Home > Maintenance & Renovation > 7 Reasons Your Home Improvement Job Went Over Budget

7 Reasons Your Home Improvement Job Went Over Budget

Updated Oct 28, 2022

Updated Oct 28, 2022

Home > Maintenance & Renovation > 7 Reasons Your Home Improvement Job Went Over Budget

Renovating your home is exciting until the bill shows a number far exceeding your budget. What you thought would be a manageable home renovation project suddenly became a laundry list of complicated, high-priced tasks you didn’t factor into your original plan.

If you’ve found yourself in this situation, you aren’t alone. According to the 2020 Houzz & Home Report, 31% of homeowners went over budget on their home remodeling projects. People typically exceed their budgets for three key reasons:

  1. There are miscommunications between the homeowner and hired contractor.
  2. Projects require more work and materials than expected.
  3. Homeowners veered from their original plans and opted for more expensive items.

Awareness of these common budgeting roadblocks is the first step to avoiding them with your home improvement project. The next step is creating a detailed game plan for your project to prevent cost surprises and contract confusion down the road.

7 Reasons Your Remodeling Project Exceeded Your Budget

The following sections discuss seven common reasons home improvement projects go over budget. In each section, we’ll dive into renovation planning mistakes, budgeting blunders, and tips for saving money on future projects.

Poor Communication With the Contractor

When it comes to home improvement projects, the general contractor can make or break your budget. Not all project managers are like the ones you see on HGTV, eager to make your dream home a reality. Unfortunately, some will provide murky contracts and low-balled price estimates just to get you to hire them. As the project progresses, they’ll throw in high material costs, labor overages, and any number of other budget-breaking loopholes.

The problem isn’t all on the contractors, though. Some homeowners hire contractors without thoroughly vetting them or reading their contracts. This almost always leads to miscommunications about project timelines, unclear pricing, and incredibly frustrating projects.

How to Avoid It

The first step to avoiding pricing problems is to get quotes from multiple contractors. This is especially important for new homeowners who are inexperienced with remodeling projects. Multiple quotes can save you from accepting an unreasonable contract price without realizing it. The more numbers you have to work with, the better your understanding of project price trends.

The next step to avoiding miscommunications with your contractor is to read the fine print of the service contract before signing anything. Even if a contractor isn’t trying to trick you into overpaying, there could still be some sneaky loopholes hiding in the lines of your contract. Your best bet is to read everything closely and ask questions before you’re locked in.

A good contractor will be happy to answer your questions truthfully and thoroughly to ensure you meet your home and budget goals. Learn more in our guide to hiring a contractor.

Unrealistic Budget

One reason homeowners are shocked by renovation bills is that they developed unrealistic budgets in the first place. We understand the desire to save money while renovating, but cutting corners will likely cost you more in the long run. At the same time, developing an unrealistically low budget will only cause frustration when the bill comes, and you realize it far exceeds your initial estimate.

How to Avoid It

Luckily, there are several ways to develop realistic expectations and fewer surprises for your home improvements.

One rule of thumb is to budget at least 20% over your initial cost estimate. This will make room for unexpected costs and provide a more realistic picture of what your renovation bill will look like. Determine your initial estimate by getting quotes from multiple contractors, speaking with other customers, and researching your project’s cost trends.

It’s best to reach a specific number before you sign any contracts. Developing a realistic budget before signing will help you stay firm in your cost limits and plan your remodel around your budget – not the other way around.

Providing a trustworthy contractor with your budget before the project starts gives their team time to assess and optimize the possibilities of your renovation. They’ll be able to design your space without unknowingly exceeding the budget you had in mind. Plus, they won’t add things you can’t afford, leaving you stuck choosing between unnecessary splurges and much-needed savings.

Mid-project Changes

One of the main reasons for renovation budget overages is mid-project changes. Many homeowners start the renovation process with a solid plan, determined to stick to it no matter what. However, as the project progresses and blueprints become realities, the homeowner may decide a certain feature would look better than the one they’d planned. One small change won’t just derail your original timeline – it’ll likely create a snowball effect of other changes.

Suppose you decide to upgrade to high-end tiles for your bathroom remodel. Then, you’ll likely start upgrading other items to match the aesthetic. Before you know it, your once straightforward renovation has snowballed into a bank-breaking project.

How to Avoid It

Preventing this problem is straightforward but takes a little discipline. Avoid giving the OK to mid-project diversions by sticking to your initial budget and remodeling plan. Unless a certain feature will wildly improve the safety or functionality of your space, it’s probably not worth the additional dollar signs.

The wonderful thing about remodeling is that you can build upon old jobs down the road. Instead of cramming all the trendy updates into one project, consider taking the renovations in phases. Practicing patience with remodeling allows you to gradually develop spaces you love without emptying your savings account in one go-round.

Issues that Arise

Unfortunately, not every home improvement project will go smoothly. Occasionally, issues will arise mid-project that tack additional costs to your receipt.

Say a plumber comes out to install new faucets in your bathroom. While preparing for the installation, they discover a pipe leak they must fix before renovating. You’ll then have to pay for the repairs and likely another appointment to perform the installation.

If you own an older home, you may encounter mold, asbestos, or drywall issues when remodeling. These problems call for expensive replacements that will undoubtedly cost a pretty penny.

How to Avoid It

Avoid cost surprises from unforeseen issues by assessing your home ahead of time. Note the area you want to remodel and potential problems that could come along with giving it a makeover. Allot a higher budget for bathroom and kitchen remodels that involve more complicated components. Features like appliances, plumbing systems, and electrical wiring are more likely to develop problems. Thus, you’re more likely to encounter roadblocks while trying to remodel these spaces.

Otherwise, regular maintenance and upkeep are your best bet for smooth home improvement processes. Routine inspections for mold, rot, and structural issues will catch problems before they progress into budget-busting catastrophes.

DIY Blunders

You may be tempted to perform a DIY home renovation, but this could cost you more than it saves. If you perform the project incorrectly, you’ll either buy additional materials to fix it or end up paying for a contractor to redo the job.

Some projects like painting or updating cabinet hardware are perfect for do-it-yourself enthusiasts. These tasks involve little invasive work and often produce small, easy-to-fix errors. Other projects, like countertop replacements and tiling, are better left to the pros.

How to Avoid It

The key to avoiding this cost overage is to admit when you lack the experience for certain projects. You may be a DIY pro who’s entirely capable of replacing gutters, tiling floors, and hanging light fixtures. In this case, you can save some cash by performing home renovations independently. However, the average, less-than-handy homeowner won’t have the tools, materials, and general know-how to get a job done right.

Project Delays and Shortages

Project delays and supply chain issues are other culprits for your home improvement budget overages. A global supply chain crisis began in early 2020 with the onset of the COVID-19 pandemic. People stuck at home began spending a lot of money on new appliances, fresh furniture, and smart home systems.

This influx of orders went to manufacturing companies at an absolute standstill due to shelter-in-place orders and infected employees. The supply chain crisis eventually trickled into the construction industry, leaving many homeowners waiting months for materials needed for home improvement projects and new homes.

Homeowners trying to renovate their spaces today still feel the effects of the supply chain crisis – effects strong enough to throw a wrench in a carefully curated project timeline. The bottom line is that the longer a project takes, the more it will cost you. If contractors come out to work on your home, but the necessary supplies haven’t arrived, they’ll have to return for follow-ups. Repeat this process over several months or even years, and you’ve added a lot of lines to your final receipt.

How to Avoid It

You can’t stop the supply chain crisis, but you can plan accordingly for your home improvement project. If possible, order the necessary supplies well ahead of your proposed project date so that everything is ready in time for the contractors to come in. The job will get done more efficiently, and you’ll likely see less impact on the project’s cost.

Inflation Rates

If you’re using a home improvement budget from a few years ago to complete a project now, you’ll certainly go over budget. Inflation rates are currently the highest in 40 years, making everything from appliances to building materials far more expensive.

According to TheConstructor.org, inflation negatively affects contractors and their clients. However, the burden ultimately shifts to the client, who must absorb increased costs. As a homeowner, you’ll pay a much higher price for the same scope of work you’d have paid less for a few years ago.

How to Avoid It

You can’t avoid price increases, but you can research current trends to be fully prepared for increased material and labor costs. You might even consider reaching out to a contractor and going over prices together to compare increases across the board. Depending on your findings, it might be time to step back and assess the feasibility of your project. If your home improvement is merely for cosmetic upgrades, you might need to spend some more time saving up.

Final Thoughts

Home renovations are undoubtedly expensive, but you can avoid some added costs with our tips. Vetting your contractor, communicating about contracts, and sticking to a well-prepared plan can help you meet your budget and home improvement goals. You’ll go into your next renovation with the clarity and confidence you need to ensure the project gets done right without breaking the bank.

We’ve got you covered if you still need some help planning your project budget. Learn more in our guide to budgeting for home renovation costs.

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