Architects Fees: A common resistance to engaging an architect is the myth that architects will cost a lot in fees.
With some of the building shows on TV where contestants are doing it for themselves, why spend money on an architect? What you save on fees, you can spend on construction, right?
After 10 years in practice, here’s the reality to bust the myth.
MWa’s fees are the first up front costs incurred on a renovation project.
As a client, you need to have money to pay the architect and other consultants, at the start of the project.
You need capacity to pay from savings or from a mortgage redraw, as fees and charges are not part of a renovation or construction loan.
That said, MWa urge prospective clients to consider fees in light of long term value, not short term costs.
In every case over the past 10 years, our clients are better off financially at the end of their project, having invested in MWa architect’s fees and their project.
In every case.
In a combination of ways, from savings made during the process, the creation of intangible value such as quality, by minimising risk and saving time, and the building of a bricks and mortar asset, MWa’s fees have paid off as an investment.
Some clients have had a measurable return of up to 300%, (even excluding the capital gain of their renovated homes).
Here are 10 specific examples, starting with the big savings first. (*names and suburbs have been changed).
Some of these scenarios are common to all our projects but make great examples, some are just great opportunities which MWa have worked to our client’s advantage – tricks of our trade.
1 Nancy in Newport saved over $150K by engaging MWa as her architect and turning her existing “five year plan” house to a “forever home”.
Nancy faced a common dilemma. Her older home was in a great location but it has been untouched for decades. While in good condition, it was not a practical site for a family with three young children, nor was the layout of the home suitable for a contemporary family. She wanted to update the home to be suitable for the next five years, then sell and move on to her “forever home”.
By the end of MWa’s sketch design process, Nancy was delighted with the vision for her new home and was convinced beyond a doubt that it could be transformed beyond her expectations, to meet the ongoing needs of her family.
The strategic advantage in adapting an existing home, and avoiding the transaction costs of buying and selling, can save clients significant amounts of money in today’s Sydney real estate market.
In mid 2017, one third of suburbs on the northern beaches of Sydney (15 of 42 suburbs) have a median house price of $2mil. The 2.5% agents fees for selling are $50K for such a sale, an average advertising budget is at least $5K and stamp duty on your new purchase (assuming your new home is $2mil also) is $95,768. Transactional taxes are even greater if your property is subject to capital gains tax.
In Nancy’s case, it was MWa’s design that turned her five year home into a “forever home”.
The end results speak for themselves. With some great design work, this renovation saved Nancy at least $150K, rather than selling her home and buying another. Total MWa fees: $50K. Return on investment: 300%.
2 Melanie in Manly is a repeat client of MWa, with two homes designed by us. Good design served her well when selling her properties. Her return was ten fold within five years.
The first home was sold in a slow market on the first “open for inspection”, getting a fabulous price ($550K over the original purchase price and renovation costs combined) and saving $15K on marketing campaign and auction fees.
The second home was sold privately, without agents fees, as soon as she decided it was time to move. Her friends made an off-market private offer, which was a suburb record.
In Melanie’s case, it was MWa’s design that made her property aspirational and desirable, and delivered a premium.
Total MWa fees for home number one: $30K. MWa fees for home number two: $45K. Savings on sales campaigns, agents fees and considering capital gains of both properties selling at a premium approx $750K. Return on investment: well, you do the calculations. Rising real estate prices helped, but MWa’s design delivered a premium.
3 Frank in Fairlight saved $25K in fees & charges and six months of time with MWa’s advice on the best strategy for gaining development approval for his addition. He avoided going through an expensive and lengthy DA process with council. MWa fees for Stage 1 Sketch Design: $15K. Savings to client: $25K Return on investment: 160%. And this is even before construction commenced.
4 Bonnie in Balgowlah saved $15K in stormwater infrastructure costs associated with her renovations including a new pool. MWa’s design included liaison and negotiation with the engineer and tailoring her landscaping surfaces to avoid triggering On-Site-Detention (OSD) as stormwater infrastructure. MWa fees for Stage 2 DA: $15K. Savings: $15K. Return on investment: 100%.
5 Sally in Seaforth saved $30K during MWa’s documentation services with trade discounts of 10% to 15% on interior products past onto her, including timber flooring, tiles, bathroom fixtures and fittings, lighting, door hardware and kitchen appliances. MWa fees for Stage 3 Documentation: $30K. Savings: $30K. Return on investment 100%.
6 Lindie in Lindfield is earning in excess of $20K pa, reaping a 100% return annually on her MWa fees of $20K for her outdoor space. It’s hired out each year as a venue for TV commercials and catalogue photos shoots for companies such as Harvey Norman. Return on investment: 100% pa ongoing. Who knew this was going to be the outcome of such a fabulous renovation?
7 Mark in Mosman, a retired bachelor, is earning over $30K a year from his secondary dwelling. MWa helped Mark with the conversion of his large existing family home into two homes; a large 4 bedroom family home and an upper floor studio apartment with balcony, water views, separate entry and parking. The project was so successful that Mark continued with the renovation to include his entire home once the studio apartment was complete. The benefits to him are that he can stay living independently in his family home for the next 10 years while it generates income for him, the home is now renovated throughout providing capital gain at the ready when it passes as a family asset to his adult children, and he is now free to travel several months of the year, while his home generates income. MWa fees: $30K. Income: over $30K in rent a year. Return on investment: + 100% return a year, excluding the growth in capital gain of the asset.
8 Bruce in Balgowlah saved $22K on his renovation, with MWa arranging his building contract to exclude Items by Owner, so these items didn’t attracting a builder’s margin. Building contract: $300K. Items by Owner: $150K. Saving on builders margin $22.5K. MWa fees for CDC application and advice on contract: $20K. Return on investment: 100%+.
9 Allan in Allambie saved $1,500 in one afternoon, when MWa question and clarified a consultant fee proposal. It took 5 minutes and its what we do, but he was thankful for our intervention and this saving.
10 And lastly, me, Michelle in Manly Vale. I renovated my own home which not only gave me great satisfaction but another bedroom so that my two oldest boys didn’t have to share a bedroom during their high school years, and a new kitchen (plus a huge external make over). I had the house re-valued and re-mortgaged post renovation, giving my family a $300K cash buffer so that my partner and I could invest in a new business, while still managing to keep our heads above water while the business was set up and running smoothly with income. Return on investment: Priceless.
So, what would you do if you knew you couldn’t lose? What if you are guaranteed, in one way or another, your investment in MWa’s fees would be returned?
Don’t let the assumption that architects fees are “a cost you can’t afford” stop you from getting the best advice possible.
Call MWa today. 0421 088 110.