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Question from a reader on Charles Chang’s victory

After reading your article, I would like to see a follow up piece on exactly where every dollar was spent. My wife and I are planning an inexpensive remodel of 2 bathrooms and a kitchen and we're at around $20,000. I know that the person listed in the story choose cost effective solutions, but my wife and I looked at extremely inexpensive cabinets for the kitchen and they're $4,500. How do you gut and re-do a kitchen (and add a hardwood floor) for $3,500.00? How do you re-do a bathroom for the price in the article? My wife and I would be very interested to know.

Steve & Suzanne, Sherman Oaks

Answer:

Thanks for your excellent query. Several other readers wrote to me to express the same disbelief about the cost. So I decided to do some more research. First, I asked the banker, John Sway, if indeed that scope of work was done for that amount of money. And he said it definitely was. The bank, Wells Fargo, is very in touch with what happens during a construction loan, and this was on the up-and-up.

Then, I spoke with Darren, a carpenter who worked on the project.

He assembled the very basic kitchen cabinets (they were bought unassembled for $1,900), worked on installing the windows, and did other tasks during the six-week remodel. Darren explained that as a subcontractor, he gives a contractor a much better price than he gives a homeowner. “He gives me a lot of work,” Darren said of Michael Hinkson. “It pays off.” There’s no way a homeowner could get those cabinets assembled for the price he gave Hinkson, whom he respectfully calls “Mr. Hinkson.” Same with the guy who refinished the floors and put in the new kitchen floor. He gave Hinkson an excellent price. When tradespeople work for contractors, the work is straightforward, the shopping is done, the materials are at the site. When one works directly with the homeowner, a lot of handholding needs to be done, the homeowners are usually not familiar with the building process and have lots of questions and concerns. In short, homeowners require more of the tradesperson’s time and attention, and thus are charged accordingly, perhaps 25 to 30 percent more.

Then I spoke with the contractor, who shared with me some of his strategies for offering homeowners better prices than they could get on their own. He also mentioned the excellent prices subcontractors give him. Most interesting to me was the way he buys his materials on sale and in advance. For instance, if a plumbing supply house is closing out faucets because the next year’s model is coming out, Hinkson will buy 4 or 5 sets, knowing that with the volume of work he does he’ll be able to use them. He does the same with cabinets, buying several kitchen’s worth of cabinets he knows to be popular, but that are offered at perhaps a 50 percent discount. Then, when he comes across a homeowner or apartment owner who wants something similar to what he has, he’ll offer them his stock at a 25 percent discount. They save money, he makes money.

While Hinkson gave Charles an itemized bid for the job, and Charles gave me a version of that for the article, I don’t think it accurately reflects exactly what happened on the job. Charles Chang wanted certain things done to the house, and he wanted to spend a certain amount. He and the contractor agreed to the scope of work and to the price. Whether the floor cost $1,000 and the windows cost $9,000, or the floor cost $2,000 and the windows cost $8,000 is impossible to know. It appears that the numbers could have been better itemized for the article. An itemized bid from the contractor, for instance, gives a price of $3,000 for the kitchen cabinets and another $1,500 for the kitchen floor. Then, a separate item shows $3,750 for texture and paint on interior walls and ceilings. How much of that was applied to the kitchen alone is impossible to say. The bid gave a price of $6,000 for window retrofits, and how much of that was applied to the just the kitchen windows is not specified.

From what I can tell, the work that was done cost the price that was quoted in the newspaper. However, one fact that I did not note is that Charles paid for the kitchen appliances from his own pocket, and they were not included in the construction loan. The appliances totaled $1,200, and Charles faxed me over a receipt that indicated that.

One final note: Charles Chang is an extremely driven shopper and dealmaker. As Hinkson said, “Let me tell you, Charles is not giving up extra money. He’s a shrewd negotiator.” Hinkson said he was satisfied with the payment for the job, but admitted: “It’s not one of those jobs where I made a lot of money.”

While the remodel itself did not take much of Chang’s time, he spent hours and hours and hours beforehand researching trades and products and prices and discounts. He has a notebook as thick as a phonebook that contains the fruits of his labor. Personally, I wouldn’t spend that much time to save a few thousand bucks. I’d rather spend my time doing my regular work and just pay a little extra. In this way, Charles Chang is an extraordinary person.

One final, final note: The cabinets in the kitchen are extremely cheap. You couldn’t tell from the photo that they were basically painted pressboard. No wood doors. No acrylic finishes. Most of us would not be satisfied with those kinds of cabinets, or the Formica counter, or the basic tile in the bathroom, and this is also what makes Charles unique, his ability to keep his expectations low and not inflate his budget out of a desire for something nicer. Most of us do not have that kind of discipline or self-restraint, at least I don’t.

I hope this helps explain the situation. And I do appreciate the questions.


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