Budget Blues
This spring, my wife, Elaine, and I bought a home that needs remodeling before we can occupy it. We researched online and found a design-build company whose aesthetics, craftsmanship, and philosophy we liked. The day after closing, we met with them at the still-empty house for a walk-through, during which we discussed our goals for the project, design fees, scheduling, and other relevant topics. The next day, we signed an agreement for a feasibility study that would result in a conceptual design and rough construction pricing. We were off and running and feeling good about the project.
Now, two-and-a-half months later, after a great deal of work for us and for the remodeler, we are back at square one because the cost estimate was so much higher than our budget—three times higher—that no amount of pencil sharpening and scope-reducing could bring it down enough.
How did that happen? The simplest answer is because no one asked about budget at that first meeting. Like most homebuyers, we did, in fact, have a rough budget in mind. Obviously, we had a list of what we wanted to remodel, but because we’d completed both an energy audit and a home inspection before closing, our budget included new heating and electrical systems, things that might escape the attention of homebuyers focused only on kitchens and baths. We also considered how much investment made sense for this house in this neighborhood given what we had paid for it, knowing that it would be years before we could recover our costs in a resale.
By the end of that first meeting at the house, we had shared most of that information with the remodeler. But because they never asked about either our budget or how we intended to finance the project, they didn’t know how much we were expecting to spend.
I think both sides made incorrect assumptions. Given our age and the fact that we talked about how this would likely be the last house we would ever buy, maybe the remodeler assumed that price was no object and that resale value wasn’t a concern. To be fair, we didn’t volunteer a number either. Maybe we assumed that, because budget never came up at any point during the walk-through, they had made the same calculation about total investment and resale value. Regardless, we had our own agenda and a lot to communicate to them in a short time, and we didn’t notice the missing budget question.
No Blame
My goal here is not to point a finger—I am as much to blame as anyone. But this experience from the homeowner side of the kitchen table points up something that is easily overlooked when remodelers talk about the need to know the budget. We all agree that remodeling is not a commodity, that costs vary from company to company for a host of reasons, not just scope of work and material selections, but also level of services provided, subcontractors used, cost of labor, speed of construction, etc. When it comes to knowing a prospect’s budget, remodelers typically look at it as a way to avoid wasting time pursuing prospects who have unrealistic budgets or who simply can’t afford their services. That makes sense, but what often gets overlooked is that an early discussion about budget is equally important to the homeowners as a way to identify a mismatch.
As remodeling customers, Elaine and I have gone from excited and encouraged to anxious and dejected. We have a design we like and a pretty thorough (but still too high) cost breakdown for the project, but time has been wasted, and completion dates have been pushed back. Maybe our project is more expensive than we think, or maybe we can’t afford the services of the remodeler we had hoped to work with. The point is, we might have discovered that two months ago and taken a different direction.
Next time you are reluctant to ask a prospect about budget, remember: It isn’t just about you.
