The home remodeling industry is in epic
growth mode! According to the 2017
Remodeling Outlook by the Harvard Joint
Center for Housing Studies, remodeling
spending in the U.S. is at an all-time
record high. Remodeling is expected to
experience healthy growth through 2025.
This rapid growth is fueled by rising home
equity, incomes, and existing home sales.
Also, a shortage of affordable new homes
results in investment in older homes.
Current unique remodeling trends
include investing in accessibility, energy
efficiency, smart home features, and
sustainability. Homeowners are being
inspired by a plethora of popular home
improvement shows like Fixer Upper®, Flip
or Flop® and Property Brothers®.
How can remodeling contractors benefit
from this explosive growth, and set
themselves apart from competitors? One
particular challenge is that the majority of
homeowners face the contractor selection
process with a negative perception, low
expectations and a low level of trust. They
often feel that contractors are out to take
advantage of them and plan on change
orders. They tend to treat contractors like
a commodity and focus solely on price.
This is exacerbated by the Harvard Study
findings that in any given year, about one
in five residential construction businesses
opens and another one in five closes.
Fly-by-night and sham contractors hurt
the overall industry, as they are the ones
often profiled on the evening news.
The vast majority of remodeling
contractors are professionals that
take exceptional pride in their work,
striving for customer satisfaction and
referrals. However, even with good
and honest intentions, homeowner
disputes occur because the scope of work
and performance standards were not
clearly identified in writing. Thus, the
homeowner’s expectations do not meet
the contractor’s planned deliverable.
One best practice is to agree on a
detailed written scope of work at the
contract phase. The more a contractor
educates the homeowner about the
scope of work, the more likely they are
to buy. Also, it is important to provide
written performance standards that
establish how workmanship, systems,
and structural work will perform after
the work is completed. Performance
standards help avoid disputes, such as,
when homeowners are unhappy about
how wood floors/framing/trim naturally
adjust to humidity, concrete/mortar/
grout/caulk shrink as they dry, drainage
grades change as fill settles, etc.
Another best practice is for contractors to
make clear to homeowners what sets them
apart from the competition. Consider
discussing the quality of work, value of
experience, aggressive schedule, and tidy
friendly crew. Show photos and provide
by Walt Keaveny, Risk Manager, MS, PE, PG
OUT OF BUSINESS
Homeowners tend to treat
contractors like a commodity
and focus solely on price.
In any given year, about one in
five residential construction
businesses opens and another
one in five closes.
One best practice is to agree
on a written detailed scope of
work at the contract phase.