The unfortunate news for the housing development market in our struggling economy is turning out to be great news for the home remodeling industry. While one industry is fighting off bankruptcy, the other is helping families who cannot afford to buy new homes by fixing up the ones they already own. If you plan to remain in one house for the next five to ten years, you are likely to make it as comfortable as possible.

A recent study completed by Harvard University’s Joint Center for Housing Studies (JCHS) forecasts that “the next decade will yield solid growth and many new opportunities” for the home remodeling industry. The study describes several indicators that are pointing towards a steady increase in business for the remodeling industry.

Despite the forcasted growth, the remodeling industry is going through some changes. Instead of the large and luxurious home additions and remodels during the previous housing boom, people will be more cautious about spending their money. There will be a transition from the excessive house additions of the late 90’s to necessary remodels that will create a home that can accommodate the family for many years to come. When someone will be looking to make an investment in improving their home, it will not be directly related to increasing the resale value.

Trends show that people will be planting some roots over the next decade. There will be fewer new home purchases and frequent moving. Homeowners will still want to increase their quality of life, as they may have in the past by moving to a bigger and better home in a nicer neighborhood. The weaker economy has instilled a new mindset of saving as much money as possible and only spending it on necessary items and amenities. Typical projects for families with reduced household mobility will include roof replacements, HVAC system upgrades, energy efficient window replacements, and room expansions.

The home remodeling industry is not solely dependent on families without household mobility; it is also showing growth in several other categories. During the recession, many homes were foreclosed by the banks and left abandoned. These homes were gutted by the previous residents, thieves looking for copper piping, and even transients. Now that the economy seems to be slightly more stable, the owners who bought the foreclosed home for dimes on the dollar are refurbishing them and getting them ready for resale. The JCHS report showed that owners of foreclosed homes spend, on average, 15 percent more on home improvements than the typical homeowner. The sad, but true, story of thousands of people’s homes being foreclosed during the recession has created a new market opportunity for savvy homeowners and the home remodeling industry.

One often overlooked growth indicator for the home remodeling industry is the new emphasis on energy efficient and “going green” types of repairs and replacements. In metro areas with higher home values, people are increasingly replacing their older windows, roofs, appliances, heating and cooling systems with low-energy alternatives. Anything that involves saving energy and being more environmentally friendly is “in” right now. Despite the recession between 2009 and 2010, improvement projects that included green features increased from 25 percent to 28 percent. The steady growth in the industry is often attributed to the strong tax incentives and government subsidies for green residential projects.

With an economy that seems to be bouncing back, homeowners stay in one place, foreclosed homes needing repair, and a culture still focused on going green, the home remodeling industry is forecasted to bounce back in a huge way. With the new report released by JCHS, home remodeling companies can hang tough and have hope for a brighter future with strong growth over the next decade. The industry may have changed and the type of repairs people are spending their money on may be more out of necessity than before, but the growth is positive nonetheless.

Home Remodeler Screening Tips

Every consumer undertaking home remodeling deserves a high quality project that is completed on time and within budget.  A competent contractor not only will make the process easy for you, they will improve your quality of living, and at the same time increase the value of your home.

Here are 10 valuable tips to help you make an informed decision when you chose a contractor to remodel your home.

1.  Start by checking all the companies you are considering online at www.cslb.ca.gov and www.bbb.org. Google each company followed by “reviews” to see what other people are saying.   What seniors should know before they remodel.

2.  Only consider contractors who are licensed, bonded and insured. In California, contractors are not required to maintain general liability insurance. Choosing a company who cannot provide you with proof of general liability and worker’s compensation insurance puts you, the homeowner in serious risk if a worker gets injured or causes damages to your property.

3.  Everything should be in writing starting with a “scope of work”, which is the narrative part of the contract.  The plans, home improvement contract including start/completion time and scope of work document makeup the entire agreement.  If the scope of work is written clearly and concisely, with no gray areas, there should be no misunderstandings.

4.  California license law requires that homes built or remodeled prior to December 31, 1977 must be tested for asbestos and prior to 1982 for lead.  If any either of these hazardous materials are discovered, remediation must be completed by an independent firm who is properly trained and licensed.  You may want to insist that testing be completed before for you finalize the home improvement contract.  For more information click here

5.  Part of the contracting process should include you approving the construction plans.  Make sure you fully understand what is on the plan and what is excluded before signing off.

6.  If there are contract allowances, go out shopping to confirm the amounts are sufficient to purchase the caliber of fixtures and finishes you desire this will avoid costly over runs that lead to change orders.

7.  By California State Law, the following documentation must be provided to you by the contractor when you enter into a property improvement:  Home Improvement Contract, Notice to Owner form, Check Out Your Contractor form, California License Law Notice, Information About Commercial Liability form, Notice of Cancellation (2 copies)

8.  Most well established contractors would not ask for a down payment.  By California law, a contractor is only allowed a 10% down payment or $1,000, whichever is less.

9.  Check the payment schedule provided by your contractor to make sure there are milestones that require inspection tied to when you pay where possible.  There should be a 5 – 10 percent retention held until final inspection is approved and all punch list items are completed.

10.  You have the right to ask for proof that subcontractors and vendors are paid.  Demand lien releases at each stage before making the disbursement.

A recent article written by one of our San Diego Remodeling competitors states that if a company offers a free design, you will get what you pay for, and also claims that the fees are hidden in the overall cost.  This makes no sense, since many design/build contractors have their own licensed architect on staff, the homeowner is under no obligation, and a firm price including all fees is quoted up front.

In the same article, this San Diego Home Remodeling company claims that they provide specific costs for six different concepts at the first meeting with clients.  It is obvious that the homeowner pays for that in the price of construction.  Do you really need 6 different designs?  If the contractor listens to your needs and budget, a well developed plan will be presented to you the first time. You will also have the opportunity to actively contribute to any modifications

San Diego Home Remodeling companies that charge for a design, do so in order to take the buyer off the street by collecting a sizable non-refundable fee.  Typically the retainer agreement states that the design is property of the contractor.  This gives the builder all the leverage because if the price comes in too high, and the homeowner decides not to complete the project, they lose considerable time and/or their investment.

Paying for design work gives you no guarantee that your budgetary goals will be met nor does it prevent the contractor from increasing the price by issuing change orders as the plans and scope of work is developed or during construction.

Frequently homeowners tell us they paid a design fee, and the price escalated out of affordability.  Even though they paid a fee, the design remained in the hands of the contractor.

For home remodeling in San Diego, I recommend choosing a company that will provide you a no cost design and an accurate quote.  The company should have a licensed architect on staff to further develop the space plan, elevations, structural and construction details.  You are an active participant in this process, and approve every step.

When it comes to building or renovating your home, you won’t get very far without the correct permits in place. It is essential that you acquire the right ones, not only under city law, but also for you and your family’s safety. (Image Source)

The city of San Diego regulates construction for the safety of all residents, as well as for the preservation of certain areas of this great county. Visit the City of San Diego website for more detailed information and guidelines on how to obtain the appropriate permits, or contact them at dsdweb@sandiego.gov.

What types of permits are there?

There are several different types of permits, based on the type of construction: structural, plumbing, mechanical, electrical and combination, which are generally obtained for single-family homes and other small projects. Most residential projects require a combination permit.

What types of construction require a permit?

Complete demolition, relocation of buildings, and new construction always require a permit, and they generally require a combination permit that covers the structural, plumbing, mechanical and electrical components of your project.  Certain types of renovations require permits.

What home improvements don’t require a permit?

Any superficial changes to your home do not require permits. If you are merely painting, or redecorating, permits are generally unnecessary. Fences up to six feet high, as well as platforms, decks, and walkways up to thirty inches high do not require permits. General plumbing, electrical, or mechanical repair work such as adjusting or replacing faucets, switches, and linings does not require a permit.

Minor work permits:

There are types of minor home improvements that only require permits, but can be issued easily through the Inspection Services Office. If you need to move an electrical outlet, or install a water heater, this is the type of permit for you. Contact the city’s Inspection Services Office at (858) 492-5070.

If you are planning to pursue a home improvement project, be sure to have a licensed design build contractor, architect or designer draft the plans for your project first.   With properly drafted and engineered plans the necessary permits can be obtained easily.  Your contractor should be responsible to call and pass all the required inspections.

Scam artists are always thinking of new ways to squeeze more money out of honest people and run away without doing any work. Being the victim of such a crime is a horrible experience and you can prevent an incident by knowing in advance what the current home renovation scams are and avoid them all together. Here are eight well known scams that you should watch out for. (Image Source)

Payment First, Work Later: A true sign of a scam is when the contractor asks for payment upfront before he has done any of the work. Although it sounds like an obvious rip-off, many people are caught up in the heat of the moment and will end up agreeing to pay in full for the job before construction has begun. There is a very high chance that the person will take the money and run. Unless you know the guy personally, close the door on them and find a reputable contractor to bid on the job.

One Time Only Sale: The oldest trick in the book for a business is to offer someone a, “one-time only” special that will never be available again. The tactic puts a lot of pressure on the customer to make an immediate decision, which usually ends up being a bad one. Trust your instincts and realize that there will always be another sale. Instead of making a decision, let the contractor know you will wait until you receive other bids for the job. The person might seem angry at the time, but if they really want your business they will come back again with another sale.

No Credentials: The best way to pick out a scam artist from the crowd is by checking their credentials. Even if you trust the person, always ask for a reference and possibly take a look at their previous work. Make sure they are an actual licensed and insured contractor before ever getting started. You can contact the local license board and Better Business Bureau for trustworthy information about any contractor’s credentials.

Loan Financing Assistance: One of the scariest scams happening to normal people looking for a home renovation is when the contractor helps them set up a loan that is actually a cover for stealing your money, securing kickbacks, or even transferring the deed on your house. They will be enticing with their offer, like an extremely low interest rate for a large loan, but do not ever go through your contractor for a loan. Always use your personal bank for a home renovation loan, refinancing, etc. If you think your contractor is legitimate, at least have a lawyer look over the paperwork to be sure you are not being duped.

“Take my word for it”: When you are ready to undergo an expensive home renovation, never trust someone’s “word.” Always triple check the paperwork and make sure that everything that was verbally agreed upon is actually written down, legally binding the contractor to the promised work. You will be very disappointed if you depended on simple trust in the beginning and in the end the renovation was only half complete with the contractor nowhere to be found.

Leftover Supplies or Working Nearby: Scam artists know that people trust their neighbors and will play on that weakness to get you to use them for a renovation job. The person will simply walk up and knock on your door, offering to give you a steep discount on the leftover supplies from their job down the street or a slick deal since they are already working in the neighborhood. The offers might sound great, but tell the guy you will take a look at their work and solicit other bids for your project before committing to his offer. Generally speaking, contractors doing cold calls to your door like this are never reputable contractors to begin with. An honest company waits for customers to seek them out through trustworthy channels.

Fake Contractor: If a contractor shows up to bid on your job and has an unmarked truck, an out-of-state license plate, or doesn’t even have proper tools, be sure to check their credentials before you ever let them inside your home. The person can be a robber trying to get inside your house to see what valuables they can steal. A few common offers (from an unknown contractor) that are known to be scams include driveway sealant, chimney repair, hot tar roofing, and duct cleaning. If you need these services, call a reputable source to bid on the job.

New Problem During Work: A scam that often goes unnoticed is when a contractor will be half way through the job and notice that there is a major problem that needs to be fixed before continuing the work. They will give you a new quote for payment and materials to do the extra work and if you don’t know exactly what to look for, you will simply agree to fix the new “problem.” Often, there is no real problem and the person is simply trying to scam you for more money. During tough economic times, some companies will add even small problems to the bill that you usually wouldn’t look too much into. Don’t be fooled, ask an unbiased third party to take a look and offer their advice on the issue. Even if you do end up needing the work done, at least you know for sure you are not being ripped off.