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Remodeling
buying a house and making it a home
While house hunting in San Antonio, you and your spouse have found the perfect home – it’s well situated close to a high-rated school district, it’s within a decent commute to your work and a nice pool and landscaped backyard really made a lasting impression. The home will require some remodeling but not enough to stop you from moving in, and it’s available for immediate occupancy. Find out more in this section about the best ways to find a remodeling contractor, the questions to ask when interviewing a contractor and what to include in the remodeling contract. Also find out what remodeling projects in the San Antonio region provide the best return on investment.

According to the National Association of the Remodeling Industry (NARI) (www.nari.org), the remodeling market is a $275 billion industry and is expected to continue to experience significant growth. It is estimated that more than 1 million homes per year undergo major renovation or remodeling. In San Antonio, there are many professional builders and remodelers to select from, most are members of the Greater San Antonio Builders Association (GSABA), an organization of professionals in the residential construction industry.

Working with Contractors in Texas
In Texas, a builder or a remodeler may not construct new homes or engage in remodeling projects that change the living area of the home or that cost more than $10,000 for interior renovations without first registering with the Texas Residential Construction Commission (TRCC) (www.trcc.state.tx.us). In addition to obtaining information about the builder or remodeler, the commission determines the physical location (address) of each builder or remodeler.

The review of the registration application includes a background check for a designated individual who serves as the registered agent for the builder or the remodeler. The commission aggressively pursues administrative actions against builders and remodelers who fail to follow statutory and regulatory requirements. The majority of commission actions are the result of complaints received from consumers.

At TRCC’s website, you can search by builder name to learn important details about a builder or remodeler, facts such as whether the builder/remodeler is registered, the number of homes a builder or remodeler has registered and the number of inspection requests where an inspector confirmed a construction defect. You also can call the commission at (877) 651-TRCC to check on a specific builder.

If you’d like a copy of the complaints filed against a builder or remodeler, send your request to open.records@trcc.state.tx.us, fax to (512) 463-9507 or mail to: P.O. Box 13509; Austin, Texas 78711-3509. Be sure to include your contact information, including your mailing address, in your request.

Another Texas resource is the Attorney General Office of Texas (www.oag.state.tx.us). This agency protects consumers and the legitimate business community by filing civil lawsuits under the Deceptive Trade Practices Act and other consumer protection statutes.

Contractor selection

At this point, you’ve had a chance to review what improvements and additions you’re interested in making to your home. Now, you need to begin the contractor selection process, which is the most important decision in a remodeling project. Nearly half of all projects signed by a remodeling contractor are the result of client referrals. An additional 22 percent of jobs are the result of word-of-mouth. By following these guidelines, you will be better prepared to make an informed decision that best suits your needs.
  1. Employ a home improvement contractor with an established business in your area. Local firms can be checked through references from past customers in your community or through local organizations. Local remodelers are compelled to perform quality work that satisfies their customers for their business to survive. Here are a few suggestions for finding local contractors:

  • Greater San Antonio Builders Association website at www.sabuilders.com. You’ll find a searchable database of member professional builders.
  • The San Antonio chapter of the National Association of Remodeling Industry (NARI) www.remodelsanantonio.org. At the website, click on Find A NARI Pro and select a professional by specialty.

Visit the TRCC website described above at www.trcc.state.tx.us to find out if a contractor you are considering is licensed.

       2.  When you meet with a potential contractor, ask for the following:

  • A current copy of his license. Call or visit TRCC’s website to verify compliance with the law.
  • A copy of the remodeling contractor’s certification of insurance for the name of his or her insurance agency to verify coverage. Most states require a contractor to carry worker’s compensation, property damage and personal liability insurance. Make sure the contractor’s insurance coverage meets all the minimum requirements.

When you solicit bids from several different home improvement contractors, be sure they are bidding on the same scope and quality of work. Discuss variations in bids and beware of any bid that is substantially lower than the others.

Questions To Ask Potential Contractors
Timing and money are the most common questions a home improvement contractor hears, but during an interview, homeowners should be asking about credentials and verifying business practices. Instead, what is often heard is, “When can you start? When will it be finished? How much will it cost?”

These simply aren’t enough. If you are going to have a successful remodeling project, you need to learn the right questions to ask and how to ask them.

Start by asking questions about a company’s business practices and experience in a similar type of project. If you decide you want to hire a particular remodeling contractor, then you can discuss when he or she can start, what time he or she can knock on your door each morning and when you will have your home to yourselves again.

Here are more questions:
  • How long have you been in business?
  • Who will be assigned as project supervisor for the job?
  • Who will be working on the project? Are they employees or subcontractors?
  • What is your approach to a project such as this?
  • Do you have a website that shows photographs of completed projects as well as projects under construction?
  • How many projects like mine have you completed in the past year?
  • Can you provide a list of reference from those projects?
  • Can you provide a list of business referrals or suppliers?
  • What percentage of your business is repeat or referral business?
  • What is a typical remodeling budget for your company?
  • Are you a member of a national trade association?
  • Have you or your employees been certified in remodeling or had any special training or education, such as earning a Certified Remodeler (CR), Certified Remodeler Specialist (CRS) or Certified Lead Carpenter (CLC) or Certified Kitchen & Bath Remodeler (CKBR) designation?

It’s also important to realize that sometimes it’s not the answers you get that are significant, but what you don’t get. Asking the right questions is not enough. You need to pay attention to your instincts and to what information is missing.

Unlike your accountant or stockbroker, your remodeler will be a part of your daily life and available for some on-the-job education. He or she will be privy to your personal life, more so than your doctor or lawyer. Your contractor will know how you look early in the morning and how well behaved your dog is. It makes sense that you should take some time to carefully select this person and make sure that it is someone to whom you can ask questions.

Proper Planning is Important
For considerably less than a new home, careful planning of your home improvement projects will enable you to update your home, increase the value of your investment and customize your living space. As part of the planning process, look over your property carefully. What repairs are needed? What improvements would you like to make? Think ahead and determine your future needs. Professional remodeling contractors can help you in your planning by outlining options and discussing the improvements you can make within your budget. Be sure to review your homeowner’s insurance policy and make adjustments for the added value of the work being done.

Think About Design and Function
Design and function should be foremost in your mind if you’re thinking of adding a room or converting an existing room. When planning a larger, more complicated project give thought to details such as, intended use of the space, flow of the space, where you want electrical outlets, telephone jacks and cable hook-ups located, the type of lighting required, your current and future storage needs and whether you want to include luxury items. These details will enable your home improvement to better suit your needs and your lifestyle.

A professional remodeling contractor or design service should be consulted about design and function of any remodeling project. He or she can also help you with time and money-saving hints.

Comply With Local Codes and Permits
Building codes have been established by most cities, towns and counties. They vary considerably from one jurisdiction to another. A building permit generally is required whenever structural work is involved or when the basic living area or footprint of the home is to be changed. Ask your real estate agent or your insurance agent about the local requirements in your area. Also, if you live in a deed-restricted community, be sure to review your copy of the homeowners agreement. Under some agreements, it’s your responsibility to notify your homeowners association if you intend to make any home improvements. This may include getting the plans approved by a design committee.

A Well Written Contract is Essential
Before any remodeling work can begin, there must be a complete contract. This holds the job together and ensures that all parties involved agree to the same vision and scope for the project.

According to NARI, here are some key areas you should look for in a contract:
  • Be sure the contract includes the contractor’s name, address, phone and license number.
  • Detail what the contractor will and will not do.
  • Your contractor should detail a list of materials for the project in your contract. This includes size, color, model, brand name and product.
  • The contract should include the approximate start date and substantial completion dates.
  • Study all required plans carefully. Insist that you approve them and that they are identified in your written contract before any work begins.
  • Federal law requires a contractor to give you written notice of your right to, without penalty, cancel a contract within three business days of signing it. This is provided it was solicited at some place other than the contractor’s place of business or an appropriate trade premises such as your home.
  • Make sure financial terms are understood and spelled out in the contract. The total price, payment schedule and any cancellation penalty should be clear.
  • A warranty covering materials and workmanship for a minimum of one year should be written into the contract. The warranty must be identified as either “full” or “limited.” The name and address of the party who will honor the warranty (contractor, distributor or manufacturer) must be identified. Make sure the time period for the warranty is specified. (See more on warranties below.)
  • A binding arbitration clause is also a good inclusion in the event a disagreement occurs. Arbitration may enable you to resolve disputes without costly litigation.
  • Thoroughly review the entire contract and be certain you understand it before signing it.
  • Consider the scope of the project and make sure all items you’ve requested are included. If you do not see a specific item in the contract, consider it not included. Never sign an incomplete contract. Always keep a copy of the final document for your records.
  • Consider having a legal professional review the contract before it is signed.

Under Texas Law
According to the Texas Attorney General’s office, any contract you sign for work on your homestead must contain the following warning next to the space for your signature:

“Important Notice: You and your contractor are responsible for meeting the terms and conditions of this contract. If you sign this contract and you fail to meet the terms and conditions of this contract, you may lose your legal ownership rights in your home. Know your rights and duties under the law.”

When you sign a contract for home improvements on your homestead, the contractor can legally place a lien on the homestead. If you sign a contract containing the language quoted above and you fail to make the payments, the company can take away your home. Therefore, it is extremely important that you understand exactly what your obligations will be under the contract, and that you are confident you can meet those obligations. If you have any questions or doubts, consult an attorney before you sign the contract.

If there will be a lien on your home, make sure a notary is present to witness your signature. A notary other than the salesperson must be present to witness you sign the document creating the lien. It should be a warning to you if the salesperson does not have a notary present or if he says he will take care of the notarization later.

If your contractor fails to pay the subcontractors and suppliers, you are responsible, even though you have not contracted directly with the subcontractor or supplier. Under Texas law, if a subcontractor or supplier who furnishes labor or materials for the construction of improvements on a property is not paid, the property may be subject to a lien for the unpaid amount.

If your homestead improvement exceeds $5,000 in cost, the contractor is required by law to deposit your payments in a construction account at a financial institution. Ask the contractor for written verification of the existence of the construction account. Monitor deposits and disbursements to subcontractors, laborers and vendors. Access to the account record should be included as a requirement in your written construction contract.

Contractor Warranties in Texas
In addition to the information provided above, Texas residents are reminded of the following on contractor warranties, from the Office of the Attorney General of Texas (www.oag.state.tx.us).

Limited statutory warranties for residential construction in Texas became effective on June 1, 2005. These warranties apply only to residential construction that began on or after that effective date. The required warranty periods reassure all home buyers that if a home component covered by the warranty does not perform up to the stated standard, the builder is obligated to repair or replace it. Any residential construction that began prior to June 1, 2005, is governed by the warranties and building and performance standards in the home’s original construction contract or, if there is no express warranty in the contract, the law may have implied certain warranties to protect the homeowner.

The statutorily-mandated periods are: one year for workmanship and materials; two years for plumbing, electrical, heating and air-conditioning delivery systems; and ten years for major structural components. There is also a ten-year warranty of habitability.

Each period begins on the earlier of: occupancy or transfer of title from the builder to the initial homeowner or if not a new home, the date the improvement is substantially completed.

Paying for the Work
It is normal for a contractor to ask for partial payment in advance, and provided that you have taken the precautions recommended above, you should expect to provide a part of the cost before the work begins. However, it is notorious that scammers involved in door-to-door rip-offs will ask for payment in full in advance, and then abscond without completing (sometimes without even starting) the job.

Even with a reputable business and a sound written contract in place, you should not pay in full until the work is complete and you have inspected it yourself and found it satisfactory. A partial payment schedule will usually specify what part of the job has been done when a partial payment is due. Inspect the work and make sure the contractor has met the schedule before you make your payment.

If you are asked to sign a certificate of completion, do not do so until all the work is completely finished, the site is cleaned up, and you are satisfied.

Working with Remodeling Professionals
Before work begins, ask your remodeling contractor what inconveniences may occur while the project is underway and plan for them accordingly. Be sure your contractor is aware of vacations or special events so that he or she may schedule their job site time appropriately.

Here are other points to consider:
  • Consider moving personal property from construction areas and declare all work zones off-limits to children and pets.
  • Be sure to put all changes in writing if your remodeling project is modified while work is being done. Both parties should sign the amendment.
  • Keep a job file including contract, plans, specifications, invoices, change orders and all correspondence with the contractor.
  • Request a contractor’s Affidavit of Final Release be provided to you at the time you make final payment and a final waiver of mechanic’s lien. This is your assurance that you will not be liable for any third-party claims for nonpayment of materials or subcontractors.

— Determining the Scope of the Project
Depending on your needs and the size complexity of your intended remodeling project, there are several different options for you to explore before finalizing your plans.

Building a home involves many different skilled professionals. As you learn about the process, it’s important to know the roles that key professionals play. Here is a brief summary of job titles and descriptions in the home-building process.

Architects represent the most highly educated and trained category of designers. The title requires a college degree and state certification. Architects are able to translate your ideas into detailed plans and list material specifications. They can also oversee your project while it is in progress and are an excellent resource for other professionals, since they have already established a pool of designers and general contractors they have worked with in the past.

Designers are skilled in the design/building process, but are not licensed or regulated in most states. If you’re planning to work with a designer, be sure to verify his or her experience and professionalism. You’ll want to review the designer’s portfolio and look for design degrees from accredited universities and membership and/or certification from professional organizations, including as the American Institute of Building Design (AIBD), the National Council of Building Design Certification (NCBDC), the National Association of the Remodeling Industry (NARI) and the American Society of Interior Designers (ASID), among others. These organizations help assure professional standards of education, field experience and adherence to a code of ethics.

Residential Designers (Space Planning) are trained to use space most efficiently and tend to focus on floor plan design, detailed lifestyle evaluation and design functionality. If you’re considering a floor plan, a family room, bathroom or kitchen, you may wish to consult with a residential/interior specialist. This specialist can spend additional time and attention to specific areas of the home that are especially important to you and your family. Oftentimes residential designers’ expertise can overlap with interior designers because they both offer advice about the latest trends and products.

Structural Engineers need to be consulted if your project requires any structural alterations to an existing building. The role complements the work of architects, who are the spatial and aesthetic experts of building design and construction. A structural engineer can provide advice on any strengthening required and the design of new lintels, beams, walls or foundations that may be needed. Structural Engineers can also perform a site inspection to establish the nature of the ground and then design suitable foundations for the building.

Kitchen and Bathroom Designers provide expert product knowledge within their specialties, but they may lack construction experience or miss design opportunities associated with additions or movement of walls, according to building experts. If the project involves high-dollar budgets where expensive cabinets, materials and appliances will be used, consider either of these professionals.

Home Center Staff Designers are an easy, immediate and cost-effective way to learn about basic design ideas. You can check your local home center store to learn about classes they are offering or simply visit the store and discuss with staff designers what you’re planning to build. You will find that design skills among the staff varies widely, and be aware that the staff will recommend solutions using their store’s products.

Interior Designers and Home Decorators are specialists who offer advice on furniture, wall coverings, colors, styles and overall physical appearance of your project. While not essential to the process, home decorators and interior decorators can save you both time and money by helping you to narrow down your choices and utilizing professional discounts for materials such as furniture, home accessories, wallpaper or paint. Communicating your personal style and preferences are important when you meet with an interior designer or home decorator. Be prepared to show examples of styles you like that you’ve found in magazines or books. Based on your input, these professionals will develop ideas that will work for the space and help create a setting that represents your artistic sensibility. Keep in mind that while an interior designer may also do some interior space planning, most usually focus on interior decorating by selecting finishing touches such as picking carpets, drapes, paint colors, fabrics and furnishings. You may find that their duties could overlap or be interchangeable with those of both residential designers and interior decorators.

Draftspersons primarily prepare technical drawings of designs created by others, although some can assist with design. These days, most drafters work in Computer Aided Drafting and Design (CADD) programs. You may already have a good idea of a floor plan you like; if that’s the case, it’s not uncommon to hire a draftsperson to draw the blueprints and have them checked by an engineer before speaking with general contractors to bid, apply for permits and build.

General Contractors coordinate and construct projects that typically involve three or more subcontractor trades, such as carpentry, plumbing, painting, roofing or electrical work. In Texas, no state license is required, but contractors must get permits at the local level. Separate boards license HVAC and plumbing trades. Those general contractors who specialize in production, concentrate on bidding and building from plans drawn by design specialists and do not offer much, if any, design or drawing services unless they advertise themselves as design/build contractors.

Design/Build Contractors offer both architectural and construction services. They can carry a job from inception to move-in, and some experts believe the results are more cost-effective and allow for more collaboration during the building process. Using this method, one firm is accountable for the entire project, which can result in a less expensive design that is practical to build and causes less confusion between design and construction specialists who may not see eye-to-eye. Due to these advantages, the design/build method has become increasingly popular.

As you speak with these various professionals in the home-building process, look for people whose experience, designs and ideas best reflect your taste and sensibilities. There should also be good communication flow and understanding of the project. After all, it’s about building your new home, one of the largest investments you’ll make in your lifetime and the center of your family’s life.

— Other Remodeling Resources
Here are other ways to look for remodeling pros in your area:
  • Job-site signs: Pay particular attention to homes with signs from their contracting company on their lawn. Is the site clean? Are tools and materials being handled in a responsible manner? Are there dust covers over the owner’s belongings to protect them?
  • Check out your local media coverage: Look for articles about local remodelers. Also check out local home improvement columns in the newspaper, TV and radio talk shows in your area. They can be a great source for finding a qualified, reputable and personable contractor.
  • Seminars: Attend local seminars on home improvement topics. Some firms host free seminars on how to choose a remodeler and other interesting remodeling topics. Check your local newspaper community news section for information.
  • Home trade shows: In San Antonio, each year the Greater San Antonio Builders Association hosts the Builders Showcase Expo. Learn more about this by visiting the association’s website at www.sabuilders.com. You’ll find it a great place to gather information about companies and to make an initial contact with potential contractors. Later it is possible to meet with them at their place of business or in your home.

The Push For Greener Homes
San Antonians place a high premium on sustainability and conservation. Here are a few local and national programs and resources for homeowners interested in building and remodeling with green standards in mind:

Smart Energy deals with how you use energy in the home. Things such as gas water heaters vs. electric or gas furnace vs. heat pump are important in Smart Energy building. A Smart Energy builder uses a combination of gas and electric appliances to maximize the most economical utility package. Visit www.cpsenergy.com and search for smart energy homebuilders in Greater San Antonio that use CPS Energy’s energy-efficient combination of natural gas and electricity, which helps homeowners save up to 20 percent on their annual energy bills.

Energy Star Builders build to certain specifications set by the EPA. A new Energy Star qualified home performs better for the homeowner and the environment thanks to a variety of energy efficient features. Energy savings are based on heating, cooling and hot water energy use and are typically achieved through a combination of building envelope upgrades, high performance windows, controlled air infiltration, upgraded heating and air conditioning systems, tight duct systems and upgraded water heating equipment. Learn more at www.energystar.gov.

Build San Antonio Green is helping its members and the building industry move the practice of green building into the mainstream in San Antonio. The program includes a green home verification and certification program, a variety of green educational offerings, advocacy on green building issues and tools and resources for its members. Build San Antonio Green is a voluntary local green building program that has certified over 150 homes and is a partnership between the Greater San Antonio Builders Association and Metropolitan Partnership for Energy. Learn more by visiting www.buildsagreen.org.

Energy Efficient Mortgages (EEMs) are available for homebuyers purchasing energy efficient homes. EEMs allow buyers to qualify for larger home loans based on quantifiably low monthly energy bills. Ask your lender to explain the EEM products provided by Fannie Mae, Freddie Mac, Federal Housing Administration (FHA) and Department of Veterans Affairs (VA). It is even possible to refinance a home with an EEM to make it more energy efficient. Visit www.hud.gov/offices/hsg/sfh/eem/energy-r.cfm to learn more.

Developing A Realistic Remodeling Budget

Review these simple tips about developing a budget from the National Association of the Remodeling Industry (NARI):

— Determine what you can afford
It may seem obvious, but oftentimes homeowners may expect a remodeling contractor to create the budget for them, which is not a good idea.

Here are some better ways to begin the process:

Keep a reserve
Once you determine how much you can afford to spend on a remodeling job, decrease that amount by 10 percent to 20 percent. This reserve should be put away to cover any change orders or incidental charges accrued along the way, which will prevent a frantic scramble for additional funds at the end of the project.

Keep “change orders to a minimum.”
It is easy for a homeowner to say, “A little more on this fixture doesn’t matter. It’s very little money.” Unfortunately, having that attitude also makes it easy to overextend a prepared budget.

While it’s rare that any remodeling project proceeds without a single change order, homeowners can keep them to a minimum by sticking to their original plans. A change order is a written document detailing any requests to alter, change or remove any items found in the contract or project.

There are three key origins of a change order:
  1. The homeowner initiates one because they have changed their mind about the design or a specific product.
  2. Unexpected damage was found (termites, for example).
  3. A code violation is uncovered that affects the project.

The proverbial, “while you’re at it…”
That phrase can annihilate a budget. While it’s tempting to a homeowner to have his remodeling contractor complete handy work, it’s good to remember that any work not specified in the original contract will have an additional cost attached to it.

Financing
If the job requires financing, shop around for the best terms on the financing, including the interest rate, terms of the pay-out and finance charges. As with any financing agreement, you should calculate the entire cost of interest and charges over the term of the loan.

A home improvement company may offer financing, but this is not necessarily the best option, even though it may seem easy to arrange the financing and the work contract at the same time. Be aware that some contractors will have you sign a credit contract to pay a certain price for the work plus a finance charge, then immediately sell the right to collect on the contract for 20 percent to 50 percent less than the contract price. That usually means you could have gotten the work done for 20 percent to 50 percent less by paying cash or arranging financing yourself.

Check with your bank and credit union to learn about loan programs and interest rates. Ask your real estate agent and insurance agent for mortgage broker referrals and check the business pages in the San Antonio Business Journal and the San Antonio Express News for any advertised promotions from lending institutions.

One financing option that has re-emerged is the FHA 203(k) Home Construction, Rehab Loan from the Department of Housing and Urban Development (HUD), which is a version of a construction loan specifically designed for rehabilitation (rehab) or remodeling of existing owner-occupied homes, including single family and two- to four- units and condominiums. The advantages include an increase in loan limits and the low FHA down payment requirements.
 
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