Why Do Some Renovations Go So Terribly Wrong?

6/25/2020

From simple projects spinning out of scope and conflicts with contractors to major delays, reno-vating a home is rarely as easy-breezy as reality television portrays it. Here, homeowners re-covering from renovation disasters and building pros get real about keeping projects on the rails.

Jody Costello simply wanted to create a safe place in her San Diego home where her aging mother could live comfortably. The addition she’d planned would cost $150,000, and she’d already given the contractor a $30,000 deposit.

 

Three weeks after handing over the check, the contractor still hadn’t begun the renovation job. And when he did show up, her contractor was driving a shiny new truck. Costello says her first thought was: “This doesn’t look good.” But she gave him the benefit of the doubt.

After the job was complete, she realized her first instinct may have been an early warning sign. The addition was unlivable due to rainwater leaks, which caused a mold problem. Costello’s mom passed away before the damage could be corrected. “So many things went wrong,” Costello says. 

Each year, homeowners spend $400 billion on renovations designed to increase their comfort, their property value or both. But ask homeowners who have embarked on renovations, and many will have choice stories of surprises (not the good kind) and unexpected costs. Often, they fail to take a few critical steps to protect a renovation project — starting with the contractor, says Ed Brasseur, a licensed general contractor in San Diego for more than 40 years.

“Basically, you’re going to get married to a contractor” for the duration of any home repair or renovation, says Brasseur. Good planning and communication will make that marriage smoother, he says, but it all starts with choosing the right person. 

She thought she hired the right contractor. She was wrong.

Jody Costello was confident she was doing everything right when she hired a licensed contractor in a local design-build firm to add the 1,000-square-foot second story and deck to her home in 2000. Her husband works as a construction estimator. They checked his references and made sure no complaints had been filed against him with the state licensing board.

When things went sideways, she says, “I realized everything we did was wrong, but it was too late.”

She ended up suing her contractor and hiring another to rebuild the addition. It also prompted her to take a deep dive into contractor hiring practices, which led her into an entirely new career as a consumer and policy advocate who teaches home remodeling bootcamps for women.

“This is my life's work,” she says.

 

RENOVATION RULE #1: Vet a contractor the way you would a surgeon

Costello realized she had failed to check out the first contractor thoroughly.

She and her husband didn’t know that complaints against a contractor may not always be made public until after they’re fully investigated. And the couple didn’t venture beyond the references the contractor provided.

“You need to go deeper,” she says. Searching for her contractor’s name on legal research and business websites would have revealed that he was involved in ongoing litigation with previous clients. Costello also suggests checking with the local building inspector’s office; they may  have relevant information about a contractor they can share.

Brasseur recommends getting bids from three or four contractors — and being wary of high and low bids.

“Someone in the middle is in the comfort zone for me,” he says.

The contractor, at a mimuimum, should also carry enough insurance to cover the cost of rebuilding a house if it burns down, plus workers compensation, adds Dennis D. Gehman, a NARI (National Association of the Remodeling Industry) master certified remodeler in Harleysville, Pennsylvania.

If a Contractor Can’t Answer These Questions…

Gehman suggests asking all contractors the following.

  1. When are you booking? If a contractor tells you they can start immediately, vet them carefully. Quality contractors can be booked weeks or months ahead.
  2. Do you use subcontractors? If so, be sure all subcontractors are licensed and insured.
  3. How do you handle project management? Ideally, the contractor will have one worker who doubles as an on-site manager for your specific project, rather than a manager who bounces from job site to job site. 

What’s worse than no contract? A bad contract.

In Bridgewater, New Jersey, Jonathan Faccone had been flipping houses for about five years when he needed work done on his own home. He turned to a licensed electrician who had worked for him before. Because of their history, Faccone didn’t think twice about giving the man $1,500 up front, without a contract locking in the scope of the work and payment schedule.

Shortly after, the electrician told Faccone he needed to take time off for an emergency. He promised to return the money — but didn’t. Faccone ended up paying another electrician to complete the job and accepted the $1,500 loss as a lesson learned. He now makes sure he has a contract with anyone he hires.

“It’s not that I don’t trust them,” he says, it’s that you never know what might come up.

Costello and her first contractor did sign a contract. When he showed up in the new truck, her gut told her to cut her losses. But when she reviewed the contract, she realized they hadn’t built in protective language. If they fired him, they would be in breach of contract. 

 

RENOVATION RULE #2: Start with a strong contract

A contract provides a roadmap of what the contractor will be doing — and lays the foundation for any legal action later. State and federal labor and consumer websites can provide suggestions for what to include.

At a minimum, according to Costello, it should contain:

  • A detailed description of the job
  • A schedule of when payments are due, tied to project milestones, and a process for making changes that raise costs
  • The right to fire the contractor and to change the scope of the work 

A “deposit” doesn’t mean “paying for work before it’s done”

According to the California Contractors State Licensing Board, contractors cannot ask for a deposit of more than  $1,000 or 10 percent of the project, whichever is less. Other states, however, set higher limits: Maryland, for instance, allows deposits up to one-third of the project price according to information available on the Maryland Department of Labor’s website.

A request for more than 30 percent should be considered a red flag, Gehman says.

Paying for work that hasn’t been completed is the biggest mistake homeowners make, according to Brasseur. “Money is power,” he says. “If you give your power away and your contractor starts messing up, you don’t have the power to get him to perform.”

 

RENOVATION RULE #3: Be on the lookout for contractor red flags

 

Commonly accepted hiring guidelines recommend avoiding contractors who:

  • Aren’t established in the community
  • Solicit door to door
  • Offer discounts for finding other customers
  • Just happen to have materials left over from a previous job
  • Accept only cash payments
  • Ask the homeowner to get the required building permits

 

Changing a light created a cascade of other projects and fixes

Danielle Pientka just wanted to replace the light fixture in the small bathroom of her Columbia, Maryland, home. But that left a hole in the ceiling. Her trusted handyman told her a new ceiling would be cheaper than patching her old popcorn ceiling, and Pientka was happy to invest in a more modern look.

But when the handyman removed the ceiling, 25 years of dryer lint poured out. A four-foot section of the dryer’s exhaust duct was missing, and singe marks told Pientka she had been lucky to avoid a disastrous fire. Because of that, she didn’t mind paying $400 extra for the new ceiling, clean-up and new duct work.

“It was extra money, but not a terrible expense compared to the expense of your whole place burning down,” she says. 

 

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