Are you overwhelmed by the prospect of remodeling your home because of the uncertainty surrounding costs? Many homeowners are unsure what potential financial surprises may arise during a remodel.
With over 15 years of experience in the industry, we've seen firsthand how hidden costs can disrupt renovation plans. We're here to provide guidance and expertise to help you navigate these challenges.
In this article, you'll learn how to navigate hidden costs from design-build contractors:
- Consultation or Design Fees
- The Impact of Pricing Models on Your Costs
- Utility Upgrades
- Homeowner Association (HOA) Fees
- Change Orders
- Temporary Living Expenses
- Storage Fees
- Waste Removal and Disposal
- Structural Modifications
- Cleaning and Restoration
The Foundation: What is a Design-Build Contractor?
A design-build contractor is a single entity that handles every aspect of a project. This streamlined approach allows for direct communication between the design and construction teams, leading to greater efficiency, unique design solutions, and faster project completion. Choosing the design-build route means your time investment is significantly decreased, and your costs will be significantly higher than if you choose to DIY or self-manage your project.
As a design-build contractor ourselves, we believe in the benefits of this approach and its ability to deliver high-quality results tailored to our clients' needs.
However, it's important to note that while we love and breathe this method, each contractor and business operates differently. While there are industry standards and best practices, it’s crucial for you to research, ask questions, and not assume that what we share from our design-build perspective applies universally. By staying informed and actively participating in the decision-making process, you will be set up for success in finding the right approach and contractor for your project.
1. Consultation or Design Fees
Consultation fees and design expenses are common when seeking professional guidance. These costs cover the expertise and time of the design-build professional who is putting together your preliminary project scope and budget range.
While our team no longer charges a consultation fee to better serve more clients, some contractors still do.
If you encounter a company that charges a consultation fee, don't be put off right away. This could potentially signify a contractor who values their time and expertise, often providing a higher level of service. Professionals who take the consultation process seriously and allocate dedicated time tend to deliver a more comprehensive and tailored experience.
Navigation Strategies:
- Spend time before your consultation to clearly define your project scope. Because the scope or your project ultimately affects your budget, this upfront work will help the contractor provide an accurate quote.
- Compare quotes and negotiate fees to find the best value for consultation and design services.
- Research contractors or design firms that offer free initial consultations. Or consider the consultation fee the first step of investing in your home.
2. The Impact of Pricing Models on Your Costs
When planning your home remodeling project, one crucial aspect to understand is the pricing model used by your contractor. The three main pricing models are fixed-price, contract plus allowances, and cost-plus.
Understanding these models is essential, as they can influence the transparency of costs, the potential for overruns, and, ultimately, the financial success of your renovation. Let's explore each model to help you make an informed decision that aligns with your budget and goals:
Fixed Price
In a fixed-price model, the contractor provides a set price for the entire project based on the agreed-upon final construction plans and scope of work. This price remains constant throughout construction unless a change order is created. Typically, contractors who use a fixed-price model provide a budget range during the consultation phase.
Pro:
- Financial Predictability: Offers a clear understanding of the total project cost upfront, minimizing the risk of budget overruns.
Con:
- Delayed Cost Visibility: Because the fixed price is presented after the final plans and scope of work are complete, you will only have a proposed budget range during the consultation and design phase. This can lead to uncertainty about the final cost until the pricing is finalized.
Contract + Allowances
In a contract + allowances pricing model, the contractor provides a base contract price for the core project, along with allowances for all materials. You are responsible for selecting items within the allocated allowance amounts.
Pro:
- Flexibility and Personalization: You understand exactly how much each product you are selecting will cost.
Con:
- Underestimated Costs: Over the years, we’ve seen many homeowners hire a contractor with the contract + allowances model. More often than not, the allowances in your contract will be lower than the actual costs of materials you select. Choosing higher-grade materials will put your project over the original budget.
Cost Plus
In a cost-plus pricing model, the homeowner pays the contractor for the actual costs of labor, materials, and overhead, plus an agreed-upon percentage or fee for the contractor's profit. This model provides transparency, as you have visibility into the actual costs incurred during the project.
Pro:
- Line-Item Visibility: Provides detailed visibility into the actual costs incurred for labor, materials, and overhead throughout the project, allowing for a clear understanding of where expenses are allocated.
Con:
- No Upfront Cost Visibility: With cost-plus pricing, there is no upfront total project cost provided. Instead, you only become aware of the final cost once all materials are purchased and the work is completed, making it challenging to anticipate and plan for the overall project expenses beforehand.
3. Utility Upgrades
Depending on the age of your home, plumbing, electrical, or HVAC upgrades may be required for your project. The design-build firm you're collaborating with can recommend solutions before construction begins or alert you to potential upgrades that may be necessary once demolition reveals the true condition. Fortunately, combining utility upgrades with a major remodel can save you time and money in the long run.
4. Homeowner Association (HOA) Fees
If you're considering remodeling in a neighborhood with a Homeowners Association (HOA), it's wise to anticipate additional costs.
Living within an HOA often means adhering to strict guidelines for exterior renovations (and occasionally interior), which might require approval and possibly additional fees. These fees could be associated with architectural reviews, permits, or compliance inspections mandated by the HOA.
Before embarking on your remodeling journey, it's essential to factor in these potential hidden costs. We also recommend reviewing and thoroughly understanding your HOA's regulations to avoid any surprises along the way.
Navigation Strategies:
- Review your HOA's governing documents to understand any remodeling restrictions.
- Communicate with your HOA board early in the planning process to get necessary approvals and expect any associated fees.
- Budget for HOA fees as part of your project budget to avoid unexpected expenses.
It’s important to note that your design-build firm will work with you to navigate your local HOA’s guidelines.
5. Change Orders
Change orders refer to adjustments made to the construction plans after the design has been finalized. Often, change orders lead to additional expenses and project delays. While most change orders cannot be avoided, design adjustments can be. To avoid unnecessary changes, do not approve your design until you are confident and excited about the solution.
Navigation Strategies:
- Make sure you talk clearly with your design-build firm about any changes you want to make to the project.
- While most design-build firms require documentation for all change orders, we recommend discussing this process before finalizing your agreement. Change order documentation should include detailed cost breakdowns and an estimated timeline.
- Think of the impact of proposed changes on the project budget and schedule before approving them.
6. Temporary Living Expenses
Remodeling is stressful and time-consuming. If you work from home, have a young family, beloved pets, or simply prefer peace and quiet, consider living elsewhere while your remodel is underway. If you decide, like many of our clients, that you prefer to be somewhere else while the dust flies, include temporary living costs in our remodeling budget.
Navigation Strategies:
- Plan ahead for temporary housing if your remodeling will disturb your usual routine.
- Explore options such as staying with friends or family, renting a temporary apartment, or securing short-term accommodations. Additionally, learn more about our recommendations in the greater Lansing area!
- To avoid financial strain during the remodel, budget for temporary living expenses as part of your project budget.
7. Storage Fees
For any major remodel, storage fees may be incurred if the furniture is reused. Renting a storage unit or utilizing off-site storage facilities can add to the project costs.
Navigation Strategies:
- Strategize storage solutions with your contractor. They may have a solution for you.
- Assess your storage needs based on the scope of your remodeling project and available space in your home.
- Consider renting a storage unit or utilizing portable storage containers to store belongings during the renovation.
- Include storage rental costs in your project budget and factor in the duration of storage needed.
8. Waste Removal and Disposal
Waste removal and disposal costs are associated with any remodeling projects. While most design-build firms include waste removal services as part of their project pricing, they do not include extra debris removal to clean out your home.
If you, like many others, plan to use remodeling as an opportunity to refresh your home by removing clutter, talk with your contractor. Have an open conversation about how much dumpster space you will need.
Navigation Strategies:
- Discuss waste removal and disposal options with your remodeler before the project begins.
- Inquire about waste disposal fees and whether they are included in the remodeler’s quote.
- Consider renting a dumpster or arranging bulk waste pickup to streamline the disposal process.
9. Structural Modifications
While most structural issues are uncovered prior to the first hammer swinging, some remain hidden until construction has begun. Foundation issues, rot and decay, or structural insufficiencies discovered during construction will need to be addressed. Here are the most common issues we find during construction: hidden rot, damaged walls or subflooring, and plumbing or electrical systems issues.
Navigation Strategies:
- Ensure your design-build firm conducts a comprehensive inspection of your home's structure before beginning the remodeling project.
- Expect potential structural issues based on the age and condition of your home.
- Budget for structural modifications as part of your project costs and set aside contingency funds for any unexpected repairs.
10. Cleaning and Restoration
Remodeling projects often leave behind a mess. After construction wraps up, you may find that additional cleaning and restoration expenses are needed to make your space livable. While many design-build firms incorporate these costs into the contract, it's a prudent step to confirm this beforehand by asking about it.
Navigation Strategies:
- Communicate with your contractor about post-construction cleaning and restoration services.
- Get a clear understanding of what cleaning and restoration tasks are included in the contractor's scope of work.
- To ensure a smooth transition back to your renovated space, budget for cleaning and restoration expenses as part of your project budget.
Next Steps to Hiring a Design-Build Contractor
If you've been feeling uncertain about managing the hidden costs of your home remodeling project, you're not alone. Many homeowners face similar challenges when navigating through the financial aspects of renovation.
Now that you've learned valuable strategies for managing hidden costs from design-build contractors, you're equipped with the knowledge and tools to ensure a successful remodeling experience without breaking the bank. By implementing these strategies, you can move forward with your project and avoid unexpected financial surprises.
At Custom Built Design & Remodeling, we understand the importance of managing remodeling expenses. With over 15 years of experience in the industry, we've helped countless homeowners achieve their remodeling goals while staying within budget.
Ready to kickstart your remodeling project? Contact our team of design-build professionals today to discuss your project goals and explore financing options. Don't let hidden costs hold you back from creating the home of your dreams.
Now that you know more about how to navigate hidden costs from home remodeling contractors, let’s take a look at whether a design-build firm like Custom Built is right for you, how we will approach your project, and other ways to vet your remodeling partner options:
- Top 4 Differences Between a Design-Build Firm and a General Contractor - A comparison between design-build firms and general contractors that highlights the pros and cons that each remodeling company brings to the table.
- Dream, Design, and Build: Our Remodeling Process - This guide details how we at Custom Built will approach your remodeling project, including who you will work with and when to expect each crucial step of your renovation to occur.
- Top 8 Questions to Ask Before Hiring a Remodeling Contractor - A list of essential questions to ask your prospective remodeling contractor before hiring them for your project; additional questions are included in each section.
Topics:
