Once you have completed your research and selected your builder for your custom luxury home, the next thing you have to do is to sign a contract with them.
A building contract has the same importance as its design, plans, materials and craftsmen used for your home.
Most of the people don’t read and understand the contract fully, and this is the most common mistake they make.Then it comes to building the luxury home, you want the smooth and budget friendly process.
Even though you might be going for a so- called ‘fixed price’ for your home, that doesn’t mean the price you are signing for is not guaranteed with some builders. These contracts have two terms ‘Provisional Sums’ and ‘Prime Costs’.
If you have followed our previous suggestions of researching your builder properly before you sign a contract with them. Your builder will take some time to understand your selections and requirements of your home.These should be fully customized and come with your building contract, and your builder must look carefully over the contracts before signing.
Make sure that the cost of your home includes your requirements. The only other things you need to be aware of that could potentially blow your building contract budget are referred to as Prime Cost items and Provisional Sums.
So, let’s have a closer look at these rarely understood terms:
A Provisional sum is an estimate of what it will cost to do an aspect of the job, when it’s not possible to know the precise cost beforehand. For example, if a site has to be excavated, it’s not always possible to know what the excavators may find beneath the surface. If it’s rock, this may result in more extensive excavation and therefore more cost.
You could imagine how much a provisional Sum could change on a large site! Tens of thousands of dollars before the house designs even starts!
When it’s time for those taps to be installed in your home, suddenly you may realize that what the builder had budgeted for in the prime cost items section of your contract in order to keep your contract price low and appealing is nothing like the quality, brand or design that you expected or wanted in your home.
When it’s time for those taps to be installed in your home, suddenly you may realize that what the builder had budgeted for in the prime cost items section of your contract in order to keep your contract price low and appealing is nothing like the quality, brand or design that you expected or wanted in your home.
What do you do, leave the inferior taps or hand over another $20,000 for the actual taps you originally wanted?
And when you consider that floor coverings, light fittings, toilets, sinks, light switches, appliances etc could all be itemised in the contract under this term, it’s now evident that the items the builder budgeted for and included in your contract price were nothing like the quality you were expecting and you will now have to pay the difference. But not only will you have to pay more for your home than you expected, you also now have the stress if the items you do want are not immediately available … what happens then? Well that’s a whole other can of worms which I’m not going to go into here. But these things all need to be considered, prior to you signing your contract!
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Source URL: https://ausmarhomes.com.au/house-land/
