Renovations

7 renovation mistakes to avoid

Hiring the wrong contractor to complete your home reno job can be an expensive mistake. To avoid these costly and painful mistakes — and a reno from hell — consider paying attention to these important lessons
Hammer and nails. How to avoid renovation mistakes
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Charlie Walker* decided it was finally time to buy his dream home. With one young child and another on the way, the 34-year-old and his wife felt they had outgrown their current home in AjaxOntario, a sought-after commuter suburb just east of Toronto.  (*Identifying information of those involved have been changed to protect their privacy.)

After a year of searching, the Walkers ended up buying a large, four-bedroom, two-car garage house. The new home was perfect: It was closer to the in-laws, it was a little under 20-years old and it was priced competitively due to the outdated decor.

In order to fit Charlie’s vision, this new home would need considerable renovation. While the scope of work was large — new bathrooms, a new kitchen and new floors, among other jobs — Charlie was comfortable. The reno job was pretty standard in a city where home renos were dime a dozen.

To help expedite the work, Charlie made a list: remove a load-bearing wall, update fixtures, install new hardwood flooring, add a bathroom, update the two existing bathrooms, scrape away the outdated popcorn ceiling, add new fixtures and swap out the dated kitchen appliances.

Quite quickly, however, the Walkers’ dream home reno became a nightmare and was wrought with renovation mistakes.

Rather than waiting eight weeks for completion of the job, the Walkers would end up waiting more than nine months — eventually having to hire another contractor to finish the job. Even worse was the fact that the Walkers ended up paying two mortgages on two homes for more than half a year, plus they paid more than 30% more than the original reno budget just to get the job done. Then there were the expenses and ongoing legal fees.

To avoid these costly and painful home renovation mistakes, consider paying attention to the seven lessons the Walkers learned from their descent into reno hell.

Lesson #1: Experience counts

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Realizing the scope of work, Charlie began searching for a general contractor — the person tasked with overseeing the day-to-day aspects of a renovation job. It was at this time that Charlie started chatting with a friend, who we’ll call Tim. While not a close friend, Charlie felt a sense of ease and comfort with Tim, having known him for more than a decade. Turns out Tim had started his own home renovation company after spending several years working for someone else.

Charlie recalls that during one conversation, Tim “essentially begged for work.” Still, despite the sentimentality, Charlie insisted on due diligence. As Charlie recalls, he asked Tim, along with a few other general contractors, to provide a bid for the job. After all the bids were in, Charlie was surprised to see that Tim’s bid was the lowest. Even better, Tim’s bid came with a shorter, tighter timeline, meaning the Walkers would be able to move out of their old house and into their new house — and stop paying two mortgages—sooner. Within days, Charlie called Tim to let him know he had the job.

What Charlie didn’t realize was Tim’s lack of experience as a general contractor may have prompted his lowball price for the job.

It can be difficult to figure out the “perfect” price for a home renovation, says Robert Koci, publisher of Canadian Contractor, a magazine geared towards Canadian home renovation contractors.

To help reign costs in and get an apple-to-apples comparison among contractors, Koci suggests establishing a firm budget from the outset.

“Customers are afraid to give a contractor a budget because they’re afraid a contractor will bid to the budget and not the price — and they will,” said Koci. But having a set target budget makes it possible to move past cost and focus on other priorities. Some bidders may offer an extended warranty, others may offer to do the job faster, and the very experienced contractors will also point out areas where reno requests are too expensive, meaning you may have to go over budget.

As Koci reminds us: If building a house was like playing football, a general contractor would be the quarterback. They manage the budget, acquire materials, and hire subcontractors. A good general contractor can explain the reason for the placement of every nail, even though he’s not the one that hammered it in. 

Thankfully, it’s easy these days to get an idea of how much a particular reno job should cost. It does mean doing a bit of homework before calling in the pros, but this upfront legwork can certainly help you weed out contractors who may not have the experience in the work you want done. Remember, if one contractor offers to get the job done faster or cheaper than all the other contractors you get a quote from, chances are this person either doesn’t appreciate the amount of work required — and this can mean big problems for you down the road — or is low-balling to get the job before adding on the costs.

Lesson #2: Never trust a handshake

Close-up of two men shaking hands. Never trust just a handshake when conducting business.
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Excited to start, Charlie remembers asking Tim to meet to discuss details of the job. According to Charlie, the men agreed that the entire reno would cost about $135,000, and the entire job from start to finish would take eight weeks to complete. Charlie says that it was at this time he asked if he could have a written contract, but, as Charlie says, he was convinced it wasn’t necessary. Charlie admits he had a nagging doubt, at that time, but ignored it, after all, he’d known the man for more than a decade. What could go wrong?

Avoiding a written contract is a huge mistake, but not for the reasons you may think, says Koci.

“You don’t want a contract just as a legal backstop,” he explains. “That’s not the reason.” In a nightmare scenario, a contract doesn’t serve to guarantee you’ll get your money back without resorting to litigation. So stop considering the contract as your primary legal recourse.

“The primary reason for a contract,” explains Koci, “is to prove that the guy you are trusting to be your quarterback is organized, understands what he’s about to do and is comfortable around project management.”

A good contract from an experienced contractor should set out the scope of work and the overall budget, as well as the pay schedules, expected milestones and work materials required for the job(s). If the contractor you’re about to hire doesn’t offer you this type of contract, you have to seriously question whether the contractor really knows what they’re doing.

“A poorly written contract is a major red flag,” says Koci.

Lesson #3: Know before you pay

Sitting around a contract. Always get a contract.
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Sealed by a handshake, it was time to get to work, so Tim asked Charlie for a cash deposit of just over $20,000. Over the next few weeks, Charlie would make additional lump sum payments, confident that his friend would stick to the budget outlined in their informal agreement.

But the lack of a formal contract set the tone. According to Charlie, he was never provided with a payment schedule — known in reno-speak as draws — nor did he get a schedule of milestones — estimated dates of when specific job components are to be completed. Instead, Charlie recalls simply signing digital documents on Tim’s phone to formalize the transfer of funds.

Expect to pay a deposit

So what should homeowners take away? Koci is clear: “It’s normal to ask for a deposit.” The deposit allows the contractor to buy the initial materials and supplies to start the job — materials and supplies for which you, the homeowner, are responsible for paying. But after the initial deposit, you shouldn’t have to fork out any additional funds until the first milestone is reached (unless major, unforeseen problems arise).

Expect to pay a management fee

After paying a lump sum, Charlie popped into his would-be dream home, only to find it empty. No workers, few materials and already a week into the job. That’s when he started to get concerned. So, he went back to the invoices and started to read everything. He was shocked to learn he was being charged a 20% management fee on top of his fixed contract price.

Typically, in a fixed contract, all aspects of a job are included in the price — materials, sub-trade costs, as well as administration costs, overhead and profit — often known as a management fee (because a general contractor’s job is to manage your project and they have to earn a living, too).

Other types of contracts will also include this fee. For instance, some renovation contractors will use a “time and materials” type of contract. Often used for smaller, piecemeal jobs or larger jobs involving a great degree of uncertainty, time and materials contracts require a homeowner to pay for the materials used in the project and the time spent completing the job. On top of this, a general contractor will tack on a management fee, which can be anywhere from 5% to 20% of the total project cost.

However, for many fixed contracts, the management fee is baked into the total price. For that reason, homeowners should ask for a project cost breakdown. Review this contract to make sure you’re not being double-charged — paying a profit mark-up in addition to a management fee. If a contract uses both fees, it’s the construction equivalent of having your cake and eating it, too.

Lesson #4: Keeping tabs involves more than just showing up

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A little over a month into the job, Charlie was surprised when his in-laws, who lived around the corner from the new house, told him no one was working on the house.

This was troubling. The total reno job was only supposed to last for eight weeks, and Charlie knew any delay would seriously jeopardize the tight completion deadline. Worse, he’d decided to delay selling his old house while his new one was being renovated. It’s a strategy known as a “bridge,” and it meant Charlie was making mortgage payments on two houses in addition to footing the cost of the renos. Any delay would mean paying more out of pocket — an unwelcome added stress at a time when his family was growing.

Concerned, Charlie recalls asking Tim about the delays. Charlie’s recalls being told, “not to worry.” 

Still concerned, Charlie remembers paying a surprise visit to the job site a few days later — he was greeted by two police cruisers parked in the driveway of his new home. Apparently, Tim had been loudly arguing with some subcontractors and the police were called.

While Charlie’s behaviour seems reasonable, Koci explains how it’s a waste of time to drop-in randomly on your home reno job. Work does stop and start, it’s part of the workflow as sub-trades squeeze new and existing jobs into tight schedules. Rather than fret about whether or not the work is being done, Koci suggests focusing on solidifying that initial contract, which should include a construction schedule and milestones. This type of schedule, along with monitoring major milestones and the timing of additional draws provided to the contractor, is “a good way to monitor the progress of the job,” says Koci.

Lesson #5: Materials matter in a renovation

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One aspect of the reno job that Charlie was looking forward to was being able to see the fruits of his research applied to the custom reno of his new home. He rightfully expected that he and his family would end up with a beautiful home, updated to suit their needs and tastes, and he was sure the reno would add value to the property. This updated home would have brand-new hardwood floors, custom granite countertops in the kitchen, premium bathroom fixtures, and— fulfilling Charlie’s ultimate dream—a home theatre in the basement.

At least, that’s what he thought he’d agreed during his initial discussions with each contractor prior to starting the reno job.

But after the run-in with the police, Charlie began paying closer attention to details of the work. What he found was a job full of cut corners. A low-quality laminate was used instead of higher quality flooring in the basement. Engineered hardwood was substituted for hardwood, and $700 toilets were replaced with toilets bought from Costco at a fraction of the price.

According to Charlie, that’s when he confronted Tim. Charlie recalls that’s when Tim asked him to sign a “scope of work” agreement, in an attempt to settle the disagreements. But, according to Charlie, this new document was nothing like their original agreement. So, Charlie refused to sign — and Tim walked off the job.

Charlie realized that, in order to finish the job at the new house, he’d have to find another general contractor. It sounded like a simple solution, but the problems were only just beginning.

Lesson #6: Don’t cut corners with unlicensed tradespeople

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Charlie’s dream house was turning out to be his worst nightmare. Besides skimping on supplies, he alleges that the handiwork of the subcontractors Tim had hired was atrocious and one of the major home renovation mistakes throughout this process. Taped and sanded drywall was so rough that professional painters refused to even start, let alone finish a full paint job. The flooring guys butchered their portion of the job, shooting nails through the engineered wood that Charlie hadn’t even wanted in the first place. New appliances were simply dropped in place without being connected to the home’s utility lines. But all this paled in comparison to the problems Charlie encountered with the plumbing and electrical components in the house.

Charlie alleges that he was pressured into not hiring a licensed electrician based on the belief that the house was previously wired by a licensed electrician. He recalls terms like “piggy-back” and “coupling” being used to explain how electrical and plumbing would be added during the home renovation. 

“If you’re a contractor, you probably do have guys who can do a little of everything,” says Koci, who said that contractors often have people who can do small electrical jobs, like pulling wire. But these jack-of-all-trades workers shouldn’t replace licensed professionals when it comes to larger or more complex jobs. For instance, explains Koci, wiring an addition, rewiring an entire home or upgrading an electrical panel isn’t a job for the generalist.

There’s also the matter of accountability. Licensed electricians provide warranties on the work they do — if a wire short circuits, they’ll have to come back and fix it or face legal repercussions.

As a general rule of thumb, if you need to pull permits, you should hire a licensed tradesperson to complete the job.

Because a licensed electrician and plumber was apparently never used on the reno job at Charlie’s new house, he states the house became fraught with potential dangers: live pot lights buried between floors and ceiling (a fire hazard); improperly installed plumbing that resulted in flooding from the upstairs bathroom; water leakage into a bedroom that was either scalding hot or icy cold; and toilets running with hot water (a long-term problem that would add to utility costs and eventually cause the toilet to crack and flood). To fix this mess of electrical and plumbing issues Charlie had to pay independent professionals to come in — another $35,000, out-of-pocket.

Lesson #7: Ending a bad reno quickly

Tired and frustrated, it's best to end a business contract as quickly as possible.
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Today, Charlie admits he let his fear and his personal relationships cloud his professional judgment. Looking back, he now sees red flags everywhere and where he made key renovation mistakes.

“If you get to this place, it’s not the time for making peace,” says Koci. His advice: If you’re going to sever ties with a contractor, do it as early and as firmly as possible.

“Contractors who are in it for the long haul have a passion for being in the business,” explains Koci. This level of dedication means the contractor cares about the quality of their work because they have a lot to lose. Most career contractors build and grow their business on referrals, so they care about the quality and craftsmanship of a client’s job.

So what happened with Charlie’s reno? Almost a year after the job was started, Charlie and his family finally moved into their dream home turned reno nightmare. Tim alleges Charlie still owes him back wages. To secure these lost wages, Tim placed a lien on Charlie’s house (which can cause a big problem for Charlie if he wants to sell the house or obtain mortgage financing). Charlie is convinced he doesn’t owe Tim any money and argues that he paid, out-of-pocket, approximately $325,000 to complete the reno — more than double the estimated initial cost of the renovation.

“It’s beyond embarrassing,” says Charlie, lamenting not only the money lost but the stress it put on himself and his growing family. “Next time, I would have a contract that itemizes everything,” he says. “Right down to the grout.”

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