The importance of a quality scope of work can’t be underestimated. It is the scope of work, after all, that will serve as the foundation for the rest of a rehab. More specifically, however, it’s the scope of work that will award savvy investors the ability to showcase the quality of work and attention to detail their rehab projects have the potential of offering. If for nothing else, a scope of work serves as a great way for investors to demonstrate their comprehension of the real estate industry, both to contractors and potential buyers. Better yet, a scope of work will see to it that your next rehab is carried out efficiently and correctly.
The scope of work, or SOW as most rehabbing professionals have come to know it by, is nothing short of instrumental over the course of a proper rehab deal. More specifically, however, a scope of work represents an agreement between today’s investors and their contractors. Done correctly, a scope of work proposal will outline every single detail of an impending project and the materials to be used. In its simplest form, a construction scope of work is a to-do list; one a contractor will be expected to follow over the course of the entire rehab. As such, a scope of work has two primary objectives: minimize miscommunication between parties and hold the contractor responsible for the agreed-upon terms set forth.
Learning how to write a scope of work represents a monumental task for those without experience in doing so. The sheer volume of things that need to be addressed over the course of a typical rehab is intimidating, to say the least. Even a simple rehab may consist of countless “fixes.” It is worth noting, however, that––like everything else––something as complex as a scope of work may transition from a huge undertaking to something more manageable when it’s broken down. To that end, a comprehensive scope of work should include six components:
Instead of memorizing how to write a scope of work, it may be easier to simply follow a scope of work template. For your convenience, the six most important components of a scope of work are outlined in detail below.
When detailing each of the six components, be sure to be as clear and concise as possible. Again, a scope of work is designed to inform your contract of everything you need done, and how to do it. Provide as much information as you can, as to answer more questions than you create. A good scope of work, for that matter, is easy to read, and leaves no questions as to what you want done.
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Rightfully so, the very first page of a scope of work should consist of both a project overview and a description. Combined, the overview and description should give a brief explanation of the project as a whole. More specifically, the project overview and description will describe the entire project in three specific sections: description, rehab overview, and contractor overview.
The description, as its name suggests, will identify the property’s general information. A good description, for that matter, will detail everything about a home, from the year it was built and the size of the property to any other information you deem relevant.
The rehab overview is exactly what you’d assume: an objective summary of the rehab projects that may need to be addressed. At this point in the scope of work, you’ll want to provide a detailed overview of the home improvement projects that will be required to bring the property up to your standards; that, and how you intend to do so. Be sure to discuss how you intend to address said projects, as to paint a clearer picture for the contractor you intend to hire.
The final section of the first component is the contractor overview; it’s here you’ll discuss the individual contractors you may need for the job at hand. In other words, identify the projects you want to complete, and proceed to identify the licensed individuals you will need to get them done.
Once you are confident the project overview and description are filled out sufficiently, proceed to create a scope of work for the exterior. In this part of the scope of work, breakdown all the work that needs to be completed on the outside of the property and the materials needed to do so, not the least of which should include the following:
No two houses are the same, nor should an investor ever expect them to be. That said, it’s almost impossible to develop a universal scope of work that works for every property. What one house needs may be entirely different from another, and vice versa. However, there are a lot of things most investors can expect to add to their own scope of work template. The most common interior items on a scope of work document include, but are not limited to:
It is true what they say: kitchens really do sell homes. Therefore, it only makes sense that each kitchen deserves its own scope of work. As a real estate investor, the scope of work you intend to use on the kitchen is an opportunity to identify shortcomings and turn them into selling points. Like every other component we have talked about up to this point, each item should be accompanied by a description and materials. There is absolutely no reason a contractor shouldn’t know how to proceed. And to that end, here are some of the most important things to account for on your own kitchen scope of work:
Not unlike the kitchen, bathrooms are important selling points, and they should be treated as such. Therefore, it’s important that each rehabber pays special considerations to every bathroom in the property. Again, each of the following items should be painstakingly detailed, as to provide the contractor with exactly what to do:
You can’t possibly know how to write a scope of work if you don’t know how you want to address both the plumbing and the electricals. While not as “glamorous” as all of the other items on this list, the individual components of your plumbing and electrical systems should be second to none—each are too important to ignore. That said, no scope of work is complete without the following additions:
Understanding how to write a good scope of work has to do with more than the obvious; a good real estate investor will use their scope of work to try and predict what it is buyers will want out of the house. That said, you will need to look beyond the obvious upgrades and anticipate the needs of impending buyers.
Here are some tips that can turn an average scope of work into one that’ll sell your property:
People Like The Open-Room Concept: I highly recommend following an open-room concept design. Today’s buyers do not appreciate closed off spaces nearly as much as they used to. Your scope of work should, therefore, account for any walls that need to be “taken care of,” in order to open things up. You’ll need to address everything from structural obstacles and permitting to licensed contractors capable of getting the job done.
More Usable Space Is Always Better: Your scope of work should include any and every means necessary to create and maximize usable space. Consider adding additional closets to your scope of work, or even shelves in the right areas. Adding closets and built-in shelves are a great way to increase appeal and add value to a home.
Reduce Noise: Dedicate a portion of your scope of work to noise canceling projects. Most homes, for that matter, can benefit from new insulation, dual pane windows, or even more trees in the front yard. There are many ways to make a home less susceptible to noise, and your scope of work should address as many of them as possible. Doing so will make the home more attractive to buyers, and perhaps even increase its value.
Rely On Natural Light: When at all possible, substitute light fixtures for natural light. That’s not to say you should get rid of all the light fixtures that are currently in place, but rather that you should allocate some of your scope of work to create more natural light. Skylights, for example, are a cost-effective strategy to increase natural light and the perception buyers have of your home.
Remain Neutral: Real estate is a numbers game. The more interested buyers you can entertain, the better. Therefore, it’s in your best interest to remain neutral in all of your decisions––especially paint color. This is not the time to get “expressive.” Instead, work with more neutral tones, as to capture the attention of a larger audience.
A truly great scope of work will detail everything that is to be expected from a contractor. More importantly, it will answer any questions the contractor currently has, or will have in the future; it’s their blueprint for how to proceed. Provided the scope of work was written correctly, it’ll answer more questions than it elicits. There is absolutely no reason for your own scope of work not to provide everything the contractor needs to move forward, and using this scope of work template should do just that.