Builders = Remodelers...Or So the Story Goes

"Contractors Turn to Home Remodeling as New Construction Slows"
Associated Press (12/20/07)

In the Madison, Wis., area, some contractors are undertaking more remodeling jobs in the wake of sluggish home construction. Michael F. Simon Builders previously did roughly 60 percent new home construction and 40 percent remodeling. But that has now reversed, according to the firm's Phil Simon. The National Kitchen & Bath Association (NKBA) says more Americans remodeled their kitchens in 2007 compared to last year, but spent less on each renovation. As a result, homeowners spent approximately $96.2 billion in 2007 compared to $127 billion in 2006, says the NKBA. But the overall number of bathroom renovations increased, as did the amount spent on them, according to the NKBA. Mike Sweeney of Sweeney Construction says projects are becoming smaller and people are spending money more carefully.

This story illustrates what happens when new home building goes "south".

Now let's take a look at what's really going on here:

Builders are seeing their livelihoods drying up, so they are now calling themselves remodelers.

This happens whenever there is a slow down in building...Nothing to worry about. Right?

WRONG!!!

Builders build houses for developers, working at arm's length with architects and engineers. They are NOT accustomed to working on a home with people LIVING IN IT! They are builders because they PREFER not to have homeowners looking over their shoulders.

At most they have to put up with visits from the buyers. Often there are no buyers yet; so they are simply pleasing themselves and the developer/architect/engineer.

Remodelers, on the other hand, work with homeowners on EVERY project. They are familiar with the post-it-notes routine of constant communication with their employers...YOU. They know that the lifeblood of their future business is referrals from happy past customers, architects and designers; and that communication and partnership with their customers is paramount to their success.

Builders build and remodelers remodel, and the twain only meets in times of stress in the industry...When builders are trying to figure out how to pay their next house payment or buy groceries.

These are the times that try a good remodeler's soul; as builders working out of the backs of pickup trucks descend on the built-out neighborhoods around San Francisco Bay and create low-ball estimates to muscle in on remodeling work.

Last time it happened was 1989-1995, when we had our last housing bust. Many well regarded and experienced remodelers retired during those years because the competition for jobs just got too ugly. I fully expect that things will be the same this time around.

Now I am not saying that '89-'95 didn't produce a few good remodelers from the thousands of builders who became remodeler wanna-be's; just that I don't want to see MY clients be the guinea pigs:

I had one client during that period who paid for her tile roof material twice because the roofing contractor her general contractor hired went bust and didn't pay the supplier. No, her contractor hadn't bothered to get a lien release before paying the roofer. He hadn't sent her a copy of the lien either.

This was the same whole house remodel where the contractor "overlooked" the fact that an addition built onto the back of the existing house was built right on the ground with no foundation. The first day on the job he hit her with a change order that was half again his original bid.

What you, as remodeling consumers, need to realize is that the price you get in a low-ball bid is not the price you will ultimately pay if the contractor overlooks obvious deficiencies in the plans and figures he/she will make it up in change orders. Believe me, you won't be in a position to negotiate when your home is torn apart.

These are the times to go over credentials with a fine tooth comb and check and double check licenses and insurance and references; and quality of work with your own eyeballs. And if all the work is not within easy driving distance, then beware the roving builder!

Pay attention to quality contractor referrals by professionals. Get FIXED PRICE BIDS on well planned and documented projects. Cross all your t's and dot all your i's.

Don't say I didn't tell you.

Peggy