News from Iafrica - Buy, or build yourself?

With housing prices still at an all time high and interest rates set to climb one to two percent in the next few months, buyers are beginning to re-examine the possibility of building for themselves in the hope of making significant savings.

"There will always be people to whom the idea of dispensing with a developer and/or an architect and managing the builder themselves will be attractive," says Bill Rawson, "but, let’s get this clear, this can be a stressful experience.

“If the client tries to pin the contractor down to a fixed price based on a comprehensive specification and instructions list, he will almost certainly find himself signing to all sorts of conditions and terminology that he does not fully understand — which could prove difficult down the line.

“Worse still, the fixed price can result in the contractor abandoning the job before he has fully completed it — very few smaller builders can afford to subsidise their own work when they are losing money.”

If, on the other hand, the client agrees to a more flexible contract, especially one with high payments for extra work or changes, he is likely to end up paying 15 percent to 30 percent more than he budgeted for, said Rawson.

"From the moment that the contractor moves onto site, his challenge is to improve his profit. With an inexperienced client it is possible to do this legally, sticking to the specification throughout. Even experienced clients and qualified architects frequently find that they have not appreciated certain conditions and terminology in the contract."

A problem on many building sites that can add to the cost, said Rawson, is theft, especially when casual labourers are employed for limited periods by the contractor or sub-contractor. This, he warned, can affect both the contractor’s and the client’s bottom line, and is hard to control.

Relocate or renovate?

By contrast, said Rawson, the purchaser who buys from a developer usually has a pre-agreed sales price and, when the time of handover comes, a completed product to examine. He will then almost invariably be given a specified time period in which to deal with snag listed problems — at the developer’s cost. What is more, said Rawson, most developers, having a reputation and brand name to protect, tend to be very cooperative in this final handover period.

“In the long run, therefore, the person buying from a developer may find himself paying slightly more — although he will benefit from economies of scale — but he will very definitely have far less stress,” said Rawson.

Rawson added that improvements to the home in which one is already living can be “a very different story” and should be seriously considered.

“Often I come across situations in which by taking out a new bond or adding to an existing bond the home can be made more comfortable and convenient to the owner and increase its value significantly. In these cases it is infinitely preferable to go this route rather than through the trauma and upheaval of selling and re-buying, especially if you like and are settled in your area.”

Article from: http://www.iafrica.com