A remodeling project can generate enough “divorce dust” to fill a 50-gallon drum. Fortunately, the potential for such a condition can be reduced, or completely eliminated, by following a few simple rules regarding money management and good planning.
Before beginning, it’s a good idea to determine an upper spending limit. This can be accomplished by a calculation that includes the average value of the homes in the neighborhood. Simply multiply the average value times 1.20.
For demonstration purposes let’s assume the average is $300,000. $300,000 x 1.20 = $360,000. Hence, for the neighborhood, $360,000 is considered the maximum budget limit.
When a home’s existing value exceeds the average value, the value of any improvements may be lost at time of sale. If you’re staying in the home forever, then disregard the AHV rule.
With the decision made concerning budget limit, it’s time to begin the three most important steps in preparing a remodel budget. They are:
2. planning, and
3. more planning.
First, the project elements must be selected. It is important to determine exactly which elements will be included. Do this by gathering pictures, prices and detailed descriptions from books, magazines, the library and the Internet. For example: Which sink, the type and style of cabinetry, the type of flooring, wall finish (smooth or textured), what style of baseboard, paint colors.
Every element should be considered down to the smallest detail. Using two colors of paint in a room is more expensive than a single color. Not double, but more.
Never rely on a contractor to recommend the initial selections. A contractor should not be called until all selections have been made. Unless the list of elements is provided to the contractors each will have a different opinion as to which products should be specified. No two contractors will recommend the same products or services.
When one contractor’s bid is $2,000 and another’s is $6,000, then the selection process was incomplete at bid time. The only time contractors’ bids are as extreme as this example is when the project specifications are incomplete or nonexistent. This is when contractors make certain assumptions.
Once you have a wish list (including a picture, price and description of each item) then you can call in a group of contractors to give you their preliminary bids for your project. From the bids you will be able to determine approximately what the project will cost.
One thing to keep in mind: The low bidder isn’t your best friend. He’s just the low bidder. By the same token the high bidder isn’t your worst enemy: He’s just the high bidder.
Here’s what we do: Average all of the bids and then choose from only those contractors whose price falls within plus or minus 5 percent of average. A bid is nothing more than an estimate, an educated guess. Once you have the average of the bids you should focus on that average amount as a reasonable value for what you’ve outlined.
If the preliminary estimates are satisfactory and meet financial constraints then it’s time to create a full set of plans and specifications prepared by an experienced individual. The plans and specifications outline the project in detail. Once the bidding is complete use the average plus/minus 5 percent formula and choose a contractor.
If in the beginning a budget number was pulled out of the sky, disappointment may occur when the actual cost is presented. The suggested planning technique: get bids, get serious about finalizing bids by preparing a formal set of plans and specifications, and finally, choose the contractor whose price is neither low or high — but instead — reasonable.
Getting greedy with individuals who supply labor can come back and bite one on the behind. Why? Because when a contractor is under the financial gun, shoddy workmanship and inferior materials follow. Doing the homework is the answer to being a winner.
For tips from James and Morris Carey, go to www.onthehouse.com or call the listener hot line, 800-737-2474, ext. 59. The Careys are also on KRKO (1380-AM) from 6 to 10 a.m. every Saturday.