margin. The builder’s margin covers all business costs and profits. Cost-plus contracts have the potential to grow extremely expensive extremely quickly and are typically advised against.
** Note – the threshold amount above which cost plus contracts are permitted has increased from $500,000 or more to $1 million or more as of 1 August, 2017.
Building contracts include information on the project, materials, schedule, price, implied warranties and the responsibilities of both parties. Materials and fittings should be stipulated down to the detail, including information on the make, model, colour and style wherever possible to avoid alterations being made to the original project specifications. Your project pricing will often include your approved final quotations as well as additional costs such as the following:
- Building fee
- Planning permit fees
- Lodgement fee
- Bond -deposit & asset protection fee
- Inspection fee
- Government levy charges
Your contract must also include a start date, progress payment schedule and a completion date. Finally, a building contract should also ensure that you’ll be regularly updated on material and fixture changes as well as any schedule changes.
It’s typically advised that you speak to a building lawyer or solicitor before signing a building contract to ensure that you are not being taken advantage of. You can access an independent building lawyer through The Law Institute of Victoria’s referral service. Additionally, you should check to ensure that a procedure for change of plans and specifications is clearly outlined. Some building contracts may attempt to include unfair terms, such as requiring progress payments for work that is not yet completed or limiting your site access. Other contract terms to look out for include the following:
- A compulsory arbitration clause
- A caveat including some right or interest on the land title
- Restriction or denial of implied warranties
- A ‘rise and fall’ clause
These terms are illegal according to Victorian laws and can be avoided through careful revision and legal advice. Once the contracts have been signed, the builder must give you a signed copy. You must not accept a copy of this contract unless the builder has signed it.
One of the most important details outlined in a contract will be your building team’s current registration and licensing. This is crucial to the quality and legality of your project.
Step 4 – Finding registered builders in Victoria
The most important registration your builders should have is a Victorian Building Authority (VBA) registration or license. You can check this using the Practitioner Search. Your building team is required to be registered for any projects with work valued over the cost of $10,000. You can also check your builder’s credentials by calling on (03) 9411 4555 or sending them an enquiry via the contact page of Master Builders Victoria website. Membership in an industry organisation is a good indicator of professionalism and high standards. Finally, you can check whether your builder has any history of misconduct through the Victorian Building Authority’s Disciplinary register.
Other licenses or paperwork required will include certificates of compliance for any plumbing, electrical and asbestos removal work. Compliance certificates are provided to certify that the work completed complies with the law. Additionally, your electrician will be required to provide a Certificate of Electrical Safety from Energy Safe Victoria.
Your builders will also require public liability insurance and domestic building insurance, which provides protection in the event your builder dies, is injured, or disappears. You can check their eligibility using the Builder Search on the Victorian Managed Insurance Authority website.
While licensing, registration, and insurance are an absolute must; you should also do due diligence to check the overall credentials, portfolio and available references of your prospective builder. This includes inquiring about their background and experience. You can approach their referees and learn more about their experience with the builder, including how they dealt with deadlines, their communication style, price stability, reliability and overall build quality.
Step 5 – The importance of effective communication
One of the most overlooked areas of finding a builder is communication. Entering a building contract is not as simple as “the price is right”. You need to feel comfortable with the builder you choose. This means getting to know them and determining whether they will give your home the appropriate care and consideration it needs. You can learn a lot about a person from the way they present themselves and the way that they talk. Organise a chat with your prospective builders, whether for a free consultation or simply to meet face-to-face. Consider how they have dressed, how much time they allow for your consultation, and whether they have readily available answers to any questions or concerns you have. Maybe they check all the boxes, but your gut says they’re not the one. It’s always best to trust your instinct and keep looking. This is a home, not a race; the winner is the one who deliberates and plans for success.
Communication is a two-way street; while there are plenty of ways to determine if a builder is right for you, it’s important that you also put your best foot forward. Being clear about your expectation and desires means that your builder can give you detailed advice. It’s also important that you approach a consultation with a realistic perspective on the build process, being mindful of the time and resources it takes to complete a custom home build. Finally, we should always give the respect we expect to be given, so being friendly and prompt in responding can show your builder that you’re enthusiastic about working closely with them and build a stronger relationship going forward.
While chatting with your builder, make sure to gauge what future communication will be like. Ask them about their preferred communication channels, what you can expect in terms of project updates, how frequently you’ll be able to check in on the build and who your regular point of contact will be.