Home Remodelers Survival Guide: #2 How to Avoid the 5 Most Common Misconceptions about Home Remodeling
“You should always get three bids.”
Not necessarily. This tactic is probably responsible for more dissatisfaction within the remodeling industry than any other single factor.
If your objective is to get a quality job at a fair price, simply comparing it to another estimate is often very misleading. There aren’t any “standard” prices or “standard” specifications for remodeling projects. Each quote or estimate you receive is a reflection of what’s included in the actual job that a particular contractor is planning on completing for you.
Given that you are buying something that does not yet exist (as opposed to a car that you can test drive, for example) it’s impossible to tell how similar (or far apart) one contractor’s proposed job is from the next.
Even if you think everything is the same or “similar enough,” it rarely is and you won’t discover this until the job is underway or worse yet, completely finished. This is after you’ve invested some or all of your money. Most likely this will amount to thousands of dollars!
In the case of buying a car and comparing prices from one dealer to another, you are much more likely
comparing the EXACT same car – built by the same manufacturer. But, you’re not buying a car! In fact, what you are buying is not even built yet. You can’t “try it out”. You can’t “test drive” it. You can’t even see it!
This is true whether the remodeling project is basic or complex. Even with a job as basic as replacing windows or roofing, one contractor’s methods and materials can be (and often are) vastly different from the next. Even building codes don’t adequately protect you from these variances.
When you compare prices in this business it’s far too easy to be fooled or misleads by not fully understanding what each contractor is planning on doing or how each one plans to do it. Most contractors are not very good at communicating exactly what it is that they plan on doing, nor are they good at explaining how they may differ from the other contractors that you may be considering.
Therefore, if you get different “prices”, without doing much of the other due diligence as I explain throughout this guide, you may believe all of the contractors you’ve called are much more similar than they really are. This may very well tempt you into justifying one of the lower priced contractors. In this business, taking an approach like this can be very dangerous and oftentimes…VERY EXPENSIVE!
If you’re concerned about getting a “good deal”, consider relying on a contractor that has an excellent
reputation. I believe it’s very rare to find a contractor that has earned an outstanding reputation for quality and service that charges too much for the work they provide. In fact, if they didn’t do exceptional work or charged too much, they wouldn’t have a good reputation nor a substantial list of satisfied clients. They simply couldn’t fool such a large number of people into believing that they were good if they weren’t indeed good.
Many people who consider the method of getting multiple bids simply believe they are well served to solicit bids, then, throw out the high and the low and take the one from the middle. As you continue to learn everything that I share in this guide, you’ll soon be free of this distorted thinking.
Instead of simply inviting contractors to come by to look at your job, ask around first to see who has a good reputation in your area for doing a great job on projects similar to yours. Get recommendations from friends, relatives, neighbors, and local lumberyards.
Take note of any job signs that you see in your area and stop by the job site to have a look around. Talk to the homeowners to see what they have to say about the contractor.
If you feel confident enough with the quality, dependability, and reputation of the recommended contractor, by all means, consider stopping there without contacting others. It may go against “conventional wisdom” but I honestly believe you will be far happier as a result. Additionally, calling other contractors may simply confuse you.
“Going with a low price saves you money!”
Think about this for a minute. If you have solicited several bids and go with the contractor that has the lowest price, you’ve just awarded your job to the guy that just figured out the cheapest way to get your project done!
Is this what you really want?
One of the most common signs of trouble ahead is someone offering to do work for a low price. A vast majority of the horror stories you hear about on TV shows like Dateline and ABC’s 20/20 about people having nightmare experiences with contractors stem from people buying a job from a lower-priced contractor.
Like the age old sayings go: “You get what you pay for!” and “You can’t get something for nothing!” Be
extremely careful in choosing your contractor based on the lowest price. Better yet… just don’t do it at all!
But you may be thinking: “well, if all things are equal, going with the lowest price is smart buying!
Absolutely, 100% yes!
But things are almost never, EVERequal in the remodeling business!
Even if you have the complete set of professional drawings and a twenty-five page written set of
specifications describing every little detail, things can still be very, very different from one contractor to the next.
What is true, though, is the more detail the better. As you’ll soon discover, I am a huge fan of “details”. They are critical in order to help establish expectations. But again, even the most detailed plans leave a lot, and I mean a lot to be “discovered.”
I say “discovered” because you won’t know this until after your job has begun in which case this strategy will cause more frustration than you could ever imagine and cost much more money in the long run.
Most of the time, the low priced contractor has left something out while the higher priced contractor has
probably figured the job correctly. He will probably never feel any stress about underestimating your particular job, which could cause him to be inclined to start cutting corners. The last thing you want is a contractor that starts cutting corners.
Another important point to make here is that running out of money may also cause a contractor to feel inclined to go get another job started in order to collect some new money so he can stay “afloat” long enough to get your job finished. And, as you may have guessed, this is one of the reasons some contractors have earned the reputation of leaving a project before it’s finished.
Wouldn’t you rather avoid having to fight with the contractor’s tooth and nail to get him to stay on your project until it’s finished?
The bottom line: NEVER use price alone as the determining factor. Many other things should be taken into consideration as well. Whenever you encounter a low price offer, some questions should immediately come to mind. Questions like: “Why is the price so low?” “What’s missing here?” and “Has the contractor figured enough into the cost to provide me with the level of service I expect?”
On the other hand, if you have found a contractor that you really feel good about, but their price is more than you can afford or you simply do not want to invest as much as has been quoted, just explain this to the contractor. A professional contractor will welcome the opportunity to help you redesign your project or make whatever changes are necessary in order to better fit your budget. As long as you are open to scaling back the project, re-examining your priorities or making other changes, this approach can be very helpful.
“I should buy the materials myself to save money.”
Most professional contractors will not be interested in working under these conditions and for very good
First, if you’re providing the materials, there’s a very good chance of getting the wrong or not enough materials. Having the wrong materials delivered, working with poor quality materials or unfamiliar suppliers is a source of major frustration for contractors and may cost them time and money. Most will just avoid this arrangement altogether.
Second, the markup that a contractor makes on materials is not discretionary. It is needed to cover the cost of operating expenses that are required to run a successful business and to make a reasonable profit. If a contractor is not able to make this money on the materials, he will have to make it up somewhere else, usually by way of higher labor prices.
Oftentimes, the contractor has negotiated discounts for many of the different materials they use to help offset their markup. Sometimes the discount is substantial enough to cover all of the markups. Sometimes, contractors will have you supply the materials, particularly when the materials are out of the ordinary. You will want to be careful with this arrangement because many times contractors do not offer a warranty on items not supplied by them. It is best, in my opinion, to just let the contractor provide all materials. This way you are safe, the contractor is happy, and there is no confusion about who is ultimately responsible should something go wrong.
“If a contractor has several years of experience, he or she must be good!”
About 96% of contractors go out of business before their fifth year and of those, approximately 80% will never make it see their tenth year.
Given these statistics, if you have a contractor that has made it through his tenth year, you’re off to a good start. He must be doing something right to survive that long.
But don’t just assume everything is going to be okay just because the contractor claims to have “10 years of experience!” In many cases, it may be more accurate to say they have one year of experience just repeated ten times!
Just because a contractor has “been around” for a number of years does not necessarily mean they are experts or consistently do a great job – check them out! Many contractors can claim to have years of experience yet a good number of their jobs may have been completed unsatisfactorily (if completed at all) or they may not have much experience doing projects similar to yours.
Reputation is the key and the person who handles your remodeling project should not only have experience but also have projects to their name that demonstrate quality craftsmanship. Investigate your contractor’s credentials thoroughly and make sure you are dealing with a qualified professional.
“The term “fully-insured” must mean that the contractor carries all of the necessary insurance to provide me with adequate protection.”
Surprisingly, this is not always the case!
Contractors are required to carry a minimum of two insurances; Worker’s Compensation insurance (if he hires one or more employees or assistants) and Contractor’s Liability insurance.
conceptions about Home Remodeling Worker’s Compensation covers you if a person that is working on your property is injured. Liability insurance covers mostly property-related things like a broken window or damage to your personal property by the contractor. Personal injuries are by far your greatest potential exposure in most cases.
While both types of insurance have become very expensive in recent years, of the two, Worker’s Compensation insurance is considerably more expensive – up to four to five times as much as Liability insurance.
Many contractors illegally avoid paying for the more expensive Worker’s Compensation insurance by claiming they don’t actually need it due to the fact that they “technically” don’t have any employees.
If the contractor “really” only works by himself he may need just the Liability insurance. But if he hires anyone to assist him and doesn’t have a Worker’s Compensation policy in place you may be dangerously exposed should that hired hand get hurt while working on your home. Most jobs require more than one person to complete them. Therefore you almost always need this protection.
In most cases, your homeowner’s policy only covers injuries incurred by people considered to be casual labor-like a maid or gardener. It’s a whole different story when it comes to hired contractors.
To be safe, stick to those contractors who carry both policies. And remember, “Fully Insured” doesn’t always mean what it implies. To verify that a contractor has both Liability and Worker’s Compensation insurance, ask for the name and phone number of the carrier so that you can call to verify if a particular contractor is adequately covered. At the very least, ask for certificates of insurance before you sign a contract.