Don’t Be One of Those Homeowners Who Goes Over Budget on a Renovation
Only 1 in 5 homeowners come in under budget. Here’s how to be one of them.
When Kelly Whalen demolished her built-in bookshelves as part of a living room DIY, she found it gave the room some much-needed space. Unfortunately, she also found a hidden subfloor made from asbestos(!) tiles. She hadn’t budgeted for a new subfloor — or for the removal of a toxic substance. Yikes.
And there were more surprises. “When we pulled up the tiling, we found we also had to pull out two layers of wall paneling just to get to the edges of the room,” says the Exton, Penn., native. The paneling fix led to a need for new insulation and drywall. What started as a small project quickly ballooned — and so did Whalen’s expenses.
Almost half of homeowners go over budget when doing a remodel, according to a report from home improvement site Houzz. A more alarming stat: Only one in five comes in under budget. Here’s how to be of them.
#1 Reconsider DIY
DIY is cheaper, right? Not necessarily, says Philadelphia-based interior architecture and design expert Glenna Stone. Depending on the project, amateurs beware.
“If you don’t have the expertise, you could end up paying
between 10% and 40% more,” Stone says.
Why? While your DIY labor is technically free, your lack of know-how can be
costly.
And then there’s hiring and scheduling. A task like moving a wall could mean hiring an engineer and an architect, not to mention coordinating permits. A general contractor knows who’ll do the best work for the best price, and they’ll know when to schedule them to avoid wasting dollars on inefficient use of time.
“If the plumber comes out before you’re ready for him, they’ll charge you for that visit, and then to come out again,” says Stone.
Finally, a contractor is more likely to get it right the first time. There’s nothing like having to buy stuff twice because you messed up. Stone recommends hiring a general contractor for most medium- to large-scale jobs.
Takeaway: Don’t DIY unless you really know what you’re doing. Mistakes cost more than hiring a pro the first time.
#2 Hire the Right Experts
If you decide to forgo the general-contractor route and hire individual workers yourself, it’s best to get at least three quotes for each service performed. Talking to professionals isn’t just about finding the most competitive price. It’s also an opportunity to figure out what services each individual contractor includes within his fee.
In fact, the least expensive contractor may be a warning sign
for inferior construction quality or subpar building materials. A bid worth
reviewing should include a line item for every charge.
“‘Everything’ means every detail, from [the] exact kind of sink fixture to
brand of roof shingles,” says Dean Bennett, president of Dean Bennett
Design and Construction in Castle Rock, Colo. Even the color of the outlets in
each room should be included in the bid, he adds.
Takeaway: The more detail that’s in the bid, the more likely you’ll come in on budget.
#3 Map Out the Project Step by Step (So You Don’t Miss Anything)
So, you’re planning to put up a backsplash. What do you need to
put into your budget? The tile and adhesive, right? And that’s about it?
Try again. Big project or small, the more detailed your plan, the better
prepared you’ll be for both the expected and unexpected costs that can (more
like will
) arise.
When estimating the cost of your project, consider the large expenses, like
that tile and adhesive, but also remember the little items like sales tax,
delivery charges, shipping charges, the float, caulking, cleaning materials,
and more. For bigger projects, you’ll need to estimate engineering costs,
interest costs, permit fees, and sewer and water tap fees, says Bennett. The
more you can plan to expect, the better.
Takeaway: Don’t forget the “small” costs. Like pennies, they might not seem like much at first, but they sure do add up.
#4 Know Where You’re Willing to Cut Corners — and Where You’re Going to Invest
Before setting a project budget, consider what features are most
important to you. When it comes to allocating funds, ancillary desires should
take second place to your overall project goals.
If, for example, your primary goal is to expand your cabinet space, how vital
are custom cabinets or high-end finishes to that goal? “If you’re … OK
with using stock sizes, you can save about 20% to 30% on your budget,”
says Stone. So if your bottom line is to increase kitchen storage space, stay
on budget by sticking with stock cabinets instead of paying more for custom.
On the flip side, if your goal is to gain more glam than storage space, custom
cabinets may be where you want to splurge.
Takeaway: Let your goals drive your budget decisions.
#5 Pad Your Budget
“For any large renovation, you have to plan for the
unexpected,” says Stone. You could open a wall and find electrical work
needs to be done. You could find that your chosen tile is on back order and
your second choice comes at a higher cost. Stone suggests building a 10% buffer
into the budget. Some experts suggest more — up to 25% for those with older
homes. According to Stone, that cash cushion is used more often than not.
When the unexpected does arise, it can pay to keep a level head. “Even if
you feel pressed for time, give yourself at least 24 hours to make an
unexpected decision,” says Stone. When people are reaching their threshold
for how long and to what degree they’ve had their house torn apart, “they
rush into a decision,” she says. “They regret it almost 100% of the
time.”
Takeaway: Pad your budget for the unexpected — and don’t rush decisions.
HOUSELOGIC
HouseLogic helps consumers make smart, confident decisions about all aspects of home ownership. Made possible by REALTORS®, the site helps owners get the most value and enjoyment from their existing home and helps buyers and sellers make the best deal possible.
ALAINA TWEDDALE
Alaina Tweddaleis a freelance writer who writes about money, home, and investing. Her work has appeared on Forbes.com, the Huffington Post, and Time.com. When she’s not writing, she’s working with her husband to slowly renovate what seems like every square inch of their home.
