July 2002
Contents : The curse of assumption:
Hello
We all get caught out by assuming we either believe something to
be a fact or that something must be true because everyone says it
is a fact. Or in my case, I know things about building houses that
I assume everyone thinking of building would know. Then I'm surprised
they don't know and have to remind myself that while I do this every
day, most people probably only build a new house once in their lifetime.
So this month I've chosen a couple of topics where this curse of
assumption catches us all out from time to time.
- Aluminium exterior window and door joinery are
maintenance free
- Getting mortgage money and how or when payments
for a building project are made.
1. Maintenance free aluminium window joinery
Most people building a new home would naturally believe that
aluminium exterior window and door joinery are maintenance free.
Sorry but they are not. That's the curse of assumption. As I did
last month, I'm going to refer to a BRANZ Bulletin.
No material used in building is completely maintenance free,
but some materials require less maintenance than others. One of
the reasons for the popularity of aluminium joinery is the lower
maintenance requirement when compared to timber joinery.
The consequences of poor maintenance of aluminium joinery tend
to be less severe than for timber joinery, but even aluminium
joinery requires some maintenance if its appearance and function
are to be maintained.
Maintaining a good appearance is not actually a big job. Sometime
we lose sight of the fact that the houses we live in should just
be financial investments as they are made from just bricks and
mortar and will be sold some day, hopefully for a handsome capital
gain. Because we attach emotional strings to our investment and
call them home, and home being the place to relax and shack off
the day's stress, too often the last thing we want to do in our
free or leisure time is wash aluminium windows, clean spouting,
touch up chipped, cracked or faded paint. But by neglecting small
maintenance issues as they arise can and often does adversely
affect our investment. Remember, sooner or later you will sell
your home/investment/liability?
This is the BRANZ recommendation to clean and maintain aluminium
joinery;
- Remove loose deposits with a clean wet sponge.
- Use a soft, non-abrasive brush with a mild detergent to remove
more stubborn deposits of salt and dust.
- Always rinse thoroughly with fresh, clean water.
- Weathered areas can have the surface restored using a special
cutting cream designed for this purpose (ask your local window
manufacturer, you'll find them in the yellow pages)
- Paint splashes or sealants can be removed from powder-coated
surfaces with methylated spirits, turpentine, white spirits or
ethyl alcohol.
- Do not use strong solvents, such as lacquer thinners, as these
will damage the powder-coating, although the damage may not show
until months later.
- Small scratches and chips can be repaired using a special kit
from the window maker
.An important maintenance issue for sliding doors and windows
is the cleaning of tracks. Dirt such as leaves, sand or other
debris should be cleaned out regularly as these will interfere
with smooth operating and may also block up drainage outlets.
Drainage holes need to be kept clear. This is of particular importance
where laminated glass or insulated glazing units are used.
If looking after you investment is important to you, whether
you are building a new home or just maintaining your existing,
then I strongly recommend you invest in this BRANZ Bulletin…
or phone the office and I'll gladly answer any questions or queries
you may have.
2. What information does the bank want before
giving a mortgage and how are the payments made when building a
house.
This is one area where I have suffered from the curse of assumption.
Some how I just believed that everyone would know the steps you
must take to satisfy the bank before they would agree to hand
over the cash, and how payments are made to the builder.
Firstly, the bank is going to want to know four things; 1) How
much do you want to borrow. 2) Do you have the means to pay the
money back. 3) After completion of the project is there enough
value in the asset to secure the bank's investment if something
goes wrong and the asset has to be sold to repay the mortgage
(i.e. you don't over capitalise you property , or in layman's
terms - money spent on the house and land is way more than what
it would ever be sold for. 4) Can the bank get security over the
loan by having the first mortgage and holding in their position
the Certificate Of Title over the property on which the house
is to be built as well as maybe other assets (usually properties)
that may be owned by the mortgagee to cover the amount of money
being borrowed.
The bank is going to want to know all of this in advance but
what I want to discuss is how you go about getting the costing
information for the house.
You start by deciding what you want to build and how much you
want to spend. Obviously, a brief visit to your bank manager to
find out how much you can borrow can save a lot of time and expense.
Then have the plans prepared based on giving firm instructions
to the architect or designer that the cost of the project has
to cost around $?????, give or take 10%. It's at this point that
a lot of good-will between designer and owner must take place.
What do I mean by that? Well, a competent designer should carry
out a brief procedure of finding out what size the owner wants
and what quality of materials they want to build with.
Very quickly, with this information the designer should be able
to guide the owner by calculating estimated costs based on size
(an average m² rate). An unethical designer may choose not
to do this for fear of losing the design project and purposely
estimating low, or if the designer does give a reasonably accurate
estimate the figure is beyond the means of the client, and the
client may choose to try someone else to get a cheaper price.
Remember, some designer's fees are based on a percentage of the
value of the completed building, so a more expensive house will
be a financial advantage to the designer. My advice, be up front
and honest, tell your designer to do the same and work as a team
with your designer.
With a completed set of plans, and maybe a quote or two to build,
this information will be forwarded on to a registered valuer (that's
assuming the quote is within the limits of what the owners expected).
The registered valuer will prepare a report for the owner to take
to the bank. This report will contain a projected value of what
the property will be worth once the proposed house is built. The
bank will use this information to either reject the application
for a mortgage or structure a package to satisfy both the bank
and the owner.
Progress payments are paid to the builder usually in instalments
as listed below. And in most cases where money is being borrowed
for a proposed building, the bank will insist that a registered
valuer inspects progress or that stages of the building have been
completed before money is released to the owner to pay the builder.
What usually happens is that the bank places the money in the
owner's cheque account so a cheque can be written out to the builder.
However, in some cases where the banks feel that the builder may
not get paid because the owner looks like they may decide to buy
ten thousand Lotto tickets or take a holiday, the bank may decide
to deposit the money directly into the builder's account.
When we (Moss Brothers Housing) build we always use the standard
Master Builders Housing Contract Agreement. Progress payments
are made in the following way:
- 10% deposit. This is paid the same time that the contract is
signed and agreed to.
- 15% on completion of the foundation.
- 30% on completion of the roof framing.
- 15% on completion of the fitting of the doors, windows and exterior
sheathing.
- 10% on completion of all interior wall linings.
- 20% on completion of the contract.
This formula is not set in concrete and can be altered to suit
all parties.
The last 20% of the contract money is paid at the same time as
all or both parties agree the project is complete. At this point
the Completions Certificate is signed and the owner can take possession.
There are no retention monies held back until after the maintenance
period, as used to happen years ago, because today we have in
place the Master Builder 5 Year New Home Guarantee. The Master
Build Guarantee is usually sufficient security for most owners
and banks.
Sometimes the owners wish to take possession before the last
bits and pieces are complete. The only way to do this is sign
the Completions Certificate, meaning the project is complete but
subject to the following items being complete, then make a list
and both parties will sign and date. The owner must remember that
they must still pay all contract completion monies at this point
and before taking possession. If they feel uncomfortable handing
over all monies, both parties can agree to lodge the money in
the Trust Account of the Master Builders.
I have done my best to describe the procedure here in writing
the best way I can. If I have made it as clear as mud for you
and created more questions than answers then you can either free
phone me (the 0800 number is listed below) or email me with the
best number to phone you on, giving a time and day and I'll do
that.
By the way; we have fantastic computer technology that allows
you to see your proposed house finished before we print the plans.
All plans are now prepared on computer. Once we have them in the
computer you can see exactly what your proposed house looks like
before we finalise the plans. We'll even be able to take you on
a journey around the outside of your new home, looking at it from
all angles.
Regards
Julian Moss
Oh PS: More and more inquiries and sales are from beyond the toll
free area of our office. Because of this, for your convenience I
have installed a 0800 Free-Help phone line to our office. So if
you have any questions or queries you can contact me on:
0800 MOSS BROS (6677-2767)
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