Don't let shoddy contractors demolish
your remodeling budget
comes to your house and starts smashing down walls, tearing out
appliances and crunching holes in ceilings, it's best to know exactly
who you are dealing with.
As a smart homeowner,
you've already used Bankrate to lock in a low interest rate on a
equity loan and to find out which
remodeling projects pay you back the most.
Now is no time to get nailed by a shoddy contractor.
According to the National
Association of the Remodeling Industry, Americans spent over
$180 billion on home improvements, and little wonder. A 1999 American
Housing Survey pinpointed the median age of the nearly 69 million
owner-occupied houses in the United States at 29 years, well ripe
for any number of improvements.
Lots of work means lots of
And lots of ways to get scammed.
Each year, home remodeling contractor problems rank among the
top 10 consumer complaints to the Better
Business Bureau. In fact, the BBB received nearly 6,500 complaints
in 2000. Americans lose money each year to everything from shoddy
workmanship to outright scams.
Holly Cherico, vice president
of communications for the BBB, says there are three main reasons
for the flood of complaints:
- Homeowners don't get all
the details written into the contract before signing it.
- Homeowners select a contractor
based on price alone without investigating their background.
- Homeowners get duped by
These fly-by-night artists
fall into three broad categories. There's the con man, an outright
criminal who promises anything at any price, demands his money up
front and vanishes. Then there's the lowball artist, a shady operator
who intentionally bids below his legitimate competitors, then makes
costly changes or skimps on workmanship to recoup a profit. Last,
there's the slipshod businessman whose intentions may be honorable
but whose incompetent estimates and overall poor judgment end up
costing you money.
"These are the door-to-door
home contractors who claim to be doing a job at your neighbor's
house, they have leftover materials and would be happy to patch
your leaky basement, repave your driveway or check your furnace,"
Protecting yourself against
the con artist should be easy, she says.
"Contact your local BBB and
ask for a list of members in that industry. That's just being a
wise consumer," Cherico says. "If you're spending several thousand
dollars, I think you want to make sure you're giving it to a reputable
OK, you've successfully avoided the outright scam artists. But
you're not out of the woods yet. There are plenty of other ways
your remodeling budget can head south -- the first and perhaps most
important being the failure to calculate an accurate budget in the
To get a ballpark idea of
what your project will cost, check out the national
averages as compiled by Remodeling magazine. Adjust the
ballpark cost slightly upward if you live in the East or West, slightly
downward if you live in the Midwest or South. As a rule, you should
adjust your total upward again if you live in a major metropolitan
|Kitchen (major remodel)
|Kitchen (minor remodel)
|Family room addition
|Attic bedroom addition
Source: 2000-01 Cost vs. Value Report,
A number of other Internet
sites can also help you arrive at a more accurate budget for your
remodeling project. One of the best is ImproveNet,
which helps calculate the cost of labor and materials based on the
size of your job.
Next, you need to determine
which types of home professionals you'll need to accomplish your
For minor work, an experienced
general contractor likely will be the most cost-effective. A specialized
contractor, however, may save money over a general contractor by
knowing the timesaving tricks of their particular specialty.
If major work is involved,
especially if there are design, aesthetic or structure issues, an
architect may be needed to draw up detailed plans and obtain permits.
To save on costly architectural fees, consider instead a certified
or licensed designer, who generally specializes in particular types
of projects (kitchens, interiors, baths, etc.). Or consider a design/build
contractor who specializes in seeing major renovations through from
start to finish.
'good sense' list
To save headaches
later, consider drawing up a short list of qualified professionals
in your area by logging on to the National Association of the Remodeling
Industry, the National
Association of Home Builders Remodelors Council or the Better
Business Bureau. To help your search go smoothly, check out how
to hire a contractor.
good sense to make sure the contractor you choose has:
business licenses, certification and professional affiliations;
work experience, including a verifiable list of local customer
security -- check banking and supplier references;
insurance to protect you and your property against loss or suit;
item should not be taken lightly. When you get down to writing the
contract, clear communication on both sides is your single best
insurance against a remodeling nightmare.
Once you've solicited bids from several licensed professionals,
studied them carefully and selected your contractor, it's time to
commit the project to paper. In general, remodeling contracts come
in three flavors:
- Cost Plus:
You and your contractor arrive at an estimated cost and you agree
to pay all actual costs plus the contractor's fee. It's a common
type of bid, but you assume the risk of cost overruns and corrections.
The contractor commits to a fixed price for cost overruns.
Change requests are documented, signed by both parties and typically
paid for prior to the change being made.
If you choose to do part of the work yourself, you may combine
elements of the cost plus and turnkey approach. The key is making
each party's responsibilities absolutely clear.
Your contract should include:
- Detailed descriptions
covering all aspects of the work to be done.
- Remodeling plans signed
by both parties.
- Payment plan (never pay
more than 30 percent down).
- Start/finish dates.
- Change orders are to be
approved by you before work is done.
- Final inspection and sign-off
prior to final payment.
In addition, include these
- Cancellation rights:
When you sign a remodeling contract, you have three business days
to change your mind and cancel it. Contractors are required to
tell you about this right and provide you with any cancellation
- Lien protection:
On large projects involving subcontractors, protect yourself
from liens against your home in the event your primary contractor
fails to pay the subs. This can be done by a release-of-lien addendum
or by placing your payments in escrow until the work is finished.
- Permitting: It
is the contractor's responsibility to obtain building permits,
if required, and to perform the work in accordance with all building
- Warranty clause:
Make sure all warranties on products and materials installed
by your contractor are in writing and verified.
You've heard the old phrase "built to spec," right?
Well, specifications, or
specs, are written instructions detailing how the work on your project
is to be completed, including installation processes, materials
and actual products to be used. Without specs, a contractor is free
to complete the work to their satisfaction, not yours.
If your project is a major
one and your budget allows, have your architect include specs with
your blueprint and hire a knowledgeable professional as your independent
inspector to make sure the work is performed "to spec."
Bottom line: The best-laid
plans of home remodeling have a way of going awry without your watchful
eye to oversee the process from start to finish. If you want it
done right, hire a reliable professional, get everything in the
contract, then watch over it like a hawk to make sure your contractor
is performing quality work.
Then, of course, sit back
and enjoy what you have caused to be done so well.
MacDonald is a freelance writer based in Florida