What Causes Change Orders in a Remodel, and How to Budget for Them Before They Surprise You

A change order is any addition or adjustment to a signed remodeling contract, along with the added cost and schedule impact that comes with it. Homeowners tend to hear the term for the first time in the middle of a project, usually right after a contractor says something like “we found something behind the wall.” That timing is part of why change orders get a bad reputation. In reality, most change orders fall into one of two very different categories, and understanding which one you’re dealing with changes how you should think about it.

The Two Kinds of Change Orders

The first kind happens because something was discovered once demolition started that couldn’t have been known beforehand. Outdated wiring, water damage, plumbing that doesn’t meet current standards, or framing that needs repair before new work can go on top of it. These are existing-condition change orders. They’re not a sign that anything was planned poorly. They’re a sign that the house had something hidden that only becomes visible once it’s opened up.

The second kind happens when a homeowner decides to change something after construction has already started. Moving a wall, switching a tile selection, upgrading a fixture, or adding a feature that wasn’t in the original scope. These are homeowner-initiated change orders, and they’re a normal part of remodeling too. The difference is that this kind is a choice, while the first kind usually isn’t.

Both are legitimate. What matters is whether they’re documented properly and priced before the work happens, not after.

What Usually Triggers an Existing-Condition Change Order

In Marin County and San Francisco specifically, a large share of the housing stock predates a lot of the systems and standards that current work is compared against. Homes built before the 1960s were often wired, plumbed, and framed in ways that were normal at the time but don’t line up with what a modern remodel requires once walls are opened.

Common examples include knob-and-tube or ungrounded wiring that needs to be addressed once an electrician has access to it, older galvanized or cast-iron plumbing that’s corroded from the inside in a way that isn’t visible from outside the pipe, dry rot or water damage around a shower, tub, or exterior wall that wasn’t detectable until the finish material came off, and prior work done without a permit that doesn’t meet current code and has to be corrected before new work can be built around it.

None of these are things a contractor can reliably predict from a walkthrough before demolition. They’re also more common the older the home is, which is worth knowing going in rather than being surprised by later. This comes up often in a full kitchen remodel or bathroom remodel in a pre-1960s Marin or San Francisco home, simply because those two rooms carry the most plumbing and electrical work of any space in the house.

What Usually Triggers a Homeowner-Initiated Change Order

This category is more straightforward, but it’s worth naming honestly because it happens often. A homeowner sees the space differently once it’s framed out and decides to move a wall. A tile that looked right in a showroom doesn’t look right once it’s next to the actual cabinetry. An appliance gets upgraded to a size that changes the surrounding cabinetry or electrical requirements.

These changes are completely reasonable. The point isn’t to avoid ever changing your mind during a project. It’s to understand that a mid-project change has a cost and schedule impact, and that impact should be documented in writing before the work happens, not absorbed quietly or argued about after the fact.

Why California Law Actually Protects You Here

This is a detail most remodeling content doesn’t mention, and it’s worth knowing before you sign anything. Under California law, a home improvement contract and any changes to it must be in writing and signed by both parties before the additional work begins. If the contract price needs to change for any reason, that also has to happen through a written change order that becomes part of the contract, as outlined in the Contractors State License Board’s consumer guide to home improvement contracts.

In practice, this means a contractor cannot simply tell you the project now costs more and expect you to pay it. You’re entitled to see the change in writing, understand what it covers, and agree to the price before that work moves forward. This isn’t a courtesy some contractors offer and others skip. It’s a requirement. Any reputable contractor should be building this into their process by default, and any homeowner should feel comfortable asking to see it in writing if it isn’t offered automatically.

This is general information about how the process is supposed to work, not a substitute for reading your own contract or asking a professional about your specific situation.

Building a Contingency Budget Separate From Your Contract Price

The most effective way to prepare for an existing-condition change order isn’t to hope you won’t get one. It’s to set aside money for it before construction starts, kept separate from the number on your signed contract.

Industry guidance generally points toward setting aside somewhere in the range of 10 to 20 percent of your total project cost as a contingency, with the higher end of that range making more sense for older homes or projects that involve opening up walls, plumbing, or electrical systems. A straightforward cosmetic update in a newer home carries less of this risk. A full whole-home remodel in a pre-1960s Marin or San Francisco home carries more of it, simply because there’s more opportunity for something to be discovered once the work begins.

This fund is meant for the first category of change order, the existing-condition kind. It isn’t meant to cover a decision to upgrade every fixture in the house mid-project. Keeping those two things separate in your own budgeting makes it much easier to understand where your money is actually going if a change order does show up.

What to Ask Before You Sign

A few questions before you sign a contract can meaningfully reduce how many surprises you run into later.

Ask what allowances are built into the proposal for items like fixtures, tile, or countertops, and what happens if your selections cost more than that allowance. Ask whether the contractor reviewed any known permit history or prior work on the property before finalizing the scope. Ask how a change order would be priced and documented if something is discovered once demolition starts. And ask how you’ll be notified and asked to approve a change before that work proceeds, rather than finding out after it’s already been built.

A contractor who answers these questions clearly and in writing is telling you something important about how the rest of the project is likely to go.

What Even the Best Planning Can’t Predict

It’s worth being honest about this part. Some conditions genuinely cannot be identified until a wall, floor, or ceiling is opened, no matter how thorough the pre-construction walkthrough was. This is especially true in older homes where prior renovations weren’t documented or permitted. Finding something unexpected partway through a project isn’t automatically a red flag about the contractor or the planning that came before it.

What matters is how it’s handled once it’s found: documented clearly, priced honestly, explained to you in plain terms, and put in writing before any additional work happens. That’s the actual measure of whether a change order is being handled well.

Frequently Asked Questions

Is a change order always a bad sign?
No. Many change orders happen because something was discovered once a wall or floor was opened, which is common in older homes and isn’t a sign that anything was planned poorly.

Can a contractor charge me more without my written approval?
In California, any change to a signed home improvement contract, including added cost, generally has to be documented in a written change order signed by both parties before that work happens. Check your own contract and ask your contractor directly if you’re unsure how this applies to your project.

How much should I set aside for unexpected costs in a remodel?
Many contractors and industry guides point to a range of roughly 10 to 20 percent of total project cost, with older homes and projects involving structural, plumbing, or electrical work generally landing toward the higher end.

What’s the difference between a change order and a contingency fund?
A contingency fund is money you set aside yourself, separate from your contract, in case a change order comes up. A change order is the actual documented change to your contract once something specific has been identified.

Do older Marin and San Francisco homes see more change orders than newer construction?
Generally, yes, because older homes are more likely to have wiring, plumbing, or framing that doesn’t meet current standards and isn’t visible until walls or floors are opened.

Before You Sign Anything

If you’re early in planning a remodel and want to understand what should already be built into a proposal, or what a fair, well-documented change order process looks like, we’re glad to walk through it with you before you sign anything with anyone.