Home Mortgage Alliance Corporation (HMAC)

'Remodelirium': keeping home renovation costs under control

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Published Date 2/21/2020

2019 was a massive year for remodels — especially the big-ticket variety. With refinance rates near record lows, many homeowners stayed put instead of looking for greener or smaller pastures. If you are a homeowner planning a home renovation in 2020, it's wise to have a plan and a budget, so that your projects don't take on a life of their own.

U.S News & World Report’s Don Vandervort offers a few tips. First, do even more homework than you think is necessary. The more planning and discovery you do upfront, the fewer surprises you'll have when it comes time to stay within your budget. For instance, if you're remodeling a master bath and need to relocate some plumbing, invite a plumber, a foundation or concrete person, and the tile/stone guy over to give you some bids BEFORE you blow out the roof for a skylight. The skylight might be your dream come true, but it's the bathroom you'll use every day, and the $4k extra you spend on the skylight may eat into your budget for new cabinetry, a rain shower and linear drain system, etc.

Your priority list should be detailed, not general. A kitchen remodel list should include everything that is intended to go into that remodel. New countertops? New cabinetry? Replace the dishwasher? Task lighting? Then pin down estimates for each by searching online with questions like "How much is a built-in wine fridge?" or "What is the average cost of a pantry with pull-out shelves?"

If you don't have a head for measurements, style, and budgets, hire someone who does. "A well-designed remodel doesn't cost more to build than a poorly designed one," says Vandervort. "In fact, a well-designed project usually costs less because good designers know how to build efficiently." A structural engineer can tell you if you can raise the ceilings up or if the joists run in the wrong direction, or if removing that wall might make your house cave in. A designer can help you achieve the look and feel you want while staying within your budget. "For example, you can save on plumbing costs by planning kitchens and bathrooms so they utilize existing drains, vents, and supply pipes. If possible, you can usually save by working within your home's existing footprint to eliminate costly foundation and roof work."

The best way to hire a contractor is word of mouth (online reviews are helpful) or seeing finished examples of their work. Beyond that, bids should be fixed. "Do not work on a "time and materials" or "cost-plus" basis. Open-ended agreements are not your budgetary friends. Your contractor agreement should detail all the work slated to be done. This includes specs on appliances, finishes, etc. Anything above and beyond is to be written upon a "change order." Changed your mind about the color of the quartz countertops? Change order. Decide you want a broom closet built into your cabinetry? Change order. How about coils to warm your master bathroom floor before the tiles go down? Change order. Those change orders add up, so keep track of them.

Paying in chunks is advisable. "Break down the project into smaller goals and pay as each goal is reached," says Vandervort. "Before beginning, detail the schedule with your contractor and tie your payments to the completion of each goal. Make sure to keep track of each of these payments as that part of the project is ending. Toward the end, make up a "punch list" of tasks that remain incomplete, such as a corner baseboard that was slopped over with paint or a cabinet door that doesn't close all the way. Make the final payment only when those details are addressed. Vandervort also says never to pay with cash and be sure to keep receipts and records for both tax purposes as well as proof of payment.

Source: US NEWS | TBWS

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