Are Builder Discounts Hiding Cashflow Problems?

Would you buy a boat with holes in it, simply because it was “on sale?” While the lure of enticing discounts from builders can be hard to resist, it often means they’re facing cashflow problems - which can lead to all sorts of disasters. 

One glaring example is Adelaide Designer Homes, who lured customers in with face-to-face discounts, promising an upfront saving. 

It did not end well: according to a recent report by 9 news, they recently entered liquidation, leaving 20 houses unfinished.* 

What’s more, creditors have claimed the builder was taking on contracts it couldn’t fulfil, with over 80 creditors unsure if they will recoup their losses. 

Bottom line: what initially appears to be a builder eager to give you the best deal, can quickly turn into a disaster. 

The Hidden Costs of "Discount Culture"

If a builder needs to significantly lower their prices to attract business, some tough questions that need to be asked: 

Question 1: How Are They Managing Their Finances?

Discounts can be a sign that the builder’s financial house is not in order. Are they juggling payments just to keep the lights on? Are they borrowing from one project to fund another? A builder with poor financial management is like a sinking ship—it’s just a matter of time before it goes down. And when it does, your dream home, your investment, and your peace of mind could all be dragged under with it.

Question 2: Are They Paying Their Trades on Time?

A builder’s ability to pay their tradespeople on time is a key indicator of their financial health. Builders who are late on payments often face strained relationships with their trades, leading to rushed jobs, corner-cutting, or, worse, having the trades walk off-site altogether. If the trades aren’t getting paid, your project isn’t getting built—at least not the way you imagined.

Question 3: Are They Skimping on Quality Materials?

When profit margins are squeezed, one of the first corners that gets cut is material quality. A builder offering heavy discounts might opt for lower-grade materials that won’t stand the test of time, meaning you could be facing costly repairs or replacements down the road. What looked like savings upfront can end up costing you tens of thousands in future headaches.

Question 4: What Impact Will it Have on Project Timelines? 

Financial mismanagement and strained relationships with trades can wreak havoc on your project timelines. A builder struggling to stay afloat will often shuffle projects around, causing delays and forcing you to stretch your patience (and your temporary housing budget) far beyond what you’d planned.

There is a Better Way: Forego Discounts, Focus on Quality

Discounts offered by builders do no represent real savings. Instead, you often end up with cut-corners, low grade materials and financial instability. If you’d prefer to get: 

• Consistency and Reliability: Builders who avoid unsustainable discounts maintain a consistent cash flow, paying trades on time and fostering good relationships. This translates into efficient, high-quality work with fewer delays.
  
  
• Transparent Costing: An upfront, transparent quote includes all aspects of your project. No hidden fees mean you know exactly what to expect, protecting you from financial surprises.
  
  
• Quality Assurance: With adequate resources, builders can afford to use quality materials and hire skilled labour, ensuring your home is built to last.
  
  

Don’t fall into the trap of prioritising short term savings over the dream home you want. 

Instead, choose a professional builder who understands the importance of maintaining a strong, sustainable business model and focuses on quality and client satisfaction rather than gimmicks. 

When selecting your builder:

• Evaluate Financial Stability: Research their business practices and financial health.
• Assess Transparency: Ensure they provide a detailed, transparent quote.
• Check Relationships: Understand their relationships with trades and suppliers.
• Review Reputation: Look at reviews and case studies of previous projects.

To help you make this important decision, we’ve prepared a comprehensive guide for you to download: 

Build with Confidence: 7 Things You Must Know Before Designing a New Home

It’s completely free - and packed with insights to help you 1) avoid the most common home building mistakes and 2) ensure your dream home becomes a reality.