A home renovation can be time-consuming, and you want the end result to be worth the hard work. If you make a home-remodel mistake, however, it could turn your dream project into a nightmare.
So how can you avoid costly renovation mistakes? We’ve gathered five tips to help you make sure you’re heading into the right project, the right way:
1. Consider return on investment
Any project is worthwhile if it makes you happy, but if you plan to sell your home soon, make sure you focus on renovation projects that give a good return on your money. Many renovations cost thousands of dollars, but won’t increase the value of your home by the same amount.
For example, it costs about $42,000 to add a new bathroom, but homeowners typically recoup only about 56% of the cost in increased home value, according to the latest Remodel magazine Cost vs. Value report. A minor kitchen remodel, on the other hand, returns about 83% of its cost, so that type of project might make more sense.
When it comes to recouping your money, consider how your home compares to others on your street. If you already have the biggest house on the block, and its market value is near the high end in your neighborhood, new improvements probably won’t increase your home’s market value by much.
Consider calling local real estate agents and contractors to ask them about the potential return you might receive from a home renovation project.
2. Create a budget
You don’t want to run out of cash in the middle of a home remodeling project. But unless you’re careful, your project may get more expensive while it’s under way. (That nicer tile may add only $7 per square foot, but if your kitchen is 70 square feet, watch out!) To avoid running short on cash, add up your expenses before you start the project. Then, add 10% or 20% to the total to allow for cost overruns.
Ask for written estimates from different contractors so you can compare prices and understand the project’s costs. You can also look for information from third-party sources, such as Consumer Reports or Remodeling magazine. It’s best to have the project fully funded before you start, whether the money comes from your personal savings, a mortgage refinance or a line of credit.
3. Research contractors
As you get estimates from different professionals, check their references and ask about their credentials. At a minimum, make sure each contractor is properly licensed to do the work on your home. You can also ask about their membership in trade associations. Many reputable contractors belong to professional trade groups such as the National Association of the Remodeling Industry or National Association of Home Builders.
A good contractor will guarantee the work and offer a warranty. You can check Better Business Bureau ratings to see if others have had complaints about companies you’re evaluating. If there have been complaints, check to see how they were resolved.
When you select a contractor, make sure you get your agreement in writing.
4. Secure home renovation permits
Permits help protect your home and your safety. Without the necessary approvals to perform work on your property, there’s a chance the renovation won’t meet local building codes. It could even affect your ability to sell your home in the future. Contact your municipality for details about what permits you must have for your renovation project. And follow up to make sure your contractor has permits in hand before beginning the work.
5. Understand price/quality tradeoffs
You’re probably planning to pay hundreds or thousands of dollars on a remodeling project. It’s understandable to look for ways to save money, but don’t automatically cut corners by using the cheapest materials.
Talk to your contractor about the tradeoffs between quality and price for your project. You’ll probably be better off selecting the best-quality products you can that fit your budget. Otherwise, you could be stuck with having to make costly repairs after a few months because you skimped on quality.
A home remodel project can give a big boost to your home’s aesthetics and market value — if you avoid costly mistakes. By setting a budget, researching contactors and making sure your improvements use quality materials, you can help avoid expensive pitfalls and enjoy your home’s new design.
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Margarette Burnette is a staff writer at NerdWallet, a personal finance website. Email: mburnette@nerdwallet.com. Twitter: @margarette.
Image via iStock.
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