The Official Online Newspaper of NAHB
Some home builders think that “sticks and bricks” are sticks and bricks, period — whether they are building a new home or doing a remodeling job. But they aren’t — and unfortunately, that’s why many sharp, successful custom builders aren’t so successful when they try to diversify their business by going into the remodeling market.
The truth is, remodeling is different — and it’s also more difficult. It is time-consuming: An eight-hour day doesn’t mean eight hours of production. We remodelers understand these things, most learned the hard way, and find a way to integrate these realities into our pricing structure.
Let’s face it: It’s certainly easier to give in to a client’s unreasonable demands when you have budgeted a few extra bucks in there to meet that eventuality from the get go, allowing both of you to feel happier about that project. The clients feel they got their money’s worth, and you are paid not only for your expenses, but also for the value you bring to the project.
Let’s look at some of the pitfalls that await the home builder turned remodeler.
Familiarity with products. You probably spec many of the brands and even some of the models for almost everything that goes into a stock or semi-custom house, but for very good reasons you limit the choices. In remodeling we certainly push brands, and they tend to be upscale compared to what the original builder installed. That means you are offering more choices for the consumer, making it more likely for you to be unfamiliar with a product, system or appliance.
With unfamiliarity come problems. Some products are easier than others to install correctly, to warranty and to complete in a reasonable amount of time once you factor in selection, ordering, delivery, reading the instructions, installing and warranty issues with suppliers you have little leverage over. All this requires a larger markup to get it right the first time. Unless you have control over the product, make sure you include that cushion.
Familiarity with the project. Here’s just one example: Even a remodeler may only be asked to do a full dormer every few years, so believe me, the learning curve can be painful. We have done all of our dormers without incurring substantial water or other ceiling and floor damage, but I can rattle off the names of competitors with stories that would keep you from sleeping at night.
When you start offering handicap-accessible bathrooms, the projects will not go well your first few times, especially if you rely on subs for all the labor.
Don’t forget these factors when you do your estimate: premises protection; material pick-up and delivery; safe, daily clean-up and organization of the job site; the smaller scale of all the job parts; possible delays from daily visits by the owners and bad weather; and bath facilities and utilities — factors that can easily add 18% to the job’s cost.
If your estimate isn’t grounded in reality, all these items become slippage — and I didn’t even mention the additional safety precautions and potential hazards of working in a home around children and pets.
Owner expectations. We don’t sell a product, we sell a dream, and each dream is unique from the viewer’s perspective. We can merely draw our clients a finished product, without showing them models or past homes done to those exact specs, but remodelers have to understand exactly what their clients’ expectations are.
The client will have expectations for cleanliness, both ongoing — sometimes even hourly — and at the end of the week or job. The level of quality is subjective for everyone, but remodelers are typically held to a higher standard and our work is checked each day, often when we aren’t there to explain.
Expect your clients to leave you notes every morning, and factor into your estimating the 15-minute conversation that goes with them.
Your salesperson — or perhaps someone else who will not be on the job daily — can make statements during the sales process that the staff in charge of producing that dream remodel are held responsible for, often with little warning and few written notes. That dropped baton pass is expensive.
Plan for more customer meetings, including a pre-construction walk-through in which the production crew meets the owners, figures out their expectations and gets the skinny on what was said and what was left unsaid. Dollars are spent here, but pay dividends on the bottom line.
Storage. Leaving everything outside in the weather and in plain view of sticky fingers is not a long-term profit plan. A work trailer, an unused van or other solution can help, but there is never enough space to truly set up a workshop and storage area at most jobs.
We usually try to commandeer the client’s garage as part of the work space for materials and tools. Typically, those garages are already full, so being organized — bringing stuff out daily and removing stuff as soon as it is no longer needed — is our standard operating procedure.
Debris. We don’t leave debris piled at job sites. Kids, pets, nosy neighbors and the required lead paint work practices all mean that waiting until it is convenient for the trash company to come pick it up is just not an option. Daily trips to an off-site dumpster, or owning 10 trash cans and a place to leave them all, need to be factored into your estimates.
Staffing. You can’t let your new-construction, rough-and-tumble group of subs and staff into your customers’ homes without serious retraining. Among practices normally tolerated at a new construction site but inappropriate for a remodel, that means no boom boxes blaring loud music or offensive lyrics and no work trucks parking on the yard.
Your staff must be able to speak the language of the client and understand how to communicate — politely and maintaining a sense of humor. Each staff member must be a team player who doesn’t cast blame on his or her co-workers when an error occurs somewhere along the way. You are an invited guest in the home, not just a worker.
This will cost time and money, and it involves a learning curve. Take this into account. You may need a whole new set of subs, even new employees, to fulfill your promises.
Two minds not thinking alike. Finally, remember that deciding to have their home remodeled is one of the most stressful things a couple can do. When you have two clients in the same house, do not assume they will be in total agreement on the job or issues that come up. Also, be careful in criticizing the existing home or the work that’s been done in the past.
Pay attention to how the couple interacts. If they are not in agreement from the start, the job has nowhere to go but down. In this case, no matter how much you pad the estimate, it may not be enough and you may even have to consider backing away. If this is their best behavior, think about what it will look like when things escalate into a crisis or compromise situation.
In our company, we consider more than 10 factors that affect the price of a project that have nothing to do with sticks and bricks. Develop your own list, use time sheets to capture labor investments and immediately use what you learn to account for those costs.
You should know by now that remodeling really is different than new construction — because honestly, sometimes a stick isn’t just a stick.
Alan Hanbury, Jr., CGR, GMR, CGP, CAPS, is treasurer of House of Hanbury Builders Inc. in Newington, Conn., a full-service remodeling company founded in 1976. A longtime leader and past chairman of the NAHB Remodelers, Hanbury is a sought-after lecturer and writer on the remodeling industry and its professionalism. For more information, email Hanbury, call him at 860-666-1537 or visit www.houseofhanbury.com.
“The Paper Trail: Systems and Forms for a Well-Run Remodeling Company,” available through NAHB BuilderBooks, shows how to use proven management systems to run a successful remodeling company.
The publication includes a CD containing 160 essential forms and documents — culled from successful remodelers across the country — that you can customize to suit your business needs.
To view or purchase this publication online, click here, or call 800-223-2665.
"How to Find a Professional Remodeler," available at NAHB BuilderBooks, promotes the professionalism of your remodeling business by offering a wealth of valuable advice to customers on the process of selecting a remodeler.
The newly updated brochure highlights the before and after photos of the most frequently remolded rooms in the house.
To view or purchase this publication online, click here, or call 800-223-2665.