How to save money on home renovations

Planning to remodel your home? Here are some smart ways to save big bucks.

As housing prices continue to climb, so does the amount of money homeowners spend on renovations. According to the U.S. Census Bureau, Americans spent $198.6 billion on remodeling their homes in 2004.

But there are ways to keep the costs under control. Here are some suggestions for saving money when you renovate your home:

Shop around
For all major work, get quotes from at least three contractors, and make sure the description of the job is exactly the same when you compare prices. Be certain you understand whether the contractor is giving you an estimate that could increase after the work begins or a firm quote that he’ll put into a contract.

Expect the unexpected
Many inexperienced homeowners underestimate the cost of remodeling. Even if you do know the fixed costs involved, there are always surprises along the way. Older houses, especially, often reveal their secrets only after you’ve removed the paneling or steamed away the wallpaper. So plan ahead: once you determine how much you can afford, create a budget that’s 10 to 20 percent lower to give yourself a cushion.

Do the grunt work yourself
Good carpenters and electricians are worth the money, but you don’t need to pay skilled professionals to do unskilled work. After you get an all-inclusive price for having tile or hardwood installed, for example, ask the contractor if he’ll drop an hour or two of labor costs if you rip out the old carpet and prep the floor before he arrives. You may also be able to save money on a kitchen or bath renovation if you remove the old fixtures or do some of the demolition yourself.

Buy the materials
Try to find a contractor who will agree to let you purchase at least some of the materials needed for your project. That way you’ll know exactly how much you’re spending, and you’ll avoid the contractor’s markup. Not all contractors will go for this -- they do need to make money, after all, and they may worry that you’ll make mistakes in measuring -- but for uncomplicated jobs they might be willing to work out an arrangement.

Think long-term
While you want to save money on your renovation now, remember that an added expense may save you more in the long term. Using inferior bathroom fixtures or doing your own plumbing, for example, may wind up costing you hundreds of dollars in water damage. Think about energy costs as well -- a high-efficiency furnace may pay for itself in lower gas bills if you plan to be in the home for a number of years.

Use low-cost financing
Major renovations can easily run into the tens of thousands of dollars. Rather than using credit cards to finance the work, consider taking out a low-cost home equity loan. Home equity lines of credit (HELOCs) may be even more attractive, as they allow you to draw on the funds as you need them rather than all at once.