A recent report released by the Joint Center for Housing Studies of Harvard University estimates that the yearly increase in residential renovation and remodeling expenses in the United States will reach a decade high of 7.7 percent this year and is expected to go down to 6.6 percent through the third quarter of 2019. Chris Herbert, Managing Director of the Joint Center further stated that “Low for-sale inventories are presenting a headwind because home sales tend to spur investments in remodeling and repair both before a sale and in the years following.” You may also see Contract Templates.
For the third quarter, annual spending for residential improvements as well as repairs by the average American is still expected to increase and reach up to a staggering $350 billion nationally. With homeowners finding themselves faced with a need for repair and renovation, a contractor should make sure that before a deal is agreed, a renovation contract should have these elements:
1. Name of parties: Identifying yourself as the contractor and properly identifying the client goes without saying in any business document, especially one that’s as important as a contract. However, you’ll be surprised how many people get this wrong, writing the name of the individual representing the business instead of the company’s legal name. If you own or manage a construction firm specializing in renovation projects, it’s appropriate to emphasize that Joe Walsh is agreeing to do business with Walsh’s Home Builders.
2. Materials: This is where you have to be as detailed as possible, lest you find your business facing ugly disputes with a homeowner because the materials you used for the job falls short on quality even when you purchased all of them from the most reliable suppliers in the market. You may want to have a detailed list of the materials you’re going to use, their item numbers, quantity, brand, etc. Outline the steps you took in the event of an inability to get the client’s preferred materials and the alternative you provide them.
3. Offer: One of the most important elements of any business contract is the official offer. Simply put, if there is no offer, no contract exists as far as your firm is concerned. A company may ask for an offer which is known in business terms as “invitation to treat” by opening bids for proposals to accept a contract later on. For instance, if you have a new product line, you will, of course, put it on the store window, letting the customers see and know that its’ available for purchase. In the same way, listing your home renovation services as part of the Sunday paper’s ads serves as an offer to the general public.
4. Acceptance: Acceptance follows an offer which means a homeowner has taken you up for the offer you made. What counts as an offer and acceptance can vary, but as a general rule, the acceptance should indicate your willingness to enter into an agreement which can either be implied or directly given to each of two parties.
Despite the anticipated decline in home remodeling projects, other areas of the residential remodeling market such as home prices and building materials continue to look stable and will be able to support above-average gains in market spending this year. Here are the steps you can follow in writing a renovation contract for your client:
1. Make sure that all parties are legally allowed to participate: The renovation contract is considered useless unless each party has the full capability to understand the terms of the paperwork they agree to sign. To make sure this understanding is properly guided, all parties must adhere to these requirements:
2. Include an estimated project schedule: A home renovation project is no simple repair or makeover. It is therefore important to indicate a start and end date, as well as target dates for when the job should be finished. It’s also wise to indicate project milestones and what happens if the work isn’t completed within the deadline set. You need to detail this since a penalty for not getting it done due to harsh weather is the same for a mistake on the contractor’s end.
3. Identify who takes responsibility for permits and licensing: Most jurisdictions have code-specific requirements, permits and licenses before a contractor is allowed any moderate to major scale renovation projects on buildings and properties. Before signing the contract, decide in advance who gets to take care of securing these requirements. You should also make sure as a contractor, that you can rightfully take responsibility for any building codes and zoning laws violations.
Renovations and home improvements of existing properties and buildings are still common, as more and more people need space or simply want the feeling of fulfillment, comfort and newfound luxury in coming home to a renovated property. Below are tips to help you finalize your renovation contract:
A kitchen revamp can get expensive and according to Remodeling, a home renovation publication, the price can go up to $64,000 for a major kitchen renovation. The same source also reports the cost versus value reveals that large-scale renovations can cost about $125,000 on average.
You have to outline a procedure for amending the renovation contract, which isn’t complicated. Just remember to get everything in writing and add an agreement to have a written record for all agreements and future amendments or changes.
A written contract is an essential part of any construction work, building maintenance and repairs, including any minor or upscale home renovation. The contract serves as a written record spelling out the terms and conditions of the agreement between homeowner and contractor, providing a crucial mediation that also enforces both parties to commit, especially when issues and disputes arise.
Whether you are a home renovation contractor thriving on projects by the dozens or a homeowner who thinks the house warrants a major revamp, learning how to write a home renovation contract ensures you understand what the project involves and why having a contract is important.