Budgeting for a remodel can be challenging, and just 36% of remodeling homeowners hit their budgets in 2019, according to the 2020 U.S. Houzz & Home report. Read on to find out how often remodeling projects go over or come in under budget. And get pro tips on what to do to keep remodeling spending on track.
In 2019, 31% of homeowners who remodeled their homes ended their projects over budget, according to the 2020 U.S. Houzz & Home study. Some 36% completed remodeling projects right on budget. Just 3% came in with their projects under budget. And 29% had no initial budget for their projects at all.
Homeowners who exceeded their budgets did so for a variety of reasons. One of the top cause’s homeowners cited was finding that products and services cost more than they had expected.
Another top reason that homeowners went over budget was that the project turned out to be more complex than expected. An example of this might be when your contractor opens a wall and finds that all the electrical wiring has to be replaced, which would add to the total project cost if you hadn’t been anticipating that.
A third reason came down to homeowner choice: deciding to buy more expensive products or materials than originally intended. Sometimes people decide that a beautiful kitchen backsplash tile or gorgeous range hood is worth the extra expense to get the look they want.
Homeowners can take steps to help keep their projects as close to budget as possible. Here are five strategies suggested by Rick Thomas of Thomas Custom Builders:
- Find a truly budget minded contractor. One that understands the costs as you move through design as well as setting a realistic budget to work within. A contractor who offers a Guaranteed Maximum Price (GMP) is ideal. A GMP contract sets a limit, or maximum price, that the customer will have to pay their contractor, regardless of the actual costs incurred. Essentially, a GWP contract puts a cap on the contract price that can’t be exceeded.
- Set aside 10% for contingencies. It is best to clearly set a limit before the reno begins so that you don’t feel strained once the renovation is complete. The more you can tell your contractor about how you want the end product to look, the closer they’ll get to a realistic estimate. Once set, add in an additional 10% to cover any unforeseen circumstances that may arise. Whatever your budget, you should add a buffer.
- Define goals based on needs VS wants. Assess each aspect of the design based on whether it falls into the “needs” category (functionality, health, safety) or “wants” (granite over quartz, heated floors, etc). Take time in design. Time spent early on in the design stage helps to save both time and money during the construction phase When available, 3D renderings provide a clearer visualization of how the end design will look, making the entire process much smoother.
- Shop, shop and shop some more. Try to keep construction allowances to a minimum by choosing all the fixtures and finishes early on. The more construction allowances, the more opportunities for misunderstandings. Homeowners should come into the project with a clear vision of the finished materials. Contractors should encourage their homeowners to make all material selections before submitting the bid.
- Consider phasing projects but design all phases at start. If budget doesn’t allow you to tackle all of your projects in one shot, don’t compromise. Completing a master design plan creates consistency throughout your entire house. Less money upfront creates more immediate cash flow, says Rick Thomas, President of Thomas Custom Builders. This gives you the ability to pay as you go, as you can afford each phase.”
The Houzz & Home study is the largest publicly available survey of residential remodeling, building and decorating activity in the country. The 2020 survey, fielded Jan. 2 to March 5, collected information from more than 87,000 respondents. The report relies on findings from homeowners who renovated their primary home in 2019.