Comparing building quotes

house plans, house keys and a spread of 100 dollar notes

Comparing Building Quotes is not an easy process

When comparing building quotes it pays to do your homework. It’s human nature to try and get the cheapest price possible when buying anything. That’s why we like to shop around, whether it’s a pair of shoes, a car or a new home. As with most things we buy it’s hard to know what is good value purely based on price alone as the same product can have huge differences between the cheapest and the most expensive.

Unfortunately, when it comes to building a new home there are many, many variables that make up the price. For this reason comparing building quotes for your new home can be one of the most time consuming, confusing and frustrating tasks as part of the home building process.

Selecting a builder is not a decision to be taken lightly. All to often a decision to appoint a builder based on price alone can be fraught with danger. Unlike a pair of shoes your builder cannot be swapped for a new one if you are not happy with him. If you have obtained a price that seems particularly cheap it could be a sign that your new home quote has not included everything you think it should have.

7 things that make will make it easier for you when comparing building quotes

  1. A quote to build a new home should be a reasonably detailed document. Alarm bells should sound if you are looking at a 1 or 2 page quote especially if many of the inclusions appear vague or missing.
  2. Is the quotation professionally presented and does it cover all your requested inclusions?
  3. Are there are a lot of PC sums (Prime cost) for items that are not generally covered by a PC. Example structural work, windows, foundations. This will usually indicate that the builder is unsure of what he is quoting or how to build this item. By using  a PC he can cover himself by having you assume the risk of cost blow out.
  4. If the estimate does not specify makes and models but refers items to builder’s ranges only, then be sure to check that these are what you actually want or expect.
  5. Are services included in the quote or can their costs be easily determined?
  6. Are site costs included?
  7. What has the builder excluded from the price?

On average most people will request three to four quotes. Anything more and you run the risk of further confusion and prolonging the comparison process.

It is also worth noting that many builders will be reluctant to quote for someone they may think is shopping around for an unrealistically cheap price. If you get less than three quotes you may not be getting an accurate price indication to build your home.

As a rule you will find that out of four quotes, one will be very expensive,  one will be unrealistically low and two or more may be relatively similar. It is likely that once you start comparing building quotes, you will find that the two or three similar priced quotes are the ones that you will end up dealing with.

Then if the cheapest quote is the cheapest by far, there’s a good chance that the builder has under-quoted, missed something or may just be desperate to win work. At the other end a really expensive quote may mean a builder is too busy, the job is too far out or he is simply not experienced in building your type of home and inclusions.

Criteria to help you when comparing building quotes.

  1. If a quote seems unrealistically low, it is usually a cause for concern.
  2. A really expensive quote could be a sign the builder is too busy or the project is too complex. These are both reasons builders will intentionally price themselves out the market.
  3. The two or three similarly priced quotes will usually signify a builder that has taken the time to carefully read the plans, understand your design, your inclusions and is serious about winning your work. These are the builders you should be talking to.
  4. How large are the building companies that you’re talking to? Large building companies may tender a competitive price, be able to service your region, but have they the skill and understanding to build a custom design home?
  5. If the builder is very small will they be able to deliver the personal service that a client such as you may require. Will he have the resources to communicate, keep on top of your request and properly manage changes that you ask for?
  6. Are the builders that you are comparing technologically minded, have a web presence and easily contactable by email?
  7. As well as comparing your building quotes’ inclusions it is equally important to know what items have been excluded. Are these obvious in the quotation tendered?

However basic these questions may seem, its often the little things that set builders apart from each other. You need to feel comfortable that your builder has not only submitted a good price but is easy to deal with and to communicate with.

Meeting Your Potential Builder

Now that you have compared your building quotes, its time to meet with your shortlisted builders. It is important to get a feel if your builder is the right fit for you. A well presented home quote will show a degree of professionalism, however you will never really feel comfortable until you have met face to face.

Whilst comparing your building quotes you should have made a list of questions to clarify any part of the quote submitted.

You should also ask questions about the building process, plans and engineering, the builder’s experience, the variation process and payment schedules. It would also be a good time to sight their builders registration and warranty insurance.

If there are exclusions these should be discussed and get an idea of costs associated with them.

These are some points to help you make the right choice with a builder

  1. Is the quotation professionally presented and does it cover all your requested inclusions?
  2. Have your concerns be properly addressed?
  3. What are your first impressions? Does the builder operate out of an office and do they present as a professional company?
  4. How long have they been in business?
  5. Do they properly understand your plans, your inclusions and understand what you want?
  6. Have they got a good rapport and do you feel comfortable with them?
  7. Does the builder seem easy to deal with?
  8. Are they being high pressure? (this could be a sign of desperation to win work)
  9. Do they embrace technology?
  10. Can the builder supply references of recent projects and past clients that you can call?
  11. Can he supply a portfolio of recent works for you to visit?
  12. Can he clearly explain the permit, contact and building process?

Building a custom home can take the best part of a year. Therefore before you appoint your builder you want to be as sure as you can that they are the right fit for you.

It may take a number of meetings with your builders before you finally decide on which one is going to build your home. Once you feel comfortable with price, experience and rapport you should be ready to appoint your builder.

In the next article we will discuss a number of questions you should ask before you sign the building contract.

To assist clients in comparing building quotes we have a checklist available for down load. If you would like to download our quote comparison checklist you can request one from our contact page and in the message box of the form type in “request a quote comparison checklist

Comparing building quotes

Part of our Selecting a builder series.

This series of articles is designed to help you understand how to obtain and compare builders’ quotes to build your new home.

Renmark Homes – An Experienced Builder, Building Custom Designed Homes in Melbourne’s North West

If you have any questions about how Renmark Homes can assist you in building your new home, please contact us on 1300 367 245, or visit our contact page for further options.