Renovation survival guide
When Sabah Mirza and her husband, Asim Rashid, decided to put a nanny suite in the basement of their west-end Toronto house, they figured they'd done their homework.
After four contractors gave estimates for installing a bedroom and bathroom, they opted for the one who had provided an itemized, competitive estimate. Everything went smoothly at first. Then the contractor didn't show up for a week. Upon his return, he apologized, claiming illness, did a bit more work, then disappeared again-this time for good.
“He stopped answering his calls. Eventually, the telephone number was disconnected,” says Rashid.
Realizing the job wasn't going to get finished by this contractor, they sorted through another round of estimates to see if someone could pick up where the first guy had left off. “They all said the same thing: ‘Oh, no. This is all wrong,'” says Mirza.
The second contractor was hired to restart the job from scratch. Weeks later, he packed up his tools and left, with a promise to return to wrap up minor finishing details. All seemed well until they tried to use the shower. “Water was pooling because the drain was higher than the tiles,” says Mirza.
Once again, messages were left to no avail. The couple eventually discovered that they weren't the only ones this contractor had left high and, well, wet. “He'd taken full deposits on other jobs and never done any work,” says Mirza.
They had to call in a third contractor to fix the shower and finish off the job. “He looked at the shower and noticed that there was no J-trap,” says Rashid. (A J-trap prevents potentially fatal sewer gases from seeping into a house.) “We had him tear up the concrete for the third time, put a J-trap in and fix the shower, which is now, finally, functional.”
In the end, the Mirza-Rashids were lucky. They hadn't given the first contractor a down payment and had held back 15 per cent from the second, so they weren't out any additional money by having to use three contractors. “We didn't lose out financially, but the hassle was unbelievable,” says Rashid. “We lost a lot of time. We wanted it done by the end of June. It ended up being completed in October.”
Sadly, their story is all too common. Renovations are a $41-billion industry in Canada, and there are countless underqualified contractors-not to mention outright scam artists-claiming to be “home-improvement experts.”
“There's so much underhanded business in the industry, and homeowners have to be able to identify that,” says author and renovation consultant Susan Easson. “The only way of doing that is education. If you don't understand the basics of construction, you're at a disadvantage when you get an estimate.”
Easson speaks from experience. She got into the business after what was supposed to be a six-month, $75,000 cottage renovation spiralled into a 12-month job that cost more than $200,000. “It would have gotten even more expensive if midway through the project I hadn't started going through the invoices and really started to understand some of the tricks of the trade,” she adds.
Unfortunately, no matter how knowledgeable you are, how much background checking you do and how closely you monitor the project, there's no way to guarantee the work will happen on time and on budget. But by using some of the measures in this article, you can improve your chances.
It may seem like a lot of time and effort, but you've probably already spent months or even years thinking about the renovation in question. It's worth investing a bit more time to prepare, plan and investigate your options properly before you begin. In the long run, you'll save yourself time, aggravation, money and possibly even your marriage.
CONTRACT NEGOTIATIONS
It can't be stressed enough that you should have a minimum of three different estimates for any renovation work you're considering, ideally from companies that friends or family have recommended. In my own experience, I've seen variations of several thousand dollars between quotes on relatively small jobs. Most recently, when soliciting suggestions for how to repair the crumbling concrete stairs at the front of my house, I was given estimates ranging from $900 to $6,000 for flagstone resurfacing. (I opted in the end simply to patch the concrete and paint the stairs myself for less than $50.)
That said, you can overwhelm yourself. “Sometimes people get too many estimates and they get confused,” says Jeff Andrew of Superior Home Improvements in Scarborough, Ont. After the salesperson has left your house, in addition to discussing the pros and cons of their pitch, you should jot down a few details to help you remember who's who-“the skinny guy with the hair plugs”-and what they promised.
Once you have your estimates in hand, how do you decide?
“The biggest mistake people make when reviewing estimates,” according to Glenn Evans of Cedar Winds Country Homes in Haliburton, Ont., “is to skip over the body of the estimate and go right to the bottom line and look at the number.” There are two approachs: choose the cheapest one, or throw out the high and low bids and go with the one in the middle. Both options can lead to problems.
“Don't let price dictate who you choose,” advises Andrew. Your decision ultimately comes down to a number of factors, including price, reputation and your confidence in the contractor's ability to provide the services you want. “It's tough for a customer,” concedes Andrew. “You have to wade through a lot of fast talk.”
The secret to success is being a knowledgeable consumer. With a basic understanding of what's involved, you can ask pointed questions without being overwhelmed by sales pitches. You can also use the information gathered from one estimate to challenge another by asking, “Why is your quote higher [or lower] than the other ones?”
But don't simply rely on contractors to point out the flaws in the competition. In her book, The Wise Renovator, (H.B. Fenn &?Co., 2005), Susan Easson explains how to break down an estimate into its three component parts: structural materials, finishing materials and labour. In fact, she recommends that as part of your research you develop an estimate of your own to compare with what the pros present. “It's not rocket science to do this. Once the homeowner understands that it's three major areas, they can start putting pen to paper. It opens up everything for discussion,” says Easson.
COMMUNITY SERVICE
It's a good idea to tell your neighbours when you're planning major construction projects. “It's not like you need their permission, but giving them the heads-up just smooths the road and it makes for better neighbours,” says Glenn Evans of Cedar Winds Country Homes. “And if you do run into a situation where you need a bit of leniency from your neighbour-say, if you need to cut through their yard-and you have talked to them beforehand, chances are they'll be OK with it.”
KEEPING UP WITH JONESES
According to the Appraisal Institute of Canada's members, these are the top five home renovation trends:
1. Home theatre
2. Hardwood flooring in kitchen
3. Main-floor laundry room
4. Use of non-neutral interior paint colours
5. Installing a Jacuzzi or whirlpool bath
BE A GOOD CUSTOMER
Despite all the horror stories, most contractors are hard-working folks who truly want to do a good job. And there are a few things you can do to make their task easier. For starters, make sure there's a parking spot available so workers don't have to schlep tools and materials from an unsupervised spot blocks away. You should also clear furniture and breakables from the area in which work is to be done. “In a lot of cases, we've rolled in to do a kitchen renovation and people's dishes are still sitting in the cupboards,” says Glenn Evans of Haliburton, Ont.-based Cedar Winds Country Homes.
Little courtesies such as offering a cup of coffee or a cold drink and pointing out where the bathroom is (would you prefer they use your bushes?) go a long way toward establishing a happy working relationship. If you're concerned about your carpet being soiled, provide drop sheets or request in advance that they be used.
Finally, contractors shouldn't be expected to be babysitters or dog watchers. Construction sites are dangerous, and you should keep your children out of the area and the path of workers. If you have pets that aren't allowed outside, it's your responsibility to lock them away. Better yet, board them (and maybe even the kids) with a friend or family member for the duration of the job.
Once work has begun, there's a fine line between being an inquisitive conversationalist and a self-designated site supervisor. While most contractors are generally happy to answer any questions you have, there are limits to how intrusive you should be.
“Respect the fact that they're doing their job. You wouldn't want someone looking over your shoulder at work all day,” points out Jeff Andrew, co-owner of Superior Home Improvements in Scarborough, Ont.
As a reader of this magazine, you're probably inclined to do as much of the work yourself as you can. Again, there's a balancing act between what's helpful and when you're getting in the way. Demolition work to prepare a site is probably the best area for DIYers to get involved. If you're replacing a deck, for example, removing the old one can save the work crew a day's labour. But since demolition is job-specific, you should discuss with your contractor what's reasonable in advance.
Along the way there will be a lot of other discussions with your contractor, which can lead to problems. “When you make a decision, be certain of your decision. Nothing drives contractors crazier than coming back to change things that were specifically discussed,” says Evans. “Everything's all fine and good: and then the customer calls and says, ‘I want all the light switches moved…'”
Why go through all this trouble for hired help? “The bottom line is: the more you do to make a contractor's job easier, the more likely he is going to go the extra mile,” says Andrew.
THE FINE PRINT
Your renovation contract is a legal document that must include all of the following information:
- The contracting company's full business name, mailing address and phone number(s)
- The company's business licence and GST number
- An itemized breakdown of all material and labour costs
- A clearly stipulated “final bill” or “total selling price”
- A timeline for installation to begin and conclude (and a rundown of any penalties or discounts if the work isn't completed on time, if applicable)
- Warranty details, including duration and extent of coverage
- A record of any down payment made and details of when installment and final payments are due
- Dated and signed by you and the contractor or salesperson
PAID IN FULL
There are a number of ways to pay for home renovations, each with its own pros and cons.
Cash/Cheque
Some contractors will offer discounts if you agree to pay cash. Temper your urge to save a few bucks with the knowledge that you would probably be contributing to the black-market economy and losing a key component of your paper trail if problems arise later. If you do prefer to avoid any of the other financing options, at least insist on paying by cheque.
Credit Card
If you have a credit card with an incentive program tied to it, $20,000 in home renos is a good way to rack up some points quickly . It's also a good route to financial ruin if you don't pay off the balance when the bill arrives. If you're really keen on earning points, use the card, then pay the bill with a line of credit or another lower-interest source of funds.
Line of Credit
As many contractors are quick to remind you, money is cheap these days. You can get a line of credit at most financial institutions that will allow you to borrow funds for slightly more than 5 per cent annually at current rates. And you only pay interest on the money when you need it. (Unlike loans, for which you take the money in advance and start to pay interest immediately.) You can lower the interest rates further-and get access to larger amounts of money-by applying for a secured line of credit (or a home equity line of credit), but keep in mind that legal and appraisal fees add an additional cost to the loan.
Mortgage Refinancing
This is an option for people who want to take advantage of their home's increased market value to make extensive (read: costly) renovations. Again, there are legal and appraisal costs, not to mention possible penalties for breaking a mortgage early. The payments are added to and amortized over the duration of the mortgage, so the long-term borrowing costs can be substantial.
WEB RESOURCES
Web sites to guide you through the renovation process:
Canada Mortgage and Housing Corporation
Your first stop for researching any homerenovation project. There's a searchable index with dozens of detailed primers on everything from replacing windows to putting on an addition. Most are free and can be ordered by mail or downloaded from the site.
Canadian Home Workshop
Read selected features and Quick Fixes, or search the article index to find out which of your back issues have stories relevant to your next project.
You can find contact numbers for your local office at this site or run a contractor's company name through its search engine to see if the bureau has any complaints registered. The BBB records complaints against both member and non-member companies.
Natural Resources Canada's Office of Energy Efficiency
The OEE administers the federal EnerGuide program. You can learn the basics about different types of heating systems and insulation, and even get information on the various grants and rebates available for homeowners who make energy-efficient renovation choices.
Use its Renova guide to calculate the estimated return on your investment for 20 different common reno projects.
If your reno job involves replacing or adding a roof, visit this site for an explanation of styles, materials and terminology. There's also a calculator for estimating replacement costs.
PAYBACK
The Appraisal Institute of Canada conducted a survey of their members-professional real estate appraisers-and asked which common renovation projects had the best and worst payback potential. Here's the top and bottom five and their estimated percentage payback.
Top five reno returns
Bathroom renovation (75 to 100 per cent)
Kitchen renovation (75 to 100 per cent)
Interior or exterior painting (50 to 100 per cent)
Roof shingle replacement (50 to 80 per cent)
Furnace/heating system replacement (50 to 80 per cent)
Bottom five reno returns
Install a skylight (0 to 25 per cent)
Add a swimming pool (10 to 40 per cent)
Asphalt paving (20 to 50 per cent)
Build a fence (25 to 50 per cent)
Interlocking paving (25 to 50 per cent)
AVOIDING RIP-OFFS
After you've solicited your quotes and decided on your preferred company, there are a number of steps to take before signing a contract. These include talking to prior customers and visiting work-in-progress job sites, contacting the Better Business Bureau to see if the contractor has any recent complaints filed against them, calling their suppliers to ensure their accounts are in good standing and verifying that their business licence is active with your municipality.
“I equate it with hiring a new employee at work. Very rarely do we hand over $50,000 to a brand new employee when we really don't know what that employee is going to be doing,” says Susan Easson, renovation consultant and author. “It's almost laughable, the amount of money we turn over and we don't understand where it's going.”
Having had two contractors disappear after partially completing work at her house, Sabah Mirza knows of one additional step she'd take in the future: “I'd try to verify that they have a real office. If they have a business address on their card, I'd drive by to see that it actually exists, so if the person drops off the face of the earth, there's a physical door to knock on. You feel so powerless if all you have is a cellphone number.” There's no guarantee that the contractor's office will be open after problems arise, but it does instill a little more confidence than a post-office box.
Only after you're comfortable with the company's legitimacy should you sign a contract. (See “The Fine Print” on previous pages) And it should go without saying that you should read all the fine print on the front and back of the contract before signing anything. Of course, that's easier said than done when there's a salesman sitting in your living room. This is, in part, why various provincial regulations give you a week or longer “cooling-off period” to cancel any contract signed in your home without incurring any penalty. Be forewarned, though- with contracts signed in a sales office, you may only be entitled to 48 hours or less to cancel the deal and recoup your deposit.
Which brings up another point: be careful about the size of the deposit you give. Most contractors will ask for a small percentage as a way of securing the deal. But any reputable renovator will have credit accounts with suppliers, which limits the need for upfront funds from the homeowner.
Upon completion of the job, you still shouldn't pay off the total balance owing. The amount and length of time vary by province, but you're entitled to hold back a percentage of the final bill. This gives you time to inspect the finished job and lets you maintain some leverage in getting contractors to return for often-overlooked finishing touches.
For more details on how to avoid reno rip-offs, see, “Don't Get Scammed,” in our May 2005 issue.
BOOK' EM
If you're the type of person who prefers to curl up with a good book rather than your laptop, countless handy guides can give you a primer on whatever job you're considering. Two that I often refer to are Black & Decker's Complete Photo Guide to Home Repair and the Reader's Digest New Fix-It-Yourself Manual.
Home Depot has a series of helpful 1-2-3 DIY guidebooks on specific subjects, such as tiling, flooring and plumbing. Each covers the materials, tools and terminology of the relevant topic and includes illustrated step-by-step instructions for a variety of projects, including a difficulty rating and the time a project takes, which can help you decide which parts of the project you can tackle yourself. (There's also a larger volume, Home Improvement 1-2-3, that covers a broad range of topics.)
Canadian author Susan Easson's anger and frustration over a cottage reno project that ended up being late and overbudget led her to launch a renovation consulting company and, more recently, self-publish The Wise Renovator. The book's focus is on educating yourself so you can better manage the contractors you hire. In addition to a chapter on construction basics, there's a guide for calculating your own estimate (using the 10 most common building materials), which can be compared to the ones you get from contractors.
Take a look at “Best Fix-It Books,” p. 70, Canadian Home Workshop, Winter 2005, for other recommended titles.
