Signature Homes, one of New Zealand’s largest home builders, is confident that even in this volatile market, it can offer its customers fixed price home construction.
Working with long-standing suppliers, Signature Homes is able to forecast well in advance, locking in prices and material orders early to allow price certainty for its customers.
In this time of construction inflation and product shortages, Signature Homes remains committed to offering fixed-price contracts, made possible by the strength of its vendor relationships, forward planning and the volume of homes it built every year.
Signature Homes managing director Paul Bull says the company is able to provide a fixed price despite the current building product price volatility due to its long-standing relationships and daily communication with its suppliers.
“We are one of New Zealand’s largest new home builders with around 950 new homes sold each year. This gives us significant market strength and the ability to negotiate fixed prices and a secure, continuous supply of all building products,” he says.
Mr Bull says recent reports that builders cannot commit to fixed prices because they are unable to guarantee a price without the risk of commercial failure are inaccurate and should not apply to volume home builders such as Signature Homes.
Supplies of essential items for building a new home, such as roof trusses, siding and wall panels, are ordered well in advance and deliveries arrive daily at Signature Homes job sites in across the country. In cases where an item is not supplied or delayed, Signature Homes finds a close alternative or alternative work for site crews to maintain building schedules.
“We have been building homes since 1983 and our name is synonymous with quality and continuous improvement. Our Fixed Price Guarantee is part of our commitment to New Zealanders to make building a new home as easy as possible,” he says.
Details are provided to clients before they sign the documents, but essentially for a House and Land package, where consents, title and preparatory work have been completed, the fixed price contract remains the most typical option. for a Signature Homes customer.
Once final design and plan decisions have been made, the home is costed and a firm, final price is agreed with the client.
In other cases, when certain customer decisions still need to be made – such as kitchen design, specific options selected by the customer and landscaping, etc. – a fixed price contract will be offered with a PC Sum build agreement which is essentially a full cost estimate for the item or work ordered by the client.
Mr. Bull says, “In the past 12 months, only 0.25% of Signature Homes Group domestic revenue has seen an increase in PC Sum, primarily due to customers upgrading their selections for better produced in their homes. The accuracy of this figure highlights and speaks to the commuter work, accuracy and transparency of our networks’ pricing. Signature Homes takes great pride in representing the actual costs our customers can expect to deliver their home.
A third scenario is a conditional contract. These are drafted when one or more items such as resource consent, title, or finances are not yet confirmed. In these cases, the conditional contract will have a deadline and the price of the construction of the house is guaranteed until a fixed date. The price of the house may increase if the conditions are not met during the contract period.
Bull explains that Signature Homes’ approach is to move customers from a conditional contract or PC Sum contract to a fixed price contract as quickly as possible.
“We want to take the worry out of cost when a customer builds a new home. A fixed price also works in their favor because mortgage lenders will be happier to lend at a fixed price and the customer can budget for construction and other costs, such as landscaping,” he says.
If costs increase during the construction period, the cost increase is absorbed by Signature Homes, not the home owner.
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