FORBES – Q & A

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Here is a special post where I was asked to do a Q & A question for the online Forbes Real Estate section.  Check back for more to come!
 

Home renovation projects are notorious for being over-budget and running outside the estimated timeline for completion. How should homeowners prepare for the unexpected?

First and foremost, sellers should always prepare themselves that although budgets and chronology of projects are set with the best of intentions, they usually are exceeded unexpectedly. 

To begin, I recommend getting three different referral contractor estimates.  Go through people you know and trust.  I would avoid going the Yelp or online review route with this because in my experience referrals from someone I know always carry more weight than from someone I don’t.  Next, compare and contrast the offers and then choose someone in the middle.  Avoid the most inexpensive estimate and the most expensive one. 

Though contractors are not usually thrilled with this next part, I highly recommend it.  As an example, If you are working with a contractor who says it’s going to take 3 months and cost 20k to complete a bathroom, after the price and duration is set I would add one last page to the contract.  An addendum that states that should the project exceed 90 days, every 7 days it’s exceeded the contractor loses $500.00.  It’s imperative to have a beginning point, end point and set price.  Another point to add here is if the set price is exceeded by more than 10%, the contractor’s fee gets eroded by the same fee amount.  It should be deducted as such. 

If you build this into the initial contract, it makes it much easier to follow through especially when there are points and penalties. You stand far more chance of hitting dates and budgets.