Why Fixed-Price Contracts Matter in Remodeling
Remodeling your Tacoma home is exciting—the mood boards, the paint chips, the material samples, the hopes and dreams. But before you can get to the fun part, you have to navigate the less glamorous parts of remodeling your home: budgets, bids, and contracts. These pieces are essential to getting the remodel you want—without surprise costs and unnecessary stress.
Many homeowners have heard horror stories: ballooning budgets, half-finished projects, unreliable contractors, subpar work. This post will walk you through the best ways to protect yourself from these issues and explain why a fixed-price contract is one of your best safeguards.
Why Homeowners Get Burned: Common Remodeling Pitfalls
Figuring out contracts, bids, estimates, and budgets is tricky. You might have three contractors come and look at your project and give you three wildly different estimates, based on what types of things they’re including, the scope of work, the allowances for various items, and more. Comparing bids and estimates is often comparing apples to oranges.
You can get a lowball bid that looks great on paper but grows mid-project as you realize that a lot of things weren’t included in the original contract.
Unclear scopes of work can leave too much room for interpretation for both you and your contractor. You’re not on the same page and you’re both making assumptions.
Contractors sometimes charge for “time and materials” without giving you specifics or line items. Not enough transparency leaves a lot of room for misunderstandings.
Projects can then be delayed or disrupted due to budgetary disagreements. If there’s a lack of alignment between expectations and what’s in writing, everyone suffers.
The Solution: Fixed-Price Contracts
Fixed-price contracts offer a way to navigate the confusion and feel confident in your budget and contract with your Tacoma home remodeling contractor. A fixed-price contract sets the price of your project before work begins, based on an agreed-upon scope and design work. There are no surprises halfway through.
With a fixed-price contract, everyone—the homeowner, the designer, and the contractor—is aligned. All the players know every detail of the project, and there aren’t any vague allowances or confusing promises made. We’ll get into how a fixed-price contract works in a minute. Let’s talk about the benefits first.
Budgeting Confidence
With a fixed-price contract, you will know exactly what you will be spending, allowing you to plan confidently. You won’t be surprised by costs that balloon and leave you to scramble for more funds—or leave your project incomplete. It’s easier to secure financing and prepare for costs when you know exactly what you need.
Financial Safety
A fixed-price contract protects you from runaway costs or scope creep. The project is well-planned ahead of time (with a designer helping you every step of the way), and you and your Tacoma contractor know every detail of what it will entail. This prevents disputes and mid-project negotiations that are unpleasant and stressful for everyone involved.
Clarity and Transparency
Because every detail is clearly spelled out (materials, labor, scope of work, timeline), expectations are clear. This leads to better relationships between the homeowner and the contractor—you’re on the same team and working together toward the same goal.
You Get What You Pay For
More upfront planning leads to higher quality outcomes. A fixed-price contract is a critical part of this thorough plan and gives you confidence to move forward with your Tacoma home remodel.
Two Main Ways to Discover What a Remodel Will Cost
Like we said before, the financial parts of a remodel aren’t the fun part, but they are essential for a good and satisfactory experience. There are two paths you can follow:
Estimates and Bids
Think of an estimate as an educated guess about what a project will cost. It’s usually based on past experience, square footage, and a very basic idea of what the project will include.
A bid is a formal offer to do the project for a particular amount—again, often based on limited information like basic project information, square footage, and general assumptions about what you want and what it will take to get there. The lack of detailed information in a bid means that you’re vulnerable to unforeseen changes, problems, upgrades, and other cost increases.
If you start a project without a detailed scope of work, you should expect potential fluctuations and unforeseen costs. There are other limitations as well:
Estimates and bids can be wildly inaccurate if the design isn’t nailed down before the project begins.
Cost overruns are often a surprise and are billed as change orders.
Estimates and bids may not include everything (for example, permits, specific finishes, and specialty trades).
Estimates can be vague and open to interpretation, leading to misaligned expectations and misunderstandings.
It’s very difficult to compare one contractor’s estimate to another’s because they will include different things and may be based on different understandings of the project.
Range of Cost
A better option is a range of cost. Here’s how it plays out. When we talk to a Tacoma homeowner for the first time, we give a range of cost based on the past twelve months of actual projects we’ve done in the Tacoma area. And we stick to this initial set of numbers! This range allows the homeowner to prepare financially for potential fluctuations while having a basic idea of what to expect.
The range of cost gives a realistic price for the type of remodel you want. It allows you to manage your financial risk better because it gives you a more comprehensive view of potential project costs. It also helps you to make informed decisions, guiding the design process because you know what each decision you make will cost. A range of cost sets realistic expectations before too much time or money is spent.
As the project moves through the design phase and the client is making selections (choosing one oven over another or deciding what type of countertops they want), the range of cost is updated, and the range is narrowed down.
The Fixed-Price Contract
The range of cost is the jumping-off point. As the design gets more specific, the price narrows. Once the final design, product selections, and scope are agreed upon, that range becomes a fixed price.
The fixed-price contract is one number, the exact price you can expect to pay, that is informed by thoughtful, collaborative planning. It requires time and planning upfront and a commitment to a detailed design process before construction starts. But it results in a great finished product that’s just what you wanted for the price you planned. And because you’re in control throughout the process, you limit the amount of unpleasant surprises in your remodel.
Creating a Smart Plan
We believe that a fixed-price contract is the best way to protect yourself and ensure that your Tacoma home remodel goes exactly like you want it to. There are other ways to make sure this happens as well:
Work with a Design-Build Contractor
With design-build, design and construction are handled in-house, allowing for more efficient, accurate budgeting and reducing surprises. Read more about the design-build process here.
Include a Contingency Budget
Even with the best and most detailed fixed-price contract, the unplanned can happen. When unexpected repair work or a last-minute decision to upgrade something comes up, having between 10 and 30% of your budget set aside for contingencies means that you’re never caught off guard.
Share Your Budget with Your Contractor
Sometimes homeowners are reluctant to share their finances because they assume their contractor will leverage it against them. But in reality, sharing your budget early in the process helps the team design your project within your limitations, preventing wasted time on things that aren’t feasible. Remember that transparency always leads to better outcomes.
Know How to Compare Bids
Again, comparing bids from different contractors is often comparing apples to oranges. Look at everything that is included—not just the bottom line. Compare the scope, timeline, materials, and warranty. Consider if allowances are realistic. Ask if permits are included. The best way to compare bids is to have conversations and ask questions.
Choose Peace of Mind with a Fixed-Price Contract
Remodeling your Tacoma home comes with a lot of big decisions. Choosing a fixed-price contract should be an easy one. It puts guardrails around your investment and ensures you’re getting what you expect. By choosing the right process—and the right team—you’ll end up with a home you love and a remodeling experience you can enjoy. Contact us today to get started.