10 Things NOT to do When Remodeling or Building a House
By Julie Lohmeier
Introduction Every year, millions of
Americans improve their homes. Whether it is building a new home, adding an
addition, or remodeling a kitchen or bath, improving your house is an expensive
proposition. In fact, in 2004 in the U.S., homeowners spent $544 billion dollars
building, remodeling and, improving their homes, with project ranging from a few
thousand to hundreds of thousands of dollars, and even millions of dollars.
For home improvements, roughly 85% of these costs on average over the past five
years was paid to contractors.
Yet, when hiring this work, many people will do less research than they will if
buying a new TV or camera.
Too frequently, logical, smart people make common mistakes every day contracting
trade work, needlessly costing themselves thousands of dollars. I should
know; I am one of them.
So I offer to you my advice. Ten points born from hard- earned experience.
Words of advice that seem so obvious, but are often forgotten and quickly
neglected in the excitement and rush to get the project going. This is my list
of 10 Don’ts from my personal list of foolish mistakes made during the course of
many home building and addition projects – including my own home.
1. Don’t Set the Size of Your Project According to the Size of Your Budget
If I can identify the one mistake that has caused most of the problems we have
encountered in building and remodeling houses, it is this one. Trying to
do too much on too little, causes you to believe the contractor who says sure
you can do all this work for an unrealistically low price, to hire
subcontractors with too little experience, and to get taken by the con artists.
More importantly, you run the risk of running out of money before you finish the
job, putting you in the position of potentially being forced to sell an
unfinished house and lose money.
2. Don’t Get References and/or See Previous Work
Would you get a babysitter, a cardiologist, or a portfolio manager without a
reference? No. No. No.
Then why do homeowners consistently spend enormous amounts of money on home
repair or building projects without getting references and seeing a contractor’s
previous work before hiring him. You’re not being rude by asking for these
things. You’re not insulting the contractor. You’re being smart.
3. Don’t Get More than One Bid
The popular wisdom regarding bids is to get five, throw out the lowest and
highest bids, and negotiate the ones in the middle. That’s excellent
advice and fine in theory. But if you a spouse, kids, or generally have a life,
you’ll find this advice next to impossible to follow. If you are simply
hiring a general contractor to run it all, and paying them 15% markup - at a
minimum - to run your job, then you can find five general contractors to bid.
If, however, you have a small job you want to manage yourself, say a new kitchen
or bathroom, or you want to manage the building of your home yourself, you
simply will not have time to find five names of each trade, call them, meet with
them, give them plans and wait for all five to come in. That, of course, assumes
that you get all five bids back. Typically you will not.
My advice: Get as many as you reasonably can – two or three is good. If
one of the three is totally out of line, dismiss it. If one of the three
is a bit higher or lower than the others, ask some probing questions to find out
why. Most importantly, make sure everything is covered and that allowances
– the amount contractors estimate for things like lighting or plumbing fixtures
that you select – is reasonable. If not, eliminate that bid from consideration.
If you have two that are reasonably comparable, you are likely in the right
ballpark. The next step is to question the contractor that everything is
covered and to ask for references. Also, let your instinct guide you too – not
just the voice in your head telling you the contractor that is 50% cheaper is
really the right one.
4. Don’t Get a Written Quote or Estimate
This piece of advice sounds like a no-brainer, doesn’t it? But you’d be
surprised how often it does not happen, especially on small jobs. It also
frequently occurs with small contractors where they are the only employee.
This practice is also very common on change orders which cause a big problem at
the end when it comes time to settle up with a contractor and get their lien
waiver (more on this later).
In any case, get the quote in writing. I have never sued a contractor or been
sued, but I would have saved myself plenty of effort and hassle had I had the
terms and costs in clear black and white. When the contractor has agreed
to the terms and costs and signed a contract, they lose the right to quibble
about it later. This includes you too. You have just signed a
contract. Just as if the contractor misses something, if you forget an item,
clause, or caveat, you too are out of luck, so make sure you read the contract
thoroughly and do not just sign it.
5. Don’t Get Written Time Frames or Deadlines with Penalties
While you should expect a difficult time in convincing a general contractor or
project manager to agree to a deadline or penalty, still try it. Do not
try this with individual contractors as the interdependencies between the
subcontractors will make this too complex to be fair, manageable, or
Work with the general contractor or manager to set the terms. Ask how long
the project will take, knowing that these projects never go as planned, and then
ask for a reasonable cushion. The cushion suggested should accommodate weather
delays and unexpected events. The cushion should also state a specific number of
rain days, defining what constitutes one.
Not only must you state a deadline and exceptions, but you must also define
“completion.” Most use when the final occupancy permit is granted by the
local municipality for building or large additions or when the final inspection
passes. For smaller projects that aren't inspected, agree to a definition,
but I would recommend you define completion as the time when every- thing is
working and the punch list (small remaining items) is complete.
The penalty can vary from a reduction on the percentage paid on the final draw
(for a construction or general manager), forfeiture of the remaining payment, or
an agreed upon dollar fine or percentage of the job in total – all to be
deducted from the remaining and final payment.
6. Don’t Get Lien Waivers After Each Payment or Pay Directly
If you are working directly with the contractors, rather than using a general
contractor, you should pay each trade directly. There are construction
managers who perform the work of a General Contractor even though legally you
are the General Contractor and will sign all contracts and pay all contractors.
You may elect to use a title company for paying the trades if you are using a
General Contractor, but I wouldn’t recommend it if you plan to pay each
When you give a payment, require a signed lien waiver in return. This is the
sub-contractor’s official acknowledgement of the payment. Get one for any
payment – deposit, interim (also known as partial) or final. Partial
waiver and final waiver forms are a bit different. Specifically, the final
waiver will show all payments as well as the final payment and acknowledges that
the contract is paid in full. The rule: No waiver, no payment.
7. Don’t Have a Clear Plan or Understanding of What You Want
The first rule of home remodeling or building is “Nothing Goes as Planned.”
No matter who makes the mistake – the architect, trade, you - all of these
situations will cost you time and money generally. You will make matters worse
if you cannot quickly collect the information you need to make a decision and
then make it. And once it’s made, do not remake the decision.
Redoing work will drag on your project, frustrate your contractors, and cost you
money to undo and redo the work. The discovery of new and unanticipated problems
will inevitably cause changes to be made “in the field”, an expression that
simply means “during construction”. If you change your mind and deviate
regularly from the plan, you will become your own worst enemy and a drain on
your budget. Know what you want, express it, stick by it – no
flip-flopping – and move on.
Of course, if a problem arises that is so bad, you should change it so as to not
compromise the entire project or the appeal and functionality of your house. But
remember, the more you change things, justified or not, the more you delay your
project and overrun your budget. However, when a problem does arise, do
not automatically accept the first option presented to you. Ask questions.
What if …, why not …, how about …? At this point, even questions
considered “dumb” can lead to a breakthrough idea and force the contractor to
think differently and come up with a better solution than first offered.
8. Don’t Go By Every Day and Visibly Inspect the Work
Being visibly involved and interested in a remodeling job – and especially in a
building or addition project – helps in two ways. First, you know progress
is being made, and you can potentially spot problems and errors before they
become too big to fix or too extensive to be manageable. Second and
admittedly more cynical, everyone works a bit harder when the boss is around.
Even if you hire a general contractor or project manager, it is your house and
your money, so you are the boss.
Even if your project is a small job, this rule applies. If you are home
all day, do not stalk the contractors or watch over their shoulders. Let them
work, but pop your head in, ask a question, give a compliment. If you are
not home, check that night and ask questions or give feedback – positive
included – the next morning when the trades arrive. If you use a project
manager or general contractor, contact them throughout the week with questions
and ask for a daily site report or weekly log. The important point to all
of this is to let them know that you care about the work and that you are
following their progress.
9. Withhold Payment until After Appropriate Inspections Pass.
The key to getting contractors to do what you need them to do is to maintain the
leverage of paying them. You must be careful not to pay ahead of the work
completed. Some contractors will require a downpayment. Try to avoid
this if you can. Before providing a downpayment, be absolutely sure this is a
contractor you trust.
For some trades, this is a necessity, especially those that must get supplies in
advance – masons, carpenters, drywallers, and often electricians and plumbers.
Others do it to ensure your commitment because they will turn down other jobs in
order to schedule yours.
All in all, it is not a horrible or terrible thing to provide a deposit, but
before you make another payment, be sure that your payouts are proportionate to
the work done to date. For example, if the framer has only framed a third
of the house, do not pay half of the contract. In addition, there are
plenty of small things in most of the trades that take time, are often done at
the end, and are not immediately obvious to one not in that trade. In
addition, do not make an interim or final payout until key inspections have
passed, especially the final inspection.
10. Don’t Treat Good Contractors Well or Cut Losses Quickly with Bad Ones.
Another reason not to overpay a contractor, or to pay in advance of work
completed, is it becomes harder to get rid of him if he does not perform because
you lose leverage and because if you fire him, you will have to pay someone else
to do the work you already paid to the original contractor.
It is a tough call to fire someone because you essentially have to start over
with that trade. This is a purely judgment call on your part. I have let
contractors go on too long, only to cost me more time and money in the long run,
and I have forced difficult trades through the process and stayed reasonably on
schedule. I must say that I have never fired someone and regretted it. I
only regretted having not done it sooner. However, if someone is doing a
lousy job or ripping you off, get rid of him fast. Conversely, treat the good
ones well. Give them repeat business. Refer them to others. Be loyal. When
they need it, cut them some slack.
Because considerable amounts of money are involved, you owe it to yourself to
study up before taking on this work. It’s simple advice, yes, but being
reminded and forewarned of how easy it is to fall into these traps will
hopefully prevent you from making these mistakes. I have done 12 home remodeling
and building projects and have learned something every time. Some lessons
seemed so obvious – how could I have been so stupid? Hopefully, you can
now avoid some of these critical, yet common, mistakes and save yourself
considerable headache and frustration. Despite the amount of stress and
frustration involved in a home building or remodeling project, the investment in
your home will be worth it. Good luck!
Along with her husband, Julie Lohmeier is the
veteran of numerous home remodeling and building projects. From working hands on
and doing much of the work herself to hiring contractors and construction
managers, she has seen the entire spectrum of home improvement. She shares
her remodeling tips, home decorating ideas, and other various rants at
www.myhomeredux.com. @copyright Julie Lohmeier,