The Three Things in a Bid That Quietly Run Up Your Cost

When a home project goes over budget, most of the time it comes down to one of three things. A placeholder budget amount that was set too low. Something that got left out of the bid. Or a change to the work that was not priced right.

These three cause more fights between homeowners and contractors than anything else.

Here is what each one means, and how to protect yourself.

Placeholder budget amounts

Some bids call these "allowances." A placeholder budget amount is money set aside for something you have not picked yet, like tile.

The contractor does not know which tile you want. So they write "Tile: $1,500" and move on.

Here is the problem. These numbers are almost always too low. Contractors are not trying to trick you. They use bare-minimum numbers because that is what most people ask for. But bare-minimum tile feels nothing like the showpiece you saw online.

A $1,500 tile placeholder for a primary bath is laughable. A real number is $3,500 to $5,000.

How to protect yourself. Know what you actually want before you sign. Visit showrooms. Get real prices. Then adjust the number to match.

And ask what happens if you go over. Usually you pay the difference, plus what the contractor adds on top of cost. Know that number before you commit.

What is left out

Some bids call these "exclusions." This is the stuff that is NOT in the bid.

A good bid lists it clearly. Something like "Does not include appliances, window coverings, landscaping repair, or asbestos removal if found."

A bad bid leaves it unsaid. The contractor assumed you knew that "kitchen remodel" did not include moving the gas line for a new range. You assumed it did. Now you have an $1,800 change to the work.

How to protect yourself. If what is left out is not written down, ask. Walk through your own situation. Ask if anything special about your house is left out. Get the answer in writing before you sign.

Changes to the work

Some bids call these "change orders." A change to the work is just that. A change to the job, in writing.

These happen on every project. The question is how they get priced and handled.

The rule. Any work outside the original bid needs a change in writing, signed by both of you, before that work starts.

Here is where homeowners get crushed. A change agreed to out loud, with vague wording, that turns into three or four times the price. "Yeah, we'll throw in a tile niche while we're here." Two weeks later: "$1,400 for the niche."

No spoken changes, ever. If it is not in writing, it did not happen.

How to protect yourself. Set a threshold in your contract. Something like "Any change over $500 needs my written okay." Ask up front how changes get priced, either cost plus a set percentage, or a flat price. And keep a running total of approved changes, so you are not blindsided at the end.

Bottom line

Placeholder budget amounts, what is left out, and changes to the work are normal parts of any contract. They are not red flags by themselves.

But each one needs to be specific, in writing, and understood before you sign.