Homeowners who renovated their properties in 2021 spent a median of $18,000, with the top 10% of the projects costing $100,000 or more, according to the U.S. Houzz & Home 2022 Renovation Trends study. Before launching a home renovation project this year, however, it’s wise to know that whatever your budget is, you’ll probably wind up spending more.
No matter how generous your budget, cost overruns will happen, and Danielle Harrison of Missouri-based Harrison Financial Planning said you’ve got to plan for all contingencies.
“As a past commercial lender there was a standard rule that you budget higher than expected and then add on 20% for overruns,” she said. “You typically will also want to tack on an additional 20% in the project duration. This is the case for most construction projects — new builds, remodels, residential and commercial.”
What could go wrong:
You might change your mind about finishes and fixtures, or supply chain issues might mean the tile or sink or chandelier you ordered isn’t available, and the similar options all cost more. Or the problems could run much deeper.
“With remodels, you’re essentially redoing somebody else’s work,” said Ben Neely, the president and owner of luxury custom builder Riverbend Homes in Texas. “Even with your best guess on how somebody built the space, you’re still basing your bid on a number of assumptions. The biggest cost overruns I see are in remodels where you’re expanding a space, and/or re-routing plumbing and electrical.”
Neely added, “Expanding an enclosed kitchen, for instance, deals with the structure of the home and often times re-running mechanicals. When you’re dealing with expanding rooms and moving walls you have to be conscious of how those walls support other parts of the home. If your remodeler opens up the ceiling and finds that all the ceiling joists are underspanned, an expensive beam or full replacement of those joists may be a costly surprise. Additionally, when you’re opening walls and find that the electrical or plumbing wasn’t up to code that can be a costly addition.”
Open Concept Surprises
One of the biggest trends of the past two decades or so has been to remodel older homes to create an “open concept” floor plan. That means taking out walls and doors between kitchens, living rooms and dining spaces to make one large space instead of a collection of smaller rooms. Sometimes, surprises will pop up that could throw the work thousands of dollars above the estimate.
What could go wrong:
“Surprises can be hidden behind walls and floors,” said Teri Simone, the chief kitchen designer at Nieu Cabinet Doors.
“Going for an open concept floor plan can often add to the project cost — so it’s best to consult with an architect/engineer team prior to beginning any demo. Particularly when walls are being removed, it’s best to know the cost for correct beams and support before getting started. On TV [home renovation shows] there’s often the surprise structural support required, which can quickly add up in cost.”
Wide Range of Kitchen Options
The average full kitchen renovation will cost between $30,000 and $80,000, and that includes appliances and cabinets — two big-ticket items, said Kelly Marohl, owner and designer of The Greenspring Home.
“It can be difficult to budget for a renovation in this area of the home because there are so many factors that will impact the price,” said Marohl.
What can go wrong:
A factor that can often add unexpected costs to a kitchen renovation is appliances or plumbing not meeting safety regulations, said Volodymyr Barabakh, the co-founder and project director of building contractor Structural Beam in Chicago. “During a remodel plumbers and electricians may pick up on unexpected regulation breaches and advise that you address them now rather than later, to save on future issues or costs.
“You may find that your old fuse board needs replacing or structural damage has been uncovered which you hadn’t factored in when budgeting. However, it is always best to prioritize fixing these, to protect you from liabilities down the road.”
Bathroom Budget Challenges
No two bathroom budgets are alike. They depend on the scope of the project, such as whether you choose to relocate plumbing lines to accommodate a new placement for a shower or toilet, or whether you choose to keep it simple and just change the vanity and flooring.
What can go wrong:
“For a full remodel, you’ll have to consider flooring, cabinetry, shower/tub, lighting, plumbing, electrical, ventilation and labor,” said Sallie McBrien of Your At Home Team in Alexandria, Virginia. “Your budget for each item will generally depend on what materials you choose and the quality of labor. Bathrooms have a lot of variables (like water) and working systems within. These can lead to far more unforeseen issues than, say, a closet. For a bathroom remodel or renovation, a 20% contingency is highly advisable. There are just more things that can go wrong.”
HomeAdvisor estimates the cost of a new roof at $5,658 to $12,060 — an average of $8,840 — and cost factors include the location of your property as well as the materials used. And like many things in 2022, materials are rising in price.
What can go wrong:
Ben Walls of Turnkey Property USA, a real estate investment firm in Kansas City, said roofers can encounter the unforeseen. He shared details of a recent project, which had a bid of $15,000.
“By the time it was done, the actual cost was $18,900,” he said. “The bid accounted for three layers of roof tear off, but the actual roof had five layers in many places. We expected to be able to use machinery to lift the shingles up to the three-story roof. However, due to the location of the building, it all had to be manually lifted. Just these two small things caused a cost overrun of $3,900, or 26% over the original budget.”
More From GOBankingRates