Budgeting for a Home Renovation Project
Like most construction lawyers, I am spending a lot of time thinking about the economy and how to safeguard my practice in these tough times. It occurred to me that now, more than ever, homeowners need to be realistic when planning a home improvement project. I have been absolutely astounded by the projects undertaken by homeowners that are well beyond their means, or cause them to live so close to the bone that there is no room for extra expense. By the time they come to see me, their situation is truly disastrous. Even in home renovations that run smoothly, it is not unreasonable to allow a cushion of ten percent for unexpected change orders. This is not the contractor's fault. One never knows what one will find once excavation begins or walls are demolished. Any sensible contractor will include a clause in his contract that allows for a change order when unexpected conditions are encountered. I jokingly tell people that I will not even change a lightbulb in my house for fear that this will steamroll into a series of additional repairs, but how many people do you know who start out changing the bathroom sink and end up doing a complete remodel? So, first ask yourself: do I really need to undertake this project? If so, which parts are needs, and which are "wants?" Will this add to the value of my home? Perhaps this sounds crazy, but if your budget is $80,000.00, I would plan on a renovation that costs no more than $50,000.00. Then, if something goes wrong, you will have a reserve for repairs and possibly replacement of materials. I am not exaggerating when I say that I have had clients on the verge of losing their homes because they overextended themselves. I should also add that this includes clients who have spent $26,000.00 on an addition where the repairs forced them to dig into retirement funds, to clients who have budgeted for one million and ended up spending two million. Although this may come off as a bit "preachy," there is enough to worry about when remodeling that you should not put yourself in the position where you cannot sleep at night because of the expense. Speak honestly with your contractor about your budget and look for reasonable ways to cut costs. It's better to have the highest quality windows and cut back on the size of your addition than to use cheap materials. Then, if you do have to address unforseen issues or end up bringing a claim, it will not be a disaster.