Building a house - Part One

When we first started looking into building a house, I admit I was naive.

I was extremely naive, clueless beyond a doubt.  I knew NOTHING about the building industry and especially nothing about the project building industry.  It is actually quite amazing at how much you learn through this process, so without further adieu... I will impart some of my new found knowledge.

CHOOSING A HOUSE

Building a house is exciting, very exciting and your excitement will be the one thing that can cause you problems later down the track when the exciting haze has lifted and you start to see the dream become your reality.  As difficult as it is to keep yourself level headed throughout this stage, I highly recommend you continually re-check yourself again and again and remind yourself of your goals constantly.  All of your hard work will be in the preparation (paperwork, selections, etc..) by the time you get to the building stage, it can be too late to fix things or very expensive to change your mind.

Display Homes

Aren't they gorgeous?  Yes they are, however, they are not fully functioning homes and it doesn't matter how gorgeous they look and how much you dream of living in that tranquility there are a number of things you need to take into consideration.

• They are built to sell you the dream;
• They are not lived in;
• You do not get what you see;
• The price is not the price.

These houses do not have to hold all your worldly possessions, when browsing around these houses, do not be sold on the decor.  Think about what you want from your home (write a list), think about storage, open the cupboards, think about where you will keep everything, make sure YOUR family will have the space you require to live in this house.  Imagine what it will look like with all your possessions in the home, think pots and pans, vacuum cleaner, prams, clothing, all that stuff you have tucked away in the garage, linen storage, etc, etc... it all adds up, lots of new homes lack storage, think of ways to build more storage into the home if you have to.

You most definitely do not get what you see.  Before I started this process I didn't even realise you could get an upgrade. {Did I mention I was naive?}

Below is a picture of the kitchen from the display home I am building.  I had a fantastic sales person and his assistant showed me around the house, she pointed out everything I needed to know about what was an upgrade and what was standard.  Prior to the walk through, I thought I was getting everything as shown below.

The sales team I dealt with were exceptional.  If the builder you are inquiring with doesn't offer you a walk through - ASK FOR IT.

Generally, most builders will provide you with some sort of option for an upgrade package, for rediculously small amount of money in comparison with what they are offering you.  Pour over this with a fine tooth comb and work out what you require against what you are being offered.  Never assume that what they offer is what you see in the display home.  Most of what you see is an upgrade on the upgrade.

Ask for a copy of the plan.  Sounds a bit silly doesn't it?  After all you're walking through the house, you can see where the rooms are.  Assumptions can cost you a lot of disappointment.  I've walked through houses and thought yep, this is it - received the plan and the layout is completely different, only to THEN be told...

 "Oh yeah, we swapped the toilet with the small bedroom in the display, we put built ins on that wall to make the kitchen bigger, you will have to move this wall to do that and push out this wall to achieve this."
 

For example..

Beautiful - look below

 

Also, in this house they had moved the toilet and one of the bedroom walls to accommodate the kitchen cupboards on that far wall.

This isn't always a bad thing, it is actually quite interesting to see all the different options but with this company no one told me that the kitchen had been reconfigured and I sat talking to the sales guy for a while, it was only when I went home and really looked at the plan that I noticed the changes.

I cannot stress this enough never assume what you see is what you get.

Pricing

Pricing varies (greatly), you will be given a standard price for a standard house when you initially inquire.  I always asked:

 "How much will it cost me to get the house to look like the display home?"

The answer to this question will usually give you a rough idea as to how much it would cost (again at this point in time it is an estimate only).  Then you have to add on 'Site Costs'.

Site Costs

Some builders will advertise deals with site costs included, note this is usually for lots of land that are flat, have all the necessary requirements and require minimum fuss - not many sites qualify.  If you are doing a knock down rebuild you will find, 99% of the time, you do not qualify for this.  Site costs can vary greatly depending on many variables.  I have seen quotes ranging from between $30k - $50k (sometimes more).  If you are still at the land buying stage, inquire as to what your land will require to be build worthy - will you need drop edge beams, will you need excavation, is there rock, etc, etc.

Council Requirements

Look into your local council requirements, some councils vary from others and what may be fine for one person, may not be fine for you. 

Also, if you are considering building in a new estate, check out the requirements for the estate, a lot of the new estates have covenants in place, where you must have x, y and z.. (usually in the facade of the home).

Timeline

You are super excited, you are going to build a house yeahhh! Its April and your imagining Christmas in your sparkly new home, think again.

Building a house doesn't happen overnight.  There are a number of scenarios that will become a factor in your build.  Are you doing a knock down rebuild?  Are you buying land?  Do you need to go through Council?  All of this comes into play after you have decided on which house you want to buy and what builder you plan to use.

You are pretty much looking at 12 months from when you sign your tender (that is for a single storey, longer if you are building a double storey), you could be lucky and get it done sooner but you could be delayed and it might stretch out longer.  I can only comment on my own experience and for us the paperwork took approximately 8 months, everyone I spoke to said it would take 6 months, but we had to go through Council and once they got involved, it blew out to 8 months. 

We signed up in December and we have been notified by our builder that it is likely that our build will be complete in March 2014.  15 months doesn't sound too bad, 3 months of a delay isn't much - true, but you have to consider how this effects your current living arrangements.  Are you living with relatives?  Are they happy to keep you for an extra 3 months?  Are you renting?  Can you afford to cover the cost of renting for a further 3 months? (contingency money anyone?).  Are you selling your house?  How will a delay impact the market?  Will you need to find temporary accomodation? 

Thankfully the actual building part of the build doesn't usually vary much, it is usually the paperwork side of things, which means you should know exactly what is happening by the time work commences on your site.

The Icky Stuff - Finances

No one likes to think about finances, especially when it comes to building a home, we all want to be able to afford the gorgeous display home. 

Now is not the time to be silly about this stuff.  Sort your finances out before you start this journey.  Work out exactly how much you can afford.  Speak to your financial advisor, broker, bank manager.  Get pre-approval from the bank.  This can be tricky because at this stage they will only be able to tell you if you can 'afford' the loan. 

Affording the loan and getting the loan are two entirely different scenarios.  When you borrow money from the bank to build a house, they will provide you with the money based on the valuation of the home.  For example, you might want to borrow $500,000.  Most banks will only provide you with 80% of the loan (you can get higher but then your into mortgage insurance which is not fun), which means the valuation of the home is going to have to come in higher than $500k. 

You will also have to consider how much money you will need to finalise the home.  Most builders, unless you are buying a complete package, will not finish off your home with landscaping, driveways, window dressings etc.  This will all have to be paid for out of your pocket.

To obtain a valuation of the property you have to pretty much spend some intial money getting to tender stage (between $1,000 - $3,000 depending on your chosen builder).  Once you get to this stage you should have a copy of your contract and your plan, this will enable you to get a valuation and hopefully the good news that you will get your loan. 

Note: I am not a financial advisor, I don't even work for a bank, call someone in the know if you need a loan.. I wrote about my own personal experience with finances here.

In Summary

• Discard the rose coloured glasses;
• Ask lots of questions (there is no such thing as a stupid question);
• Think about what you want and need in a home;
• Do your homework;
• Ask more questions;
• Sort out your finances; and
• Enjoy the process!

Stay tuned for what happens after you have chosen your house.

Miss Betsy xo