WHY CAN’T I TAKE ADVANTAGE OF SPECIALS ON TAPWARE AND APPLIANCES WHEN BUILDING MY NEW HOME?
We get it – you want to make sure you’re not spending a dollar more than you have to when building your new home. And we agree, there’s no future in paying out money that you don’t need to. So when you see a discounted price on that beautiful tapset you’ve always wanted you think you’ve hit the jackpot …only to find out that your builders processes don’t accommodate it. So you’re then left wondering – why can’t I take advantage of specials on tapware and appliances when building my new home?
While no two builders policies are exactly the same, many of them are set up on prearranged agreements with suppliers. These agreements often cover a number of things including price. And the price is often geared around volume over a given period of time – say a year. If the builder commits to buy a minimum amount of product during that time then they get a discount.
And this applies to most if not all materials included in building a home. So when the builder prices up your home, they use the prearranged pricing. This gives them certainty that their costs will be accurate when the time comes later on to actually build the home, which then enables them to give you the best price – they don’t have to inflate it to allow for ‘what ifs’.
So you then work through the details with the builder, get all your permits in place, and then comes the time to choose the colours and fixtures and fittings … and that’s when you see the oven of your dreams on special for 20% off the list price. All your Christmas’ have come at once. Or so you think.
But then lets look at it in a bit more detail.
Firstly, the special price is probably only for a very limited time – often for this week or month only. So let’s assume the builder agrees to apply the discount to the price, and then when it’s time for them to actually purchase the oven, it’s 4 months down the track and the discounted price is long gone. And maybe the oven is too …
Which leads on to the next point. Why were they offering a special price? Often it’s because they’re overstocked and wanting to clear out their stock. So even if the supplier agreed to hold the low price for a few months, when the time comes they probably haven’t got any stock of it.
But let’s say that the supplier did agree to hold the price and they agreed to keep the stock. The time finally comes for the builder to reach out to the supplier and buy it and they then say no, specials don’t apply to our builder wholesale agreement, you’re already getting a good price from us. Ah but of course!
So we’re back to the start – the builder has already built a very good price into the initial cost of the home for you. Many home buyers see the retail – or list – prices around and think that they’re high and that the builder will be paying that same higher list price. (Don’t get us wrong – there are some products or suppliers that offer little or no discounts to builders, but it’s not the norm.)
But then some people might think, well then the builder is getting a good price and then putting a margin on it and so I’m still not getting the benefit of that really good price. Well the reality is that yes, builders do put a margin on the cost so they can make money to cover their costs and stay in business and build beautiful homes for you – we’ve never seen builders do things for free just cos they like you!
There’s one other thing we want to comment on that’s often not considered. Let’s say the oven is worth $999, and the discounted price is $799 – a substantial saving of $200. You notify the builder, and ask them to adjust the documents. Let’s just assume for a minute that the builder can accommodate this request. So they then have to phone the supplier to discuss it, get a quote through, and then get their estimator to update the costings, get the scope of works amended and notes made for the purchasing system to identify this special price. Probably about 3 to 4 hours work. We’re not sure what a going hourly rate is, but let’s say $60.
So the builder just spent over $200 to adjust the system to accommodate a $200 saving.
And that’s often why the few builders that do allow for specials have extra margin built in to cover this work.
So the reality is that you’re much better off to work in with the builders system and know that in the bigger picture it’s not only going to be easier and smoother for everyone but you won’t gain anything by trying to take advantage of the specials. We know that one size never fits all, but ask your builder up front what their policy is with things like bathrooms are and appliances and if they don’t accommodate specials than you can rest assured that you’re getting a jolly good price upfront.
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