How to Budget for a Home Improvement Project

When it comes to setting an appropriate budget for a home improvement project, a recent study by Modernize, an online resource designed to help homeowners find reliable contractors, said 79% of homeowners do not create a budget for their project, an increase from 75% in 2019. According to the survey, after price, expertise is the most important factor sited in selecting a contractor, as 26% reported it was a critical factor, up from 19% in the 2019.

With that in mind, Callen staff members Christopher Wittmann, CR, Senior Sales Representative and Marie Owens, Kitchen/Bath Sales Design Consultant, shared their thoughts on the study and suggested what homeowners should do to develop a realistic budget for their project.

In commenting on the study, Christopher said he found it interesting that while about 50% of homeowners used the Internet and related sources to help educate themselves on what is involved in a remodeling project, half of them were still stressed about their projects. “That says to me there is too much conflicting and unreliable information on websites and not enough solid resources to rely on,” he said. “The rising emphasis on self-reliance has driven consumers to be more accountable for their product choices, which is both good and bad.”

Marie said to her the most surprising part of the study is price is considered the most important factor in selecting a contractor. “The majority of potential clients contacting us are doing so because of Callen’s reputation. They frequently have even heard that we are likely going to be more costly than other contractors, but that we are worth it because of our excellent service,” she said.

Both Callen staffers agreed many homeowners do not create a budget because they do not have all of the facts and information available initially to do so. “Helping the client understand the cost of the project is one of our primary roles as a Sales Design Consultant,” Marie said. “It is important to properly plan for the cost of a remodeling project for your own peace of mind.”

According to Christopher, “going in with an open mind and a reasonably open budget allows the homeowner to understand what is possible and determine whether the options presented are of value in the end, increasing or decreasing the budget if needed.”

To clarify his point, Christopher offered an analogy of looking to purchase a vehicle. “If one was in the market to purchase a car, it’s easy to have a set budget ahead of time and either walk on the sales lot and view the sticker price or go online and look at vehicle’s that fall within the pre-set budget,” he explained. “The remodeling arena is the equivalent of the end-user asking the manufacturer to build them a car from scratch. There are many product quality levels and options available, along with their respective price points, that require some education first before a pre-set investment range can be set.”

Marie and Christopher both agreed establishing a budget at the outset of the project was necessary. “It is essential to prepare for the expenses involved so as not to let one’s emotions cause the investment to become unmanageable afterward,” Christopher said. “For most, remodeling allows for a fresh start, and when we are purchasing the conveniences we desire, we often allow our hearts to lead and our wallets to follow. It can lead to post-project stress of paying for the work when the project should have ultimately helped reduced stress.”

When it comes to tips to ensure proper budgeting, each made suggestions for homeowners to follow. “Be clear with your expectations and make sure your contractor understands and is able to communicate back to you in writing and with plans what is going to happen in the remodel,” Marie said. “It is all about communication through the written proposal and through the drawings.”

In terms of whether the project can be completed based on the establishes budget, Marie said when she completes the final plan, the cost will be at the desired budget. “As we are working through the plans and budget, the client is apt to think their project will come in at the low end of the budget range. They are usually surprised if it comes in at the high end of the budget range even if they have continued to add more to the project as you are going through the process. Also, homeowners may be tempted to add to their ‘needs’ list during the design process. As needs are added, the price will change.”

Christopher encourages homeowners to understand how much their property is worth and how much equity is available. “While the home improvement should be for the end-users benefits first and not for a future owner, steps should be taken to ensure the project doesn’t cause the property to lose value or ROI (return on investment) in the event selling the home shortly is planned.” He also suggests contacting a realtor that knows the area and understands what will retain a good ROI to stay within a budget that won’t cause the home to be over-valued for the area it’s in.

“The best practice is to find the company and sales representative/Sales Design Consultant that you like and work with them exclusively,” Christopher said. “Sales Design Consultants will always provide their best ideas and solutions first and can make changes to fit the range of investment that the end-user is most comfortable with based on the solutions they value the most. Do not choose a company solely on price, as this can result in undesirable outcomes and issues that will cost more in the long run.”