Good Estimate vs. Bad Deal: How To Evaluate Your Home Renovation Estimate
How do you know if you’ve received a good home renovation estimate? Looking at price alone can blind you to some of the telltale signs of a bad deal.
That’s why we’ve talked with the experts and compiled three checklists to help you evaluate your estimate with eyes wide-open.
4 Must-Haves for Any Good Estimate
- Project Scope: Begin at the beginning with a clear picture—in writing—of the project, specifying exactly what it does (and doesn’t) include.
- Timeline: How long will that remodel take? Nail down a start date and projected completion with caveats for any unforeseen circumstances.
- Payment Schedule: How much and how often does your contractor expect payment? Here’s where you may have some negotiating power and can suggest payment based on phases of completed work to keep the project on schedule.
- Change Orders: Renovations sometimes meet with unexpected changes to account for what’s behind the walls, floors, or ceilings. Money magazine advocates for insisting on written approval before any change in the original plan can commence. Protect yourself from skyrocketing fees with a clause on how your contractor will handle changes, how much they will cost, and how long they will take. Don’t rely on that verbal handshake as confirmation of clear communication between parties.
The above tips are standard for qualified and reputable contractors. If you meet with any resistance, consider walking away as your vendor may not have the knowledge or skills to do the job well.
3 Warning Signs of a Bad Deal in the Making
- A Low, Low Price: If the price is too good to be true, it probably is. A lowball estimate that’s wildly inconsistent with others you’ve received may signal inexperience that can cost you more down the road.
- No Binding Arbitration: Agree on how you’ll disagree now to avoid costly litigation later. A binding arbitration clause in your contract (a standard inclusion) spells out how you’ll resolve disputes.
- No License: No work permit, no work. A skilled contractor knows how to apply for and secure a permit. Without one, your project can be shut down. Consider the work permit as insurance that the job will be done right, and insist your contractor follows the rules.
4 Ways to Get the Best Estimate Possible
Now that you know what to include in your contract and what to look out for, how do you find the right person for the job?
- Read Reviews: Do your due diligence by reading about other people’s experiences on sites like Google, Yelp, HomeAdvisor, Next Door, and Angie’s List.
- Ask for References: As with any job, ask for references—and then put on your reporter hat. Realtor.com suggests asking references about a contractor’s reliability (showing up on time), accessibility (reachable and responsive to questions), and truthfulness about the final price.
- Get It in Writing: Specificity is your best friend. Get as much detail in writing as possible before you commit to the contract. Refer to the four must-haves above as a checklist on what to include.
- Trust Your Gut: Do you feel comfortable around the vendor? Are they moving or talking too fast and pressuring you in any way? If something doesn’t feel quite right, follow your instincts. After all, this person will be in your home for days, if not months!
Keep the above lists as a reference for evaluating your next home renovation estimate. Preparation is key to realizing the remodel and making the most of your hard-earned money.
If you need assistance funding your renovation, a Hometap Investment can help. Tap into your home’s equity without interest or monthly payments.
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YOU SHOULD KNOW…
We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.
Hometap is made up of a collaborative team of underwriters, investment managers, financial analysts, and—most importantly—homeowners—in the home financing field that understand the challenges that come with owning a home.