Eieio
August 29th, 2009, 10:00 AM
Q I read wildly varying figures for the cost of remodeling a kitchen. What is the real cost today if I use an experienced contractor?
A Most publications will have you believe that bathrooms can be remodeled for $10,000 to $20,000, kitchens for $20,000 to $50,000, and additions built for $50,000 to $100,000.
While these prices no doubt work in some areas, and may suffice for owner-built work with no labor costs, we know they are way too low for much of the professional work in the Bay Area.
In our area, for professionally built work, expect to spend at least $30,000 to $50,000 for bathroom remodels, $80,000 to $150,000 for kitchens, and $250,000 to $500,000 for additions.
Why are the "real" costs so much more than reported?
One factor is this: Have you ever asked a friend what they paid for their house or car and gotten an answer that seemed like they just got an unbelievable deal? You are left wondering how that could be because you paid considerably more for your home/car/loan.
This is also what happens with remodeling costs. Often magazines, your friends, neighbors, architects and contractors underplay the real cost of doing the work to make it more appealing.
Another reason the real costs of work might be underplayed has to do with property taxes. To reduce permit costs and any reassessments (this applies only in California),
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there is a temptation to underreport costs, which reduces your property taxes.
For example, let's say your house is worth $500,000, and you sign a contract to do $200,000 of remodeling. Perhaps you bought your home when it only cost $250,000, so your property taxes are low.
When the home is remodeled, counties cannot increase the value of the entire home, but they can up the assessed value by the amount of the improvements — in this example, $200,000.
To reduce this effect, many owners understate the value of the improvement, perhaps in this case claiming that the improvements added only $100,000 of value.
I have even had clients successfully argue that their new kitchen and bath did not add any value, since they already had one anyway!
If remodeling costs were understated to save on property taxes, and if these figures were used to calculate the costs of improvements, the figures would be artificially low.
Similarly, building permit fees are based in large part on the stated value of the improvements. Again, there is a tendency of owners to understate the value to save on permit fees.
In addition, building professionals tend to be optimistic when it comes to the costs of improvements. This is natural, because if they throw in every possible cost, they may not get the work. Owners often award the work to designers and builders who "tell them what they want to hear." Architects and builders may be tempted to underestimate costs to stay competitive, especially in this tough market.
If this information makes you feel vulnerable to being lowballed, then you are getting the message. Be cautious of ballpark prices and media reports and academic studies, because they will tend to be low for the reasons mentioned above.
I recommend you interview several local providers and ask them to give you a realistic idea of price — not high, not low, but realistic.
After talking to at least three professionals, you should have a good idea of the actual price range. With any luck, the estimates will be close enough to let you make a "go, no-go" decision with some confidence.
Link
http://www.mercurynews.com/homeandgarden/ci_13217767?nclick_check=1
A Most publications will have you believe that bathrooms can be remodeled for $10,000 to $20,000, kitchens for $20,000 to $50,000, and additions built for $50,000 to $100,000.
While these prices no doubt work in some areas, and may suffice for owner-built work with no labor costs, we know they are way too low for much of the professional work in the Bay Area.
In our area, for professionally built work, expect to spend at least $30,000 to $50,000 for bathroom remodels, $80,000 to $150,000 for kitchens, and $250,000 to $500,000 for additions.
Why are the "real" costs so much more than reported?
One factor is this: Have you ever asked a friend what they paid for their house or car and gotten an answer that seemed like they just got an unbelievable deal? You are left wondering how that could be because you paid considerably more for your home/car/loan.
This is also what happens with remodeling costs. Often magazines, your friends, neighbors, architects and contractors underplay the real cost of doing the work to make it more appealing.
Another reason the real costs of work might be underplayed has to do with property taxes. To reduce permit costs and any reassessments (this applies only in California),
Advertisement
there is a temptation to underreport costs, which reduces your property taxes.
For example, let's say your house is worth $500,000, and you sign a contract to do $200,000 of remodeling. Perhaps you bought your home when it only cost $250,000, so your property taxes are low.
When the home is remodeled, counties cannot increase the value of the entire home, but they can up the assessed value by the amount of the improvements — in this example, $200,000.
To reduce this effect, many owners understate the value of the improvement, perhaps in this case claiming that the improvements added only $100,000 of value.
I have even had clients successfully argue that their new kitchen and bath did not add any value, since they already had one anyway!
If remodeling costs were understated to save on property taxes, and if these figures were used to calculate the costs of improvements, the figures would be artificially low.
Similarly, building permit fees are based in large part on the stated value of the improvements. Again, there is a tendency of owners to understate the value to save on permit fees.
In addition, building professionals tend to be optimistic when it comes to the costs of improvements. This is natural, because if they throw in every possible cost, they may not get the work. Owners often award the work to designers and builders who "tell them what they want to hear." Architects and builders may be tempted to underestimate costs to stay competitive, especially in this tough market.
If this information makes you feel vulnerable to being lowballed, then you are getting the message. Be cautious of ballpark prices and media reports and academic studies, because they will tend to be low for the reasons mentioned above.
I recommend you interview several local providers and ask them to give you a realistic idea of price — not high, not low, but realistic.
After talking to at least three professionals, you should have a good idea of the actual price range. With any luck, the estimates will be close enough to let you make a "go, no-go" decision with some confidence.
Link
http://www.mercurynews.com/homeandgarden/ci_13217767?nclick_check=1