Common Pitfalls on Home Remodels

You have finally decided to update your home, now what? Many people spend months looking at kitchen finishes, but spend no time at all investigating general contractors. Below should serve as a basic guide to avoid some common pitfalls homeowners fall victim to daily.First and foremost, do your homework before selecting any general contractor. Ask your potential general contractor if he belongs to any organizations. Here in Houston there are dozens of organizations, in addition to national organizations. Ask questions about the building process with each person you interview, find someone that is willing to listen and explain the process while working with you. If he doesn’t have the patience to explain something now, he certainly won’t in three months if you are frustrated.Remember, this is an interview process that encompasses the person, your trust in that person, craftsmanship, and price. Interview more than one general contractor. Find someone that you can communicate with and you feel comfortable with. You should have daily communication with this person and being able to communicate will help both parties.

The old adage is true, you get what you pay for. Take a step back and look at the numbers. If you are spending $40,000 vs. $44,000, and the higher bid is someone that you feel comfortable communicating with and feel you can trust, a 10% increase is worth avoiding stress.Remember, your kitchen, bath, or entire house may be unusable for weeks or months on end. Ending on time may be worth a small percentage increase. Often times you choose someone that is cheaper than the competition, but how do you think he can afford being the cheapest? Common practice in construction is to under bid the competition and then take on more volume. In that situation you will more than likely be fighting regularly to have someone working in your home. This could add weeks or months to the timeline. That said, keep in mind that paying more doesn’t necessarily mean you will get more.

All things being equal, price can be the most important aspect. Confirm your general contractor has insurance coverage. If it is a very large project investigate having the contractor fully bond the project. An experienced construction attorney can help you navigate this. Get recommendations and contact them all. Take notes so you can sit down a week later with your significant other and discuss the different pros and cons you were told. Read the contract and understand it. This is where hiring an experienced construction attorney for contract review can save you headaches and years of litigation expenses. Add clauses that work in your favor. Many times the contractor presents a contract and the homeowner signs without question. Always read the contract. You will never have the contractor’s attention more than you do right now. Take a day to review the contract, take it to an attorney for a quick discussion, and change bad language. You have more power now than you will at any other time, take advantage of it. Negotiate delay penalties for slow or late construction. This will put pressure on the contractor to complete the job on time. Limit your payments and reserve a high percentage of funds until after construction is complete and you have signed off.

Before signing a contract understand how a contractor may take advantage of you:

  • Providing lower quality of materials than desired;
  • Provide what appears to be a complete estimate, but then creates a change order for every detail of the house. This may add up and quickly exceed the original budget;
  • The contractor over book jobs and sporadically show up, creating a never ending project;
  • You near completion and the contractor asks for full payment and promises to finish the punch list at a later time. Once paid, he never finishes the punch list and you are forced to hire a third party;
  • Subcontractors need a certificate of work satisfaction from the homeowner in order to get paid by the general contractor. He assures you on a Friday afternoon he will be back Monday to finish, you sign off and he never shows back up. You signed off on completion and the general contractor refuses to pay to have someone complete the work;
  • The contractor gets paid the majority of his money and it makes no financial sense to finish the job;
  • The contractor has already been paid out by the homeowner, but there is still $5,000 the contractor must pay subcontractors in order to complete the work. Once the contractor is paid, he now has no incentive to pay subcontractors to show up and finish the work. To a homeowner, a job that is $5,000 away from completion will feel like the work was half done.

Example: A full kitchen upgrade that totals $40,000. The last $5,000 goes to pay granite, paint touch ups, plumbing and electrical trims (sink and faucet, light bulbs and plug plates). You may have new cabinets, appliances, tile, wall texture and paint, and a new look, but the final finishes make the home feel complete and yours is not.

Once work is complete, have all parties sign a full release of all potential liens. This, again, is where an attorney is needed. The last thing you want is to pay your contractor out, only to have liens filed by his subcontractors because they were never paid by the general contractor.

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