How to Budget for a Home Renovation

In this age of instant information, it’s natural to look for shortcuts. Determining the cost of a remodel is one of those shortcuts people usually look for, and unfortunately that is one place where shortcuts don’t work.

The square foot pricing method originated from homebuilding where it works very well. With homebuilding, you have all the same components every time usually in the same ratio from home to home. Every new home has a complete foundation, framing package, roof, siding, paint, etc. There is very little variation within the same level or type of home and the square foot costs are generally consistent within a given quality or area.

Remodeling is quite different. There are no two jobs alike. For example, take two different bathroom jobs. One is a 5’ x 9’ with a single vanity, tub/shower combo, tile floor, toilet and lighting. If the total sales price is $30,000 that comes to $667/SF. Now let’s take the same project scope, but the bathroom is 10’ x 12” and the sales price is $40,000. The square foot cost is $337/SF! Just by varying the size of a project the unit cost is halved! This doesn’t take into account any variation of material quality or overall scope. You can see that the unit prices can vary wildly. The only way to know the true cost of your remodeling project is to have a complete design and specify the materials you are going to use.

Because we do this for a living, we look for ways to provide value to the customer. One of those ways is to be able to budget and price a job quickly. Years ago, I looked at past data on remodeling projects we have completed and attempted to arrive at a square foot price for a given project. What I noticed right off the bat was that just to categorize a job was challenging. There was no such thing as just a kitchen remodel or just a bathroom remodel. Usually those projects entailed work elsewhere in the house and the costs were never split out. I found out quickly that I was wasting my time trying to figure out a cost per square foot for project types. There are just too many variables. You’re better off just using cost ranges for individual job components (Bath, Kitchen, Master Suite, etc.) and adding them together to arrive at a budget. Any reputable remodeling contractor should be able to assist you in developing a budget.

My advice for people looking to start a remodeling project is to interview a handful of reputable contractors and choose the one you feel you trust the most, then develop the budget together and stop taking shortcuts, you’ll only get burned!

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