According to the National Association of Consumer Agency Administrators, the amount of money Americans spend annually on home improvements is about $105 billion. Fixing up a house doesn't come without hitches. The most common complaints homeowners have about renovations include cost overruns, missed deadlines and shoddy workmanship.
To help you avoid a run-in with your contractor, the association suggests you put every promise in writing in the contract. Otherwise, promises a contractor makes will be difficult to enforce.Among the items a contract for a major renovation should include are:
- A complete description of the work to be done, the materials to be used, the starting and completion dates and the payment schedule. It should have the full name and address of the contractor and the homeowner as well as the contractor's license number.
- Any changes should be added to the contract.
- A typical payment schedule would be to pay 10-30 percent as the downpayment, an additional payment when the job is half finished and the final payment when the project has been completed to your satisfaction and you have proof that subcontractors and suppliers have been paid. You may also want to link payment to on-time performance.
- Information about building materials should include the grade of lumber to be used for framing, flooring and trim. Appliance models and colors should be specified. Don't accept the phrase "or the equivalent."
Choosing a contractor
The National Association of Consumer Agency Administrators suggests that you use a local, well-established contractor. Get recommendations from friends and neighbors and ask the contractor for references. Check with those homeowners to see if the work was done property, on time and within the contract price.
The association advises you to get more than one estimate. Estimates should include exactly what you're getting for that price. Don't hire a contractor that works on a cost-plus or a time and materials basis.
Don't automatically choose the lowest bidder. In some cases the low bidder could be inexperienced and unable to complete the work for that amount of money. An unethical low bidder might use shoddy materials and shortcuts.
Make sure the contractor has liability insurance. You may even want to ask to see a copy of his workmen's compensation policy. If the contractor doesn't have insurance and a workman is injured on the job, you might be held liable.
Insist that your contractor follow local building codes and has obtained the necessary building permits.
Home valuation
Remember that your home isn't likely to sell for more than 15 percent above its neighborhood home value median. Don't over-improve your home beyond its likely selling price.