RENOVATION

WITHOUT
AGGRAVATION
Our survey of 300 contractors revealed shady pro practices,
common and costly homeowner mistakes, and strategies
to make your next project a complete success.
BY DANIEL DICLERICO

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

PHOTO ILLUSTRATIONS BY ZELA LOBB 41

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

THE PLANNING PHASE

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-
org/homevalues
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
List, HomeAdvisor, and Porch, can also
help you find pros. See Word-of-Mouth
Moves to the Web, on page 44, for de-
tails. Remember these rules as you go
through the vetting process:
Check credentials. Even if they come
with a glowing review from your sister-
in-law, you still need to check the bona
fides of every professional on your short
list. In our survey, almost a fifth of GCs
lacked either a state license or the proper
insurance, and 9percent lacked both.
Though proper credentials arent a guar-
antee of quality, theyre a good sign that
the GC runs a reputable business. Whats
more, our survey found that fully accred-
ited GCs are better at holding down costs
when unexpected problems arise. The
Contractors License Reference Site (at
contractors-license.org) has information
on licensing requirements in your state
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?)
will only intensify as the project heats up.
Its also important to understand how a
GC communicates during a project and
to be comfortable with that method.
Ask whether youll be dealing with him
directly, or whether hell be delegating
the job to one of his project managers (if
the latter, make sure to vet the manager,
too). Beyond face time, some GCs rely on
email or handwritten notes, and others
use construction management software,
which lets a homeowner track schedul-
ing, payments, shipments, and more.
Remember that budgets are a mov-
ing target. The number you start out
with during the planning phase is likely
to change when you begin to see what
materials actually cost. GCs have to make
similar calculations, factoring what they
think the job will cost against their own
profit margins and unforeseen expenses
(more on those in a moment).
Always negotiate. Only 4percent of the
GCs in our survey said they are never
willing to negotiate the price of a job
(66percent are somewhat willing, and was the median discount offered on
30percent are very willing). Getting bids multiroom projects in our survey).
from at least three GCs will give you a Be prepared for surprises. When we
sense of the market rate and also provide asked GCs about job-related (as opposed
bargaining power. Remember, the lowest to people-related) problems that lead to
bid may not be the best, says Katherine delays or cost overruns, they said that
Hutt, national spokeswoman for the Bet- many of the culprits are hidden behind
ter Business Bureau. Conventional wis- wallsstructural damage, for example,
dom holds that you should throw out the or electrical wiring that isnt up to code.
highest bid, but if you think that the GC Even though most contractors plan for
offering it is the best person for the job, those contingencies, we recommend add-
its worth trying to negotiate a lower price. ing at least a 10percent cushion into your
Keeping the business of a repeat cus- budget to cover such surprises.
tomer was the biggest reason to haggle, On major projects, its worth paying a
cited by 75percent of GCs, who reported few hundred dollars for a pre-inspection
offering a median discount of 10percent. by a certified home inspector. Even a
So if theres more work coming down the good GC might only look as far as the
line, be sure to mention that during ne- kitchen or bathroom; we see the house
gotiations. Combining projects could also as a system, says Frank Lesh, executive
save you in the long run: Two-thirds of director of the American Society of Home
GCs said they offer discounts on jobs in- Inspectors. Lets say youre putting in an
volving more than one room (10percent (continued on page 45)
SHOW ME THE MONEY!
The pros and cons of taking a loan from your contractor
If you need help paying Those options are not equity lines of credit or
for your renovation, your without drawbacks: If you home equity loans (currently
contractor might save you cant pay off an interest-free averaging around 4.7and
a trip to the bank: Forty- loan in full before the term is 4.5percent, respectively, for
twopercent of GCs in our up, for example, youll prob- $30,000). Compare the full
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-
Some GCs offer interest- deal. With personal loans, nation fees, and any other
free loans for, say, 12 to you need to check all terms charges, says Bill Simone,
18monthsalmost always and conditions to make sure president of Custom Design
through a third-party there are no unexpected & Construction, based in Los
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
cards, such as the Wells payments, if that was stipu- Harvards Joint Center
Fargo Home Projects Visa, lated in your contract. for Housing Studies. And
that can be used to pay for Disciplined borrowers keep in mind that when
renovations (interest rates might consider using a your lender is your contrac-
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
at retailers, but interest for a renovation. But that whether there were prob-
rates go up to 28.9percent. approach is only for those lems using his financing, and
Contractors may also who are sure they can pay check to see whether there
act as middlemen for loans off the balance before the are complaints about the
with third parties. Interest introductory period ends. companys financing deals
rates at LendKey, for Compare any deal youre with your states office of
example, recently ranged offered through a contractor consumer affairs and the
from 6.49to 11.99percent, with banks and credit union Better Business Bureau.
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
Interior
Decorator
liaison between
you and the GC
THE WORK PHASE
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-
vey, kitchen projects require a median
of threeweeks to complete, but a third of
them take fourweeks or longer.
The work is messy, too. If theres any
way for you to move in with relatives or
into a hotel, at least during the dusty
demo phase, youll minimize stress
along with possible exposure to hazard-
ous materials. If your home was built
before 1978, your GC will need to follow
the Environmental Protection Agencys
Lead Renovation, Repair and Painting
Rule, which includes containing lead dust
with plastic sheeting and disposing of
contaminated debris in heavy-duty bags.
Store valuable or treasured items far
from the work site or at a storage facility.
If you have to stay in the house, a good
contractor will help you find ways to keep
disruptions to a minimum, by setting up
a temporary food-prep space and relocat-
ing the refrigerator, for instance, during a
kitchen renovation. These other tips will
save you trouble once the work begins:
Stay involved. You cant just write the
contractor a checkthen check out.
Homeowner involvement throughout
the project is critical, Truant says. Even
if youve moved out of the house, plan
on a couple of in-person meetings every
week and more frequent meetings at cru-
cial points, such as during the demolition
phase or before tile is installed (changing
the layout or grout color can be difficult
and costly once work has started).
Stick to the plan. Changing your mind
after the work is underway is the biggest
mistake homeowners make, and it can
be the costliest too, according to our sur-
vey. So-called change orders, or work that
arises after the contract has been signed,
inflate the budget by an average of 10per-
cent. It might be as simple as adding an-
other couple of light fixtures in the hall,
but that means the GC has to get the elec-
trician back in, and probably the painter,
PHOTOS: ISTOCK/GETTY IMAGES
too. The domino effect quickly adds up,
and the homeowner foots the bill.
Make the GC your point person. En-
gaging the subcontractors directly often
creates conflict. If you have a question
about their workor their behavior
A TALE OF TWO
CONTRACTS
Most renovations are covered
by one of these two types
of contracts. Choose wisely.
FIXED-PRICE
CONTRACTS
With a fixed-price contract,
the general contractor provides an
estimate covering labor, materials,
profit margin, and a cushion for
contingencies. If the contractor
exceeds the budget for a foresee-
able reasonunderestimating the
cost of the drywall installation,
for examplehe or she is on the
hook. That can be advantageous
for the homeowner, but it can also
affect the quality of the work if the
contractor cuts corners to stay
on budgetby ordering cheaper
drywall, perhaps. Also, if the project
comes in under budget, the con-
tractor pockets the profit, which
again could encourage
subpar work.
COST-PLUS
CONTRACTS
A cost-plus contract covers labor,
materials, and profit but does not
include an amount for contingen-
cies. Instead, additional charges are
passed along to the homeowner.
That could put you at a disadvan-
tage if youre embarking on a com-
plicated project that might reveal
expensive unknowns. If the project
comes in under budget, however,
you keep the savings. Whats more,
the contractor has no incentive to
scrimp. If you trust your contrac-
tor, cost-plus will almost always
save you money and give you the
best quality product, says Frank
Montgomery, a contractor based
in Franklin, N.C. Most cost-plus
contracts come with a guaranteed
maximum price, or a ceiling on
additional charges. One downside:
Youll need to stay on top of the
paperwork unless you have un-
questioning faith in your contractor.
| JUNE 2016 |
tell the GC and let him or her handle it.
Though you shouldnt engage the
subcontractors, you do need to be sure
theyre being paid. If theyre not, you
could be held liable. Stipulate in the con-
tract that the GC will provide you with
lien releases (basically proofs of pay-
ment) signed by the GC and subcontrac-
tor throughout the project.
Dont demolish your relationships
along the way. Client-contractor rela-
tions arent the only ones that get tested
on a remodel. Couples often feel the
strain as well. Consider a January 2016
survey from Houzz, which found that
41 percent of people who remodeled
with their partner found the experience
frustrating; 7percent felt they needed
couples counseling during the process,
and 5percent even considered a breakup.
A home remodel is a blank canvas
upon which any unresolved issues in your
relationship will be painted, Irving says.
He recommends that, whenever possible,
couples should try their hand at a small
project before tackling a potential rela-
tionship wrecker. Have the bathroom
retiled and see how that goes before you
do a master suite addition, he suggests.
THE POST-PROJECT PHASE
Theres no such thing as perfection on a
remodeling job. That said, dont make the
final payment until youre 100percent
satisfied with the project. Making sure
the electrical plates are dead-square on
the walls is worth being picky about, says
Irving. Otherwise they will haunt you.
Share your experience. Word-of-mouth
still rules, but the power of online reviews
on sites such as HomeAdvisor and Porch
is getting stronger. Whether you had a
great experience or a terrible one, youll
be providing a valuable service to other
homeowners (and threatening to share
a negative experience might also bring a
wayward contractor back in line).
If you follow our guidelines, though,
chances are your remodel will turn out
just the way you wanted. Then its time to
start dreaming about your next project.
WATCH, COMMENT & SHARE at ConsumerReports.org 47
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