Home renovations are on the rise, with more homeowners choosing to stay put with their low mortgage rate and access to a pile of home equity to spend, but renovations don’t always go as planned. In fact, more often than not, they don’t.
Residential real estate company Clever Real Estate said 63% of homeowners have gone into debt to fund a home renovation and 78% of recent renovating owners surveyed went over budget.
One of the biggest budget busters is homeowners failing to get more than one contractor bid, and failing to understand the bids they get, or even carefully reading them.
Encino, California-based GreatBuildz, a service that connects homeowners with vetted general contractors for home renovation work, is promoting a new artificial intelligence-based tool that can help homeowners tackling a home renovation project compare and understand often vague or hard-to-understand contractor bids.
“It’ll tell you what’s missing from this one. It will tell you what may or may not be included in this other one. And it will give you follow-up questions so you can go to your contractors and say, ‘Hey, it looks like these things may be missing. I’m not sure if this was included,'” said Jon Grishpul, co-CEO at GreatBuildz.
Using the tool, BidCompareAI.com, is free and can analyze bids in as little as two or three minutes.
There are no real standards for contractor project bids. Seasoned contractors with years of experience know what their bids mean, but often the customer does not. For example, a kitchen renovation bid may just list “new cabinets,” or it may include detailed costs of that part of the job, such as installation labor, time to complete, and even a variety of cabinet choices and prices for homeowners to consider when budgeting.
The tool also spots things like omitted demolition costs or misaligned fixture pricing. The tool generates detailed, clear and easy-to-understand side-by-side spreadsheets.
BidCompareAI can complete up to four side-by-side comparisons at a time. It uses AI to analyze quotes and generate a clear, easy-to-understand comparison. It can flag scope inconsistencies, highlight missing items or unrealistic pricing and summarize key differences that could impact project cost. GreatBuildz said the tool can determine the bid with the best value, not just the cheapest bid.
Among those who said they went over budget on a renovation, 53% cited vague or misleading bids that obscured hidden expenses of cutting corners.
Failing to understand bids up front is not the only big home renovation budget buster. Owner change orders that occur after the project starts are another.
“Whether it’s having the contractor install the flooring or the tile, and then you realizing, ‘You know, I don’t really love this color.’ Not only do you have to pay the extra cost of redoing the work, but you have to pay the cost of undoing the work that the contractor has already done,” Grishpul said.
While that suggests making up your mind before the work begins is a must, it does not mean owners should just walk away once the contractor and his or her team start working.
“Even the best of the best contractors would benefit from some oversight. So make sure you are there reviewing the work. Make sure you are satisfied with the quality of the work every step of the way,” he said.
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