Interviewing the Expert - The Budget
/By Ashley Zimmermann, Creative Content Director for @designREMODEL
Image by Upsplash
Welcome to Part 2 in our Remodeling FAQs series, where John and I discuss answers to all my most challenging remodeling industry consumer questions. This installment is all about budgeting and pricing, undoubtedly one of the most crucial and sensitive aspects of a remodeling project. My first few interview questions featured below aimed to build a financial frame of reference for first-time homeowners or someone investing in their first remodeling project.
1. What kind of pricing should I expect?
This answer is not black-and-white. Pricing is multifaceted and highly depends on the region of the country. Per John, it is essential to remember the following about the remodeling industry:
Remodeling is an expensive and time-consuming endeavor that requires a high level of specialized skill to do correctly.
Remodeling is often labor-intensive.
A skilled contractor may need to spend a lot of time fixing shoddy or incorrect work done by a prior contractor. This adds to the running list of expenses.
Running a remodeling company involves significant overhead, as well as risks. Overhead (built-in company operating expenses) can include vehicles, gas, insurance, and more.
No two projects are alike; therefore, there is no cookie-cutter formula for pricing.
John elaborated on these points:
“Building codes are intended to protect life and property, which adds to the project cost. Overhead and risks must be factored into the cost of any project. Most homeowners only calculate material and labor costs and overlook the costs that are not directly pertinent to their specific project (overhead). Yet, these costs do need to be factored into the overall project cost; otherwise, the company would not be in business.”
This sentiment is good food for thought for non-business owners.
2. How can I tell if a quote is too high or too low?
To establish a frame of reference, John told me about some online industry cost calculator tools:
“There are pricing guides online that can provide a good idea of costs. One tool is Cost vs. Value, compiled by Remodeling Magazine, a trade journal for the remodeling industry. Another is found on Houzz.com.” Both tools are linked at the bottom of this article. Cost vs. Value prompts you to click on your region of the country (i.e., East North Central, New England, Pacific, or Mountain); you can then scroll through the list to explore average job costs for different remodeling projects, like a “Bath Remodel- Upscale” or “Major Kitchen Remodel- Upscale.” You can then look at the resale value and “cost recouped” for each type of project. Upon comparing the above-mentioned projects in the East North Central region (Upper Midwest) and New England, the cost difference between the upscale kitchen remodel in New England versus the Midwest is $9,034, and the difference between the upscale bath remodel in New England versus the Midwest is $6,416, with New England claiming the pricier options. Enter your ZIP code in the Houzz.com tool for similar pricing comparison data.
John elaborated: “You may also obtain multiple quotes and in doing so, make sure you are comparing apples to apples. A detailed scope of work, an extensive list of specifications, and a clear and detailed set of plans can go a long way toward getting an accurate price quote.
Note that many companies are passing on projects that are being shopped around or have a vague scope of work/plans.” A critical discerning question is, What is the contractor with the lower quote leaving out? To explain the “shopping around” notion, John told me matter-of-factly that @designREMODEL will not get into bidding games with another company; this isn’t worth the time and energy. Something else to be aware of: “Some contractors play the game of quoting low and then hitting the homeowner with [unexpected] change orders, which can increase costs.”
3. What can we accomplish with a small, medium, and large budget?
This was another “frame of reference” question from me. Here is a breakdown:
Small budget- Tend to be cosmetic updates, i.e., a countertop change. A lot of companies don’t want to get involved with these types of projects because they aren’t lucrative.
Medium budget- can be a complete space update using off-the-shelf products, i.e., replacing flooring.
Large budget- high-end customization, professional design, and upscale choices.
John told me to think about this concept like buying cars- you’ll be able to achieve certain goals, wants, and needs with a small, medium, and large vehicle budget.
4. If something is out of my price range, how can we work together to find a compromise?
In reply, John remarked, “Sticky question! It is up to the homeowner to compromise what they want, and the contractor will then adjust accordingly. A savvy contractor will not budge on his pricing. It is not on the contractor to lower his price just so the homeowner can pay less and still get what they originally wanted.”
5. How can I ensure that my budget and desires for the project will be respected?
John’s answer is simple: “Have clear and detailed plans and a contract with a fixed project price.” As with any interpersonal relationship, clear communication and proper expectation-setting will go a long way. Clearly articulate your budget and desired outcome with your contractor and everything will then be priced accordingly.
6. Why are companies are charging for estimates? I thought those were free.
John summarizes this answer in three points below:
1. Increased costs of doing business.
2. Complexity of projects.
3. A higher level of professionalism and standards are been required from remodeling companies of all sizes.
To elaborate, let’s clarify the difference between an estimate and a quote. A synonym of ‘estimate’ is ‘guess.’ The dictionary definition of a ‘guess’ is based on incomplete or insufficient information. One might [informally] call this a ‘guesstimate.’
Contrastingly, a proper quote includes plans, specifications, and a detailed scope of work. This helps in arriving at a more accurate number. Think about it this way: you may be able to give an estimate in 30 seconds, but a quote can take 30 hours to draft up. The quality work put into a proper estimate is valuable, and therefore, a cost is justifiably attached.
What remodeling questions do you have, budget-related or otherwise? Please comment below, and we will include yours in our upcoming Q&As. We hope you enjoyed this second “Interviewing the Expert” installment!
Featured remodeling cost-calculator tools: