Markup at Prestart

[Tano]

Someone just told me that the builder markup at the prestart meeting is higher than the markup they use before you sign the contract and prestart. Has anyone heard of this?

 

[bashworth]

That's pretty much how it works. It's the same as buying a car typically you pay much more for a set of car mats from the dealer than it would cost at the shop down the road.

If you want to duplicate the display home the cost of the build can go up by 50% or more. (see the following link for some examples http://www.anewhouse.com.au/2013/08/love-the-display-home/)

 

[westminster]

Someone just told me that the builder markup at the prestart meeting is higher than the markup they use before you sign the contract and prestart. Has anyone heard of this?

I've heard it but I don't know if it's true as it's hard to get prices in both instances.

The person who told me about this (conspiracy) theory was that you were already contracted to the builder so they can do what they want and you wear it.

I'm am a big believer of getting as much precosted as possible and not spending any money at Prestart. Simply because it's all part of due diligence and its the time where you can compare builders to builders and walk away if necessary.

I've seen some crying over spilt milk where people have signed up then spent $50k at prestart on things which they thought 'surely this will only cost a few thousand'

 

[chibs]

Most builders would definitely mark up the prices at prestart because they've already got your business. I recently learnt that they're also quite liberal with spending the provisional sums once you sign the pre contract.

 

[boeman]

Depends on the builder.

One builder I worked at had set markups for different elements of the build regardless of prestart/contract/variation. Electrical was the highest markup. Colour selections the lowest. Project builders don't want you to change things, it creates work. It is just one big production line and they want to spit out as many homes as possible, as easily as they can. Sounds harsh, but it is how they make money. The markup on electrical was 60%, tiling 35% and so on. Pretty ridiculous.

Where I work now and the previous high-end builder, we have a standard mark up on all items, regardless of where/when they are priced. If it costs us one hundred, expect to pay one hundred + x.

I won't talk figures since some here know where I work currently.

 

[Tano]

Thanks for the insight guys. Hes friend was a supervisor for a major building company and states its 30% markup before prestart and 40% at prestart.