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What is a preliminary building agreement and do you really need one?

Preliminary building agreement
Preliminary building agreement

Are you thinking of building your forever home and hoping for a fixed priced contract with no hidden costs? 

Maybe you have been asked to sign a Preliminary Building Agreement by a builder but you don’t entirely know what it means for you? 

What if you have been working with a Builder and they don’t offer you a Preliminary Building Agreement? 

Read on to see why a Preliminary Building Agreement is so important and why, without one, your dream home might just turn into your worst nightmare!

What is a Preliminary Building Agreement?

A Preliminary Building Agreement (PBA), when done correctly, is designed to protect you and your Builder from unsightly hidden costs during your build.

A detailed PBA is one that has been custom designed specifically for your block of land and your custom home. It allows the Builder to obtain the necessary reports to carry out an effective investigation into your build site so they can see exactly what can and cannot be done.

The goal of a PBA is ensure that your chosen Builder has all of the necessary information they need to prepare an in-depth and accurate fixed price tender so you will not be hit with sudden, unexpected costs during the building process.

Preliminary building agreement

Do you need a PBA?

The short answer is YES.

That is if you want to know the true and accurate fixed cost to build your home prior to starting any building works. 

Designing and building your new home can be a stressful time, but it doesn’t have to be. Be sure to look for a builder who will offer you a detailed Preliminary Building Agreement. 

You need to be able to trust that what your Builder is telling you is accurate and truthful. If you don’t feel that you can trust your Builder in the early stages how can you trust your Builder further down the track? 

By engaging a professional Builder who takes the time to provide an in-depth, customised PBA specifically for your home, you are ensuring that your Builder is investigating your build site thoroughly and competently, before you are locked into a contract. 

You are much better off paying money for a PBA up front prior to signing a contract than being hit with unexpected hidden costs once the build has commenced.

Preliminary building agreement

What should you look for in a PBA?

An in-depth, customised PBA, should be exactly that.

The PBA you are presented with should be more than one page with a fee and a vague breakdown.

A PBA should contain an itemised list of reports that are applicable to your build site which, in turn, will enable the Builder to provide an accurate fixed priced tender.

If the PBA provides a description of what each report is, even better! This can help you better understand where your money is going and why each report is so important.

As a PBA is independent to your building contract, look for a Builder, which if you choose not to build, will allow you to keep the reports they have obtained on your behalf. Ultimately the reports obtained are only useful to you and your piece of land.

If a Builder does not want to release any of the reports itemised in the PBA to you then they may not have obtained the reports in the first place.

Why does the cost of a PBA vary from Builder to Builder?

There may be a couple of reasons for this. Either the area you are building in is a new development and the Builder already has a few reports that could relate to your block, therefore bringing the cost down; or they are simply trying to lure you in with a suspiciously low cost.

Some Builder’s don’t customise their PBAs and will apply a generic document to all of their prospective clients, irrespective of whether it will assist in determining a fixed priced tender or not.

Low costs and generically worded PBAs are used by Builders that aren’t prepared to do the hard work now to ensure you receive a fixed priced, accurate tender. They are comfortable to charge you extra money further on down the track for items they could have easily picked up on if the PBA was done correctly.

Ultimately if a Builder isn’t prepared to sit down and discuss the PBA with you then they aren’t prepared to design a PBA that is customised to suit the requirements of your block, your needs and your dream home.

A professional Builder you can trust and depend on will aim to give each and every one of their clients an enjoyable and stress free building experience, from the initial investigations of a thorough PBA right through to the handover of your keys.

Preliminary building agreement

Everything you need to know is included in this free guide for consumers looking to engage a professional builder who can provide you with a comprehensive Preliminary Building Agreement to ensure that your quote to build your new home is detailed and accurate.

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