Should I use a Builder Broker for my Project?
If you are considering a Builder Broker for your project -the short answer is – Don’t do it!
Let me explain why
In todays market, it is getting increasingly more difficult to build a home to a clients budget.
Increase costs associated with safety, logistics and now the Securities of Payment Act have ALL had a negative impact on housing affordability.
the hardest thing for a builder to do at the very start of the project, is trying to get as much of the project costed up within our clients budget.
It is not uncommon when pricing up a project, to find that the plans are 20, 30 and even 40% over budget
So, how do we cut costs on these projects?
As a builder, we need to have brilliant negotiating skills and the ability to really get creative with plans.
These attributes help us to find creative methods to cut back and trim costs associated with a build
One of the easiest ways to cut substantial cut costs is by minimising the amount of labour on site.
labour costs these days can be up to 65% of the build cost, so reducing the trades required on site is a no brainer – right!
For example – many volume builders use brick cladding, thus reducing the need for a painter to paint the exterior of the home
if you are on a steep site, you may use colourbond cladding to the same effect!
How a Builder Broker is counter productive!
First of all – you have just added an extra mouth to feed in your project
At a time when you need to reduce the people involved with the build – you will add another.
Now, I know they will tell you that it costs you – NOTHING -right
But do you REALLY believe they are doing it for free?
These costs are passed directly onto the consumer in one of two ways
1- The cost of their service is passed onto the builder as a finders fee.
The builder will always add this fee to their build price – so it is passed on to you
These costs can be similar to Real Estate agents fees of 2.5% of the build cost, at a flat rate
Ill let you do your own sums on your project
2 – This is the most common method
The broker will search for up to 8 different builders to price up your project
They will then select the cheapest builder, and the 2 more expensive builders within the range
The broker will then ask the cheapest builder to increase their price to within 90% and of the 2nd most expensive builder, and present the 3 Quotes to the client.
(This top up will become the brokers commission)
They will spruik the cheapest builder as that builder has the most commission on the project.
So what you the client will get is the Cheapest builder of the 3, who has probably not even priced the project correctly, but has made the broker the most commission.
The only way to find the best builder for your project is through due diligence, and try to get them involved at the design stage.