We are so excited to continue this series, and hopefully shed some more light on the process of renovations and construction.
In case you missed the first part of this series, do yourself a favor and jump back to this post, probably before you read this one.
As we mentioned in the last post, picking the people you work with can be one of the best or worst decisions you’ll make in the entire process.
It’s why we can’t stress enough to not pick those that you are working with simply because they are the cheapest. It’s the worst thing you can do. Remember you’re not always comparing apples to apples.
Question #1
Why a contract?
Once you’ve settled on the people you’re working with, you’ll need to enter the contract phase. I don’t care if this is your best friend since diapers and they gave you their kidney, you still need a contract. The biggest misconception is that contracts equal lack of trust. But if that’s your motive for a contract in this situation, then you need to hang it up with this contractor or designer, and start looking again.
The contract we would suggest is there to clearly spell out expectations for both parties so that there is clear communications between the two parties. Everyone knows their role and the parameters that they are to operate under. It doesn’t have to be filled with legal jargon or sound like it was written in 18th century Brittish English (ps why do lawyers speak like that?) It just clearly needs to spell out the scope of work, fees and responsibilities.
Here are a few good things that your contract with your contractor should have. (And we aren’t saying this is everything it needs.)
• Scope of work – Clearly define the scope of the project. What will it entail? Is this a kitchen remodel? What is being remodeled in the kitchen? New appliances? Be detailed here so there is a clear understanding. Most good contractors will emphasize this as they don’t want to be halfway through the project only for you to tack on something else.
• Bid and allowances – Make sure that the final bid amount is in the contract as well as the allowance amount for everything. If you have a lighting budget for $4,000 make sure that it’s in there. These allowances will be a guide to help you and the contractor stay on budget. It also becomes beneficial if you need to rob Peter to pay Paul. Because if you know you only spent $3,000 of the $4,000 in your lighting budget, then you can pull that extra $1,000 to help pay for that tile you just have to have, but is outside the allowance amount. It’s a win for you in that situation.
• Who will get supplies – Most of the time it’s cheaper and more beneficial for the contractor to gather the supplies. However, there are some instances where you want something unique and it would cost you more, or be more difficult for the contractor to get them. In this case, make sure you note in the contract that you will be getting “x” so that the contractor doesn’t order it and you end up with something you don’t need.
• Change orders – Yes, you will change your mind in the process and if you don’t, then please let me know because I’ll take you out for drinks and a steak to congratulate you. Seriously, though, changes are a part of any renovation or build and there is nothing wrong with them as long as everyone knows how they are going to be handled. Note how the changes will be handled.
Generally speaking, you want them in some sort of written form as an addendum to the contract. Don’t rely on the fact you sent your contractor a text message and he replied ‘ok’. When you have a change order, spell out what exactly you want to change or add to the project, verbally review it with the contractor, and both of you sign off on it. You’ll need to not only cover the change, but also the cost of the change or how the change replaces a previous part of the project.
• Overages – More than likely, there will be overages. I know you say you’re a thrifty shopper and you’ll keep everything on budget, but this is the part where I pat you on the head and say well let’s just talk about it anyway.
Who will pay for what overages needs to be clearly defined. And there are all types of overages. Some overages are contractor induced, because of error in construction or poor bidding. Some are from the client side, because mama gotta have that new thing she saw on the HGTV. And some overages are because of unforeseen circumstances during the building project, like finding mold or poor workmanship from the previous builder that needs to be fixed. {Wheeeee!}
In all the cases you need to define in the contract who pays for what.
• Time frame – When will the project begin, how long will it take, and will there be a penalty for missing the completion date? (More on that in a second.) Are there days that are off limits for building? Who will have access? And how will they gain that access?
• Payment – How will the contractor be paid? Is this being self-financed or financed through a bank? What are the bank’s stipulations on payment or inspections?
If you’re going through a bank, be sure to communicate clearly the bank policies to the contractor. Most banks pay in lump sums based on phases of the job completed after an inspection has been completed. Don’t expect the bank to pay per job and if your contractor needs that, then you might have to look elsewhere.
If you are paying out of pocket, then set up that schedule. Do you want to pay him after each sub comes and works, or pay in a lump sum as the bank would? I suggest paying in lump sums after inspections are done. However, it’s also a good idea to provide a retainer fee to the contractor. Note: some contractors may require you to place all the money in an escrow account to be paid by terms the two of you set.
• Late fees – If you’re late making a payment will there be a fee? If so, how much? If the money is placed in escrow or you’re financing through a bank, this won’t be an issue.
If he misses the project deadline is there a deduction on his payment? If so how much? You need to be gracious with this, as there are a lot of things out of the contractor’s control: weather, worker shortage, supply issues, etc. So if there is a late fee, I would extend a grace period. Make allowances for things outside their control.
• Breaking the contract – In the worst cast scenario, your contractor becomes someone who you cannot work with anymore, or you become someone he can’t work with. How will you dissolve the partnership? And what monies/funds will be owed the contractor? Generally, you owe all monies for work completed plus fees, but we would recommend an individual inspection of the work before payment.
• Other expectations – Are there days you don’t want anyone working on the project? Will there be a representative of the contractor present any time a worker is present? If something gets stolen from the project, who is responsible for covering the cost? If products or other portions of the home are damaged, who pays to replace it? Do you expect the workers to clean the site every day? How often do you expect a work update from the contractor? Are there any subs you don’t want working on the project? (i.e. electrical company X because you think they are dishonest.)
• Warranty – Is there a warranty on the work? Who is warranting it? The contractor or the sub? How long does the warranty last? 12 months? How soon will the issue be resolved?
There are other things you might want to consider adding, depending on your situation and honestly, the more you cover and can possibly think of, the better you are up front.
Question #2
Can I act as my own contractor?
The simple answer is yes. But it always depends on the project. Every situation is different so this is a tough question to answer in one big blanket statement. The long answer is, you probably don’t want to.
(Note: we aren’t talking about small projects in this series, but full on renovations or builds. As you know we are all for DIYing your own projects, but there is a time when it’s better to hand it over and not DIY it.)
Remember when you’re hiring a contractor, and hire the right one, you’re paying for that expertise, knowledge, and convenience. So it’s worth it.
We always come back to this: professionals are professionals for a reason, and I say that not because you aren’t capable, because you totally are. But more because it’s easier and safer and frankly, if you’re using a bank, you’re required to use a contractor for your full on renovation or build.
In the event you want to act as your own contractor then you’ll have some homework to do.
• Get your hands on the codes books. You’ll need these for reference at the least.
• Gather a list of reputable subs, this depends on your project as to which one’s you’ll need. It all depends on what you want to take on yourself. Do you want to lay your own tile? Or is it worth it to hire someone out? Laying tile is an art, and it’s different for each job… make sure you’re up to the task, because sometimes replacing your mistakes is more expensive and costly in time… and time is money. Sometimes it’s easier to hire from the beginning.
• Consider getting some workers comp and liability insurance, depending on the project and your area. You might want to be covered in case someone does something stupid. This is the beauty of working with people. It’s unpredictable at times.
• Know the names and numbers of your local codes inspectors.
• You’ll need to have a firm idea on the scope of your project and develop a timeline for when what work needs to be done. For instance, you don’t want to drywall before you do electrical. All the spaces need to coincide together to be the most cost efficient for you. There is a certain order that each project needs to follow. If it doesn’t, it may end up costing you more time and money.
• Once you have a firm idea on the scope and you have some drawings of the project, you’ll need to begin applying for a building permit. This varies from place to place and again is one of the benefits to hiring a contractor. He knows the process.
• Next, you’ll begin getting bids from subs on the various parts of the project. Then you’ll begin hiring and fitting them into your time table. You’ll want to set up payment terms with them all, generally after inspections.
• There are a lot of other issues you’ll want to be mindful of, but that is not the topic today. We simply wanted to let you know that yes, you can certainly act as your own contractor. It simply depends on the scope of the work, and getting a firm perspective on the reality of it all.
With all the above said, you can also be your own contractor and hire a project manager. While you’re saving on some of the day to day stuff and a little money, you’ll still have work to do. So you need to evaluate if it is worth it.
Question #3
What are subs?
In the home building and renovations world, you’ll hear the term “subs” thrown around. This simply refers to sub-contractors or companies/people who specialize in a certain field within the building industry. They are people hired by you or your contractor to complete a certain section of the project. They are not concerned with the entirety of the project but are only concerned with their portion. That is the job of the general contractor.
Typically, your contractor will either have a group that he works with regularly, or he’ll seek bids from a few subs. It’s generally good practice to seek multiple bids unless you have a history with a certain company. Then we advise you to go with those you trust and like. And this is generally what a contractor will do. This practice will also speed up the process of building as there is no down time for taking bids.
You might spend a little more with this process, but you’ll get quality work you trust, which {trust us} is always better.
Question #4
Do I have to pull a permit?
That depends largely on the area, and the scope of work.
As you can imagine, there are different rules for different places and the rules also change based on the scope of work.
Speaking in generalities, if you’re only doing cosmetic work, you might be able to proceed without a permit. But if you’re increasing square footage or knocking out walls, then you will most likely need one. Simply call your local codes department and ask, or check their website.
Permits are pretty simple to pull and usually aren’t too costly, though in some places they like to make a pretty penny off of them. Remember, if you’re going to have an inspection, you’ll need to pull a permit anyway.
There are different types of permits.
You have a general building permit, which might cover your framing, and general construction.
Electrical permits, which cover wiring and all things electrical.
Plumbing permits, septic permits and even a few others.
This is where knowing the full scope of your project will help you know which permits to pull. In some cases your subs will pull the permit for you, like HVAC.
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We hope this helps shed the light on some of this subject when it comes to getting started. (And continue reading on our third post in this series.)
We’re still only scratching the surface in the fun of home renovations and building, and we’ll tackle more designer-related items in the next post.
As always, if you have any questions please leave them in the comment section below.
(If they’re urgent, because you’re about to begin, write ‘urgent’ and make sure to leave your email address in our comment form. We will email you an answer as soon as we can. Don’t worry the email addresses in the form – they only show to us, not publicly.)
Have an inspired day thinking about creating the home you truly love!
{Pssst: The Handmade Home is growing! We’re now offering in-house design services paired with contractor services in the Nashville area. This format creates an even smoother flow in the process and helping attain what you want in your home. Contact us today if you’re interested… we can’t wait to help you love where you dwell.}
Courtney Madden says
This is amazing. Thank you so much!
jan says
Thanks for the info. Super helpful! We are considering buying a home that is an amazing location but it needs a major remodeling starting with the design of the outside. Would we start with talking with contractors? It’s hard to envision what can be done with it. Needs some major help.
jamin says
Hey, Jan.
That is so exciting you’ll love the house once you are done and it is totally worth it.
In this case I would talk with a designer first to get an idea of what you want to present to the contractor. While the contractor will be great for executing the idea I would want to talk with a designer to create my idea. If you are interested we do offer design services for out of town clients. If you are interested in working with us you can begin the discussion by filling out the form on our construction and design services page https://www.thehandmadehome.net/design-services/
Best!
Allison says
What is the name of your bathroom paint color?
ashley @ the handmade home says
Hi! Sw Tidewater – one of our faves ;}