Remodeling Primer: 10 Steps to a Dream House

An aging housing stock and affluent consumers who are settled in their communities are creating a remodeling boom.

Roughly $143 billion in projects were completed last year, up 7% from the previous year. And the growth appears to be accelerating, with remodeling expenditures rising by 12% in the final quarter of the year, according to recently revised Census Bureau data.

If today’s heady growth continues, the remodeling industry will surpass the $200-billion home building industry by 2010, experts predict.

“Many of our member remodeling companies are barely keeping up with the rush of homeowners over the last several years,” said Robert L. Mitchell, president of the National Assn. of Home Builders and a remodeling contractor based in Washington, D.C.

There are, however, some troubling facts that prospective home remodelers ought to know before jumping on the bandwagon:

* About half of today’s 700,000 remodeling contractors are expected to be out of business within five years. Some of that is natural attrition in a cottage industry like remodeling, in which the vast majority of contractors are one-man operations.

That leaves many homeowners with the prospect of having a builder go out of business in the middle of construction or in a situation in which the builder can’t be found when something goes wrong shortly after the project is done.

* Only about one-third of those who remodel are completely satisfied with the job, remodeling experts add. In fact, general contracting consistently ranks among the three most complained-about businesses in America, rivaled only by car dealers and auto repair shops, says Holly Cherico, a spokeswoman for the National Council of Better Business Bureaus in Washington, D.C.

On the bright side, about one-third of all remodeling projects sail smoothly enough to keep everybody happy. Satisfied consumers and seasoned experts contend that consumers can vastly increase their chance of landing in the satisfied minority if they grasp 10 keys to success.

Over the next 10 weeks, The Times will explore those issues in depth to help you plan your next remodel, with an eye to finishing the project without blowing your budget.

Here’s what to look for in the coming weeks.

Part 1: Preliminary Digging

Before remodeling, consumers would be wise to find out two things: What will they be permitted to do and what makes sense from a resale point of view?

Although most remodels are tackled to improve lifestyle rather than the resale value of the house, when you’re remodeling you are often dealing with your family’s largest asset. It makes little sense to rush ahead without considering just how that asset might appreciate or decline in value.

Part 2: Preparing a Plan

No matter whether you’re contemplating a minor kitchen rehab or a massive, down-to-the-studs redo, every remodel must start with a plan. There are roughly four ways to go: Hire an architect, hire a designer, hire a design-build firm or go it alone, possibly with the help of a computer program. The ideal choice is going to depend on both your project and you. We offer a look at what each prospect is likely to cost and what you can expect to get in return.

Part 3: Reviewing the Plans

Act in haste, repent in leisure. Never is this adage more appropriate than in the design phase. Just ask Glen Pickren, president of Barron Financial Services in Irvine, who once added up the cost of all the completed plans that had landed in his company’s waste bin--not the cost to build, mind you, but the cost of the drawings. The result: $1 million in drawings that wouldn’t be built.

Pickren places a lot of the blame on architects and designers who don’t pay enough attention to budget, but the ultimate cost--and responsibility--falls on the consumer. How can you ensure that your plans will suit your budget and your lifestyle?

Part 4: Defining the Details

If you deal with a seasoned architect or designer, you’re going to be asked to start shopping long before you get final plans. For smaller room additions, you may simply need to consider whether you want built-in cabinetry or crown molding; vinyl or wood window frames. On a bigger project, you may need to start picking out everything from appliances to tile to doors, knobs and handles.

“It’s overwhelming,” acknowledges Bruce Wentworth, an architect based in Washington, D.C.

Still, shopping early does two important things: It allows the designer to know your tastes, and it allows you to start figuring out what this project will cost. In addition, if you are able to specify details, including the makes and models of the things you want, you have a much better chance of getting apples-to-apples bids from contractors.

Part 5: Interviewing and Hiring a Contractor

Choose your contractor the way you would choose your spouse, seasoned remodelers say. During the construction of your home, a good match with the builder is going to have a dramatic effect on your satisfaction during and after the job.

What makes a perfect match? Start with the basics, such as whether your contractor complies with applicable state laws and codes, and move to the harder-to-define items, like whether this is a person you can talk to and trust.

Part 6: Getting It in Writing

Andrew Hui spent weeks researching before he wrote up a contract that his contractor signed. The deal not only specified what would be done and how much it would cost, it also detailed when work would start and end, and what would happen if the project took longer to complete than scheduled.

Hui’s project, which doubled the size of his house, did take about a month longer than projected. As a result, Hui’s contractor did a little extra work free.

“It was a real win-win situation,” says the resident of the Westchester area of Los Angeles.

Though some contractors write their own deals and balk at so-called completion clauses like the one Hui used to great advantage, every contract ought to have details spelled out. Some additional items might save you a fortune in time, energy and money in the end, experts add.

We review what needs to be in a contract and what’s simply a good idea.

Part 7: Sticker Shock

When the bids for Lisa and Patrick Higgins’ 2,000-square-foot West Los Angeles remodel came in about $100,000 over budget, the Higgins didn’t give up the project. Instead, they gave up the built-in cabinets, some square footage and the designer tile. Today, they’ve got the house of their dreams, and it cost them only a little more than they had planned.

They’re a good example of the right way to handle higher-than-expected bids from contractors. In many cases, over-budget projects don’t need to be shelved, they need to be scaled back.

Part 8: Construction Financing

If you don’t have tens of thousands of dollars sitting in your checking account, you’re going to have to find a way to finance your project. We will look at options.

Part 9: Managing the Job

Two years ago, an attorney and an engineer started a major remodel, leaving them and their two children living in a small guest house behind their expansive--but still incomplete--home. Why the project, which was initially expected to take eight months, remains undone is the subject of debate. The couple, who asked not to be named, blame their contractor. Their contractor blames the couple.

Though their dispute is worse than most, many construction projects are delayed by poor scheduling on the part of the homeowner and the contractor. Homeowners should work with their builders, before breaking ground, on scheduling that gets work completed on time and gets residents out during the worst days and keeps them available when decisions need to be made.

Part 10: Changes

What are the four most expensive words in the English language? “While you’re at it,” says Kermit Baker, director of the remodeling futures program at Harvard University’s Joint Center for Housing Studies. Roughly 10% to 30% of the cost of any remodeling project typically comes from change orders during the construction phase, experts note.

Though some changes may be needed, they’re rarely competitively bid, which can make changes expensive. We look at what to expect and how to manage changes so you get what you need without spending a fortune.