A fixed price building contract sounds reassuring when you are planning a new home. You want to know what it will cost, so you can plan the rest of your life around it.
Perhaps you have already found a design you love. You can picture the kitchen, the couch and the day you get the keys. Then the builder gives you a price, and the dream starts to feel real.
Before you sign, though, ask one more question: “What does that price actually cover?”
It is a fair question. After all, you are making a big decision, and you deserve an answer you understand.
Let’s work through the main things to check, without making it harder than it needs to be.
Start with what your fixed price building contract includes
First, look at the plans and the written details that go with the price. The display home can help you picture your future, but it may include features that cost extra.
For example, check the ceiling height, flooring, heating and cooling, lights, power points and appliances. Then ask about the bathroom finishes and the front of the home.
If something caught your eye in the display, point it out. Ask, “Does my quote include this?”
Also check which version of the plan the builder has priced. Otherwise, you could end up comparing a price for one layout with drawings for another.
Finally, ask the builder to put the answers in writing. That way, you can check the details later instead of trying to remember every conversation.
Find out which amounts are still estimates
Next, look for amounts that the builder has estimated rather than fully priced.
Your contract may call these prime cost items or provisional sums. Keep those terms on your question list, because they mean different things.
A prime cost item usually covers a fitting or fixture when you have not yet settled its exact make, model or price. For example, you might still need to choose taps, tiles or an oven.
A provisional sum estimates the cost of work that the builder cannot price exactly at that stage. Digging on the block is one example.
So ask what each amount covers and what the builder based it on. Also ask how the contract deals with a difference between the estimate and the actual cost.
The aim is simple: know which numbers are firm and which ones still need attention.
Choose finishes with the price in front of you
Here is a made-up example.
You love the bathroom tiles in the display. However, the quote allows for another range, and your favourite tiles cost more.
Before choosing them, ask the builder for the full cost of the change. Does that cover the tiles alone, or does the work cost more too?
You may still decide they are worth it. What matters is knowing the cost before you say yes.
Where possible, make your choices early. Then ask the builder to record the products and prices clearly, so everyone works from the same list.
Check the price against your actual block
The same house design can need different work on different blocks. For that reason, the land and the building price need to make sense together.
Your block might slope, or it might have questions about soil, drainage, access or retaining walls. Water and other services may also need checking.
Ask which reports the builder has used. Then find out whether they have checked this exact plan against your lot.
If something is still unknown, ask who will check it and what happens next. You do not need to become a soil expert to follow that conversation.
An unanswered question does not automatically mean an extra charge later. Whether the builder can change the price depends on the contract and the law, so seek legal advice if you are unsure.
Understand how changes work before you sign
Even with careful planning, you might change your mind. Perhaps you want another appliance, an extra power point or a different room layout.
A change to the agreed work is often called a variation.
Before signing, ask your builder how they handle one. Who writes it up? How will they show the cost? Could it affect the finish date?
Also ask when you need to agree and how you will keep a record.
Consumer Affairs Victoria recommends putting changes in writing. Its guide to changing a building contract explains the rules in more detail.
For advice about your own contract, speak with a lawyer who handles building contracts. Meanwhile, keep your plans, quotes and written changes together so you can find them easily.
Allow for more than the building price
Your fixed price building contract may cover the agreed building work without covering everything you need to move in.
For example, you might need to arrange the driveway, fences, landscaping or blinds separately. Depending on your plans, you may also have land, loan, permit, advice and moving costs.
That is why it helps to keep a whole-home budget alongside the contract price.
Start with this list:
| Item | Question to ask |
|---|---|
| Flooring | Which product and rooms does the price cover? |
| Heating and cooling | What system will the builder supply? |
| Work on the block | What reports and estimates support the price? |
| Driveway, fences and garden | Who will arrange and pay for each part? |
| Connections | What has the builder checked for this lot? |
| Changes | How will we agree on the cost and timing? |
Beside each item, write “included”, “estimate”, “paid separately” or “need to ask”.
As a result, you will have a clearer picture of where your money needs to go. You can also see which questions to raise at your next meeting.
Compare the details before you compare the totals
Imagine two builders quote for a similar home. One price looks lower, but the flooring details are unclear and some outside work sits outside the quote.
The other builder includes more, yet one estimate still needs explaining.
At this point, the totals do not tell the whole story.
First, go back to what you want in your home. Ask both builders to explain the same items, including your chosen flooring and outside work.
Then compare the prices again.
You might still prefer the lower quote. Either way, you will have a clearer reason for your choice, because you understand what each builder offers.
Take five questions to your next builder meeting
Before you go, write these down:
- What plans and written details does this price cover?
- Which amounts are estimates?
- What have you checked about my block?
- What will I need to arrange or pay for separately?
- How do we agree on changes to cost and timing?
Take notes during the meeting, and ask for written answers afterwards. If you need time to think, give yourself that space.
You can enjoy planning your home while still checking the details.
Let’s make your next step clearer
You do not need every answer before talking to Madison Property.
Perhaps you have found a block, collected a few quotes or reached the point where everything feels a little confusing. We can start there.
We help you work through what you want, compare your building options and find a builder who suits your plans. We are the bridge between you, your land and the right builder.
Before you engage us, we explain our role, fees and any payment from a builder. Your lawyer and other qualified experts provide the legal and technical advice you may need.
So, before you sign a fixed price building contract, let’s talk about what you are getting and what still needs checking.