How to Spot Red Flags in Your Renovation Contract/Quote

Better safe than sorry – especially when it involves your hard-earned money.

You might have heard of the renovation ‘horror’ stories that make it to the news where homeowners are left stranded when their interior designers/contractors leave works unfinished, or worse, take off the moment they receive the initial deposit.

Knowing how to spot the signs from afar can make all the difference in your renovation experience, especially if you’re a first-time homeowner. That’s why we spoke to both interior designers and homeowners to find out how you can identify red flags in your renovation contract.

Here’s what they had to say.

Watch out for these red flags

1. Your renovation contract has only a few clauses

Robin Wong, a senior designer and licensed builder at Posh Home, shares that while homeowners may be put off by an extensive list of clauses, “a contract with a lot of clauses helps [them] to better understand what is included and to avoid a rough relationship with the interior designer (ID) or the firm at the final stages of the renovation.”

Clauses would include mainly the services and works provided by the interior firm and what they’re responsible for, as well as other terms and conditions covering payment, disputes, cancellation/termination, warranty and liabilities.

While different clauses may be included depending on the firm you’re engaging, a liability clause, for example, sets a cap on the damages an interior firm is required to pay if something goes wrong during the renovation. A termination clause, meanwhile, outlines the conditions under which a contract may be terminated.

Such clearly-stated clauses can guide you and provide clarity in case things go awry.

2. The scope of work is listed in lump sums

If there are lump sums for small items in the contract, Robin says these are perfectly fine – but not for big-ticket items.

“Say you’re quoted $5,000 for the living room carpentry, but it doesn’t include the details of things you want like a TV console or a feature wall console. There could be arguments because of the ambiguity about what’s meant to be included.”

That’s why major renovation works should be clearly itemised in the contract.

3. The description of works to be done is vague

It’s not just the renovation works themselves that should be clear. Here are two other things that should be specified as well: carpentry measurements (like the square footage of a feature wall and the length of a wardrobe) and materials to be used.

Robin adds: “For example, the kitchen countertop material cost per foot run should be listed. It could go from $100 to $300 per foot run because there's a wide range of materials available. For feature walls, you could be quoted $20 to $25 per square foot – but adding stone, mirrors, glass or metal would bump up the price to about $45 per square foot. Fluted panel designs also cost more.”

Homeowner Jill emphasises the same: “If you want paint of a certain colour, or with particular properties like anti-mould, it should be clearly included. Or, if you want a built-in wardrobe with specific storage compartments, listing the key details is important.”

Clarity in the contract deliverables inspires trust and can help you to pick out the important details before signing, just like in the case of Atiqah, a first-time homeowner who is currently renovating her BTO flat; she could make a well-informed decision and “choose the firm that’s offering [her] a better deal”.

“One of the reasons I picked my ID is because his contract allowed me to choose large-format tiles up to 60cm by 60cm. This detail was quite important to me, because if I picked the other quotes which only had tile size selections up to 60cm by 30cm, I would have had to top up.”

Atiqah adds: “For things like hacking and plumbing, I actually don’t have an itemised breakdown. My contract only shows the total number of items included for these works. It could be because these works are done by their contractors, but if I were to ask my ID to take out one item, I’m sure he would adjust the price accordingly. I trust him, so I didn’t ask for a breakdown for those.”

The level of detail and format of the contract ultimately varies across different interior firms and also hinges on good communication and trust.

4. No progressive payment schedule/having to pay a large deposit upfront

Typically, payment milestones are broken down into a few stages: these cover the deposit upon confirmation, commencement of works, carpentry and the final/balance payment upon handover.

As a CaseTrust accredited firm, CK Choo, the Ops and Finance lead at Azcendant highlights that they are required to adhere to limits on the percentage of payment for each stage. Do keep in mind that the percentage of payments varies across firms.

Here are two scenarios when it comes to payment milestones that could raise a red flag:

• When you’re asked to pay a large deposit
• The payment milestones are not broken down along with the corresponding renovation stages

CK is of the opinion that “the initial deposit should not be anything more than 15%, whether it’s a new or resale flat”. Bearing in mind that this is typically a non-refundable deposit, you should always check the payment terms carefully.

Even for firms without accreditations such as CaseTrust, Robin shares that the initial deposit for contracts under $150,000 usually ranges from 5% to 10% and shared a typical breakdown that is similar to the above sample contract.

5. You are quoted an unusually low value or promised large discounts

Both CK and Robin caution against choosing a very low quote, especially if there’s a large price variance from other quotes you’ve had a look at.

Elaborating, CK says: “If you want to renovate a 4-room BTO with all the carpentry included, the quotation should fall between about $40,000 to $100,000, depending on factors like the materials chosen and their quality.

To give a scenario, if you’re quoted $30,000 and the designer agrees to a $5,000 discount, that’s nearly 15% to 20% less. It’s definitely something to look out for – given the industry is poorly regulated, the designer or contractor you engage could just collect the deposit and disappear.”

Have a look at the different components of the quotes and if they are about the same, you can be more assured that you’re being quoted the market price.

Explore: How Much is a 3, 4, and 5-Room HDB Flat Renovation in 2023?

6. The interior design firm you spoke with has little industry experience

Robin shares that based on statistics and his personal experience, there is a higher chance that companies managed by those with less than three years of experience in the industry have a higher chance of closing down.

“While I’m not saying that this is the case for all young companies, you should be cautious and do more research on the interior design firm, such as looking through their reviews and their portfolio.”

Explore: SuperTrust: The 32 Best Interior Design Firms in Singapore in 2022

Other things to know about your renovation contract

Variation orders may be issued on top of your contract

If you’re a first-time homeowner, you might not be too familiar with variation orders (VOs), which come up more commonly for resale flats.

These essentially refer to works that were not included in the original signed contract, regardless of whether you want to add on some works or if you want to remove something during the renovation process.

“Until we start demolishing, we can’t guarantee what works will be necessary on-site, which is when variation orders can come up,” shares CK. Particularly in older resale flats, you may face unexpected complications that require repairs/refurbishment.

“[The possibility of] variation orders should be made known to customers and require their agreement beforehand,” says Robin, so that you don’t rack up unexpected costs. “For any variation or additional items, the designer should seek the owner’s approval before proceeding. Vice versa, homeowners need to inform the design firm if they wish to omit something and come to an agreement.”

Electrical wiring costs may not be included in your contract

Here’s one thing that may not be included in your contract: electrical wiring costs.

As homeowner Jill explains, “They can only give you a quote once you meet the electrician on-site and let them know where you want your electrical points.”

Since electrical points differ depending on your requirements, such as if you want to reconfigure existing points or set up new ones, it would be difficult to have an accurate quote upfront.

Tips for checking your renovation contract

Confirm that the stated payment recipient is the interior design firm

If the payment recipient stated in the contract is different from the firm’s name, check with your designer whether it’s an affiliate company as there may be such instances (which are not an issue).

Payments (regardless of payment method) MUST be made directly to the interior firm only, and not to your designer or an external sub-contractor your designer hired.

If your contractor/designer pressures you to transfer the money to an account that is different from what’s stated in the contract, never succumb to their request and call up the interior firm to clarify.

Adding on, Jill’s advice is that homeowners should never make cash payments directly to an individual designer. “There’s no trail if you make a cash payment,” she says, recounting that she had “heard of someone who made a cash payment and their designer ran away”.

Make sure you understand your contract clauses

“The clauses can be quite confusing because of the legal terms, so you should clarify all your doubts before proceeding to sign the contract,” says Atiqah.

Echoing this, CK says that you should not be intimidated by the interior designer and ask what you need to, so that both parties can avoid misunderstandings/issues cropping up later.

Renovate with peace of mind

With an experienced interior designer, you can rest assured that your renovation is in good hands from day one. Request a free quote here, and we will match you up with up to 5 interior firms, based on your budget and style.

What’s more, you will also be eligible for the Qanvast Trust Programme, which includes the $50,000 Qanvast Guarantee that safeguards your deposits!

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