Don’t Make This Mistake When Building Your First Home In WA

Trent Fleskens
November 22, 2018 4:25 PM

15,000 new homes are built each year in WA, with a large majority of them being built for First Home Owners.

The sales process for most builders involves heavy marketing budgets on facebook and Google Adwords to generate phone calls, and sending a sales representative with very few qualifications to ‘assist’ people to make sound investment decisions when it comes to building their first home.

Unfortunately for the doe-eyed young couple driving down ‘The Promenade’ in Ellenbrook, the sales representative sitting in the shiny new home isn’t paid to take into consideration the most profitable construction decisions or even the most appropriate finance budget. In fact, they generally aren’t trained or qualified to do so.

Unfortunately, the only service the sales representative is incentivised to provide is assisting clients identify their maximum borrowing capacity and offer jacked-upbuilding contracts in cheap land plots the builder is partnered with. This is how they are paid. 

Yes, it is a solution. But is the solution in the interest of the builder or the client?

And the proof is in the pudding.

A whole cycle of project builders up-selling shiny new houses in suburbs with infinite land supply to couples who had saved for a decade to afford the deposit has left first-home buyers with homes worth 20-30% less than their mortgage balance in suburbs like Ellenbrook, Baldivis, and Alkimos.

So what is the solution?

First-homebuyers still need assistance finding suitable and attractive house-and-land packages they can afford!

Well, that solution is called a ‘building broker’.

Building brokers are quite under-represented in WA, but can offer the same client-side representation that a mortgage broker does to keep the prices low and the product appropriate.

Rather than having a sales representative coax a client down a sales funnel, a building broker represents the client and brokers out the opportunity to a range of project builders who all bid for the opportunity to build their home.This way, the client gets to see a range of design ideas and has help negotiating the lowest cost deal out there.

But this is only half of the equation!

After all, it is land that appreciates over time, not the house!

Hence, a good building broker should also be qualified to assist the client to find a suitable and affordable plot of land in a suburb with strong growth fundamentals, not just the latest package deal with incentives at the display village with 100 other vacant lots next door.

This way, a first-home buyer can build their dream home with the same profit drivers as a sophisticated developer who invests and builds in the best locations around Perth.

Strategic Building Brokers provide this all-inclusive service and Managing Director, Trent Fleskens, believes having more building brokers assisting first-home buyers is the best way to be protected from poor investment decisions and mortgage repossessions.

“First-home buyers should always remember that the sales representative at the display home is paid on commission to sell you a home, whether you need it or not. Often, the bigger the contract, the more they are paid”, he explained.

Like mortgage brokers, building brokers, on the other hand, are paid the same flat commission from the building company the client chooses, and represents the client throughout the building process to ensure they get the best deal possible with the builder that fits their needs.

“If you’ve never built before and you’re not sure which areas around Perth are actually going to appreciate in value, it makes sense to have a building broker assist you through the process. They don’t cost you a cent, and generally end up saving you thousands!”

In the next property cycle, it is becoming clear that building your first home on subdivided land in established suburbs with strong growth fundamentals is now the preferred option for informed first-home owners.

Strategic Property Group is a full-service Mortgage Broking and Subdivision Consultancy based in Perth, Western Australia. If you'd like to learn more about property development and investing for your future, check out the rest of our site, or head over to our Contact page to get in touch.

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Trent Fleskens, Director of Strategic Property Group

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