It will cost more than expected
Competition is fierce, so a contractor might initially offer an attractive price just to beat out all the other bids. Their goal is to get you to sign the contract. Once you’re locked in, they can and will upsell you with add-ons or things you thought were included in the project.
If you’re already $100,000 deep and three months into bathroom and kitchen work, you probably won’t balk at a $3,000 recessed lighting project. And since the walls are now open, what’s another $2,000 for an electric car charger?
Also, as your contractor gets further into the project, he or she might point out “unforeseen” problems that require more work. The additional fees may be legit, but some unscrupulous contractors will often find excuses to jack up the price.
Don’t rush into anything. Do your research, get multiple bids, and be willing to walk away. Be as detailed as possible when drawing up the contract regarding costs, time, materials and work.
It will take longer than expected
Two classic lines you may hear from your contractor if they’re lagging on time: “This project is costing me money.” “I’m practically working for free.”
The best way to make sure your contractor is honest about timing is to include a late fee agreement. Come up with a conservative finish date that you’re both comfortable with.
The clause should state that for each day the contractor is late, there will be a credit or reduction in price. Not only will this protect your finances, it will significantly reduce all the stress you’ll ultimately feel.
Don’t let emotions get in the way
Emotions are a homeowner’s worst enemy. The more emotional you are around your contractor, the more they know they can take advantage of you.
Let’s say you just bought your dream home. “We love it so much, and it’s in the perfect location,” you tell your contractor. You also let it slip that you overbid by $65,000. That’s a lot. In such a scenario, your contractor might think: With the kind of money this couple has, what’s the harm in charging an extra $10,000?
Keep things strictly business and leave your emotions at the door.
Spend within the scope of your property value
A few years ago, we worked with a couple that downsized to a less expensive home that needed some work.
One of the upgrades was building a deck outsode the master bedroom. They initially struggled with which doors to choose, and at what price range. The low grade doors cost $8,000, with the middle grade around $15,000, and the high end doors at about $25,000.
To make sure they were spending within the scope of the home value, we recommended that they toured some open houses in the neighborhood, specifically the ones that went through a one-year renovation.
They stumbled across a three-bedroom, three-bathroom house with 1,800 square feet of living space. The property had mid-grade sliding doors leading to the backyard. Since the listing price was comparable to the value of their home, they knew which sliding doors to use and how much to spend.
Always think in percentages
Your reno budget should be based on the percentage value of your property. If you end up overspending, you may never recoup costs, let alone make a return.
If your house is worth $1 million, for example, we suggest keeping the budget at most 10% of your home value ($100,000).
The final elements are timing and purpose. If economic conditions are right, the best time to list your property is as soon as renovations are compete. That’s when your home will look and smell the best.
If you’re simply renovating your forever home to enjoy, then none of this really matters (until it does).
Beware of pricing discrimination by neighborhood
Although input and labor costs are largely independent of your home’s value, some contractors may charge more based on where you live.
A contractor one of our homeowner hired, before connecting with Expert Restoration Service, once confessed that if he ever did a project in a specific neighborhood, he’d increase his price by “100% more” — just because it’s in one of the most expensive areas around Indianapolis. They were told by their previous contractor that “More comfortable homeowners are more likely to accept higher charges because their homes have larger price buffers to absorb renovation costs.”. What the what...!
Always go through the contract details with a fine-tooth comb and look for any unnecessary features your contractor may have added to inflate the price. Once the project has started, keep track of all the activity to make sure you were charged for the work done.
Lower your expectations
Unfortunately, no matter how optimistic you are about home remodeling, life isn't Pinterest or HGTV.
To protect your mental health, expect everything to cost 50% more and take 50% longer — especially during a pandemic, when home remodeling is booming. If the project beats your expectations, you’ll feel great. If not, your expectations have been set.
For those who are easily stressed by the process, buying an already-remodeled home may be the better option. The older (and wealthier) you get, the less you’ll want to spend time and money on renovations. Instead of building sweat equity, you could consider building passive real estate equity.
Whatever you decide to do, we wish you all the best with your decision. We hope that you will come out on the other side with all your relationships intact and the home of your dreams! If you need help along the way...Expert Restoration Service is a general contractor, serving the Indianapolis and surrounding areas. Rest at ease with your budget, we offer financing that can help to open up your options. If we can be of service or to get started on your project today, call 317.643.1207 or book online now.