The Preliminary Service Agreement (PSA): A Quick Overview

Questions to Ask When Choosing a Builder

Hiring the right builder is essential for a successful project. In this post, we discuss our “Qualify Your Builder” checklist. These questions will help you assess a builder’s experience, quality practices, & project management skills, so you can make an informed decision before signing a contract.

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Context

After using our C4 Checklist: Choosing Your builder (link above) to interview your shortlist of builders and finding one you like, what's next?

Next, you'll need to pay an initial deposit to the builder to lock in the pricing and standard design and inclusions details for your chosen floor plan.

Before you make this payment, your salesperson or builder will provide you with a Preliminary Service Agreement (PSA) and an Electronic Consent Form to sign.

The PSA outlines the specific tasks the builder will do for the initial deposit. The tasks that they will complete are generally as follows:

1. Contours: A surveyor attends site and "maps" out the land gradient and features, services present, fences, trees, presence of soil stockpiles onsite.
2. Soil Test: A geotechnical engineer sends a drilling rig to site to bore into the ground in at least two locations. They test and analyse the soil samples to provide you with a soil report that tells you the soil classification of your site. This is important because it determines the details of your foundation system (how beefy it needs to be).

Understanding Surveys & Contour Plans: A guide 4 homeowners

A contour survey maps land elevation,important for new homeowners in planning and construction. Understand RP and SP roles, contour lines, and reduced levels. This guide helps interpret survey plans for accurate design, drainage, and compliance.

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Demystifying Geotechnical Soil Tests for Homeowners

Confused by the technical jargon in geotechnical reports? This article demystifies soil tests, helping property owners make informed decisions for construction projects. Learn about soil density, strength, and permeability, and how these factors influence foundation stability.

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The Electronic Consent Form requires your approval and contact details (such as email) so the builder can communicate with you electronically.

You will be asked to sign these documents and at the same time, pay your initial deposit which may be between $1000 and $2000 which can be done by EFTPOS (or in the past cheque).

Real Life Example

You can sign and deposit multiple PSA agreements with different builders to obtain initial estimates from each. This allows you to compare inclusions, allowances, and site-specific charges side by side.

It’s a great way to see which builder provides the clearest, most detailed estimate upfront. Use this as an opportunity to test their communication and the quality of their documentation. Is it clear and unambiguous? Do they explain everything properly?

If you go with multiple PSAs, keep in mind that you’ll need to pay two deposits—and you’ll forfeit one when you choose your preferred builder.

A smarter approach is to stagger your PSA deposits.

Pay one builder to complete the core tasks, like the soil test and contour survey. Then, take these results to the second builder and negotiate a lower deposit, since you’ve already covered those items in the first PSA agreement. That way, they only need to complete the pre-lodgement, house siting, and initial estimate tasks to get back your first run to compare each builders site specific pricing.

Creating Leverage Through Double Deposits

Taking this approach gives you leverage with the salesperson and builder because it makes it clear that they need to earn your business. I've seen this strategy work exceptionally well for clients to secure the best contract price. Salespeople hate it—but it pushes them to fight harder with their admin team to get you a better deal when they know they're competing for your signature.

Project builders don’t like this tactic, but it’s the most effective way to get the best price from builders who sell "value-driven" products. It forces them to prove their worth by clearly demonstrating why they offer more value than their competitors.

Practical Tools

The PSA Document

An Example of the PSA - Preliminary Service Agreement, what it says and the tasks/actions created from signing it.

Electronic Consent Form

An example of an electronic consent form (below). You should always sign one of these or agree to a clause in your contract to confirm that you consent to receive electronic communications. Otherwise, you’ll be stuck with snail mail! 😄

Find Out More

For a detailed breakdown of the PSA, we’ve written a full blog post that explains its inclusions, the key information it contains, and what happens after you sign it.

Click the link below to read the post:

Preparing for a Meeting with a Project Builder: Key Tips

Before meeting with a project builder, it’s essential to be well-prepared. Understand your budget, have a clear vision of your project, familiarize yourself with the building process, and don’t hesitate to ask questions. Being informed can save you time, money, and stress.

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Understanding Preliminary Service Agreements

The preliminary service agreement sets the stage for your home building project, detailing essential aspects like work scope, timeline, and payment terms. It’s the blueprint for a successful partnership with your contractor.

Constructor - Build A Better New HomeAnthony Painter