Leave initial deposit with 2 builders go get to contract stage

I am building a new house and looking at two volume builders. They both have something like a $1.5k deposit required before they get to work to prepare a contract.

Would it make sense to proceed with two different volume builders to the contract stage and forego the initial deposit on one builder and proceed with the other depending on what the final contracted price is?

I ask this as I imagine that builders must realise you have a lot of time invested up to the point of contract signing giving them leverage and therefore they might take advantage with a padded cost in the final contract.

For example, if builder A comes out with a build cost of $30k more than builder B for what is essentially the same thing, I can drop builder A and proceed with builder B.

Thoughts?

 

You are wasting time and efforts of others. They can deduct costs (direct and indirect) out of the $1500 and even bill you for additional costs eg site costs for soil testing etc and it pays to carefully check the terms & conditions. Many dont, but will if they find you were playing them. The sales person/s will be trying to ensure the contract price matches your price expectations they have already given so they dont lose a sale (which is how those people are paid !!!) and they wont pad it unless you make major changes and keep moving the goalposts which increase costs.. or major site issues are noted etc. Changes have prices. Tip I may share is make as few changes as you need as every change adds costs.eg Render costs heaps more than Moroka and when its the sides and rear only its nothing major. It doesnt change the fascade or the house. And know your base specs v the display home which may have upgrades shown not the base secs.

Its like paying for a TV at Harvey Norman then shopping around and finding is elsewhere cheaper and buying another. You take the other back. What do you think Harvey Norman will do...They wont refund a cent as its a change of mind. Lesson....Shop around ...and then commit.

 

Thanks Paul for your reponse.

Ok that is reassuring. I totally get that price should go up if you ask for more (or building costs go up between initial contact and final contract).

And so they should. I am not complaining about the concept of an upfront deposit/fee to prepare contract if it involves work on their part. And that fee should cover their efforts while taking into account the probability of locking you in as a customer and those fees could be transparently disclosed upfront (in my ideal world).

Not really, because when it comes to TVs two different companies are selling an identical product and you can compare prices in real time. You can't do that with building contracts. And I am not asking for a refund on a deposit. (And, also plenty of retail shops do let you return a product and give a refund no questions asked).

I guess if you put detailed plans to tender and three construction companies quote then you can compare prices in real time.

But with volume builders you can't do that as you are working within their system. You don't find out the price of things until later. They say things like, "you will find that out when you select your fittings", which is after the deposit.

 

Why can't you get their price before contracts are drawn up?

Tools

 

Are you building in QLD?
Every volume builder I know can tell you exactly how much their houses cost along with a list of inclusions for that price. This is long before you get to a formal contract stage.
Are you adding custom elements to the build or anything out of the ordinary?
Even so the cost should be calculated prior to contract
*edit - just thought - are you thinking the actual contract price will be different to the initial price shown?

 

This seems like a very small amount. Is this like a Preparation of Plans amount? So a deposit required before they draw up plans and give cost estimates?

At what stage are you in talks with the builder? If it's a $1500 fee to draw up plans and do estimates then yes I would do it so you can property compare 2 builders. If it's after plans have been done and estimates given and is for them to prepare a contract then no I wouldn't do it as you should have all the information you need to make that decision.

 

Yes. One company is around $1.5k and another $2.5k if I understood correctly.

But then I am probably not understanding things correctly. As far as I can make out they try and get you to put a deposit down before you are allowed to go see their 'studio' and have a proper understanding of the likely costs. The skeptical side of me thinks there is a reason for that.

 

No different to paying them a tenderers fee IMHO. A very small amount so you can compare the two options.

 

Yes, but there is lots of little gotchas. For example, the facade they show on their website might show a full render, but the quote for that facade will not mention any render. So then you are lulled into thinking that product A is cheaper than product B for the same thing.

Given the complexity of everything, I am guessing you don't really what the true price and cost of everything is until you get to contract and you have the full documents.

Therefore I think it is almost meaningless to compare the list prices of houses from their websites and compare across companies.

 

For volume builders it’s usually to cover the soil test. Hard to estimate cost otherwise.

 

The volume builders I have seen here in SE QLD typically only have about 4 different facades, four different styles of fixtures and fittings etc, limited choice to change much else so they can quote the actual cost before going to contract stage.
Just looking at a website is not going to get you an accurate quote but it rarely does, you would need to contact the builder and sit with them and then get a quote based on what you want.
You should definitely be able to find out how much you are going to pay prior to going to contract and certainly before paying them $1500 for the privilege.
If you're set on building new then I would recommend speaking with a few other builders who won't charge you $1500 just to get a quote (plenty of choice in QLD)