Welcome to Home Building Like a Boss, the podcast dedicated to helping first home buyers in Perth  build their dream home with ease and excitement.  I'm Jamie, your host and go to building broker.  Are you ready to feel empowered, in control and excited about your building journey? I'll help guide you with expert advice, insider tips and tricks and real life stories to help you navigate the confusing world of home building.

Tune in as I take you on the journey to building your home like a boss.  OK,  so in today's episode, we are going to dive into the six biggest mistakes that first home buyers make that cost you big time. Now, the first one that I'm going to talk about in today's episode is fixed price building contracts.

Now, fixed price building contracts aren't necessarily fixed price. Builders can use a clause under the HIA and MBA building contracts, which is the two associations that are within the building industry, the Housing Institute Association and the Masters Builder Association. Now, they're the two governing bodies that the contracts Usually, most of the time get generated through industry, unless a builder has their own contract.

Now, there is a clause in that contract that allows builders to increase their price of the contract, depending on the time delay, or. of the process. So now what this means is the clause that is usually that gets used is 45 working days. So from 45 the date you signed your contract, if you haven't met your owner obligations and there's been delays with land titles.

finance hiccups, like things like that, that you're waiting along the way, or, you know, you might have to wait to stay in your employment for X amount of time, or you might need to provide some pay slips, anything like that, that adds on time. That is technically your obligation to move through the process as quick as possible.

If it lapses that 45 days and you haven't achieved to get to a building permit and site yet. Then your builder can pass on increase up until 5 percent without you having the option to terminate that building contract. So if the builder price increases you over 5 percent do have the option to terminate that contract.

But they can pass on those increased costs up until that date. Now, this, there's some builders that do use this clause to, to increase the costs right before you're about to head to site. It is actually near impossible to meet these agreements within 45 working days to go through the process, sign your building contract, get to pre start, do your variations, all those types of things.

Get your finance, go through settlement, sign off your final plans, get through building permit, all the things to achieve that in 45 working days is actually close to near impossible. So the building contracts do favor the builders, which is why it's so important to pick a builder that isn't abusing those clauses inside the contract and is priced correctly.

You want to build a, that's pricing your quote correctly up until from when you sign. All the way through. And you know, if you meet your owner obligations, you move through the process, you do things quick, you book in your pre start, you turn around times, you get everything to your mortgage broker, you can move through that process seemly, and that's what creates that great collaboration through, you know, the builder mortgage broker, your building team, all working together to move through that process.

That will help avoid any price increases or time delays that give the builder, the option to increase your fixed price contract. Now I probably went into a little bit too much detail there, but that is essentially a fixed price contract. Isn't necessarily fixed price. And the best thing to do for you to protect yourself is to move through the process with efficient and effective decisions.

So you can get the best outcome. Moving through that process, you know, things like land titles and all of that vary and can affect this, which is also why it's important to understand what your titled and untitled land is and what your untitled land delay is. Now that's built into the base price of your contract.

I have a previous episode on this as well. So you can head to one of those episodes. Have a look and have a listen at to what an untitled land allowance is inside your quote, and that protects you as the client from getting any price increases if there's any delays. Number two is walking through a display home thinking that's what you're going to get.

Now display homes are built to the highest and the top spec to look the most flashy to get you to sign on the dotted line. This is a marketing tactic that builders use and those display homes are not built to standard or base specs. So when you're walking through and you're looking at freestanding bath and the skylights.

And the full height tiling and a nice flashy things and the gold taps, all of that isn't standard. So it's really important to understand if you go display shopping, make sure you go in with the right mindset that this is at the top spec. It is not the base and standard spec. It is super important to have a chat with your builder to understand what the base spec is.

Go have a look at a home that is under construction because that's going to give you a better idea. Of what that builder's standard range is verse going through a display home. Now, when you get a quote, you want to compare apples and apples, not apples and oranges. So you want to make sure you're looking at the same spec.

And it is super important to understand that those display villages, they have 150 to 2 grand built in on top of the standard specification to make it look that good. So it looks nice and flashy. So when you walk through, you fall in love and you want to sign on the dotted line. Number three is falling for the too good to be true promotions.

Now, the building industry is full of smoke and mirrors and a lot of promotions. Now we'll pay rent while you build, we'll have add free air con for you, 50 grand worth of kitchen upgrades. All of those are smoke and mirrors and fake promotions. Now, what does this mean? This is essentially your builder is adding.

And covering the cost of that promotion in the base price of the home. So let's say the floor design costs 350, 000 now with free air con, that promotion is 360, 000 now is that base price. And that includes that promotion of free air con. So they've just put the cost of the promotion. Into the base price of the home.

And now that is essentially free air con. Now, same as we'll pay rent while you build, we'll pay you rent while you build is 10, 000 lumped into the base price of the home. If the house was 350, it's now 360 with 10 grand built into it. And that is, we'll pay rent while you build. And those terms and conditions are always up until a maximum amount of usually around 10 depending.

Depending on the promotion will pay rent while you build is to a maximum amount of 500 paid over X amount of weeks, which is what the promotion is. Mistake number four, getting too excited and signing on a block of land without understanding what the site works costs are. Now it is very exciting at the start of the process.

You've got your budget. Hopefully, because that's the first most important step. You've got your budget and you're super keen. You want to live in this area and you go and sign up on a block. Now, this block could have a fire rating. It could have a noise requirements. It could have clay in the soil and those things there at extra costs.

Now that's what the builder has to charge you. to build your house on that block. Now, you might not know those costs and have not factored them into your budget. And when you go to get a quote or a sketch from a builder, they're going to have to put that in the quote. So rather, you know, in a, in Perth, in a green titled new estate with a class soil, your site works roughly sits between.

20 to 22, 000 around about there. Now, if you have a noise requirement or a bowel or something like that, you will have extra costs on there. So let's say you have a fire rating of 12. 5 on there and you, you didn't know that that was on your block. That is an extra 7, 000. So all of a sudden, you know, your site works is sitting around early 30, 000 compared to maybe what you thought around 20, 000.

So it's, It's super important to speak with someone before you sign your land contract to understand what your site works are and what the requirements are on your block, because this is going to save you quite a lot of money. Number five, assuming that your builder is going to look after you. Now at the end of the day, as the client, you have to look over.

All of your plans, your addenda, your contracts, your working drawings. Now, if you sign off something or you miss something, or you don't understand something, the builder will put it back on you that you have signed those, that set of addenda, final plans, working drawings. So it's always super important to understand.

What you're signing. If you don't understand, ask questions. Have a team around you and someone that you feel comfortable asking those questions, whether that's your builder, your sales rep, your building broker. You want someone there to be able to ask those questions because if you just assume and you sign things, that is what the builder is going to go back on.

They're not going to go back on and be like, okay, well, Yeah, I know you didn't understand that, um, but you signed off your final plans, but we'll add in the free tap for you. It's not going to happen. The builder will work off those working drawings and what you have signed. So it's super important that you understand that.

And number six is thinking that house and land packages are always the best deal. Now, house and land packages, what is a house and land package? A house and land package is two contracts, your land contract and your build contract put together going for finance as your House and land package, essentially.

Now, this does not mean you have to stick with that builder because of their marketing or house and land package. You can get a block and you can put your own design, work with a builder that you want to do a custom design and put those two together. And you have created your own house and land package.

Most of the marketing tactics that builders. Use around house and land packages is usually like house and land package from 599 and it's got a little asterisk around it and the site works might not have been costed. It will say subject to availability on the blocks. The block might not actually be available.

And this inclusions.  For what's in that will be stripped down right to the bare minimum because they make the price cheaper because it looks better online. Cause you're like, Oh my God, I can get a house for 599. But in reality, you've got all these other costs that that will add on. So house and land packages aren't always the best deal.

And you can create your own house and land package for what works for you, you know, understanding, okay, what's the quote, what's the inclusions comparing apples and apples. And what is the block is the block in an estate or an area that I like. Don't just sign up with a builder because they have a house and land package in an area that you'd like.

Pick a block, get a block, contact someone, contact the land agent, use building broker. All those things can help you secure the block and then work on getting your builder and your design. split the process up into two, make it slightly less overwhelming, understand what your site works costs are, which is one of the things that I just mentioned before.

And then that's going to make the process a little bit more smoother. All of these six things are going to save you time, stress, and money, but these are usually the most common mistakes that we see first home buyers make. That costs them the biggest.  Thank you so much for tuning in to the home building like a boss podcast. 

I hope you enjoyed today's episode and learned something new. Remember you've got this and I've got your back until next time. Stay inspired, stay informed and stay confident on your building journey. I can't wait to chat with you on the next episode.  Don't forget to check out the show notes for more information and free resources.

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