founder and owner
PO Box 1896
Edmonds, WA 98020
© IMR Renovations, Inc.
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IMR Contractor ID:
Site development by
Eben Design, Inc.
Copy by Steve Gray.
Eight things smart consumers do first |
Checking Licenses |
Contract Vocabulary 101
|Using Your Home’s Equity
By Steve Niebrand
If you are thinking about doing that dream remodel, think about utilizing the equity you already have in your home. Add in the tax advantages of a home equity loan, and your dream remodel may be closer than you think.
With the availability of so many financial products which one should you choose?
Choosing an experienced Broker should be the first order of business. Brokers have access to multiple lenders and thereby can offer a much wider range of products. For example, if low payments are a priority, then look into the “Options Loan.” This loan offers several payment choices each month, low minimum payments, and interest-only or fully amortized terms. Equity lines of credit are another great option and are readily available at low short-term rates. Another choice might be a custom “Con-Perm” loans which have interest-only payments to keep your payments low during construction or provide the option to delay the monthly payments until construction is complete.
Just as each remodel is different, each loan can be different as well–allow adequate planning time for both. Consult with your Broker early in your planning process to help you unlock your home’s equity and realize the remodel of your dreams.
Steve Niebrand is a Senior Loan Consultant specializing in home equity loans and lines of credit. He can be reached at 425-442-9091 or email@example.com.
- Plan your project carefully and know what you want accomplished.
- Ensure the contractor and all subtrades are licensed with the Washington State Department of Labor & Industries (L&I). IMR's Contractor ID is IMRREI*991DZ.
- Ask for references…and check them!
- Obtain a written contract with an accurate scope of work.
- Before the project begins, agree on how potential problems and inconveniences are to be handled and be sure this is included in the written contract.
- Don't shy away from paying for professional design services. The cost of design services can be misleading if you only consider initial price.
- Work with a contractor you like. All reputable contractors will charge about the same for your remodel, so choose a contractor with whom you have a good rapport. If communication is difficult or one-sided from the start, expect challenges down the road.
- Plan on working as a team. To keep your job running smoothly, the contractor, suppliers and homeowner need to become active team members. You can contribute greatly to your team by providing timely responses to design questions, following up quickly on any outstanding issues and above of all, trusting your fellow team members.
In Washington State, contractors must register with the Department of Labor and Industries, post a bond and carry general liability insurance coverage. Contractors must possess a current unified business identifier (UBI) number and an employer identification number (EIN).
To verify a license, call the Labor and Industries Service Center at 800-647-0982 and check:
What is a contract, why should I sign it and what does it include? A contract is a legal document that clearly outlines responsibility, scope of work, time of completion, costs and general provisions. It may also include contingencies for what will happen if the job "grows" (sometimes called "scope creep"), is changed by the homeowner, or unexpected costs are incurred. This contract is legally binding and should be considered a statement of trust between the homeowner and the contractor.
- if the contractor is currently registered
- whether the contractor has adequate insurance for Washington State
- if action against the contractor's bond is pending or has been taken in the past
Both the homeowner and the contractor will have different perspectives on how the project should be carried out. The contract is there to clarify each party's expectations. Before signing a contract, be sure to review it with the contractor and ask questions or for clarification as needed.
A complete contract should include the following elements:
Tip: Make sure there are two copies of the contract so both parties have a signed original. And when signing a contract use blue ink to easily distinguish between the original and a photocopy even with a quick glance.
- Start date of the project.
- Defined scope of the remodel and budget required to complete it.
- Signature lines and date lines for both contractor and homeowners.
- Policy on unforeseen overages.
- Policy on cancellation of contract once signed by either party.
- Percentage of mark-up on labor, materials, subtrades and management fee.
- Completion date.
- Deposit requirements.
- Payment terms.
Bonded: All General Contractors are required by the State of Washington to secure a bond of $12,000 prior to going into business. Any Specialty Contractor is required to secure a $6,000 bond.
Budget: Also referred to as the estimate. An approximation of the cost of the remodel project. IMR's budgets are always done in good faith. Budget and estimate are often used interchangeably in the remodel business.
Contractor ID: Once licensing, bonding and insurance requirements are met, L&I will issue a contractor number. IMR's contractor ID number is IMRREI*991DZ.
Demo: Short for demolition; the process of removing existing materials in preparation for new installations.
Drywall and Mud: These are the most common surface material used on walls and ceilings. Drywall, also known as board or sheetrock, is a rigid sheet material that is screwed to the wall to cover insulation and framing. Mud is the paste-like material used to smooth joints and seams of the drywall. These materials accept paint and finish beautifully.
Fixed Bid: A fixed price for a given scope of work. This is the alternative to Time and Materials. Under a fixed bid, you pay the agreed-upon amount whether the job runs long or short. This is not considered the best solution for complicated remodels as there is no chance for savings if the job is completed early. If the job runs long, the contractor may either cut corners to keep from losing money or apply an expensive change order to the original estimate to recoup any losses.
Fixtures: A general term referring to faucets, light fixtures, sinks, toilets and other finishing elements.
Framing: A general term referring to the structure of the house. Usually consisting of 2x4" or 2x6" studs, rafters and beams. Can be compared to the skeleton of a house.
Insured: All contractors must carry $50,000 Property Damage Insurance (per occurrence) and $200,000 public liability (per occurrence). The certificate of insurance must carry the policy number, effective date, signature of agent and expiration date (or Cancellation Clause) of coverage.
L&I: Acronym for a state's Department of Labor & Industry. This agency governs contractors and administers laws covering contractor registration and industrial insurance. Local offices are listed under Washington, State of, in the white pages or government section of the telephone book. The statewide contractor registration hotline is 1-800-647-0982. The website for verifying contractor registration is www.LNI.wa.gov/contractors/contractor.asp.
Licensed: All contractors must have a unified business identifier (UBI) for state tax purposes and an employer identification number (EIN) for federal tax purposes.
Millwork and Trim: Any of the numerous finished wood products found in the home such as window trim, crown molding, shutters, doors, stairs and banisters.
"Refer": For those who came of age in the 1960s don't be too excited to hear this term on the job site. This is contractor slang for refrigerators or refrigeration units.
Remodel Consulting: A portion of any good contractor's job. This is a service where a contractor does not do actual construction, but rather acts as a consultant on your remodel. Consulting functions may include design service, material selection, budget analysis, space planning and the like. Dennis, owner of IMR Renovations, offers comprehensive Remodel Consulting services.
Retail Cost: Cost of goods charged to the end-user or homeowner. Often used in conjunction with "wholesale" price.
Rough In: A general term for the first steps of installation of electrical and plumbing systems. This may include the pipes and wiring which will be hidden in walls, ceilings and floors and does not include final fixtures such as faucets, light switches, light fixtures, etc.
Scope Document: The pre-defined detailed description of the remodel.
Scope Creep: Creep is the incremental changes to a project after construction has begun. Even small changes can have a ripple effect on labor cost, scheduling and materials. It is best to invest heavily in the pre-planning and design phases to minimize changes in the scope of the project once construction has begun.
Site Prep: Prior to construction, the location of the remodel must be prepared. Preparation may include covering floors and walls to reduce the likelihood of damage during the remodel process. Also may include sealing areas off to contain dust.
Space Planning: The term used when creating a new floor plan or altering existing floor plans. Efficient space planning often means you can do more within limited space constraints or reduce the space required for an addition. Space planning also may include optimizing views, creating openness and creating a logical and comfortable traffic flow through the area.
Subfloor: The flooring substrate found below the finished carpet, tile or hardwood floors. This layer provides structural support for the finished walking surface.
Subcontractors: Also called subtrades. These are specialists hired by a contractor to work under their direction. These specialists may include plumbers, roofers, electricians, cabinet makers and quality painters. It is important that each subtrade is licensed and bonded, carrying a valid contractor ID number.
Time & Materials (T&M): A billing method where you pay the labor and material costs plus mark-up until your remodel is complete. An estimate is provided, but if a job runs longer than anticipated, you pay more, if the job goes more quickly, you reap the labor savings. This is the billing method used by IMR as both parties win: the homeowner pays exactly for the work done-nothing more, nothing less-and stays in better control of the project; and the contractor can complete the job with the highest quality without cutting corners.
Trim Out: This is the continuation of the rough in process where final fixtures (faucets, light fixtures, sinks, etc) are put in place and readied for use. This process usually takes place after sheet rock and paint are completed.
Wholesale Costs: Special discounts on building materials given to registered contractors. This allows the contractor to apply the agreed upon mark-up without inflating the price for the homeowner.
"Zoo Day": Often used as "it will be a good day to go to the zoo." A euphemistic way to inform the homeowner that it will be an especially hectic, noisy or dusty day on the remodel site so it would be a good day to avoid being home and enjoy a day at the zoo.