Tuesday, May 28, 2013

Remodeling 101: Part 3 - Budgets


The most common question that I receive when I meet clients during the initial consultation of any renovation project is, "How much is this going to cost?". This is not a question that can be answered on the spot. There are many variables that go into estimating any construction project and it is important that the contractor is able to do their due diligence before disclosing cost figures. It is one of the reasons why people are told to get multiple quotes. You would be surprised how much estimates can vary from one contractor to another. 

I like to know my client's budget up front. However, finding this out, is more often easier said than done. People are hesitant to disclose their budgets up front. I understand this mentality... The client is concerned that if they tell the contractor their budget is $15,000 and the actual cost is around $10,000, the contractor will automatically bill up to the client's budget and pocket the difference. I am not saying this doesn't happen, however, if you have done your research and hired a reputable contractor it most likely will not.  

I have had several projects in which I was able to come in under the client's budget and others in which the customer had unrealistic expectations of what their desired improvements would cost. In either situation I can explain and justify the costs and offer solutions to reduce the costs if need be. 

Here are two examples:

Client A (under budget) - Wanted his bathroom remodeled for around $7,000. He received multiple estimates from other contractors for around $10,000 but couldn't justify spending that amount of money on "such a small bathroom". After meeting with both him and his wife and discussing their expectations Investcove was able to complete the job for around $6,300.

Client B (unrealistic expectations) - Wanted her 2,500 square foot home completely renovated including a full gourmet kitchen, custom laundry room, two bathrooms, removal of existing tile and installation of hand scraped hard wood flooring throughout, brand new impact windows and doors, interior and exterior paint, and filling a sunken living room in with concrete. This was an extensive remodel that included heavy duty plumbing and electrical work. In addition, this client chose very high end and expensive materials. She did not disclose her budget upfront but we later found out that she estimated all of the work to cost around $70,000 which was about $30,000-$40,000 less than the actual costs based on her material choices. 

Client A was obviously happy because their remodel came out around 10% less than anticipated. They had a feeling that $10,000 was too much money for their bathroom remodel and they ended up being right. The fact that we knew their budget upfront allowed us to suggest materials that we knew would be conducive to their budget and in this case even came in under budget! This doesn't always happen but we definitely always try. 

Client B was panicked because she received the estimates and was shocked by the pricing. In this case, if she had disclosed a $70,000 budget up front we could have sat down with her and explained why it was unrealistic and how we could get the costs down to where she wanted them to be. 

If you are considering a remodel but have no idea what things costs or what your budget should be here are some suggestions to point you in the right direction:

1) Ask around - Talk to your friends, relatives, and neighbors. Talk to anyone who has completed a remodel in the past year and ask them how much they spent. I know, I know... this is not the most comfortable conversation to have but if you explain why you are asking they will be more than happy to help.

2) Google - Go ahead! You know you Google everything else. Google, "bathroom remodeling costs" or "cost to install new flooring" and read some of the message boards to get an idea of what things costs. As with everything else on the internet... keep an open mind and take everything with a grain of salt!

3) Research - Look at some of our earlier posts on HOW TO: Hiring a Contractor. Do your research and only call contractors that are reputable. Receive recommendations from friends or other trades that you do business with. Make sure they have a portfolio and ask them about their experience in project management and working with budgets.

4) Pictures - Have inspiration pictures for your contractors when they come to the initial site visit. There are multiple ways to achieve one look and pictures can help your contractor guide you in the right direction for your desired outcome and budget.

5) Full disclosure - Tell the contractor your budget. By now, you should have honest and reputable contractors in line and you need to trust that they will do everything within their power to provide you with the best possible pricing. 

6) Trust your gut! - I think this is true of everything in life... trust your intuition! If you have a bad feeling about a contractor then leave it at that and do not do business with them. On the other hand, if you have a good feeling about a contractor then you should probably trust that you are making the right decision! 

If you have any questions on construction budgets please feel free to leave a comment or you can head on over to our Facebook page and post to our wall or private message us! 

Blog post by Aja De Los Santos, GM & Head Designer at Investcove Properties

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