Model Remodelers

Murphy says the experience convinced him there was "an opportunity to improve things in the industry, and to raise the level of communication and professionalism." He founded Mastercraft Remodeling, and five years later the company stays busy mainly in the trendy San Marco and Riverside/Avondale neighborhoods, where hundreds of vintage homes, many of them historically significant, are being restored to their Gilded Age glory.

Murphy is quick to point out that the remodeler he hired wasn't incompetent or dishonest. He had simply done a poor job of sharing information and managing expectations. "When the job was finished, it was nice," says Murphy, who still owns a direct-mail company called American Graphic Communications. "But there was always some problem. We were always waiting for someone to show up, or wondering why something wasn't getting done when it was supposed to get done."

It could have been worse-and sometimes is. Just about everyone has a horror story about a remodeling job gone awry. It wasn't finished on time. It cost twice as much as it was supposed to. The workmanship was shoddy.

Such tales make Murphy and other members of the NEFBA Remodelers Council cringe. That's why the 40-member council, which includes suppliers as well as remodelers, is working to educate consumers on how to have a positive remodeling experience.

Busy Year Anticipated

Certainly, the effort is well timed. Following a lull in residential remodeling at the end of 2002, professional remodelers reported a busier beginning to 2003 and significantly improved expectations for the rest of this year, according to results of the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI), released last month.

"It's a combination of things," says Murphy. "Low interest rates and home equity conversions are a driving force. But also, people like the neighborhoods they're in and they like older homes. They just want to raise the level of amenities up to what they could get in a new home."

The RMI is based on a quarterly survey of more than 600 professional remodelers, whose answers to a series of questions are assigned numerical values in order to calculate two separate indexes. The first index gauges current market conditions and is based on remodelers' reports of major and minor additions and alterations, plus maintenance work and repairs, on both owner- and renter-occupied dwellings.

The second index gauges expectations for the near future and is based on remodelers' reports of their calls for bids, amount of work committed for the next three months, job backlogs and appointments for proposals. A variety of "special questions" are also asked at the end of the survey to help pinpoint market perspectives.

Both indexes recorded substantial gains in the first quarter of 2003, offsetting much, though not all, of their declines since the same time last year. The index gauging current market conditions rose to 46.4, up 3.2 points from the final quarter of 2002 but still off from its 52.7 reading for the first quarter of 2002. (Year-ago comparisons are particularly relevant because RMI indexes are not seasonally adjusted.) Showing even greater strength, the index gauging future expectations rose to 50.3, up a remarkable 11.2 points from the final quarter of 2002 but shy of that year's peak 54.6 reading in the first quarter.

"Especially encouraging is that future expectations and backlogs of remodeling jobs in the pipeline are so strong," notes Murphy. "Current additions, alterations and maintenance and repair work ordered by homeowners rose to very healthy levels at the beginning of this year, and professional remodelers are optimistic that conditions will continue improving."

Meanwhile, results of the "special questions" section of the RMI revealed that kitchen and bathroom remodeling jobs continued to be the most common work done by professional remodelers as the new year got under way. Room additions and whole-house remodeling were the next most requested jobs.

By a wide margin, remodelers pegged granite countertops as the most popular single feature requested by clients. Commercial-grade appliances and upgraded wiring for high-speed Internet access were the second- and third-most requested jobs, respectively.

Making Informed Decisions

Is remodeling right for you? Murphy and others say that from an investment point of view, extensive remodeling makes sense if you plan to remain in your home for a while.

"You can certainly overspend," says Murphy. "You don't want to spend $200,000 remodeling a $100,000 house. But as a rule, if you plan to stay for five years, you'll make your money back."

Murphy asks his potential clients two questions: "First I ask what they would like to do if they had an unlimited budget," he says. "Then I ask what the minimum is that they're willing to accept." The scope of work, he notes, usually falls somewhere somewhere between those two extremes.

Dale Crisp, owner of Kendale, Jacksonville's largest-volume remodeler, works with clients in a similar manner. When scope of work is under discussion, Crisp tries to makes certain the remodeling investment will be worthwhile.

"You need to know what the neighborhood will support in terms of increased home value," says Crisp. "You also need to know if you could get the same thing for less money by simply moving to a new home. Then it becomes a matter of emotion. But I will say that probably 30 percent of the time, we end up recommending against moving ahead with the plans clients present us with."

Crisp and Murphy-along with national remodeling experts-also agree that the best return on investment comes from remodeling kitchens and bathrooms, expanding master suites and adding more living space.

Hiring a Remodeler

The generally accepted edict that you should request three bids for any job isn't always applicable in remodeling, say local experts, because so many remodeling projects are rather nebulous. "Asking how much remodeling a bathroom will cost is like asking how much a bag of groceries is going to cost," says Murphy. "It just depends."

The only time competitive bidding makes sense, says Murphy, is when a job has been designed by an architect and there are uniform specifications that each bidder can follow. Lacking that, he suggests that you first find a contractor with whom you are comfortable based upon on such factors as licensing, reputation and quality of work.

"Any contractor can give you three names of people who were happy with their work," adds Murphy. "Instead of that, ask for the last three permits they pulled and investigate those jobs. Talk to the clients. Ask to have a look around."

Crisp agrees. "Unless you can make real apple-to-apple comparisons, then interview companies and find one you want to work with," Crisp says. "You can't make a decision based only on price because there are so many variables."

Larry Murr, owner of Larry Murr Remodeling, says that most top remodelers won't bother to bid on projects in which it appears that price will be the only criteria. Others will charge for bids, with the cost to be deducted from the final fee if the company is hired.

"Most anyone who considers himself to be a professional remodeler feels the same way," says Murr, whose company won the majority of this year's NEFBA-sponsored First Coast Remodeling Awards. "Otherwise, we're just spinning our wheels."

Plus, Murr notes, less-qualified remodelers will always win a bidding war-although the cost to the homeowner may ultimately be much greater when inferior work has to be repaired.

Part of the process of finding a remodeler is checking credentials.

In addition to being licensed by the state as a contractor, some professional remodelers have completed specialized training to earn the designation Certified Graduate Remodeler (CGR) or Certified Aging-in-Place Specialist (CAPS). Certified remodelors have the expertise and experience to guide you through the often daunting home remodeling project with the care and attention to detail you would expect from the best in the business.

CGR certification requires that graduates meet prescribed standards of business practice, have proven track records of successful project management, complete a comprehensive training curriculum and pledge to uphold the program's rigorous code of ethics.

Graduates of the CGR program must also meet re-certification criteria every three years. Requirements include attendance at remodeling industry trade shows, business-related seminars and continuing education workshops, proof of insurance and letters of recommendation from suppliers and financial institutions.

CAPS certification encompasses the technical, business management, and customer service skills essential to competing in the fastest-growing segment of the residential remodeling industry -home modifications for "aging-in-place."

Aging-in-place means living in one's home safely, independently and comfortably, regardless of age, income or physical disabilities. It offers homeowners the reassurance of being able to call a house a home for a lifetime.

The NEFBA Remodelors Council is collaborating with the NAHB Seniors Housing Center, NAHB Research Center and the AARP to support the CAPS program.

For more information on either the CGR or the CAPS programs, contact the NEFBA Remodelors Council at (904) 715-4355, ext. 229 or via e-mail at ttaylor@nefba.com.

Avoiding a Money Pit

Even the best remodelers are sometimes confronted with unexpected challenges, although the real pros claim that they are rarely taken entirely by surprise buy what they find when working on older homes.

Murphy says his company spends considerable time cleaning up messes that contractors in years past have left behind. "Sometimes you find things and you're amazed there hasn't been a catastrophe," he says. "You might find the roof is about to fall in, which could be a $100,000 problem that an extra $100 could have prevented back when the work was done."

Crisp recalls being asked to remodel a kitchen that turned out to be made of poured concrete. "It had been built back in the Cold War and was a bomb shelter," he says. "That obviously presented a set of challenges. But as a rule, the unknowns are pretty limited. The client shouldn't be caught totally unaware if the contractor has done his homework."

So how do remodelers charge for their work? For large jobs, many use a "cost-plus" formula, in which actual hard costs (including labor and materials) are calculated and a fixed percentage for profit and overhead is added. For a quality remodeler, cost plus 25 percent to 35 percent is typical. Others simply charge a flat fee.

When a lending institution is financing remodeling work, the remodeler is typically paid in five biweekly or monthly "draws" as the work progresses. Other times, the remodeler may be paid as specific milestones in the project are reached. In any case, Murr says, the contract between the remodeler and the homeowner should specify the payment schedule.

Finally, make certain to adjust insurance coverage on your home to reflect increased value as a result of improvements. If you've gotten a construction loan rolled into a mortgage, then your lending institution will require this-but even so, it only makes sense to protect your investment.

After all, it'll cost a lot more the second time around.