Building your home means you can design it exactly the way you want. But building your dream home can turn into a nightmare if you choose a builder that over-promises and under-delivers.
That’s why you need to ask these four crucial questions before signing a building contract.
1. Are you a registered builder?
In the state of Victoria, builders must be registered with the Victorian Building Authority (VBA). Ask to see the builder’s VBA card that contains a photo ID and specifies the type of building work they are licensed to perform. If you use an unregistered builder, you will have little or no recourse should they conduct poor quality work.
2. Do you have builder’s insurance?
The VBA requires that all registered builders have domestic building insurance (DBI) for residential building projects over $16,000.
Your builder must provide you with a copy of the insurance policy and a certificate of currency covering the property.
Domestic building insurance covers any of the following situations that may arise before work is complete:
- The builder dies
- The builder is declared insolvent
- The builder pulls a disappearing act leaving you with an unfinished home
DBI will cover costs up to $300,000 to fix structural defects over a six-year period and non-structural defects for up to two years.
3. Can I see examples of your work?
Don’t rely solely on a catalogue or photos. Photos can be deceiving and an unethical builder may show you false or enhanced photos.
The best way to assess a builder’s workmanship is to see it first-hand. If they don’t have a display home, request to view a property they currently have under construction and ask for references from previous clients.
4. Is the contract price fixed?
Some first home builders get caught signing cost-plus contracts that result in added costs later on that push the project over budget. That’s because a cost-plus contract provides estimates on labour and materials that may increase with market fluctuations or any additional work required as the project progresses.
A fixed-priced contract, on the other hand, sets fixed costs for the total build. If there are no unforeseen circumstances that impact or delay the project, your final payment will remain as listed in the contract. No unpleasant surprises.