Unexpected But Common Expenses That Can Effect Your Remodeling Budget

Almost every remodeling project comes with unexpected, and often expensive surprises. There's no real way to avoid every issue, but a little investigating can help you to prevent shock from busting your remodeling budget. For example, This Old House contractor Tom Silva suggests that it's often common to find water damage behind under sink cabinets in the kitchen or the bath. So checking inside the cabinet and under the counter for dark stains can let you know you may have a problem like rot before any work begins. Another tip is identifying any load bearing walls before setting your heart on that open concept kitchen. This can save you time and money. If you're not sure if a wall is load bearing, have your design-build remodeler check it out. A professional remodeler will help you uncover issues before you begin your project. They are there to solve problems and determine the best course of action. As a general rule, before you cut into any wall, your contractor will help determine what's behind it. Go to the attic, check the basement and determine if there is any ductwork, wiring, or plumbing hidden in the wall. Cutting through live wiring, or breaking active plumbing is expensive, and very dangerous mistakes. It is just another good reason for hiring a professional remodeler.

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Of course, there are always issues you can't anticipate that will come up once construction begins, like damage caused by previous renovations, or code issues that will need to be rectified. Contractors will always suggest you set aside 15% of your remodeling budget for any surprises, so you don't find yourself over budget at the end, as a rule of thumb. However, if your design-build-remodel company does proper preparation and investigation during the design and pre-construction process, it’s possible that they can proactively uncover hidden conditions prior to contract signing. One example of how this can happen is Our Proven Process for Your Successful Project.

Here are some hidden costs you may discover as you get into your remodeling project.

Construction Related Costs The Can Impact Your Remodeling Budget

Your contractor will provide you with a proposal and costs for your project, but cannot foresee some problems that could arise. Most contractors will build a contingency into their remodeling budget estimate to address these unexpected expenses.

Building Code Issues

this 1980s home needed all new electrical in the kitchen and bathroom to comply with modern buildling codes when it was remodeled in 2020.

If you live in an older home, no matter how well it's constructed, your builder will most likely come across some details that are not up to current building codes. While your home may have been built to the codes that were in place when it was constructed, codes change. You may find older wiring, cast iron plumbing or asbestos that will need to be addressed. It's an added expense, but you'll have no choice but to repair it to pass final inspections.

Ultimately, it makes your home safer and prevents bigger issues down the road. Go into any project with the understanding this may pop up, and you may need to re-prioritize your to-do list and dip into your remodeling budget to cover the expense. Determine which renovations are “must-haves” and which you can put off until later if necessary.

Property Line Survey

Adding an addition or landscaping elements like a fence may require a property line survey to ensure you are building within your property lines. For some reasons, property lines can get blurred over time, so if you don't have a current land survey, you may need to pay to have one done to ensure you're not building on a neighbors property. This can cost a couple of hundred dollars out of your remodeling budget.

Water Damage, Pests, and Rot

Sometimes problems are obvious, and sometimes they're hidden until your contractor starts pulling up floorboards or knocking down walls. Pests like termites, carpenter ants, along with rot or water damage caused by a leaking roof can do serious damage and can increase your remodeling budget quickly.

Unplanned Structural Changes

careful design planning and an outsourced engineer avoided the risk of any unforseen structural changesin this 3rd story foursquare attic finishing.

Consumer Reports found that unforeseen structural changes, for example, a beam's lack of structural integrity, or discovering that a wall can, in fact, be removed, can impact your remodeling budget by as much as 10 to 15%. One way to mitigate this potential expense is to explore all of your options with your contractor before starting your project to have a clear idea of potential costs.

Waste Removal

Dumpster fees are typically included when you are presented with a proposal. If your dumpster needs to be placed on a public street, most municipalities will charge you a fee. Some local governments even require a homeowners' insurance rider cover dumpster-related injuries, another potential cost. No proof of insurance and the city can shut you down. If hazardous materials are found, for example, asbestos, you may need to pay a specialist and additional waste removal fees. Expect to see waste removal fees as a line item in your remodeling proposal.

Other Hidden Costs To Consider

Along with unanticipated construction-related costs, you may need to other costs that could arise. For example, if you're having your kitchen remodeled, will you be able to set up a temporary cooking space, or will you need to order-in meals at a cost? Here are a few other potential costs to consider, outside or your remodeling budget.

Daycare Costs

There are certain elements of your project that you may not want to have the kids around for. For example, demolition day can be particularly noisy, dirty and dangerous. Or floor refinishing could mean that you and the family may need to spend a few days in a hotel. Sit with your contractor and review your construction schedule and work with them to devise a plan. A playdate for the kids can save on daycare. Maybe a weekend visit to your parents can during floor refinishing is a way to save you the cost of a hotel.

Boarding Pets

Construction sites are not the most pet-friendly environments. The strangers, noise, and dirt can scare your pets, or worse, they can get injured. Workers will be bringing materials in and out of the house as well so your pet could accidentally escape and get lost. Just be upfront with your contractor, let them know you have a pet and ask for timelines to determine if you'll need to board them. Another option is to set up a secure space for your pet in your home as far as possible from the construction zone.

Homeowners Insurance

After a large remodel, you may need to revisit your insurance coverage. Remodeling your home can be a cost-effective alternative to moving, but you may need to increase coverage. An easy rule of thumb is to increase your coverage by the full amount of the contract until the project is completed. Then, make sure to update your homeowner's policy once you've finished work by having your agent assess the new value of the home. It’s often less than the sum of the two were individually.

Potentially Higher Property Taxes

the homeowners of this extensively remodeled home in middleton wi will pay significantly less in property taxes by buying a less expensive home and having it remodeled, than if they had spent the same amount of money overall to build a brand-new home.

Significant additions or updates, especially new kitchens or baths, can increase your home's value and that can impact your property tax bill. Assessors typically get copies of building permits applications so they'll know about your project and may reassess the value of your home which can increase property taxes.

With a little planning and some thought before your project begins, you can be prepared for some issues that could come up during your remodeling projects like daycare or pet boarding. While there are some issues that won't be uncovered until you start, adding a contingency to your remodeling budget before you start work can help to make any surprises a little less disruptive. Work with your contractor and discuss your project's timeline to help you plan ahead and make the process run more smoothly.

Pro Tip: In Wisconsin, the good news is that typically your property taxes and property assessment won’t go up by the full amount of the cost of your remodeling project. The reason for this is that while a remodeled kitchen may cost $100,000, your assessment might only go up by $50,000. It’s because you need to go backward - doing demolition work and the like - before you start moving forward - when remodeling. And the value of your home is based upon it’s replacement cost, which means that you could have your home built from the ground up with the new features, for less money than the remodeling costs add to its original value.

How to Avoid Cost Overruns when Remodeling

How to Avoid These Problems

The key to avoiding problems such as these is an organized process. The process must be designed to discover client needs and uncover hidden conditions, or defects, in the home.

Your design-build-remodel company should be willing to have honest and open conversations, provide realistic timelines, and real pricing. If something sounds too good to be true, it probably is. The fact is that many “contractors” are disorganized when it comes to scheduling, and scared to tell the truth when it comes to money. These are red flags.

Click here to discover Our Proven Process for Your Successful Project.

This article was updated by Abe Degnan on 11/2/2022.

If you're planning a home remodeling project in the Madison, Wisconsin area, give the experts at Degnan Design-Build-Remodel a call at (608) 846-5963. We always work closely with homeowners to make sure that the process runs smoothly, and your project stays on time and on budget.