HOME RENOVATION 101
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Home Remodeling Contract
A good house renovation contract can save you a lot of trouble and maybe even a lawsuit or two. What should be in the agreement?
▪ Usually you will only have a written agreement when you are embarking upon a large home improvement job with with General Contractor. Otherwise, an unsigned reference document (either the estimate provided by the Contractor or a scope of work provided to the contractor by you) is sufficient.
▪ In my experience, General Contractors ("GC's") tend to work either on a "Guaranteed Maximum Price" basis or on a "Cost Plus" basis. Cost Plus means that the GC will charge you for the cost of the labor plus a percentage for his profit. So, if he has to hire a roofer for $5,000, and the cost plus contract allows him to have a 20% profit, then you will need to pay him $6,000.
If you have found a GC that you like and trust, then Cost Plus can actually save you money if the home remodeling job turns out to be easier than anyone initially thought. Plus, if you trust the house renovationcontractor not to overcharge you, then the total price can be very accurate.
▪ For house remodeling Subcontractors, avoid paying by the hour if you can help it. You never know how fast the person works, and you may be robbing the Contractor of some motivation to get the job done quickly if you pay her by the hour. There are exceptions to this rule since some Contractors are traditionally paid by the hour: light framing and punch-out work is usually hourly. ["Punch-out" refers to the minor details that are taken care of at the end of the project, such as installing locksets, touching up paint, installing shelves, etc.]
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Former builder and instructor of "Save Time and Money in Home Remodeling" cont. ed. course at Emory University
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