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Building brokers

Discussion in 'Development' started by mrdobalina, 30th Oct, 2015.

  1. mrdobalina

    mrdobalina Well-Known Member

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    Has anyone used building brokers and if so, what has been your experience with them?

    I met up with one today. They charge 2% of construction costs; and pretty much guarantee that the costs they could achieve are lower than what you could get going straight to builders. This is due to the volume of work they push through the builders and the margins they can squeeze from the builders.

    There was a thread about this on somersoft, but its been a few years.
     
  2. Skuttles

    Skuttles Well-Known Member

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    I used one for my current project.
    They serve a good purpose if u are time poor to tender builders and chase up actually getting quotes back. I suspect builders may be hungrier at the moment, so this may be less of an issue?
    Savings (if any) are subjective, can't ever really be quantified as all builder specs /finishes are different. It's not like u can go direct to the same builders with the same plans to 100% confirm any savings. I got a couple independent quotes and the broker ones were mostly a bit cheaper, but marginally when looking at an overall % basis, maybe 5%.
    After quotes came back it was still me doing the detailed analysis of each quote to check all inclusions, it's never 'apples to apples' across builders.
    Hope that helps
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    I used one for my recent build due to being a long way from the project - probably not what I'd do again but it was okay at the time.

    We did get a very good price for our build though, so it was worth it in that sense, just maybe not a very efficient building company. It went 6 months over time - but even with the extra holding costs it was $50k cheaper than the nearest quote.
     
  4. MTR

    MTR Well-Known Member Premium Member

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    my only concern is you are stuck with the design, once you lock it with building broker if the designer sucks what next? They tender the build, but no control with design, and design is critical
     
  5. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    I've run them as cc and construct only. Work with the clients to get the design they want and then get the construction prices based on that approval.

    They seemed happy with that approach.
     
  6. mrdobalina

    mrdobalina Well-Known Member

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    As Andrew said, you can get your own designer to draft the plans and put them through DA. You own the designs. Then engage the building broker to broker the build tenders.

    Alternatively you can engage them from the start and get them to do the design from start to finish. They obviously charge more for that.
     
  7. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I know the one Skuttles and others have used and they are handy for getting back a good response in tenders.

    @MTR this and other brokers are all generally happy to take a private design and tender it if you have a designer you prefer to use. It's actually less work for them and something they probably prefer I'd say.
     
  8. thydzik

    thydzik Well-Known Member

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    I spoke to two in Perth and in the end decided to going directly with an Architect/Drafter instead.
    My main gripes were;
    • as previously mentioned, you can't take the plans and go to another builder, so you pay some money and then are stuck with them without even know the prices or the builder.
    • their profit is a percentage of the contact price, the higher the price the more they get, how does that work in your favour.
    • lack of transparency, you have no real way of knowing what kind of deals the broker is making with the builders, how much cut each one is giving him, how much collusion. what the broker presents to you is only a summary of each builder.

    I have never used one, only had initial discussions with them.
     
  9. mrdobalina

    mrdobalina Well-Known Member

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    Do you think this happens a lot?
     
  10. MTR

    MTR Well-Known Member Premium Member

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    No idea this was the case? I expected that this is how they make their money on drawings
    Interesting, that puts a different spin on it for me.
     
  11. mrdobalina

    mrdobalina Well-Known Member

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    The company I spoke to, If you get them to do your drawings, you pay 2% of construction costs for the drawings. You also own the drawings, so free to take it elsewhere if they can't broker a good construction for you.
     
  12. thydzik

    thydzik Well-Known Member

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    All my opinion, but I am sure the commissions each builder gives the broker is different.
    The broker can easily portray their preference of builder to look more favourable and get selected.
     
  13. Tenex

    Tenex Well-Known Member

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    I have dealt with a couple of brokers as I am planning to build. In my experience majority of them have a select number of builders they work with and usually get the margin from the builder.

    As others have pointed out, do the design and DA yourself if you can.

    With brokers or builders my motto (and not everyone agrees with this) is they are pitching to get my business and therefore they need to be prepared to sweat a little bit.

    The ones that want to get paid from the moment they say hi are the ones that will pay the least attention to your work in my opinion.

    I generally dont pay for tenders or brokers, if they dont like it so be it. There is always someone else who will understand that a few hours of free work is involved when selling a few hundreds of thousands worth of spending to someone.
     
  14. Aaron Sice

    Aaron Sice Well-Known Member

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    i found out on the quiet that one broker in Perth charges 6% comm.

    that's insane and certainly has put me off using them.
     
  15. Vassago

    Vassago Active Member

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    When the builder I was using for a project went into administration recently I used a building broker to assist getting quotes from builders. He got 3 quotes and I got 1 quote. Was great, saved me a lot of time chasing up builders for quotes.

    Ended up using a builder the broker recommended, so far it is going great.
     
    Aaron Sice likes this.
  16. mrdobalina

    mrdobalina Well-Known Member

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    Did you have much saving going with the builder the broker recommended, compared to the quote you got yourself? Was the quality comparable?
     
  17. mrdobalina

    mrdobalina Well-Known Member

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    Geez. Sounds like they are getting some back door deals.