Profitable Renovations

Think of a home improvement job as the beginning of a marriage, full of dreams and optimism. But unfortunately, with remodeling, as with marital bliss, sometimes it all ends up in court. “On the front end, everyone is ‘in love’ and willing to agree,” says Leonard Woods, an Austin-based attorney. “Once there are problems and the ‘divorce’ starts, no one will agree to anything.”

That’s why you need to conduct due diligence up front. Think of it as a remodeling prenup. Here are a few tips about how to protect yourself in case a home renovation goes sour:

Do your homework. Check out your prospective contractor with the Better Business Bureau, and investigate whether the company has received complaints from past customers. “A lot of people get scammed” by fly-by-night operations, says Case’s Ruffin-Walker. Also, beware of rip-off artists who knock on your door and ask to inspect your roof or repair your driveway.

Get everything in writing. Every detail of the job should be spelled out in an ironclad contract. If not, legal disputes may arise. Don’t try to draw up the contract yourself. You’ll find that it’s worth the expense of hiring an attorney who specializes in commercial litigation or consumer law. Contact your local bar association for referrals.

Check up on insurance coverage. Make sure any crew working on your property is fully insured. They should have a general liability policy and a workers’ compensation policy. Remember, if a worker steps on a nail or suffers any other type of injury on your property, you’ll be liable if the contractor isn’t adequately protected. Obtain a completion bond. What happens if your contractor builds a backyard gazebo and it promptly collapses? The firm’s insurance policies might not even cover such an incident. Obtaining a completion bond ensures that all work will be done according to specifications.

Expect the unexpected. Experts say you should expect construction costs to exceed, at a minimum, 25% of the budget. Also, factor in unpredictable elements, like uncooperative weather and material shipment delays, which can push back your ideal schedule.

It seems that everyone in the U.S. has either been through a home-remodeling nightmare or knows someone who has. To help maximize your chances of avoiding one, visit the following Websites:

Consumer Advocate Jody Costello: You might come across some bad apples in the remodeling field (as in any industry). If you do, Costello’s site will help you review your rights, find an attorney, and get out of a remodeling fiasco with minimal damage to your home and finances.

National Association of Home Builders: Primarily for those building a home from scratch, this site is chock-full of information on the building process. Click on “Resources” then “For consumers” for a terrific soup-to-nuts guide.

National Association of the Remodeling Industry: A great resource for finding qualified contractors, this site also offers consumer-friendly tips. For example, an insurance certificate isn’t enough because it doesn’t tell you whether the policy is still current.

Remodeling magazine: Not only does this site tell you if your planned renovation will recoup much of your costs, it breaks down numbers by nine different regions in the country.

This story originally appeared in the June 2008 issue of Black Enterprise magazine.