Service estimates are a homeowner’s first indication of how much a home repair or update is going to cost. In some cases, an estimate greatly influences the final project, as homeowners make adjustments to meet their budget.
To find out how to interpret estimates, we asked our panel of experts to tell us more about how they are compiled. With a little insider advice, homeowners can get the most out of their home improvement dollar.
Budgets are a sensitive issue when it comes to home improvement and our experts have lots of great advice on what homeowners should consider when they receive an estimate. While we compile all their comments into a comprehensive article, take a look this week’s award-winning comments, listed below.
How Should Homeowners Interpret Estimates?
For all contractors, designers and home improvement professionals, how accurate are estimates?
Do most professionals shoot high and try to come in under budget?
Should a homeowner expect projects to come in on budget or just near the budget?
How should homeowners interpret differences between professional estimates?
For realtors, how are appraisals like estimates? And, how do they relate to asking price?
"For homeowners, interpreting and comparing estimates is the biggest challenge they face because more often than not, they have no idea what's really included in those estimates. They make assumptions based on a lack of knowledge on how each contractor is bidding out the project, if they are including materials, specific work summary and a detailed spec sheet.
Unfortunately, these are grey areas to a homeowner who will skim over important details – or lack thereof – and get to the bottom line pricing. Which, should they go with that alone will surely get them in trouble when they discover unexpected work or materials aren't in the bid and change orders begin flying.
With proposals, it's necessary to conduct an exhaustive proposal review to ensure the proposals actually have apple-to-apple information. Proposals that are not clear, complete and uniform cannot be compared. Period. The price of a proposal has no meaning if you don't know what's included. And therein lies the problem; homeowners more often than not, simply don't take the time needed to do this." read more
"When viewing an estimate take these things into consideration:
1. Do they have all materials quoted and what extras would there be in the event the contractor under bid the project? We see this issue a lot. Some companies that price only by square foot and materials, like gravel, sand, edging, etc, end up running out because the job's environment is not factored in.
2. What are the warranties and do they sound reasonable for the industry? We see operations that say they have a 10 to 20 year warranty but haven't been in business for any longer than a year.
3. Are you buying on cost or on quality? Cheap work means poor customer service, cheap materials, or poor craftsmanship. Something is lacking if the contractor is below market value.
4. Is it an estimate or a design you are looking for? These areas are two different things. Our company prides itself on the design of the project, so we can be a little more extensive in that process. Consider if it will be the right size for you needs once it is built. Consider furniture placement, traffic movement and how the project matches the property." read more
"How is an appraisal like an estimate? Lots of people selling their homes think that we [realtors], when giving price opinions, are “bidding” on their house, and that the higher the recommended listing price, the higher the amount they will get for the house. This misguided logic then tells them to select the agent who has told them the highest number.
This is called “buying the listing”, folks. Some agents will tell a seller anything they need to in order to secure the listing. Doing this harms the seller, as statistics have proven that starting out a listing overpriced actually causes the home to sell for less than it would have, had it been priced correctly at the outset. Homes get the most interest in the first 2-4 weeks on market, so why would you want to price it right after the interest has gone to its lowest?
So, here is the wisdom I can give you: whether talking with realtors about price opinions on your house, or getting “estimates” from contractors for a planned project, select a professional with a strong reputation for high standards of conduct and great results. Talk to others who have done business with them and were more than satisfied. Then trust that you are in good hands, follow their counsel, let them do their work and pay them what they are worth." read more
"Homeowners should ask their contractors if this is a rough estimate or a firm quote. If they want a firm quote, they need to be very specific in describing the work they want to have done. They should spell out which materials they want to provide themselves, and which materials they want their contractor to provide. Then, they should ask their contractor for a firm quote, in writing, with a statement of how long the quote is good for (e.g. 30 days or 90 days).
I always insist that my plumbers get a clear understanding of the scope of work and job responsibilities from the customer. We then give the customer a firm quote based on that information. If the customer doesn't change the scope of work or job responsibilities, we don't change our pricing. On the very rare occasion when one of our plumbers miss-quotes and the job costs more than quoted, then we have to eat the cost. We don't pass that cost on to the customer because it's not the customer's fault we miss-quoted. If the customer changes the scope of work, however, then we let the customer know what the new cost will before we continue on with the project. This gives the customer the opportunity to decide whether the requested changes are worth the additional cost or not. There should be no surprises at the end of the job if everyone communicates clearly throughout the process." read more
"First, you need to get more than one estimate. Any single contractor can cost a lot more or a lot less than any others. So ideally you want 3-4 so you can compare. If one contractor comes in way less than all the rest, does this mean you will be getting a bargain? Or will you be getting what you pay for? With nothing to compare to you would never know.
Second, the process of obtaining estimates can tell you a lot about the contractor. Do they actually answer the phone when you call? If not, do they return your call promptly? Do they show up on time for the estimate? Do they follow up in a reasonable amount of time? Does the estimate give you details about the entire project or just a price? Is it written on professional letterhead or a piece of scrap paper? There are not necessarily right or wrong answers, but you'll learn a lot about who you want to hire – and who you don't – by going through the process of getting estimates.
Third, you'll learn a lot about the little details of construction in general, and your project in particular. A good contractor will ask lots of questions, some you didn't even think of. And they'll all ask slightly different questions. So if you decide to hire the first contractor you meet with, you may need to have a second discussion to go over some of those details you learned about from the second or third estimates." read more