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Our survey of 300 contractors revealed shady pro practices,
common and costly homeowner mistakes, and strategies
to make your next project a complete success.

THINK 2016 might finally be the year to samples a lot longer than anticipated.
tackle that big renovation project youve Though the number of remodeling
been putting off? Welcome to the club. pros has declined, there are still less
Fueled largely by the rebounding housing experiencedand less scrupulousones
market, home improvement spending is out there, according to a recent survey of
projected to reach $155billion this year, 300 general contractors from around the
surpassing the peak set in 2006, accord- country conducted by the Consumer Re-
ing to Harvards Joint Center for Housing ports National Research Center. Among
Studies. At the same time, the construc- the shady industry practices GCs reported
tion industry is in the throes of a massive are contractors using unskilled laborers
labor shortage, having shed more than to carry out their work, and winning jobs
2million jobs since 2007. with lowball bids and then jacking up the
You dont need a degree in Keynesian cost later with unforeseen problems.
economics to spot the problem: Demand Our survey asked the crucial questions
for remodeling work is swiftly outpac- you might not know to ask, such as: How
ing the supply of qualified professionals. much wiggle room is there in the esti-
Its gotten to the point that Ive had to mate? (Hint: more than you may think.)
tell clients that it might be a few months What are the biggest homeowner mis-
before I can take them on, says LuAnn takes? How long do projects really take?
Fabian, a general contractor (GC) based The answers, along with insights from
in Hermosa Beach, Calif. So if you want other design and remodeling profession-
to be in your dream kitchen by the holi- als, inform this, our home remodelers
days, you could be clutching your tile survival guide. Follow our advice and you


could save thousands of dollars on your
renovation without compromising qual-
ityor losing your cool.


Proper planning is the best predictor of
satisfaction and will also minimize the
number of costly changes you make once
the work is underway. So before you even
think of looking for a contractor, youll
need to spend time gathering ideas and
taking a hard look at your own budget. A
2015 report from Houzz, a home-design
website, found that half of homeowners
who renovated their kitchen gathered
ideas for sixmonths or longer. You can
organize inspirational photos by using
Houzzs ideabook feature or starting a
Pinterest page; an old-fashioned scrap-
book with pictures from your favorite
magazines will also work.
As excited as you might be to get
started, avoid the temptation to rush:
Chances are youll be living with the
results of the project for a long time, so
youll want to get it right. Consider fac-
toring major life changes into your plan,
which could include an accessible walk-
in shower or an open-plan family room an architect based in Canton, Mich. significantly reduce remodelers remorse.
big enough to accommodate your future If youre not knocking down walls or Establish a system of checks and bal-
teenage kids and their friends. making other structural changes, an in- ances between your design team and
Remember to consider the impact terior designer or a certified kitchen and your contractor from the start. Its those
on the resale value of your home, too, bath designer can probably draw up the big decisions made in the first 10 to 15per-
even if you have no plans to move. For plans; most charge fees between 4and cent of the design process that have the
example, you might not have any use for 7percent of the total budgetvs. the 10to most impact on cost, says Marc Truant,
the second bathroom with a full tub, but 20percent most architects charge. president of a Boston-based design-build
youll probably regret converting it into a firmthe term for remodeling businesses
home office or workout room if you ever WHETHER YOU opt for an architect or a that provide both the design and con-
do decide to sell, because additional bath- designer, insist on 3D drawings: Theyll struction work. An experienced GC will
rooms are always a big selling point. help you visualize the remodeled space help you head off things you cant afford
Once you have a clear idea of what better than flat elevations will. Cutting- before you pay for finished drawings.
youd like to do and how much you can edge design pros are beginning to use Though word-of-mouth referrals from
realistically spend, its time to bring in virtual reality software to create immer- friends and neighbors are the best way to
the pros. For major projectssay, a gut sive spaces that clients can experience find remodeling pros, real estate agents
kitchen renovation or family room addi- by wearing a special headset. The technol- can also provide leads to reputable GCs.
tionyou should gather your entire team ogy isnt widely available but could soon The National Association of the Remod-
as early as possible. See Assembling Your eling Industry offers a state-by-state
A-Team, on page 45, for details. Its al- directory of certified contractors on its
For a list of remodeling projects
ways best to have the architect and the that add maximum value to the website, nari.org (its members must go
general contractor working together LEARN home, go to ConsumerReports. through extensive screening and test-
right from the start, says Dawn Zuber, ing and adhere to a strict code of ethics),

42 WATCH, COMMENT & SHARE at ConsumerReports.org | JUNE 2016 |

and online home services, such as Angies (66percent are somewhat willing, and was the median discount offered on
List, HomeAdvisor, and Porch, can also 30percent are very willing). Getting bids multiroom projects in our survey).
help you find pros. See Word-of-Mouth from at least three GCs will give you a Be prepared for surprises. When we
Moves to the Web, on page 44, for de- sense of the market rate and also provide asked GCs about job-related (as opposed
tails. Remember these rules as you go bargaining power. Remember, the lowest to people-related) problems that lead to
through the vetting process: bid may not be the best, says Katherine delays or cost overruns, they said that
Check credentials. Even if they come Hutt, national spokeswoman for the Bet- many of the culprits are hidden behind
with a glowing review from your sister- ter Business Bureau. Conventional wis- wallsstructural damage, for example,
in-law, you still need to check the bona dom holds that you should throw out the or electrical wiring that isnt up to code.
fides of every professional on your short highest bid, but if you think that the GC Even though most contractors plan for
list. In our survey, almost a fifth of GCs offering it is the best person for the job, those contingencies, we recommend add-
lacked either a state license or the proper its worth trying to negotiate a lower price. ing at least a 10percent cushion into your
insurance, and 9percent lacked both. Keeping the business of a repeat cus- budget to cover such surprises.
Though proper credentials arent a guar- tomer was the biggest reason to haggle, On major projects, its worth paying a
antee of quality, theyre a good sign that cited by 75percent of GCs, who reported few hundred dollars for a pre-inspection
the GC runs a reputable business. Whats offering a median discount of 10percent. by a certified home inspector. Even a
more, our survey found that fully accred- So if theres more work coming down the good GC might only look as far as the
ited GCs are better at holding down costs line, be sure to mention that during ne- kitchen or bathroom; we see the house
when unexpected problems arise. The gotiations. Combining projects could also as a system, says Frank Lesh, executive
Contractors License Reference Site (at save you in the long run: Two-thirds of director of the American Society of Home
contractors-license.org) has information GCs said they offer discounts on jobs in- Inspectors. Lets say youre putting in an
on licensing requirements in your state volving more than one room (10percent (continued on page 45)
and a list of licensed contractors.
Listen to your gut. Trust and a good
rapport between you and your contrac-
tor are essential. Any negative feelings
you have during the initial interview
(Too bossy? Condescending? Rushed?) The pros and cons of taking a loan from your contractor
will only intensify as the project heats up.
Its also important to understand how a
If you need help paying Those options are not equity lines of credit or
GC communicates during a project and for your renovation, your without drawbacks: If you home equity loans (currently
to be comfortable with that method. contractor might save you cant pay off an interest-free averaging around 4.7and
Ask whether youll be dealing with him a trip to the bank: Forty- loan in full before the term is 4.5percent, respectively, for
directly, or whether hell be delegating twopercent of GCs in our up, for example, youll prob- $30,000). Compare the full
the job to one of his project managers (if survey said they provide ably owe interest backdated cost of the loans, including
financing options to clients. to the day you signed the rates, closing costs, origi-
the latter, make sure to vet the manager, Some GCs offer interest- deal. With personal loans, nation fees, and any other
too). Beyond face time, some GCs rely on free loans for, say, 12 to you need to check all terms charges, says Bill Simone,
email or handwritten notes, and others 18monthsalmost always and conditions to make sure president of Custom Design
use construction management software, through a third-party there are no unexpected & Construction, based in Los
which lets a homeowner track schedul- lender. Others may offer so- fees. Make sure you dont Angeles, and a member of
called private label credit lose the right to withhold the steering committee for
ing, payments, shipments, and more. cards, such as the Wells payments, if that was stipu- Harvards Joint Center
Remember that budgets are a mov- Fargo Home Projects Visa, lated in your contract. for Housing Studies. And
ing target. The number you start out that can be used to pay for Disciplined borrowers keep in mind that when
with during the planning phase is likely renovations (interest rates might consider using a your lender is your contrac-
to change when you begin to see what range from 0 to 12.9per- card with a zeropercent tor, you need to vet him in
cent). You can use the card introductory rate to pay both roles. Ask past clients
materials actually cost. GCs have to make at retailers, but interest for a renovation. But that whether there were prob-
similar calculations, factoring what they rates go up to 28.9percent. approach is only for those lems using his financing, and
think the job will cost against their own Contractors may also who are sure they can pay check to see whether there
profit margins and unforeseen expenses act as middlemen for loans off the balance before the are complaints about the
(more on those in a moment). with third parties. Interest introductory period ends. companys financing deals
rates at LendKey, for Compare any deal youre with your states office of
Always negotiate. Only 4percent of the example, recently ranged offered through a contractor consumer affairs and the
GCs in our survey said they are never from 6.49to 11.99percent, with banks and credit union Better Business Bureau.
willing to negotiate the price of a job depending on your credit. options, including home Mandy Walker

| JUNE 2016 | WATCH, COMMENT & SHARE at ConsumerReports.org 43

extra bathroom. Well come in with sewer dollar amount. The contract should list
scopes to make sure the plumbing system the number of outlets, switches, and light
can handle the extra stress. fixtures, including all model numbers. It
Larger contracting companies might of- should also state a start and completion
fer a pre-inspection as part of their overall date (ask for a penalty fee of, say, $50
service. We have a building performance to $100 for every day past the deadline)
engineer on our team who specializes in and include a payment schedule, such
exploratory work, says John Kraemer, as a 5percent initial deposit with the re-
a GC based in Edina, Minn. Using an mainder paid at defined milestones, for
infrared camera, he might find missing example, demolition, rough framing, and
floor joists or walls that dont have any installation of finish materials.
insulation. Youll still have to deal with
the problems, but not in the last-minute BE SURE the contract also spells out ex-
manner that can quickly blow the budget. clusions, or whats not included. Want
Get everything in writing. No matter to save money by handling the debris
how much faith you have in your GC, a removal or finish painting on your own?
written contract is an essential protection That must be stipulated. For major proj-
for both of you. It should specify the full ects, its also worth including an arbitra-
scope of the work, including a detailed tion clause. Should a major dispute arise
breakdown of labor and material costs between you and your GC that cant be
for each part of the project. For example, settled in good faith, the clause provides
the electrical costs shouldnt be a single language for resolution outside the court
system, often with a state-appointed
mediator. As for the fine print, watch
out for allowances, which give the
ASSEMBLING YOUR A-TEAM contractor a lot of leeway in the prices
of products and materials, and can end
Know what key players you needand when youll need them up busting the budget very quickly.
Cover your assets. Nine out of 10 GCs
in our survey say they provide a written
Architect the schedule and he or she brings. When You Need One guarantee for their work, so insist on one
What They Do hiring plumbers, Find certified de- Never, really, but in the contract. The median time period
Listen to your electricians, and signers through the their advice can be
ideas, help you all other subcon- National Kitchen & the difference was 15months, with 14percent of respon-
think through the tractors. GCs also Bath Association between a room dents promising more than threeyears of
design, and trans- secure all neces- (nkba.org) or the thats so-so coverage. Even if your contract doesnt
late all of it into sary permits. American Society and one thats include a guarantee, youll enjoy some
drawings for the When You Need One of Interior Design- sensational. protection if the contractor is licensed.
general contractor A job is too big to ers (asid.org). What They Charge
to follow. do on your own. When You Need One 5to 20percent. For example, the California State License
When You Need One What They Charge Trying to decide Board will rule on complaints involving
Youre knocking 25percent. between granite, Renovation patent defects (such as a cabinet thats
down walls or quartz, and lami- Consultant coming off the wall) for up to fouryears
changing your Interior or nate countertops is What They Do and on latent structural defects (like a
homes structural or Kitchen/Bath driving you insane. Help you plan,
mechanical systems. Designer What They Charge determine your buckling foundation) for up to 10 years.
What They Charge What They Do 4to 7percent. budgettheyll
10to 20percent of Help with design even be the
overall project cost. choices, such as
selecting a kitchen
liaison between
you and the GC
General countertop or the What They Do during the entire
Contractor tile and tub for These tastemakers renovation. No matter how well you plan, remodeling
What They Do the bathroom. Bud- offer guidance on When You Need One is full of uncertainty. I always tell my
These MVPs take get permitting, its decorative style, You want a lot of clients to bump up their estimates of time
charge of the proj- worth considering color, furnishings, hand-holding. and money by 20percent, says Bruce
ect from start to a designer for the and other aesthetic What They Charge Irving, a renovation consultant based in
finish, managing unique knowledge concerns. Up to 5percent.
(continued on page 47)

| JUNE 2016 | WATCH, COMMENT & SHARE at ConsumerReports.org 45

Cambridge, Mass. According to our sur- tell the GC and let him or her handle it.
vey, kitchen projects require a median Though you shouldnt engage the
of threeweeks to complete, but a third of A TALE OF TWO subcontractors, you do need to be sure
them take fourweeks or longer. CONTRACTS theyre being paid. If theyre not, you
The work is messy, too. If theres any could be held liable. Stipulate in the con-
Most renovations are covered
way for you to move in with relatives or tract that the GC will provide you with
by one of these two types
into a hotel, at least during the dusty lien releases (basically proofs of pay-
of contracts. Choose wisely.
demo phase, youll minimize stress ment) signed by the GC and subcontrac-
along with possible exposure to hazard- tor throughout the project.
ous materials. If your home was built Dont demolish your relationships
before 1978, your GC will need to follow FIXED-PRICE along the way. Client-contractor rela-
the Environmental Protection Agencys
Lead Renovation, Repair and Painting
CONTRACTS tions arent the only ones that get tested
on a remodel. Couples often feel the
With a fixed-price contract,
Rule, which includes containing lead dust the general contractor provides an strain as well. Consider a January 2016
with plastic sheeting and disposing of estimate covering labor, materials, survey from Houzz, which found that
contaminated debris in heavy-duty bags. profit margin, and a cushion for 41 percent of people who remodeled
contingencies. If the contractor
Store valuable or treasured items far with their partner found the experience
exceeds the budget for a foresee-
from the work site or at a storage facility. able reasonunderestimating the frustrating; 7percent felt they needed
If you have to stay in the house, a good cost of the drywall installation, couples counseling during the process,
contractor will help you find ways to keep for examplehe or she is on the and 5percent even considered a breakup.
disruptions to a minimum, by setting up hook. That can be advantageous A home remodel is a blank canvas
for the homeowner, but it can also
a temporary food-prep space and relocat- upon which any unresolved issues in your
affect the quality of the work if the
ing the refrigerator, for instance, during a contractor cuts corners to stay relationship will be painted, Irving says.
kitchen renovation. These other tips will on budgetby ordering cheaper He recommends that, whenever possible,
save you trouble once the work begins: drywall, perhaps. Also, if the project couples should try their hand at a small
Stay involved. You cant just write the comes in under budget, the con- project before tackling a potential rela-
tractor pockets the profit, which
contractor a checkthen check out. tionship wrecker. Have the bathroom
again could encourage
Homeowner involvement throughout subpar work. retiled and see how that goes before you
the project is critical, Truant says. Even do a master suite addition, he suggests.
if youve moved out of the house, plan
on a couple of in-person meetings every
week and more frequent meetings at cru- CONTRACTS THE POST-PROJECT PHASE
cial points, such as during the demolition A cost-plus contract covers labor,
phase or before tile is installed (changing materials, and profit but does not Theres no such thing as perfection on a
include an amount for contingen-
the layout or grout color can be difficult remodeling job. That said, dont make the
cies. Instead, additional charges are
and costly once work has started). passed along to the homeowner. final payment until youre 100percent
Stick to the plan. Changing your mind That could put you at a disadvan- satisfied with the project. Making sure
after the work is underway is the biggest tage if youre embarking on a com- the electrical plates are dead-square on
mistake homeowners make, and it can plicated project that might reveal the walls is worth being picky about, says
expensive unknowns. If the project
be the costliest too, according to our sur- Irving. Otherwise they will haunt you.
comes in under budget, however,
vey. So-called change orders, or work that you keep the savings. Whats more, Share your experience. Word-of-mouth
arises after the contract has been signed, the contractor has no incentive to still rules, but the power of online reviews
inflate the budget by an average of 10per- scrimp. If you trust your contrac- on sites such as HomeAdvisor and Porch
cent. It might be as simple as adding an- tor, cost-plus will almost always is getting stronger. Whether you had a
save you money and give you the
other couple of light fixtures in the hall, great experience or a terrible one, youll
best quality product, says Frank
but that means the GC has to get the elec- Montgomery, a contractor based be providing a valuable service to other
trician back in, and probably the painter, in Franklin, N.C. Most cost-plus homeowners (and threatening to share

too. The domino effect quickly adds up, contracts come with a guaranteed a negative experience might also bring a
and the homeowner foots the bill. maximum price, or a ceiling on wayward contractor back in line).
additional charges. One downside:
Make the GC your point person. En- If you follow our guidelines, though,
Youll need to stay on top of the
gaging the subcontractors directly often paperwork unless you have un- chances are your remodel will turn out
creates conflict. If you have a question questioning faith in your contractor. just the way you wanted. Then its time to
about their workor their behavior start dreaming about your next project.

| JUNE 2016 | WATCH, COMMENT & SHARE at ConsumerReports.org 47

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