After 40 years in business, we’ve heard our share of remodeling horror stories from clients who have come to Stebnitz Builders only after they’ve been bitten by companies who, at best, were simply unqualified to run a project or their business to deliver on the clients’ expectations or, at worst, were borderline crooks.
Those remodeling horror stories never begin with, “We spent a lot of time investigating several contractors and chose the guy with the highest price.”
Inevitably, we hear, “We thought we were going to save a lot of money going with XYZ Company. Boy, were we wrong!”
Although consumers regularly use price as one of several deciding factors in making major purchasing decisions, savvy homeowners know that a price that’s too low can signal big problems and major unexpected costs ahead.
Here are 6 caveats to know before signing on the dotted line:
1) Low Quality Products Cost Less
Some homeowners mistakenly assume that all building products are created equal. And while one nail may indeed be indistinguishable from another, this is not the case with many other building materials such as wallboard, structural materials, insulation, windows, doors, flooring, roofing or counters and cabinets. As you would expect with anything you buy, better quality, longer-lasting products cost more money. So a low estimate may be a sign of lower quality, less durable materials being used. When you get a remodeling estimate, make sure you understand EXACTLY the quality and specifications of the building materials to be used in every aspect of your job.
2) Poor Planning Can Lead to Unrealistic Pricing
A too-low price can mean a remodeler hasn’t based the estimate on a detailed, comprehensive work plan. Often times, remodeling “contractors” are really more of a carpenter than a business owner, and is not experienced in planning and estimating costs. Especially in a down economy when skilled craftsman lose their jobs, they will start their own business to make ends meet.
While it’s completely understandable that people will use any skill to make a living, running a project and a business requires additional skill sets that many carpenters don’t want or have. Like a cake that falls when you don’t follow the recipe, a remodeling project goes wrong when you don’t do the right things at the right time. Cost, quality and schedule control requires solid upfront planning and conscientious project management. If a job is plagued by poor estimating, planning or execution, critical time can be lost at many stages of the project, resulting in cost overruns that are often passed on to you, and cause you inconvenience and headaches.
3) Desperate Companies Resort to Fire Sale Prices
A lower-than-realistic price is a red flag rather than a green light. When the economy creates tough times for remodeling businesses, some may resort to booking jobs at any price in order to retain their staff and trades people in the short-term. An experienced, reputable builder knows the real costs for quality materials and skilled labor, as well as the gross margins for operations needed to stay in business. A company who chooses to ignore realistic pricing in the short term will have to cut corners somewhere. There is a chance they won’t make it in the long-term, and will perhaps leave you with a half-finished project, a project that is not as good as promised or a situation where your warranty means nothing.
4) Low Estimates and Less-Skilled Labor
In every industry, workers with the highest level of skill and experience command the highest salaries. The remodeling industry is no exception. If you receive an estimate that is surprisingly low, you should question whether less skilled, less experienced workers are going to be working on your job. Remember, you will be living in your newly remodeled home every day for many years, and no homeowner is ever satisfied with poor craftsmanship.
How do you know how much experience your crew has? Ask your contractor to supply resume’s on those carpenters. How long have they been in the industry? Have them provide examples of projects they’ve completed and testimonials of clients they’ve worked for. Lastly, find out how long they’ve been with the company and any special credentials or awards they’ve received. If they’ve been in the industry for 20 years, but have been with a dozen companies in that time, there may be some reason for concern.
5) Allowances Can Cost You Big Time and Big $$
A common practice in remodeling is for a remodeler to provide you an estimate/contract price that is based in part on “allowances.” These are place holders in the budget that should cover the products and parts of the project that you want for your project but have not yet selected (appliances, lighting, finishes, cabinets, etc.). Because a low price is attractive when selling, some remodelers use allowances for low-cost builder-grade components. When the time comes for you to make a product selection, you will have to pay for the difference between what you agreed to and what the product you want actually costs. For many types of projects, this can cost you thousands (or tens of thousands) of dollars you had not expected. A basic low-end light switch costs under a dollar. But if you what you have in mind is a high quality, long-lasting dimmer switch, it can cost over $75.
6) Low Estimates and Missing Security
If you receive an estimate that is significantly lower than others (we’ve seen 20%, 30% and even 50% less than the company with the higher price), investigate whether the remodeling company cuts its expenses by not carrying proper insurance, licenses, workers compensation or does not get required building permits or inspections when needed. Reputable companies always take these requirements seriously, consider insurance, licensing and permits as a fixed part of the cost of doing business, and follow the law. If a contractor takes illegal and unwise shortcuts here, can you trust them to avoid shortcuts that will cost you money or result in a lower quality, less durable and perhaps dangerous project? If you hire a contractor without the proper insurances, any worker that might be hurt on your project can sue you for damages if your contractor doesn’t have the insurance to pay for the injuries.
It’s human nature to want to score a great deal and avoid paying top-dollar for some higher-priced goods and services. Initial low estimates may grab your attention, but stop and ask yourself why it’s so low. Remember your ultimate goal will be a project that runs smoothly and results in a beautiful home that better fits your lifestyle – completed on time and on budget. By doing a little more research on your contractor, you can avoid a very expensive mistake and your own horror story.