The reason why home renovation projects always cost more and take longer than agreed upon is because the contractors try to extract as much money as possible from homeowners.
The tricks contractors usually employ are:
1) Win the bid at any cost (pardon the pun). To win the project, the contractor must highlight an attractive price and good quality craftsmanship. Competition is fierce, so contractors will say and do anything to win the bid. It doesn’t matter if the price is an artificially low price. The goal is to have the homeowner sign the contract and lock them in.
2) Take the house as hostage. Once the homeowner has signed the contract, they are now held hostage by the contractors. The deeper a project goes, the more a contractor will highlight “unforeseen” problems that require more work. Even though there’s nothing really unforeseen for contractors who’ve been around long enough, homeowners don’t know this. If homeowners start balking, then of course the contractor will do the homeowners a “favor” and lower the price of the extra cost.
3) Play on emotions. Most renovation projects are initiated by the first timers. As a result, homeowners generally don’t have any idea how the process works. For example, a permit might cost $500, but a contractor may charge $800 to pull the permit for their time and “extreme hassle,” even though it takes at most 3 hours to pull the permit. A new home is very emotional for most people. It might have taken a couple 10 years of saving to come up with the down payment. Or maybe the couple lost multiple bids and finally paid a big premium for this home. All these situations help contractors make more money off of projects.
4) Cookie cutter thinking. Homeowners who enter into a renovation project have this cookie cutter, “It will take longer than expected, and I will pay more expected” mentality. Contractors love this type of static thinking because it allows for them to take advantage of homeowners. It’s up to homeowners to cut this type of thinking out and make contractors stick to a contract. But contractors can be very intimidating some times. They use their intimidation to force things through.
5) Smile comes free with the bill. The most skilled gougers are the contractors who bring up new work to be done while constantly being nice and smiling. Contractors understand that most people just want to have contractors who take the time to listen to their client’s problems and find beautiful solutions. They understand homeowners are busy with their jobs and don’t fully understand all the nuances. By just being responsive over e-mail and talking things through, contractors adeptly persuade and guilt homeowners into paying more than expected.