Quick preface: Mom if you are reading this, I know what you are thinking… and yes I am being coy, but this recent CNBC article titled, “Expect your home remodeling to ‘cost 50% more and take 50% longer,’ says finance expert” really intrigued me, and yes… also really got under my skin.
This blog title may seem like a headline out of The Onion, but that is because the original CNBC headline seems just as ridiculous — Why would a financial expert be casting such a dark shadow on an entire industry, one that has many companies that are truly honest and trying to help? Perhaps this is an exposé unveiling the shady stigmas attached to the small business home improvement contractors, or shedding light on his own bad decisions; either way I feel it is worth explaining that there is another way… a remodeling project does not have to cost and take 50% longer than you are told; and LivCo and the other pro remodelers out there are happy to share any and all of their client references with you to prove it.
The reality is the remodeling and construction trades have been commoditized for decades. While choosing a better, faster, or cheaper focus leaves most normal businesses crafting a ‘better’ differentiator, construction trades and general contractors have continued to fight for every dollar, to be either cheaper or faster, and often believing that providing both is the best way to secure work to feed their families. This leaves them being in the position of the lowest bidder. Low dollars = get the job; and then they can make it up in the process to cover the potential losses. This is a recipe for a customer service disaster and also a ‘business 101’ failure; and is also why the remodeling industry is often considered the dregs of professional construction. The construction industry and buyers have perpetuated a market of the lowest bidder, and it is not accurate to what projects actually cost, and does a huge disservice to both our clientele and our industry.
OK… enough defense of the why, let’s talk about how to fix it. Don’t just assume that any home improvement project will cost 50% more and take 50% longer… vet the companies you work with to understand the value they bring beyond being the cheapest. In reality, the project will always be a function of labor, materials, and what it takes to bring the final product to your expectations… that’s it. And yes this will vary – labor hired by the contractor that shows up when they say they will will likely cost more than the lowest bidder subcontractor. A good GC will take this into consideration and understand the value of the time and communication saved.
To lend a little more light to the value of a professional remodeler and even more so in a design/build contractor scenario, below are my responses to the author, Sam Dogen’s assertions:
1. It will cost more than expected.
Most importantly here is the word ‘expected’. Any pro remodeler should be working diligently to align expectations between the owner, designer, and builder. This should also be defined early in the design process, not once your home is torn apart and there is no turning back. Our feasibility design process is setup to define just that — the expectation of the design, costs, and timing. This happens on paper, which is way less expensive than once it is under construction and with LivCo usually occurs within the first 2-3 weeks of design and planning. Clarity of expectations across all parties is a process issue, and should be clearly defined in the design phase. Solution: Ask your builder what they do before construction to define the cost expectations of a project. (A much deeper and process oriented question than “are your projects typically over-budget?”) LivCo’s first step is a in-depth design study that incorporates detailed budgeting so that we can shape the project based on budget feedback from day one.
2. It will take longer than expected.
Same as above – clearly define the project expectations with your builder during the design process. We usually ask our clients if they have a date they would like to have the project complete and we work backwards from there to show the incredible number of things that need to be produced, decided, and executed to make that happen if it is even possible. More often than not, an extended duration is a function of a poorly defined scope of work on the builder or design side, which results in changes to the design, indecision, and misaligned expectations.
Dogen argues that builders bring up two classic lines that could be solved with contract language for liquidated damages. “This project is costing me money.” “I’m practically working for free.” Again this is a process and communication issue on the builder side. A clearly defined process should require approvals by certain dates by the client to keep the project on time. So many pieces of a project have extensive lead times that are out of the power of the builder if approved, changed, or added during construction. Project delays are a two way street —- we tell every single one of our clients that our goals are aligned, we want to have a quality project completed as quickly as possible; but we need to work together with a mutual understanding of what is involved and required from our clients to make that happen.
Solution: Ask your builder how they deal with change orders during construction. LivCo would answer that we do everything we can on the paper end of design so that everything is as clearly defined as possible and you are ecstatic about what it will be. As the space is being built there may be other ideas that come up, seeing it in real-time, but that may result in a construction delays. Sometimes it is worth it if the ideas are that great, but we will deal with that as it comes up and help guide you through the value judgements, and decision-making process.
3. Don’t let emotions get in the way.
This is a really tough one that really get’s under my skin. You are going to have your builder and their workers inside your home for months. This is your home… you are raising your children here, retiring here, or maybe starting a new life here… it’s not a car or handbag… how can it not be emotional? Dogen insinuates, actually he straight up says, that if you act like you really love where you live, don’t show it because a contractor will be more likely to rip you off. This is clearly an issue of trust. A pro remodeler does not operate basing business decisions on client emotions. A pro remodeler is a client advocate and consultant. A pro remodeler is helping their clients understand the costs of their projects and the value their company brings in achieving it from day one.
Solution: Ask your builder how you can know that you can trust them. Years ago we had a client that said that they had been burned before and were nervous about trusting us. Understanding the huge financial investment they were about to make with a company they simply found on the internet, they were just not so sure. We put photos of all of our projects on our website, so I always offer for clients to find a project that aligns with theirs and I will be happy to connect them with the owners. I don’t give a hand-picked reference list, I let them choose. They can pick any client we have ever worked for and I am happy for them to talk to them, because I know we worked our butts off to earn every client’s trust. For this client I even offered up my mom’s phone number, so that if at any point they felt I was being dishonest or not trustworthy, they could call her directly, and she would give me an earful on their behalf. They never had to call her
4. Spend within the scope of your property value.
I often wonder why people can so quickly buy expensive things knowing they will end up in the garbage, donation bin, or simply be worthless in ten years. A $60,000 car is worth tens of thousands dollars less as soon as you drive it off the lot, but a house is somehow assumed that whatever you put into it you should be able to immediately get that money back, plus some. Homes should be considered more than a financial investment, they are a quality of life investment. This is true now more than ever as we have had stay-at-home orders and expansive work from home during the pandemic. Home improvement is unique in that it does provide true equity, but don’t let a want for an immediate return on dollars cloud your need for improved quality of life.
Solution: Understand the relative property values of your neighborhood, and construction costs so that you can make value judgements for the needs of your family and home. We frequently offer the Cost vs. Value report that shows average costs of remodeling projects in our area and the average recoup value of the improvement. We also have a network of local realtors we can connect clients with if they need more data points to guide their improvement project. Make sure your builder, designer, and architect clearly understand your needs and pain points and is able to offer creative and budget-minded solutions.
5. Always think in percentages.
This is just silly, and has nothing to do with the specific context of your home and your needs. See #4 above for more detail…
6. Beware of pricing discrimination by neighborhood.
Typically in a more expensive neighborhood there is also a higher level of design and specifications. Property values, at least in the Chicago suburbs, also dictate a standard for finishes. For example, designing in a lower priced neighborhood we would not plan a budget to include a Subzero appliance package, but there are certain neighborhoods where that is the standard. With that specification level, also often comes more plan modifications for the purposes of a more perfect plan. Simply put, a pro remodeler doesn’t change the pricing structure for specific neighborhoods, but will likely increase the specification level to be comparable to the market. With that there are often more municipal requirements in higher-end neighborhoods, additional bonds, tree-protection, fencing, and porta-john screening to name a few, that can also drive neighborhood costs up.
Solution: Ask your builder how they define the early specification level. Also ask if they have done other work in your neighborhood and if they are comfortable talking about their costs and specification level. At LivCo we try to align our early design & budgeting specifications with the relative local market, and we are happy to talk about similar projects and budgets.
7. Lower your expectations.
This one makes me so sad… I really wish Mr. Dogen called us before embarking on the first of his four miserable remodeling experiences. His words, “Unfortunately, no matter how optimistic you are about home remodeling, you’ll likely have a miserable experience.” I guess it is a do as I say not as I do type of article, because if its so miserable, why did he do it four times, and not just buy a renovated home as he suggests? I dunno…
Solution: Ask your builder what your expectations should be for the process, budget, and overall experience. A pro remodeler should be honest with you about it, but also leave you inspired at that same time with what your home can be if you’re up for it. No pain, no gain.
So Dogen is correct in some ways; remodeling is expensive, messy, exhausting, and nothing like what you see on TV. But, it can also be a truly special and human experience. It is a unique opportunity that you may only have once or twice in your life to collectively work with a team to craft your home into something tailored to just you and your family. There are very few things in life that you can fully custom craft around you, and remodeling is one of them – and don’t forget it is also where you live… so I think that’s worth it. Just do your due diligence and recognize the value in a pro remodeler. Don’t shop for fastest or cheapest, because it probably won’t be either at the end of the day. Just look for the best and ask the questions that reinforce that their process supports the best end product and customer experience. That’s how to make it worth your while and change your life, vs. buy a flip. Lastly Mr. Dogen, please schedule a video consult with me before your next remodel project, so we can see if we can give you a true professional experience and change your tune.
No two remodeling companies are created equal, but there are a whole lot of really good ones. The easiest way to start your search is through professional affiliations such as NARI, Remodelers Advantage, Guild Quality, NAHB, and the AIA. Also check their digital presence, and their reviews – Companies have very little control over public reviews, so if they have lots of good ones, they are definitely doing something right.