Potential Pitfalls of Home Improvement Projects

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Feb 26, 2023

What Can Go Wrong?

Home improvement projects can be exciting but also come with several risks that homeowners need to consider. The most significant risks include schedule delays, unexpected costs, liability issues, and quality concerns. Schedule delays can cause inconvenience, especially if homeowners need to vacate their homes during the renovations. Cost overruns can strain the budget, while liability issues can arise from injuries to workers or damage to neighboring properties. Finally, ensuring the quality of the work can be challenging, and homeowners may need to be vigilant to prevent shoddy workmanship.

Expectations settings

One of the most significant risks in home improvement projects is having unaligned expectations between homeowners and contractors. For instance, homeowners may have a specific design or finish in mind, while contractors may prioritize functionality and cost-effectiveness. This misalignment can cause misunderstandings, disagreements, and even lawsuits. To avoid such risks, it is crucial to have a detailed and clear contract that outlines all expectations and requirements, including building codes must be met.  The problem is twofold: A. Most homeowners find a contractor through a recommendation or good reviews, and they don’t really negotiate the terms of the agreement, after all someone told them that they can trust that guy. B. The agreement that’s provided by the contractor is typically one sided and protects only their interests, or it’s vague and leaves a lot of room for interpretations.What happens typically is that each side starts the project with different expectations and from that point things can go bad.

Subpar quality

It's understandable for homeowners to lack expertise in construction, but they do have a keen eye for what constitutes a satisfactory outcome. Building codes provide a framework for ensuring safety and quality in construction. Any work that is impractical or aesthetically unsatisfactory is often in violation of building code standards. When homeowners fail to prioritize compliance with these standards, some contractors may cut corners to save time and costs, compromising the quality of the work. It's therefore essential to align all remodeling work with building codes and local regulations to guarantee a successful outcome. This way, homeowners can have peace of mind and contractors can be held accountable for delivering work that meets the expected standards.

Steep Change Order Charges

It's a common and unfortunate practice in the construction industry to provide low "estimates" to homeowners, leaving contractors with lower profits. To win the bid, contractors purposely underbid the project, making the deal more appealing to the homeowner. As the project progresses, the contractor may claim "unexpected" extra work, such as subfloor damage, and charge a significantly higher fee than it's worth, knowing that the homeowner is locked into the contract and can't shop around for other options.Our experience shows that starting a project with an “estimate” is the wrong way to go. Instead, we advise homeowners to work with a final bid that includes a clear commitment for the scope of work and the associated fee. Additionally, your contract should have a clause specifying how change orders will be charged. This way, contractors are not incentivized to find extra scope of work, and homeowners can avoid any surprise charges that may come up later on in the project. By taking these steps, homeowners can ensure that they are getting a fair deal and that the project will be completed with transparency and integrity.

Mechanics lien

Many homeowners are unaware of the financial risk of mechanics liens in major remodeling projects. It's a mechanism set by California law to ensure that subcontractors and material providers are paid. When labor or material is provided to a construction or remodeling project, a lien can be recorded against the property, providing assurance of payment. Unfortunately, homeowners may be held responsible for paying all sub-trades if the contractor they hired fails to pay their labor and material providers, making it essential to understand the potential risk of paying twice.

Liability

Homeowners who undertake remodeling projects on their property face several liability risks. These risks can arise from a variety of sources, including injuries to contractors or visitors, damage to neighboring properties, and code violations. Homeowners can be held legally responsible for these liabilities, which can result in significant financial losses and legal fees. One of the most significant liability risks in a remodeling project is the possibility of injuries to workers or visitors on the property. Homeowners must ensure that contractors and other workers have adequate insurance coverage and follow proper safety protocols. Failure to do so can result in lawsuits and financial damages. Another liability risk in remodeling projects is damage to neighboring properties. If a renovation causes damage to a neighbor's property, the homeowner may be held liable for the cost of repairs. It's essential to take steps to prevent damage, such as obtaining necessary permits and following building codes.

Schedule and payment

It's common for contractors to face cash flow challenges and plan their schedules based on financial considerations. To encourage contractors to stay focused on your project and avoid taking on other jobs, we recommend a payment system where each phase of the project is paid for only after it's completed. By avoiding upfront payments for labor, you can incentivize your contractor to stay committed to your project and ensure that the work is completed to your satisfaction before making any payment. 

Summary

Home improvement projects can be a daunting task for homeowners, who are often required to make critical decisions in a short time frame. Making the wrong decision can result in dissatisfaction with the outcome, significant financial loss, or project delays. To ensure a secure and seamless home improvement project, we have developed BuildWiz VAULT. This service is built upon years of experience with hundreds of successful projects and includes a fair agreement that outlines the scope of work, consulting, contractor background checks, payment through a hold account, dispute mediation, mechanics lien mitigation, and more. Best of all, this service is free for homeowners, and we only charge contractors a 1% fee based on the contract amount. By using BuildWiz VAULT, homeowners can have peace of mind and ensure a successful outcome for their home improvement projects.

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