Budgeting for the hidden costs of building a home

When building a new home, there are so many factors that you’ll be comparing to determine which builder and design are right for you. At the end of the day, regardless of what your budget is, you want to ensure you’re getting value for your hard-earned money.

When I mention the term ‘value’ do you think ‘price’? A lot of people do! When you’re building a home, value means so much more than just getting an upgraded stovetop. Getting value for your time and money means choosing an honest builder that ensures you’re getting quality for every dollar you spend.

The most common home building horror story you hear is that there are so many hidden costs that were missing from the initial quote. But that doesn’t have to always be the case! The best way to avoid any nasty surprises is to get educated. You should go into the process knowing:

1. What your budget limitations are, and
2. all the right information to help you make an educated and informed comparisons and decisions.

What is the max price you can afford?

Knowing your limitations is the most important thing (aside from standing strongly by them!). The first question every sales consultant and associate will ask you is ‘What is your budget?’. To help them help you, you need to be able to answer this question.

There is no point looking at designs of homes that are out of your reach. It’ll only leave you feeling disappointed. Knowing your max price will also help you understand what you can buy for your budget. This may lead to a realisation that you’re just not able to build your ‘dream home’ just yet but will allow you to make informed decisions during the process. Whether you delay the project or make some compromises – having a clear budget in mind helps you stay in control.

For sale: 4 McMaster Avenue, Middleton Grange, NSW

Know the different types of prices

The second thing you notice when entering the home building journey is all the jargon that the sales people use. If you know what these terms mean, you’ll understand the prices you’re getting and foresee any potential hidden costs.

What is a base price?

Almost every single builder will give you a base price. In most cases, it’s impossible to build a home for its base price. 

There is a trend in the building industry to create these fictional ‘base prices’ that only include bits and pieces of what is required to build the home. No two builders include exactly the same things in their ‘base price’. Worst of all, most ‘base prices’ exclude some of the most essential items including:

• Site costs – This is required to prepare the land before the home is built on top. Exact site costs vary from site to site but there are certain items that are unavoidable and should be considered regardless of where you’re building. Site fencing, bins, temporary toilets, rubbish removal and temporary driveways are all costs that mostly cannot be avoided but are often not included in the base price.
• BASIX – This is the energy efficiency rating of your new home. Complying with minimum BASIX scores is compulsory in NSW. It’s a list of simple measures to include in your new home but these are often left out of the base price to make it look cheaper (even though you’ll need to add them on anyway).

Why would a builder leave out these unavoidable costs? I honestly don’t know. It’s not fair to you and, doesn’t help you make an easy or quick decision.

Another factor that makes base prices incomparable are the inclusions. Every builder provides different quality products and finishes. Look through these inclusions thoroughly! Whether it is a kitchen tap, laundry cabinet, floor coverings or even wardrobes, ensure that you’re comparing apples with apples. There’s no use going with the cheapest price if your carpet, tiles, and wardrobes have been left out of the base price.

For sale: 10 Fairbank Drive, Gledswood Hills, NSW

Don’t fall for ‘price per SQM’

Price per square meter is just another way of presenting you with a base price. It’s difficult to tell what items the builder has included in their price per SQM calculation. There’s no way to know what quality, inclusions and finishes have been considered.

Know the inclusions you’re comparing

It’s important to not just compare the prices that you’re being given by different builders. Price is important but at the end of the day you need to know what you’re getting. Ensure that you’re getting as much inclusions information as possible from each builder. Don’t just check what has been included but also compare the quality of the items they’re providing.

The quality of the different appliances, fittings, doors, and even selection of included bricks will make a difference later in the building process. Pay close attention to the things that will be finalised at your colour selections. If you have a particular brick or roof colour, or if you would like a specific looking front door, ensure these items are included from the beginning to avoid disappointment or extra costs down the track.

True value for money cannot be compared on paper. Go with your gut. Choose a builder that listens to and understands you. Your builder is your partner through your home building journey – what is the point of choosing the cheapest price if it’s not the best option for you and your family.

For more tips of building a new home check out our guide to finding the right builder and the pros and cons of building your first home.