How to Avoid Breaking the Remodeling Budget

How to Avoid Breaking the Remodeling Budget

In my experience, homeowners experience 4 different types of bad experiences during and after a major remodel project:

  1. Financial – The actual costs are much greater than the anticipated costs
  2. Financial – They invest more money than they can get out during resale
  3. Problems with Contractors
  4. Style/Look – When it’s completed, there are certain areas or items that they’re not satisfied with.
  5. Function – Don’t like way certain areas or items function
Successful Home Remodeling
Successful Home Remodeling

And many of these areas overlap – For example, a contractor makes a decision on his own without asking about placement of an appliance or cabinet and the homeowner doesn’t like the result.

In this series of articles (on successive Mondays), we’ll address each of these area starting today with Financial Pitfalls – Costs Exceed Budget

Pitfall:  Actual Costs are Greater Than Anticipated:

Planning: The planning for a remodeling project must be extraordinarily comprehensive because even small details can have big price tags.  I got a question recently from a homeowner living in Pennsylvania saying that she wanted to do an attic remodel and got a ballpark from a contractor of $200/sf for the remodel  She wanted to know if that was reasonable.  It certainly is a starting point.  In the area I work – the greater Washington DC area – the price for an attic remodel could range from $100/sf to $250/sf.  For a 1000 sf attic, that’s a price range of $100,000 to $250,000.  Not a good basis for any planning except whether it’s even worth planning further.  Similarly, even for the exact same floor plan, I can’t give much closer a price range without having worked through the details.  Let me give just a few examples: a kitchen with laminate counters can cost $5,000 less than a kitchen with the same square feet of granite counters.  I can spend anywhere from $4,000 to $20,000 for appliances for the same size kitchen.  I can spend $1,000 to $6,000 on flooring.  And lighting can be anywhere from $1,000 to $15,000 for the same area.  A single sink can be anywhere from $100 t0 $1,200.  And the list goes on.  When I work with a client, I start with the ballpark only so they can figure out whether to continue.  Then I work on a floor plan with the functionality that they need.  And then we start working on the details WITH THEIR BUDGET IN MIND.

Compromise: With the basic goal in hand in the form of a floorplan and wishlist of specifications, we can then start to plan the specifics.  For most homeowners this means identifying specific compromises to get close to their goals within their budget.  I usually present a detailed budget that meets their budget and one that contains their full set of desires.  Sometimes these can be tens of thousands of dollars apart.  Then we start compromising.  Maybe some items are so important that it’s worth increasing their budget.  Some high priced items are jettisoned (maybe that higher priced stove or dishwasher or specialty cabinets) for lower priced items in order to stay in the budget.  Or maybe the project is phased so that they get it all – just not all at once.

Execution: The other reason for detailed planning is that a change at the planning stage is incredibly cheaper than a change-order after the job starts.  I always include 10%-25% contingency in the budget to take account of inevitable unexpected items when the walls are opened up and the equally inevitable “while you’re here” requests.  That’s why my projects almost never exceed the budget.  But when you don’t do detailed planning up-front, the costs can exceed the budget by 50% or even 100% because it’s costly to change plans in the middle of the project.  The costs of change come from

For further reading:

–    Budgeting for a Remodeling Project
–    How to cut $20,000 Out of A $85,000 Kitchen Remodel
–    What Does it Cost to Remodel a kitchen?
–    8 Way to Keep Kitchen Remodeling Costs Down
–    Price Drivers in Residential Remodeling
–    Budgeting for a Remodeling Project
–    Basement Remodeling – Cost Components
–    A Low-Cost Kitchen Remodel
–    You control remodeling costs
–    Comparing Price Estimates – Make Sure It’s Apples to Apples



Related Posts