Here are some basic things you must have to get your home remodeling or new home building project ready for competitive bidding so you can be sure you’re getting the best price possible.
1) Complete, detailed plans
Your local building department doesn’t require much to issue a building permit. All they want to know is whether the plans meet the building code, and the code is mostly about safety – not about what kind of countertops you want.
A set of “permit-ready” plans is missing a lot of what you need to get accurate and complete bids. You need far more information – especially drawings of architectural details inside and outside of the house.
2) Specifications
“Specs” aren’t part of the drawings; drawings tell the contractor where things go, the specs tell them what those things are. The drawings will show a toilet in each bathroom, but the specs tell the contractor what kind of toilets you want. If you want a different toilet in the master bath than the kid’s bath, the specs spell that out.
Without specs, you’re leaving the decisions about fixtures and finishes up to the bidders – which causes confusion and misunderstanding and makes it much tougher to compare bids.
3) Bid Invitation Letter
When are the bids due? What format should the bids be submitted in? Who do bidders call with questions? Where should the bids be turned in? How many bidders are expected?
These questions – and more – should be addressed in a bid invitation letter sent out to each bidder.
4) General Conditions
There are dozens of little issues to deal with on a construction project that have nothing to do with construction, but everything to do with the price.
Insurance is one, as are working hours; parking for subcontractors; change orders; quality assurance; dispute resolution; cleaning, and on and on. A “general conditions” document spells all of this out.
5) Quality Bidders
An experienced, qualified contractor with a track record of success competing against two guys with a pickup truck and a magnetic door sign isn’t going to get you an apples-to-apples comparison.
6) References
You might be surprised by how often homeowners don’t check references. They can give you confidence in a contractor, but they can raise important red flags, too.
If you hired an architect to design your project, ask him if he offers this level of service. Many do, and would be more than happy to help manage the specification and bidding process for you.
The important thing to remember…three quotes based on accurate and detailed specs would result in a very good idea of what a fair price for a job should be. You can’t get that kind of assurance with just one price!
Competitive bidding works the same way in new home and remodeling construction. Qualified contractors submitting bids on a well-defined project know they’ve got to give their best price if they want to get the job.
Home remodeling is on the rise. And no wonder. Owners having trouble selling their homes in this sluggish real estate market want to give them as much buyer appeal as they can afford.
Others are deciding if they can’t move, they might as well make the most of the house they may be calling home for some time to come.
After a year of decline in home remodeling, the number of homeowners saying they plan to remodel in the next 12 months increased from last year, according to RemodelOrMove.com, a website that provides homeowners remodeling options and has conducted semi-annual surveys of owners since 2005.
In tough economic times, it’s important to make smart decisions. Here’s what to consider before you pick up a hammer:
1 – The biggest bang for your buck
Before you even come up with a plan, consider how long you will live in the home. If you only plan to stay for several years, you may not be able to earn back the cost of a major renovation. Short-term owners should consider simple cosmetics, such as refinishing floors, painting and updating fixtures and lighting.
If you plan to stay in the home for five years or longer, then a kitchen or bathroom renovation provides the best return on your investment.
One of the biggest mistakes people make is to install a new pool in parts of the country where the weather is colder. In general, renovating should bring a property up to the value of the comparable houses nearby, not make it the most expensive home in the neighborhood.
A good rule of thumb is you shouldn’t try to improve the value of your home more than 25% of its current value.
2 – Financing the project
Before you start renovating, estimate the cost and decide how you’ll pay for it.
Borrowing is not the only way to finance a remodeling job. If your project is inexpensive and you have adequate savings, tapping them is the easiest way to go.
Many use their credit cards for projects under a few thousand dollars.
Owners can finance a kitchen or bath renovation or add a deck that way. If you hire a contractor for a bigger project, the costs can balloon. Then you may be better off with a personal loan, a home-equity loan or line of credit.
Sharp declines in home values mean many owners have no equity to tap. For those who do, financing home improvements with a home-equity loan makes sense because the interest is tax-deductible, Woolsey says.
3 – Are you covered?
Before you start a project, make sure the contractor and subcontractors have adequate insurance coverage. Ask if the contractor has workers’ compensation, which covers lost wages and pays for medical and rehabilitation expenses if workers are injured. If not, an injured worker can sue you, says the Insurance Information Institute.
If you’re adding an extra room, you’ll need to increase your home insurance coverage. Don’t wait until the renovation is completed to contact your insurance agent. If the addition is damaged or destroyed before insurance coverage has been increased, you may be responsible for the cost of repairing or rebuilding it.
Homeowners also should visit DisasterSafety.org, where the Institute for Business & Home Safety provides info about each state’s building codes and standards. It’s where homeowners can find out how to be sure contractors make their homes hurricane- or wildfire-resistant.
And during the renovation keep all of the receipts for items purchased, such as furniture and electronics, because you will want to make sure you have the right amount of coverage for personal possessions.
4 – Ways to save money
Kitchens and bathrooms are the most popular renovation projects. But don’t overlook less-visible improvements that may cut the costs of owning a house.
Updating old plumbing and electrical wiring and disaster proofing your roof may lower your insurance premiums.
Owners of older homes can reduce their energy bills by adding insulation and installing new windows. Federal and state tax credits for certain improvements — such as energy-efficient central air conditioning, heating or water heaters — can lower your costs even more.
In the end, a renovation project’s payoff may be measured best by how much satisfaction it gives the homeowners.
Is Now the Time to Remodel?
While selling your home may be tough, remodeling it has gotten easier and adds value… which then makes it easier to sell.
Questions or comments about remodeling your home? Use the comment link below. We’d love to hear from you.
Remodeling Cost Recovery Now Available
Homeowners can now discover how much remodeling projects add to their home’s value.
Remodeling Magazine has released its annual Cost vs. Value Report. The 2009-10 report covers 80 U.S. cities and is available for download at www.costvsvalue.com. On this site, you can compare national and regional averages for 33 popular remodeling projects. You can also download a PDF with project data for any one of 80 U.S. cities. The report contains data that compares construction costs for popular remodeling projects against the share of those costs recovered at resale. In addition to city data, the report includes tables with national and regional averages, as well as complete project descriptions. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. The report was produced by Hanley Wood, LLC.
On a national level, the project with the biggest improvement from 2008 was the attic bedroom addition, recouping 83.1 percent of remodeling costs compared to 73.8 percent in 2008. The only other interior project that landed in the top 10 was a minor kitchen remodel with 78.3 percent costs recouped.
Other exterior projects in the top 10 include midrange vinyl and upscale foam-backed vinyl sliding replacements, which returned more than 79 percent of costs. In addition, several types of window replacements – midrange wood, midrange vinyl, and upscale vinyl – all returned more than 76 percent of costs upon sale.
Similar to last year’s report, the least profitable remodeling projects in terms of resale value were home office remodels and sunroom additions, returning only 48.1 percent and 50.7 percent of project costs.
Even though they don’t usually return 100% of their cost, a remodeling job that remedies an extremely dated kitchen or bath can make the difference in selling your home. In most cases there will be some easy parts of the job that the homeowner can do himself to save money. Painting is one example. Don’t look at a remodeling job only from the perspective of resale value. That’s a consideration that belongs in the calculation, but the enjoyment of an improvement is another important factor. If you plan to stay in the same home for the next five years or more, the difference between whether a project that you wanted to enjoy adds 50% or 80% to the resale value becomes less relevant.
Keep Your Home Lead-Safe
The National Association of the Remodeling Industry (NARI) is making homeowners aware of the U.S. Environmental Protection Agency’s (EPA) Renovation, Repair and Painting (RRP) regulations that will take effect April 22, 2010, requiring remodelers working in homes built before 1978 to follow practices designed to minimize the exposure of residents to lead hazards.
The following is a checklist for homeowners living in pre-1978 homes:
- Verify that your contractor’s firm is registered with the EPA.
- Verify at least one person is a Certified Renovator and has documented the training of the work crew and is supervising the work being completed in the home.
- Know that these certifications are accessible at the work site at all times.
- Firms must post signs before renovation begins, clearly defining the work area and warning occupants and other persons not involved in renovation activities to remain outside of the work area.
- Make sure you understand and sign the EPA’s “Renovate Right” brochure.
- Remove all belongings from the immediate area of the renovation.
- Notice if your contractor is using plastic sheeting that is taped 6 feet beyond the perimeter of surfaces undergoing renovation; reusable cloth coverings are not acceptable.
- Renovators should be cleaning up and mopping daily to minimize dust contamination.
- Contractors must use HEPA vacuums and/or wet mopping to remove lead particles.
- Depending on the scope of project, renovators may be wearing disposable suits, to minimize their exposure to lead.
- All contaminated materials should be placed in heavy duty plastic bags before your contractor disposes of them.
As a homeowner, if your renovator is skipping any steps of the checklist, you may want to contact the EPA to file an official complaint. Contractors who fail to comply with the RRP rule, are eligible for a fine of $37,500 per day.
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