Anyway, fast-forward three decades and several economic cycles, and Neighbor Brian now has many moons of experience building and remodeling homes in San Francisco under his belt. His talent and professionalism has been affirmed for us by his former clients, several of whom also now consider him a friend.
So when Neighbor Brian said he wanted to write something for Bernalwood, we suggested he share some precious wisdom on how to work with a contractor to do a home remodel without going broke, or insane, or both. Herewith are Neighbor Brian’s Pro Tips for would-be Bernal home improvers:
I’ve been remodeling homes since the early 1990’s. One of the things I love most about residential work is the unique insight it offers me into how people relate to their homes and the people who work on them.
Every client is unique in some way. Some people hate the mess and inconvenience. One of my clients was so distraught when demolition began that her partner forbade her from visiting the house until the drywall went back in. Other people think construction is cool, and can anticipate the finished product long before the work takes shape My favorite client ever — when forced to live in half of her house with her husband and 2 small kids while we worked on the other half — said, “camping on a futon in the living room reminds me of being back in college. So cool!” What a client! She never uttered a sour word to me or my crew and we ultimately became good friends.
I’ve always found it fascinating to see how people react to construction, and how the Contractor/Owner relationship plays out. Working in people’s homes is very personal stuff. Some people cope well, and other people don’t really understand what they are getting into.
Amid all of the current real estate hubbub, I thought it might be interesting to share some remodeling advice for homeowners, from a contractor’s perspective. Here are a few observations to keep in mind when planning a construction project.
The Golden Rule of Construction
There is a saying in construction that really rings true: “There are three types of construction: Fast, High Quality, and Inexpensive. You can pick any two.”
The point here is that you have to understand the fundamental trade-offs between quality, speed, and price. Remember this, always, and if you know which is most important to you, you can more easily select a contractor who fits best with your needs. I cannot count the number of times clients have asked me if I would consider an incentive to expedite their project. I always defer, explaining that fair payment is motivation enough. If they push the issue, I explain further that it typically doesn’t make financial sense to trade money for speed on a construction project. Construction is simple in many ways, but it is not easily done in less time than normal without risking quality or significant cost increases.Unless money is no object — and I have yet to find a client for whom that was true — it is ALWAYS cheaper to rent an apartment or take a vacation to get away from the mess, rather than to pay the contractor to knock a few weeks off of the schedule.
What to Look for When Looking for a Contractor
In slower economic periods ( such as from 2008 to 2013), homeowners can expect to get multiple bids and cherrypick the best deal from multiple contractors. But in hotter markets like we see today, you have to court your contractor as much as they need to sell you.
If you are at the beginning of the planning process for a larger project, defer to professionals for how and when to seek bids. It is fine to ask contractors for their impressions of a project early in the planning phase – contractors are generally happy to suggest potential budget ranges for you – but don’t ask seven companies to provide proper bids on a set of preliminary plans if the project is six months or more down the road. Preliminary numbers are not generally useful when making hiring decisions, so tread lightly when asking people to provide estimates. The point of early preliminary interviews should be to glean information about what lies ahead, and to begin to develop a rapport with people you might want to work with. But don’t ask too much of contractors too soon. Contractors don’t like putting bids together for no reason.
Indeed, anything you can do to save the contractor time and hassle while preparing your bid will be repaid tenfold when it comes time to work collaboratively during the project. If you don’t have a set of plans you can provide, write up a bullet-point list of everything you think the project entails. If you know what fixtures you want to have installed, don’t ask contractors to go through the trouble of estimating the same thing on their own. Contractors really appreciate simple steps like that, and they can pave the way for a more successful working relationship.
It’s About the Relationship
Just showing you are motivated and organized can be quite appealing to potential bidders. The flip-side, however, is that you don’t want to look compulsive about your project, or you will likely scare good people away.
Ultimately, you have to decide who to hire. I cannot say enough about the importance of getting along with your contractor. Construction is an inherently messy, invasive process that often takes longer than you or your contractor would prefer. So you might as well like the people you are working with! If you get a bad vibe from someone, heading in another direction might be wise. If someone seems a little too busy to you, hiring someone with more availability could be better. Signing a contract to remodel your kitchen or build out your basement might seem like a business or financial decision, but residential construction is ultimately a very personal process. Working with someone you like can make all the difference. Keep this in mind and don’t focus on costs alone when comparing bids.
Expect the Unexpected
“Life is Change” they say, and construction is no different. Residential remodeling projects of almost any size can change for any number of reasons. And they will. Termites, code changes, horrors hidden inside walls, neighbor complaints, even simple human error can send your project off in unforeseen directions. You can’t always know what to expect in the way of surprises, but you can prepare for them financially by including a contingency for additional costs in your personal budget. Especially when you need to stay within a specific overall cost, setting extra money aside is a wise thing to do. How much is right? Read on.
The Truth About “Change Orders”
Much has been said about the dreaded Change Order, those bills for additional work that goes beyond the scope of the original project bid. But Change Orders are a part of construction that you have to be prepared for, and they go hand in hand with remodeling. In my years as a contractor, I never once had a project of more than $20,000 that didn’t involve a cost increase of one kind or another. Stuff happens. I think most contractors price Change Orders fairly. Yes, they can be costly. And yes, there are unscrupulous souls among our lot who generate too many of them. (I have no doubt that there is probably is a contractor out there somewhere with a boat named Change Order and a dingy named Contract.) But as a rule, contractors don’t get rich off changes in the scope of work.
If you can’t avoid extra costs, what can be done to avoid the stress associated with them? First, ask your contractor or architect to estimate a reasonable contingency budget for your project. A kitchen might require a 5% contingency, but a lateral addition might merit 10% or more. Whatever the case, budget this amount and consider the money spent. You’ll sleep better. Much better.
Second, look beyond the construction contract cost and develop an overall project budget. What costs are excluded from the contractor’s scope of work? Will you have landscaping to do when the contractor leaves? Engineering or Special Inspection costs to incur during the project? And don’t forget about owner-supplied fixtures or furniture. Those things can really add up, and you need to be thorough and realistic about your project budget.
A Caution on Contractor References
If you think that checking your contractor’s references is a form of due diligence, think again. References are cherrypicked by the person you are checking up on, so take what you hear from them with a grain of salt. I don’t believe checking reference is particularly helpful, unless you want someone to help nudge you in a particular direction. If your decision comes down to two bidders, it might be more helpful to ask which contractor can start (or finish) sooner, or consider who has more experience with projects similar to yours, or which contractor might be willing to shave a few thousand dollars off the cost in order to win your business. (OMG, did I just say that!?!) Out-of-the-box questions along those lines might be more insightful than what you hear from references.
To Permit or Not to Permit… Is That Your Question?
I generally advise homeowners to get permits for as much work as possible, as it tends to pay off in terms of market value when it comes time to sell your house. Especially if you are plan to do work outside of your four walls, where just about anyone could call you in for doing work without a permit, paying permit fees makes good sense. However, it’s also worth noting that the SF Building Department has changed its policy concerning unpermitted work. Long gone are the days when inspectors were paid to snoop around on Saturdays looking for unpermitted work. If your budget is tight, and you trust your neighbors, and the work is all inside of the house, you have options.
Beware of the Lowball
If you receive bids which are vastly different, be careful before accepting the low bidder. If you know what you are doing and follow some of the advice I have given here, you should end up with an apples-to-apples set of bids where one bid stands out as a clear value. This IS possible! However, it’s also possible to get into trouble by hiring based on numbers alone. Carefully review bids to understand WHY the numbers are different. Talk to your contractor before signing on the dotted line as to his/her expectations for how changes to the price might unfold. No matter what the contract says, what’s not stated can be equally important. So understand where the low bidder is coming from by generating such a tantalizing price. One of the absolute worst things that can happen is for your contractor to get in hot water because of an under-pricing mistake made when bidding the project. What can seem like a great deal when work begins can easily unravel if your contractor gets into financial trouble because of it. (EDITOR’S NOTE. This is exactly what happened to me. See the photo notes below.)
Little Guys vs. Bigger Guys
Another thing to be wary of is very small contracting firms. Whether an unlicensed “Jack of All Trades” or a licensed contractor who performs many trades by him/herself, going with a very small company comes with very real risks you should understand. Yes, there are diamonds in the rough who do great work time and time again, but they are the exception to the rule when it comes to small construction companies. Most people who excel in construction tend to gravitate toward larger operations, where efficiencies of scale come into play and specialization can be leveraged. People who work alone have fewer resources to bring to bear on your project, which can be especially frustrating toward the end of the project, when you just want them to be done and gone. That said, the prices of smaller firms are sometimes unbeatable, so just make sure you understand exactly what is being promised in terms of time and cost before signing up with a smaller independent. Even if they come highly recommended from someone you know, they have to be the right person for YOUR job.