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June 2016

The Goldilocks Price:
Not Too High But Not Too Low

Consumers regularly use price as one of several deciding factors in making major purchasing decisions, and know to avoid a price that seems unusually high. Nobody wants to pay too much. But savvy homeowners also know that a price that is too low can signal big problems ahead, plus major unexpected costs, for a remodeling project.

So think of Goldilocks before signing on the dotted line of that remodeling contract.

Low Quality Products Cost Less

Some homeowners mistakenly assume that all building products are created equal. And while one nail may be indistinguishable from another, this is not the case with many other building materials such as structural materials, insulation, windows, doors, flooring, roofing or counters and cabinets. As you would expect with anything you buy, better quality, longer-lasting products cost more money. So a low estimate may be a sign of lower quality, less durable materials being used. When you get a remodeling estimate, make sure you understand EXACTLY the quality and specifications of the building materials to be used in every aspect of your job.

Poor Planning Can Lead to Unrealistic Pricing

A too-low price can mean a remodeler hasn't based the estimate on a detailed, comprehensive work plan. Cost, quality and schedule control requires solid upfront planning and conscientious project management. If a job is plagued by poor estimating, planning or execution, critical time can be lost at many stages of the project, resulting in cost overruns that are often passed on to you, and cause you inconvenience and headaches.

Desperate Companies Resort to Fire Sale Prices

A lower-than-expected price can be a red flag rather than a green light. An experienced, reputable builder knows the real costs for quality materials and skilled labor, as well as the profit margins needed to stay in business. A company who chooses to ignore realistic pricing in the short term will have to cut corners somewhere and will perhaps leave you with a half-finished project.

Bathroom remodeling

Low Estimates and Less Skilled Labor

In every industry, workers with the highest level of skill and experience command the highest salaries. The remodeling industry is no exception. If you receive an estimate that is surprisingly low, you should ask about the experience of the workers on your job.

Some Allowances Can Cost You Big Time

A common practice in remodeling is for a remodeler to provide you an estimate/contract price that is based in part on "allowances." These are placeholders in the budget that should cover the products and parts of the project that you want for your project but have not yet selected (appliances, lighting, cabinets, etc.). Allowances are a perfectly acceptable vehicle in a contract when the contractor allows a reasonable amount of money for those items. But because a low price is attractive when selling, some remodelers use allowances for only low-cost builder-grade components. When the time comes for you to make a product selection, you will have to pay for the difference between what you agreed to and what the product you want actually costs. For many types of projects, this can cost you thousands of dollars you had not expected to pay.

Low Estimates and Missing Security

If you receive an estimate that is lower than expected, investigate whether the remodeling company saves on expenses by not carrying proper insurance, licenses, workers compensation or does not get required building permits or inspections when needed. Reputable companies always take these requirements seriously, and consider insurance, licensing and permits as a fixed part of the cost of doing business. If a contractor takes illegal and unwise shortcuts here, can you trust them to avoid shortcuts that will cost you money or result in a lower quality project?

So, if an initial low estimate grabs your attention, stop and ask yourself why it's so low. Remember your ultimate goal will be a smoothly run project that results in a beautifully remodeled home for you – completed on time and on budget. Chances are, after a little more research, you will decide against making that very expensive mistake.

Maintenance Tip: Make Sure Your Downspouts and Splashblocks are Clear

Leaves, grass clippings and other debris can block your downspouts or splashblocks, causing the water to pool up and possibly leak into your home. Leaks can result in wood rot, mold and other major damage. Always keep downspouts clear and properly draining water 3-4 feet away from your foundation.

Photo of canoe ride
Summer Canoe Ride

What's the Story?

Contractors find many ways to cut on costs and get the job. We have published an E-book "How to Avoid Home Horror Stories: Your Successful Remodeling Project" that describes some of the items in the article above in better detail. (It is free on our web site I think the best description of "Goldilocks" pricing comes from our lumber salesperson, John Relf, who says "It costs a lot of money to save money."

Basement remodeling photo
Eric and Holly Larson's recently completed basement. 

Buying inexpensive products that don't last is just one example of the disservice this can be for homeowners. I always think of windows and the number of them that we have replaced over the years. They were the lesser expensive ones initially but how less expensive are they when they need to be replaced after 20 years?

June is halfway over and it feels like the summer is flying by. We had an interesting bike ride to our cabin over the Memorial Day weekend – rain for 81 miles the first day. Day 2 was nice, but cool.

Bike ride photo
Starting Day 2 on the MinniWi Vlll ride.
Bear with a bike helmet  
A biking friend  

We are getting ready for a trip to Calgary for a friend's son's wedding and then a week of hiking and enjoying the Canadian Rockies. I have been there often to ski in the winter but never been there in the summer. Should be fun.

The fish have been biting at our cabin and our new dog enjoys riding in the canoe. What could be better?

John Sylvestre

Until next month,

John Sylvestre
Phone: 612-861-0188

Sylvestre Remodeling & Design