What happens when renovating or building goes wrong? And how do you avoid the 5 and 6 figure blowouts?
When we stuff up renovating or building, it rarely involves tens or hundreds of dollars. More often than not, it means thousands, tens of thousands, and sometimes hundreds of thousands of dollars extra. Do you sometimes wish you could take a renovation course to avoid your money gurgling down the drain? (Hot tip – you can take one right here!)
For many things in our lives, we can correct our mistakes. Have another go, and do better next time.
Yet, when it comes to building or renovating our family homes, most of us only do it once or twice in our lifetimes. The expense is big, the decisions are permanent, and the choices we make become the home we have to live in – good or bad.
The fear of stuffing it up, and regretting the choices make (that are screaming at us daily in our homes) is real.
Especially when you hear the horror stories.
Here are 4 real-life renovating and building horror stories, and tips to help you avoid these situations on your project.
#1 The homeowner and her family, whose builder went into liquidation during the renovation of their home.
This family moved into an apartment to make way for the renovation of their family home.
Things were progressing well enough, until they weren’t. The builder seemed to be falling behind. Sub-contractors were complaining that they weren’t getting paid. One threatened to come and pull out all the work he had done on the project. The builder kept stalling, kept saying things were going to be fine. The owners started paying the builder’s progress claims directly to the contractors to ensure they got paid. It was increasingly become a serious mess.
The builder went into liquidation – not only on their project, but on all projects he had underway at the time. Building literally stopped overnight. The project was already running behind. So what happened next?
After hiring lawyers to deal with the insurance claim and the aggressive receiver, they still had a half-finished home and were paying rent on a unit.
It took them some time to find another builder willing to take on the project, and the new builder quoted $50,000 to rectify the previous builder’s poor quality work. As well as several hundred thousand more dollars to finish the project.
Just like that, their budget blew out by double.
Fortunately these homeowners were in a position to fund the project to completion. However, you can imagine the additional stress this has put on them, and the frustration with delays and legalities of dealing with a liquidation and insurance claim.
And whilst the builder lost his license as his company went into liquidation, he is now operating under a “Qualified Supervisor Certificate”. This means he is unable to contract directly with consumers, but can be the nominated supervisor on a residential project for someone else’s building company.
Tips to avoid this for your project:
- Once a builder is on your site, terminating a contract can be difficult and onerous. So, ensure you ask LOADS of questions before you contract your builder. Questions about the history of their licenses, whether they’ve had licenses cancelled (in any capacity), and whether any of their staff have had licenses cancelled.
- Be ready to manage your project diligently, or have someone do it on your behalf. This includes checking payments, seeing that paid invoices have actually been paid. Occasionally it can be worthwhile checking on presented invoices to ensure that payments are actually being made as claimed. Any good quality builder will not resent you checking in on this.
- And if your preferred builder isn’t ready to start on your timeframe, question whether the alternatives are as desirable. This builder was not the preferred builder, but one that all parties (designer or owner) had not had experience with before. They chose him because he was ready to start on their timing. The job has ended up being far more delayed than if they’d waited for their preferred builder to start.
#2 The homeowners who spent money on and time with a design team for months on a proposal to convert their garage into a granny flat …
These homeowners hired a team of designers to design and document the conversion of their garage into a granny flat. When they submitted it for a Complying Development Certificate, Council reject the application because it didn’t meet planning codes, and the garage isn’t structurally sound.
They are now reviewing the agreement to determine what recourse can be taken with the design team to reclaim their fees and council application costs. And they’re looking for another designer to assist with getting the application done properly.
This has meant wasted time, money and fees on professionals who didn’t do their job well, and now have to be legally pursued for fee compensation.
Tips to avoid this for your project:
- Review your consultant agreements in great detail, whilst imagining the worst-case scenario. On review, these homeowners find that their agreement is missing some key information regarding necessary due diligence during the process that would have caught this issue much earlier.
- Before considering the conversion of any part of your home, or adding on (say a second storey), get structural advice as to whether its even possible. This will save you any headaches with the design process.
- And also get an understanding early of your local planning laws. A simple check with your local council will often reveal some some key information for your property. Or at the very least, it will arm you with better questions when you first get your design team over to start your project.
#3 The homeowner who decided to do an owner-builder extension to save some money.
This homeowner got quotes to renovate and extend their home, but found it was well over their budget. They decided to take on the project as an owner-builder.
However, they didn’t know how to check off that work was being completed to the required standard. They moved back into the project to save some money when the first stage was finished, and turned on the plumbing. It hadn’t been sealed properly, before the walls were lined. So, the plumbing exploded, the walls and floors got damaged.
They sought quotes for a builder to rectify the damage, and finish the project. Quotes were at least another $200,000 over what they planned to spend. Unfortunately, because the whole project took longer than they anticipated, they’re nearing the end of their approval period. Getting an extension is difficult, so they’re backed into a corner to find the funds and get the project finished.
Tips to avoid this for your project:
- Seriously consider whether owner-builder is a good approach for you. Many homeowners say to me “I’m really organised, do you think I could do an Owner-Builder?” However, if you don’t know what you’re organising, it won’t necessarily help that you’re organised.
- Build in a contingency for any project. Things can and do go wrong, and so having some spare funds to cover it will help you manage your risk overall.
- If doing an Owner-Builder project, consider hiring a building inspector, or someone who can assist with checking the work of trades, and ensuring components of work are completed to required standards. If you have no building experience, it is very difficult to know what you’re looking for in finished work.
#4 The homeowner who hired a friend to design and manage their project.
The friend got busy, didn’t attend site as regularly as originally planned.
The builder didn’t do their job well in one area, and the project started leaking and deteriorating.
THREE YEARS LATER, they’re finally taking legal action against the builder after trying every other avenue to resolve the dispute, and get the work fixed at the builder’s cost.
They’re also hiring another builder to fix the issues. More money and a huge amount of wasted time.
Tips for you to avoid in your project:
- Hiring friends and family is fraught with risk in any project. I prepared this video to explain some of the issues you can face, and that you should seek to protect yourself from. Both for the sake of your project, and your friendship!
- These homeowners tried to do the kind and non-legal process for three years. We can wait far too long to speak up about our dissatisfaction, and as a result the situation gets far worse. The minute there is something needing addressing, deal with it then and there. It will prevent it from becoming a much bigger issue down the track (and everyone feeling far more resentful in the process).
- Document everything. Keeping track of conversations, instructions, and errors at each step of the way. You will have difficulty remembering everything, and a paper trail will assist when any further action is required in disputes.
These are but a smidgen of the horror stories I hear from homeowners reaching out to me to ask “What do we do now?”
In Undercover Architect, I’m not one for the horror stories. It’s not my normal style to share all the scary facts about building and renovating. I’d much rather help you get inspired, motivated and confident to get it right in your project – and teach you what you need to know.
It is however, hard to ignore: stuff-ups in renovating and building are rarely in the $100s or $1000s. More often than not they are in the $10,000s and $100,000s. Stuff-ups that derail projects, cause financial stress and impact how and where you get to live.
So how do you avoid the 5 and 6 figure blowouts? Simple. Get informed and prepared. You being a super savvy homeowner is your biggest asset – and Undercover Architect is your secret ally.