Home Renovation 101: Simple Steps for Building Your Dream House

By the Mercury Team

Home Renovation 101: Simple Steps for Building Your Dream House

Remodeling a home isn’t a new concept. U.S. homeowners are expected to spend about $339 billion on remodeling in the first quarter of 2019, a 6.9 percent increase from a year earlier, and $346.8 billion on remodeling in the second quarter of 2019, a 7.0 percent increase from the year before, according to the Joint Center for Housing Studies of Harvard University

Hopefully, homeowners have or will become familiar with the following checklist, before opening a checkbook or sinking that first nail.

Establish a budget. Renovating a home is often more cost-effective than moving into a new one; however, if this is the route you choose, don’t break the bank. Keep track of monthly expenses (e.g., utilities, mortgage, groceries, etc.) to gauge how much money you can afford to set aside for your remodel. Start by setting up a special savings account specifically for a renovation project and, if needed, talk to your financial institution about the possibility of taking out a loan. Taking the extra time to look for coupons and deals to save money on household expenditures can also free up more money.

Remodeling projects rarely come in under budget, so add a 10 percent cushion and include permit costs. (Contact a local building permit office for more information about requirements and pricing.)

Sketch out your plans. It’s important to know how planned changes might affect the home’s overall structure. Consult with a professional to learn more about load-bearing walls and impacting the house’s foundation before demolition begins. Some architects offer a one-time design consultation to discuss what you hope to accomplish with a renovation and will then sketch a few options, which can later be turned into blueprints for a builder to formalize construction plans.

Certain projects have a better return on investment than others, so before green-lighting construction, decide if a major overhaul is what you seek or if minor adjustments will suffice. Remodeling Magazine compiled a list 21 projects in its annual Cost vs. Value Report that add value to homes, with replacing the front door the least expensive and replacing the garage door the most valuable undertakings.

Consult with an insurance agent. The planning process is a good time to speak with an insurance agent to ensure your home is properly covered for any potential losses after construction has been completed.

“Many people don’t think about how structural and functional changes to their homes can affect their insurance coverage. For example, adding a home alarm may result in a lower premium, but a home office may require a commercial general liability policy in addition to your homeowners coverage, to cover all additional exposures,” said Randy Petro, vice president of claims for Mercury Insurance. “Adding more square footage, upgrading kitchens or bathrooms, or replacing carpet with hardwood or stone flooring can also impact the replacement costs of your home. For example, the cost to replace a new gourmet kitchen is much greater than the cost to replace your pre-remodel kitchen, so you should speak to your agent to make sure you have enough insurance to cover these upgrades.”

To DIY or not to DIY? The internet, the “For Dummies” book series, and the abundance of TV shows on HGTV, the DIY Network and TLC empower people with the confidence to undertake certain home improvements on their own. Some money-saving “do-it-yourself” projects include replacing your siding (having professionals install it can cost up to five times more than doing it yourself), plumbing fixes and kitchen remodels (median savings were approximately $4,500 based on census data). However, if you’re uncertain of your capabilities, hire a professional because your mistakes could lead to even more costly repairs if you get it wrong.

Tap into your network. Family and friends can be valuable resources for finding reputable, licensed contractors for a home renovation project. Try to secure at least three bids before deciding on who to hire and be wary of choosing someone just because they had the lowest bid … sometimes you get what you pay for.

“You’ll also want to ensure that they carry worker’s compensation and liability insurance in case someone on their staff gets injured on the job,” said Petro. “This is very important, because if your contractor doesn’t have sufficient insurance then you could be left holding the bag if a worker is injured while working on your property.”

Once you’ve chosen a contractor, be open to their recommendations for suppliers because these are often their professional contacts and may be great sources for less expensive materials. Be sure to agree upon a timeline and contract that clearly outlines when and how materials will be paid for, as well as when the contractor gets paid. Don’t pay for everything up front and keep the dialogue going throughout the process to guarantee the project is ultimately completed to your satisfaction. And once everything is all done … enjoy your new home!