Home Remodeling – Essential Knowledge

Hidden Remodeling Costs




hidden remodeling costs

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Home Remodeling Costs

Home remodeling costs and how to finance them are always top of mind when it comes to planning a remodel project. These costs are both obvious and not so obvious.

Obvious Remodeling Costs

The bulk of remodeling costs is obvious. These are the costs of contractors, permits, materials, and miscellaneous labor.

By the way, here is an excellent online guide to overall remodeling costs on a zip-code-by-zip-code basis: Remodeling Costs – Complete House Renovation Guide

Hidden Remodeling Costs

But there are costs or potential costs that are not obvious. So, in this chapter, we reveal the main ways in which the cost of your remodel project can go off the rails in unexpected ways. Murphy’s Law is always at work.

Starting out on a home remodel can be exciting. But it can also become unpleasant, troublesome, as well as downright tear-out-your-hair discouraging, especially when it comes down to unexpected costs.

So, to budget the costs of your home remodel, here are 13 often hidden cost items that you should know about.

Changing the Plan

This hidden cost of remodeling is actually hiding in plain sight. By far the largest cause of project price increases arises out of the client changing his or her mind. Changes of mind result in change orders. And almost all change orders carry a price tag.

This all goes back to the original planning of the project.

Change orders result from an inadequate original scope of work and project mission creep. An example would be a change related to an order of custom cabinetry that is already being fabricated off-site.

If you change your mind about the kitchen layout, this affects the design and manufacture of the cabinets. You will have to pay for the added cost of this. And of course, cabinetry is a notoriously expensive component of a kitchen remodel project.

Issues Requiring Structural Modification

These hidden remodeling costs are buried behind the walls. The need for structural modification can arise in two ways:

  1. When the drywall is removed, it becomes apparent that you could have a better floor plan if you opened things up to create a great room effect. This may suddenly be highly desirable but there is a cost attached to making the change.
  2. Removing the drywall reveals inadequacies in the structure. An example would be a beam that needs to be beefed up. There is a cost for this.

“Up to Code” Issues

Older homes were designed primarily with health and safety in mind. But modern code requirements overlay public policies on top of this. These are related, for example, to energy conservation. And these updated building codes often result in hidden added costs. And, depending on where you are in the country, these code upgrades can also involve the strengthening of the structure to meet seismic requirements.

Now, if you have a competent contractor, he will in most cases be able to give you a heads-up that this is likely to happen. And you will then be able to budget for it.

Of course, it is only in major remodel jobs that require building inspections that these issues become pressing. They do not normally occur in simple, less extensive renovation projects.

Electrical and Mechanical Systems

As with issues requiring structural modification, these hidden remodeling costs are mostly behind the drywall. All the cosmetic upgrades give glamor to a remodel project. But in an older home, you have just got to get down to the basics. It is vital to address potential deficiencies in the electrical, plumbing, and air conditioning infrastructure before the project gets underway.

Otherwise, you are just putting lipstick on the proverbial pig.

You don’t want to be in a position of having to tear out newly finished drywall or cabinetry to take care of problems in these systems later. It just makes it more expensive than it needs to be. So if there is a financial bullet to bite, it is better to do it ahead of time.

Poor Building Practices

The drywall of a home can cover a multitude of building sins. These may have occurred during the original construction and were overlooked by the building inspector. Or it may have been in an earlier remodel that was not even submitted for inspection.

These hidden issues typically involve inadequate structure or improperly installed plumbing, electrical, and air conditioning components. These can be expensive to fix.

Termite and Water Damage

Damage caused by insect pests and rot also lurks unseen behind drywall. When uncovered, this can be a nasty and expensive surprise. It is well to allow for this kind of contingency in the budget. Ask your contractor what kind of dollar amount to provide.

If all goes well and no damage is found, then you can celebrate and apply the newly found budget surplus to, say, an upgrade in finishes.

Bigger Utility Bills

You should anticipate somewhat greater energy bills during the project. These arise out of the use of electrical equipment such as air compressors powered nail guns.

In the big scheme of things, these increases are minimal (say, $10 to $20 per month) but you should be aware of them.

Pet Boarding

While some cats and dogs actually do fine while a remodeling project is going on, others don’t. A lot has to do with the size of the project.

However, going into any remodeling project it is a good idea to put pet boarding in the budget.

Dining Out

In the case of a kitchen remodel, expect a pricey month or so of eating in restaurants. Although it may be that you can get by with take-out food, or a microwave and fridge plugged into the living room wall.

This is entirely a matter of personal taste and inclination. But, if comfort and convenience are a priority, include restaurant dining in the budget.

Impact on Job or Business

Throughout a remodel project, you or your spouse will have to take time off from your job or business to meet your remodeling contractor or visit product showrooms to select finishes or appliances.

So you must consider this and make appropriate arrangements with your employer or your own business. This may have a financial impact on you.

On the other hand, you may be working from home. And this means that you must find some way to do this with a remodeling project going on around you. But the upside is that you are in a  position to keep an eye on the work as it progresses.

Moving Out

Depending on the extent of the remodel, it might be necessary for you to leave your home altogether for a while to allow your contractors to operate efficiently. Or you may need to make arrangements to store a room full or two of furniture.

Talk to your contractor about this before the project gets going, so that you are properly prepared. Although, I must say that a contractor worth his salt will bring this up himself.

Higher Insurance Premiums

If you are doing a major renovation, this may significantly affect your insurance premium. This would be the case if you were to add value to your home by, say, adding a new bathroom or putting on an addition. Talk to your insurance company about this.

Also, make sure that the remodeling activity itself is covered by your insurance, and, if not, what additional coverage needs to be purchased.

Higher Property Taxes

As with insurance, a major remodel project, especially one that adds square footage to the home, will likely affect your property taxes. If you are getting building permits, the building authority is probably tasked with reporting the project to the tax assessor’s office. This is certainly the case here in California.

The actual impact on your property taxes will depend on your jurisdiction. So talk to your tax assessor in advance of the project, so you will know what you are facing.

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