The question of whether you should tell your contractor your budget largely comes down to your situation. Many people feel differently about the subject and nearly everyone has good reasons to support their preference.
Ask your contractor for a quote to gauge what they will charge you for the project. You can tell your contractor your budget, but they may increase their price to meet your budget. Compare their estimate to your budget to decide if you should use that contractor.
Should You Tell Your Contractor Your Budget?
It is generally recommended that you don’t tell your contractor your budget. However, there is an argument both for and against telling your contractor your budget before a project.
Seasoned builder-owners will tell you to wait for a contractor’s bid, but that doesn’t always work out.
Let’s take a look at the benefits and downsides of telling your contractor your budget.
Why You Should Name Your Budget – Pros & Benefits
The main benefit of telling your contractor your budget is that you can come to an understanding.
Contractors can often work around your budget and give you the most bang for your buck. You can improve communication with your contractor in some cases if you share your budget for the project.
Telling a contractor your budget can also make it clear what you do and don’t want to be done. This can come in handy if your contractor is prone to suggesting add-ons. Clarity, communication, and understanding are the main benefits of telling your contractor your budget.
When you are ready to start a project, the first step is to get an idea of what you can afford. There are a few ways to do this. One is to look at your monthly expenses and see if any of them are going up or down.
Another is to use a home budgeting software program. It will give you a realistic idea of what you can and cannot afford. If you want to tell your contractor what you can afford, be sure to do it in a way that is respectful. For example, say that you are willing to spend $XXX per
Informing The Contractor Of Your Budget
1. Identify the budget range you are comfortable with.
2. Identify the specific costs associated with each item.
3. Add up all the costs and come up with your total budget.
4. List the specific items you would like to have in your budget.
5. Make a list of all the costs associated with each item and compare it to your total budget.
6. If there are any items you would like to have in your budget but cannot afford, identify which ones and come up with a cost-effective way to include them.
The Downsides of Naming Your Construction Budget
Sharing your budget with a contractor can be a problem for several reasons. You can improve communication if you tell your contractor your budget, but you can also limit your negotiating stance. Telling a contractor your budget often makes it unlikely that their bid will be lower than your desired budget.
Good luck getting a contractor to lower their price after they’ve heard your desired budget. That isn’t always the case, however. You cannot depend on a contractor to be able to meet your budget for a project when all is said and done.
Unexpected problems and add-ons pop up during projects regularly, and this can add to your budget. A contractor can make a bid and try to stick to it, but you never know how much money incidentals will add to the cost.
To Tell or to Not Tell
When it comes down to it, the reasons for telling your budget to your contractor outweigh those against. One of the primary driving forces behind not discussing your budget with your contractor comes down a question of trust.
The fear that you will be taken advantage of can guide you into situations where you cannot establish a creative dialogue with your contractor. When this happens, the project takes on limitations that it should not have.
For good measure, do not hire a contractor that you do not trust. There are many above-board contractors to choose from who will provide you with good services at fair prices.
Draft a Contract
If you are finding it difficult to determine which contractors are best suited to you and your needs, one possible solution is that you can draft a contract where all the costs, as well as allowance for extras and surprise costs, are clearly stated.
Drafting an agreement and signing it with your contractor is a good way to ensure that a firm budget is not only set but also that both parties agree that there should be no excessive additions that cannot be explained.
Can you ask a contractor for an itemized bill?
You can ask a contractor for an itemized bill, but they aren’t required to provide one. It is possible to request a contractor to provide an itemized bill upon completion if you include that in your contract.
How can I protect myself when I hire a contractor?
Write a contract or hire a lawyer before you start a project with a contractor to protect yourself. Include stipulations that limit your liability and protect your budget and home before you hire a contractor.
Summing It Up
Tell your contractor your budget if you know and trust them. However, telling a contractor your budget can weaken your negotiating stance later on, and that can be a problem if you’ve never worked with them before.
Sharing your budget with a contractor can help improve communication, and that is the main benefit.
Draft a contract and remember that incidentals can pop up with any project. No matter what kind of an agreement you meet with a contractor, you may end up spending more if new problems are discovered.