Conclusion  To accurately predict what a home improvement project will cost AND establish how much you can afford, follow these 7 Steps.

1. Have a Plan
2. Get a REALISTIC Ballpark Figure
3. Figure Out What You Have to Spend
4. Shop All Finishing Materials
5. Get Bids from TWO Contractors
6. Set Priorities & Trim Initial Scope if Necessary
7. Budget For Hidden Costs or Accidents

1. Have a Plan

Everything worth doing deserves some degree of deeper thought. If you have a desire to remodel or improve an area or all of of your home, having a plan makes the budgeting and planning process of your home improvement project that much clearer. It’s hard to hit a moving target. A plan focuses your needs and desires into a vision that you can express to others, namely your General Contractor.

Having a plan and not deviating from it is one of the most crucial things to keeping costs manageable during a construction project. Distinguish in the plan a list of “musthaves” along with things that you merely “want”. Knowing the difference will tell you clear as day what you can potentially trim from the list later on if the budget limits are getting reached. We’ll follow up on this more in step 6.

Another factor to consider is the amount of time you plan on living in this home. Is this home going to be a stepping stone for you and your family or is this your forever home that you plan on living in it for 20+ years? The answers to these questions will help you decide what to do and therefore budget for in your remodel.

Your plan is the umbrella stage for all of the other subsequent stages in the budgeting process. A budget, after all, is a financial plan with a target that you hope to remain under. Setting the foundation for the plan is an important first step.

Questions to ask yourself:

– What’s the point? What is your main goal with your project?
– What are your “must-haves”?
– What are your “wants”?
– Where do you see yourself in 5 years? 20 years?

2. Get a REALISTIC Ballpark Figure

Once you’ve determined what you are trying to do and why, congrats! The vision is now more than just a dream. It’s time to do some nuts and bolts research to see what this vision will cost to become a realty.

Wide ranging figures showing how much common renovation costs are available from sources such as HomeAdvisor. They have what they call a “True Cost Guide”, which you can access here. For many, this resource will be all you need to get in the ballpark. This particular tool factors in many variables specific to you. If you provide your zip code HomeAdvisor can even narrow down prices based on region and connect you with contractors in your area.

Costs are broken down into two main segments:

1. Materials

Labor is typically the more fixed variable in this equation. $6/sf tile cost about as much to install as $3/sf tile. Sure, you might be getting ballpark figures from HomeAdvisor based on tier 2 kitchens(middle of the road) because your kitchen is a tier 2 kitchen, BUT the materials you have in mind are all unknowingly tier 1 materials. Therefore, your perceived budget may be unrealistic based on your presumption. Best to set your own expectations as early on as possible.

Materials are usually the more variable cost in the equation. For example, kitchen sinks run from $100 to $5,000. Faucets can be around $60 and go up to $3,000+. The labor to install these sinks will vary, but typically not as much as long as the material installation process is apples to apples. Sometimes this isn’t as clear cut as it seem because how would you know the effort involved. This is where HomeAdvisor comes in handy and a little background info can be found online. Remember, this is just a ballpark. Just stay inside the ballpark.

Consider various rules of thumb when planning compartmentalized type of jobs, like a kitchen or bathroom remodel. The reason for this is simple. You don’t want to over improve a part of your home relative to the home’s value. You’ll never get that investment back if you ever sell the house because you basically overpaid for it. Of course. IF you ever sell the house is a decision you must make in the initial planning stage. This part of step one ties in here.

For example, an industry rule of thumb is a kitchen remodel should cost no less than 5% of your home value but no greater than 15%. A $100,000 kitchen makes little sense in a $250,000 house. UNLESS…this is your forever home and you are a kitchen/food aficionado. If you plan on upsizing to a $400,000 house with an extra couple of bedrooms for the future kids it’s likely best to cut some corners and trim down your expectations for your $100,000 kitchen remodel and be realistic about your home from an investment perspective.

Another common inquiry are bathrooms. A bathroom renovation should cost between 3% and 7% of the home’s value.

At the end of the day, you shouldn’t trust everything you read online even though these are credible sources. This is meant to get you in the BALLPARK. A vision is easier to execute for both you and the contractor if all of the subjective variables are known and illustrated. 

3. Figure Out What YOU Have to Spend

So you have a project in mind and you’ve done some preliminary research on what your project should cost. If you have the cash laying around, that’s of course going to be your easiest and most seamless route.

If you plan on financing then the next steps are to assess what a bank will lend you and how this will affect your monthly payments. You presumably have a mortgage. كيفية لعب بوكر If not, CONGRATULATIONS! If so, you’re doing great and are on your way to financial freedom. This mortgage is a fixed amount. You will either increase the monthly payment on that mortgage or have a secondary loan that you pay in addition to that mortgage if you take out a loan for the construction costs.

These are the three basic type of loan options for home improvements:
1. Home Equity Line of Credit (HELOC)
2. Home Equity Loan (HEL)
3. Cash Out-Refinance

The first two options utilize the existing equity you have in your house at the time of application.
Equity = Appraisal Value – Mortgage Principle

If you have, let’s say, $50,000 of equity in your home after an appraisal is done. Your bank offers an 80% loan to value HELOC. You are essentially applying for a $40,000(80% of $50k) line of credit that acts like a checking account. You can
withdraw and deposit funds as you please. The caveat is you are charged interest on the amount that is withdrawn from the credit line instead of on the entire amount. This will save you interest costs as compared to a traditional loan.

A HEM on the other hand acts like a traditional mortgage instead of a checking account. You receive a lump sum in cash from the bank. You have a term period and a fully amortizing note that you pay monthly in addition to your regular mortgage.

A cash out refinance can occur when the appreciated value of the home spikes up for whatever reason. Maybe enough time went by or your neighborhood or town is witnessing a real estate bull market. Either way, you refinance the home based on a similar loan to value ratio except now the value is way up. You can take cash out of your home’s equity and it is added to what your old mortgage payment was. It’s a completely new loan at the end of the day instead of a secondary loan and your payment will likely increase because you’ve increased principle in the form of receiving
cash. This only works in certain circumstances and tends to not be as user friendly as the other two options.

4. Shop all FINISHING Materials

Doing this part diligently is how you keep the shadows out of the budgeting process for both you and your general contractor. Communication during production is key and it starts here.

If you want a kitchen or bathroom remodel you’re ready to contact a construction company for bids. HANG ON! The scope of work within those bids could be way different. To ensure you are getting apples to apples bids it is important that the finishing material be selected or at least shopped prior to reaching out to contractors.

Finishing materials include things like countertop material, cabinet wood, flooring material, lighting or plumbing fixtures if they are out of the ordinary, windows, doors, trim, wall color, etc. These are the discretionary choices you make as homeowner

For example, an identical kitchen remodel using different flooring material will likely have vastly different costs associated. The reason for this is that various floors take different times to install than others. If the contractor or you don’t know what the floor will be they may just charge you an average with the intention of up-charging you later.

Pre-selecting finishing material makes this an improbable scenario. Everyone is on the same page with what you want the finished product to look and act like so they can now price labor accordingly. The end result is you have more faith in the estimate accuracy.

5. Get Bids from Two (Yes ONLY Two) Contractors

I know what you’re thinking. The rule of thumb here is to get at least three bids when deciding on a contractor to hire. Seems counter-intuitive to only want to get two, right?

For starters, when we are debating a remodeling budget, we aren’t talking about quoting a set of new tires, getting a fence fixed, or new gutters, or how much gas is from one station to the next. We’re talking about a complex bid process and five figure remodels at minimum. Less is more here.

General Contractors that do full scale remodels are typically not evil geniuses that are lurking around the corner to price gouge you based off of the plans you give them. No, full scale remodelers typically enjoy building and managing relatively large things. ربح الاموال They are typically more professional and are conscious of the reputation that they leave
behind. They value relationships because they realize that a happy client leads to more happy clients.

To further answer the question of “Why are more bids counter-productive to bidding your project?” Let’s look at a few specific reasons below.

1. Contractor Diligence. When a contractor has a 50% chance of winning your job he/she might go that extra distance and provide you with that much more value to try and win the job. If that same contractor knows he/she has only a 30% chance they may just throw some numbers at it and move along.

2. Relationships. How would you feel if you were requested by someone else to do some sort of labor for them, but the initial conversation was one of blatant distrust and skepticism from the person requesting your help? How would that
make you feel as a potential hire? You would likely distrust them. If the opposite is true you are likely to nurture a sense of goodwill. That goodwill then gets mirrored back. A general contractor that likes you will fight harder for your business and once hired will tend to go the extra mile to make sure your job gets done to the highest standard that they are capable of.

3. Scope Creep. The thing about scope creep is it happens so nonchalantly you don’t notice it until you get 3 or more wildly different bids and wonder what happened. How it goes is this;

You have contractor 1 come to bid the house and you talk about opening up your kitchen. The next contractor comes in and he/she brings up the fact that since you’re opening up the kitchen we can add a 1/2 bath in the hallway since the
plumbing is being moved. Contractor 3 notices since a 1/2 bath and an open concept floor pan are being explored that there is room to extend the entire back corner of the kitchen out into an unused spot in the yard at minimal impact to the functionality of your yard. Contractor 4 thinks it’s possible to do a mud room in that potential new spot. You started with a kitchen remodel and with the notion of “let’s just see what that extra item would cost” with each of the 4 contractors, you’ve ended up with 4 bids that are all very different and a job that is double the size that you originally intended. This is a MASSIVE waste of time for the homeowner and contractor alike. You aren’t bidding the job fairly and you may hire the wrong team. لعب روليت مجاني

4. Time and Logistics. If nothing else, the effort that goes into multiple bids of this scope take long. Typically we see 2-4 weeks depending on scope. If you have one contractor per week come in and each take one month to deliver a bid
conservatively you could be looking at 60-90 days before you even get the bid back. By that time the prices may not be accurate anymore due to the nature of the industry. Prices can change quickly. The faster you get all of the data you need to make a decision the better for you.

**A final point to make is you must compare apples to apples if you are only getting two bids. You can’t pick a guy in an unmarked white van to do one bid and request your other bid from a professional design-bid-build firm who does millions a year in revenue. You may think the cheaper team is a better value and hire them based off of low pricing. You usually get what you pay for in construction.

6. Set Priorities and Scale Down if Necessary

Ok, you’ve made it this far. By now you have a decently well thought out plan, you know what you have to spend, and you have two bids from two like general contractor companies. You put all of this together and realize wait…I only have about 80% of the funds to do everything included in the scope of work that I budgeted for. What now?!

This is where the importance of step one really comes in handy. This is your detailed plan that labels your needs as separate from your wants. You are faced with the decision to either figure out if raising your budget to account for the 20% that your are missing is wise or if you should trim down to meet your budget. You can always do a combination of both and meet in the middle.

Your needs are your non negotiable. These aren’t going anywhere. Review them, then put them aside. Focus on your “wants” list. The stuff that is “cool” to you but not really necessary from a utilitarian standpoint. There is no right or wrong here. This is the most subjective part of the budgeting exercise. Assign a percentage value to each of your “wants” and have them add up to 100%. You weigh these items importance to you. The lowest weighted items get cut.

Likewise you can start to dig into your materials list to see if any materials or labor can be downgraded to accompany a smaller budget. For example, a fancy tile costs you $15/sf to install because of its complexity. A cheaper tile that costs marginally the same but is easier to install costs $6/sf to install. How important is the fancy tile to you? If it’s not worth double, cut it out of the scope and go with the cheaper labor item.

On the flip side of this approach you can boost your budget, but only do this after careful consideration of both your personal finances and the value of the home and your neighborhood. You don’t want to price yourself out of the neighborhood. Also consider how long you are going to live in the home. If it’s your forever home you might be ok with spending a little bit more to get it exactly how you want.

7. Budget for Hidden Costs or Accidents

Due to the amount of complexities embedded within any construction project there is bound to be some sort of setback where no one is at fault. It’s the nature of the work. A good general contractor can help alleviate major set backs, but don’t expect any job to go perfectly without setbacks. Even under budget and on time jobs have hiccups along the way. With construction, it’s all about managing issues as they arise and setting expectations on both sides of the transaction.

You don’t want to stretch yourself too thin. If you have access to $100,000 to spend on a remodel and you get your bid as close to $100,000 as possible you could be in for some trouble when(not if) a setback occurs.

Ask your contractor if they include in their bid any contingency for cost overruns, accidents, or damage done during construction. A realistic contractor knows a perfect construction job is improbably so they should not baulk at this question. If they price their services according to a contingency for overruns it should instill more confidence in you. At least you know if there is a hiccup they won’t be crawling back to you and asking for additional money to cover the setback.

If they don’t internally budget for overruns, expect frequent uncharges and surprises. To compensate for this, we believe it prudent to add about 10-15% to the figure delivered in the bids furnished to you. If the General Contractor gives you a bid for $100,000, you should internally budget for $110,000-$115,000.

What’s neat about this approach is if the job actually costs around $100,000 and you budgeted for $110,000 – $115,000 then you’ll be able to put some money in your bank account or do another aspect of the job that you originally had trimmed. If the job goes over budget, at worst, at least it’s covered.


A home remodel project is a big deal and can be a daunting feet. It warrants a solid plan. An accurate and realistic budget for this type of work is key to ensuring you get what you want.