Custom Homes – Investing in the Right Home Development

The process with volume builders begins with buying an off-the-plan design.

It’ll be prices starting from, so you start off thinking that you’re buying a two-story home for $300,000. That’s great! It fits on your block, you pay the small deposit for the concept design, which is where they’ll just get your design and stick it on top of your site, and then the pricing process really starts.

You might want to enlarge your dining room, moving the wall by a metre, and then you might want a different type of stairs. As you start changing, increasing, decreasing and moving certain features, the price starts to go up.

It’s not a cheap increase; you might move your wall only a metre and it’ll add $20,000-$30,000 to the cost of your home. And they haven’t even gotten into the inclusions, which is everything from the doors to the skirting boards, taps, finishes – that’s when the upgrade packages are revealed.

Because there’s normally two or three stages to your upgrades, the first stage coming out at your concept design phase. This is where they may offer you different types of doors or skirting boards and architraves, and you might start to upgrade those. So you might go from a flush, plain-panelled door to a decorative panel door, costing an increase of 200% to 300% just to change the door.

Next is your electrical; you might want to put down lights throughout your house. The general cost of putting in a down light is around $35 per down light, but they’ll probably charge you about $130 each, and those costs go up too.

That’s only stage one. By now, your price might’ve started at $300,000 and now it’s gone up to $360,000 because you’ve spent an extra $60K on all the extras thus far.

Regardless, you pay your 5% deposit, it goes through council, and then once you get the approval, you reach stage two. This is where you look at another package of upgrades for kitchen finishes, bench tops, taps and stoves.

The packages will always be non-complete. For example, there’ll be certain things that will go with your kitchen but it won’t be a complete kitchen package. You might upgrade your stove, dishwasher, and then your bathroom and all of the taps, and then you might decide to do a free-standing bath. All those upgrades have each been adding to your price because you’re changing things internally again.

The secondary packages follow, which are always elements that are complementary to the upgrades you’ve just completed. This convinces you to upgrade your glass splashback to suit this or change the tiling to suit that, consequently changing your tiling package because now that you’ve picked your $10K kitchen upgrade package, you need other elements to suit your upgrades.

And you just keep repeating this same process.

It’s an exciting experience; your excitement’s running, someone put a sign out the front that has your name written on it, they’ll give you a glass of champagne when you walk in. They’ll make you feel as if it’s all about you, and then you walk out of there spending another $50K to $60K.

I’ve heard from people that’ve gone through that exact process tell me that it’s like a whirlwind, you walk in there and then in the next minute, you’re sitting in your car about to drive home and think, what just happened? after signing another upgrade worth about $40K in variations.

You’ve also got to think about how you have to borrow that extra money.

You started off signing a contract for a $300,000 house on day one and now you’re submitting the complete contract for $400,000, half of which is being spent on elements from the fixed layout that you didn’t want in the first place.

Because in the end, you’re not really changing anything.

You might make the dining room a bit bigger or the bedroom a bit smaller, but overall it’s the same home that those 500 other people in your suburb have got. All you’ve done is spend $100K on extras.

Nobody is going to take the standard stuff. Who’s going to take a 40mm skirting when it looks like rubbish? Who’s going to take a flush plain-panel door? No one.

The display homes are like old-school clickbait. The tap, benches, the tiles, they all look beautiful but that’s not what you’re getting.

They’ll tell you the starting price of your home but they don’t necessarily tell you what the finished product actually costs, how much that finished house that you’re looking at actually costs.

It’s phenomenal the amount of extra money that you end up spending.

With custom builds, we reverse engineer. We’re not starting with something that you’re then going to package out; we’re starting with your package and your design with your budget. We then reverse engineer from that budget in order to put as much as we can into that design as you want.

Project builders however are essentially selling a base model, relying on you to upgrade because that’s where majority of the money is, not the standard build.

The margins on their standard builds are very low so they rely on selling you upgrades because that’s where the costs increase from 200% or more.

For example, a client that we knew went through a project builder and he wanted to add a 700mm long piece of cupboard to the bench top and kitchen. When he got quoted, they told him that it was going to cost $1,800 when it generally should only cost around $200. So the amount of markup that they’d made on that single small addition is where the money is for project builders; they want you to change.

Project builders are very strategic about how they introduce their upgrade packages to clients and how they are all mixed-and-matched so that once you sign off on the first upgrade package, they’ll hit you with the necessary second upgrade package made to complement and complete the elements from the first package.