Understanding Change Orders: When Are They Legitimate?

You signed a contract, agreed on a price, and work began. Then the change orders started. First it was $1,200 for "unforeseen plumbing." Then $800 for a code compliance update. Before you knew it, your $35,000 kitchen renovation was pushing $44,000. Change orders are a normal part of construction, but they're also one of the most common mechanisms through which renovation budgets spiral out of control. Understanding when a change order is legitimate and when it deserves scrutiny is one of the most valuable skills a homeowner can develop.

What Exactly Is a Change Order?

A change order is a formal modification to the original scope, cost, or timeline of a construction contract. It's a written document — or at least it should be — that describes the change, explains the reason, and states the cost impact. Both parties, homeowner and contractor, must agree to and sign a change order before the additional work proceeds.

Change orders exist because renovation projects involve a degree of uncertainty. No matter how thorough the pre-work inspection, opening walls, pulling up floors, and exposing hidden systems can reveal conditions that nobody anticipated. A well-drafted contract will include a process for handling change orders, and a professional contractor will present them clearly and transparently.

Legitimate Reasons for Change Orders

Not all change orders are cause for alarm. Many are completely justified, and refusing them could actually result in a worse outcome for your project. Here are the most common legitimate scenarios.

Hidden Damage and Concealed Conditions

Once demolition begins, contractors frequently discover issues that were invisible during the planning phase. These are genuine surprises that require additional work.

• Water damage and rot — Removing tile or drywall may reveal moisture damage to subfloors, studs, or joists. Repairing a rotted subfloor typically adds $800 to $2,500 depending on the extent of the damage.
• Outdated or substandard wiring — Older homes often have knob-and-tube wiring, aluminum wiring, or circuits that don't meet current load requirements. Rewiring a kitchen or bathroom can add $1,500 to $4,000.
• Plumbing issues — Corroded galvanized pipes, improper venting, or deteriorated drain lines may only become apparent once walls are opened. Replacing a section of corroded supply line runs $500 to $1,500; rerouting a drain line can cost $1,000 to $3,000.
• Asbestos or lead paint — In homes built before 1980, discovering asbestos in tile, insulation, or joint compound triggers mandatory remediation. Professional abatement costs $1,500 to $5,000 or more depending on the material and area.
• Structural deficiencies — Sagging joists, cracked headers, or inadequate support beams may need reinforcement before finish work can proceed. Structural repairs range from $1,000 to $10,000.

Building Code Requirements

Renovation work often triggers code compliance requirements that go beyond the original scope. When you pull a permit for a bathroom remodel, the inspector may require upgrades to meet current code, even if the existing conditions were grandfathered in under older regulations. Common code-driven change orders include adding GFCI outlets, upgrading ventilation, installing fire blocking, or bringing stair railings up to current height standards. These changes are non-negotiable from a legal and safety standpoint.

Owner-Requested Changes

Sometimes the homeowner is the source of the change order, and that's perfectly fine. You might decide mid-project that you want to upgrade from laminate to quartz countertops, add a recessed niche in the shower, or move a light fixture to a different location. These are valid changes, but they should still be documented formally with a written change order that specifies the cost and timeline impact before work proceeds.

Suspicious Change Orders: Red Flags to Watch For

While many change orders are legitimate, some are not. Here are warning signs that a change order deserves closer examination.

Vague Descriptions

A legitimate change order will describe the specific problem, the proposed solution, and the cost breakdown. If a change order simply says "unforeseen conditions — $2,400" without detailing what those conditions are, push back. Ask for photographs of the issue, a description of the repair, and an itemized cost that separates materials from labor.

Work That Should Have Been Anticipated

An experienced contractor should anticipate common issues during the estimating phase. If your contractor quoted a bathroom remodel in a 1960s home without budgeting for the possibility of galvanized plumbing or asbestos tile, that's a failure of due diligence, not an unforeseen condition. Be skeptical of change orders for issues that a thorough pre-work inspection should have identified.

Inflated Pricing on Small Additions

Watch for disproportionate pricing on minor additions. Adding a single electrical outlet should cost $150 to $350, not $800. Installing an additional row of subway tile should be priced proportionally to the per-square-foot rate in the original contract. If a small addition carries a price tag that seems wildly out of proportion, request a breakdown and compare the rates to the original quote.

High Volume of Change Orders

One or two change orders on a major renovation is typical. Five or six starts to suggest either poor initial planning or a deliberate strategy of bidding low and supplementing with change orders. Industry data suggests that change orders on well-planned residential projects should account for no more than 10% to 15% of the original contract value. If you're approaching 20% or higher, something has gone wrong.

Pressure to Approve Immediately

A contractor who demands immediate approval of a change order — "I need an answer today or the crew sits idle" — may be using urgency as a negotiating tactic. While some decisions genuinely are time-sensitive, you should always have at least 24 to 48 hours to review a change order, research the pricing, and ask questions.

How to Evaluate a Change Order

When a change order lands on your kitchen counter, here's a step-by-step process for evaluating it fairly.

1. Read the full description — Does it clearly explain what was discovered and why the additional work is necessary? If not, ask for clarification before proceeding.
2. Request documentation — Ask for photographs of the condition that triggered the change order. A contractor who has nothing to hide will happily show you the rotted subfloor or corroded pipe.
3. Review the cost breakdown — The change order should separate materials from labor and provide unit costs. Compare labor rates to those in the original contract. There's no reason the hourly rate should change for additional work.
4. Get a second opinion if needed — For large change orders (over $3,000), consider having an independent contractor or home inspector verify the condition and assess the proposed cost. This may cost $200 to $400 but could save you thousands.
5. Check against market rates — Use a tool like Quoterly to validate the pricing on a change order against current market data for your area. What seems expensive in isolation may actually be fair, or what seems reasonable might be well above average.
6. Negotiate before signing — A change order is a negotiation, not a take-it-or-leave-it demand. If the labor hours seem high, discuss it. If the material costs seem inflated, point to specific comparisons. Most contractors expect some back-and-forth.

Documentation Requirements

Every change order should be documented in writing, regardless of how minor the change seems. A properly documented change order includes:

• A unique change order number — Sequential numbering helps track all modifications over the life of the project.
• A detailed description of the change — What work is being added, removed, or modified, and why.
• Itemized cost impact — Materials, labor, and any other costs broken out individually.
• Timeline impact — How many additional days the change will add to the project schedule.
• Signatures from both parties — Both you and the contractor must sign before work begins.

Never approve a change order verbally. Even a friendly "yeah, go ahead and take care of that" can lead to disputes later about what was agreed to and at what price. Get it in writing every time.

Prevention Strategies

The best change order is the one you never receive. While you can't eliminate surprises entirely, you can minimize them with upfront planning.

• Invest in a pre-renovation inspection — For $300 to $600, a qualified home inspector can identify many hidden conditions before demolition begins. This is especially valuable in homes built before 1980.
• Include a contingency budget — Experienced renovators budget 10% to 20% above the contract price as a contingency fund for change orders. This isn't permission for the contractor to spend more; it's your personal safety net.
• Define scope thoroughly — The more detailed your original contract, the harder it is for work to be categorized as "extra." Specify materials, quantities, finishes, and locations for every element of the project.
• Request exploratory demolition — On major projects, consider paying for a limited demolition phase before finalizing the full contract. Opening one wall or pulling up a small section of flooring can reveal hidden conditions that inform a more accurate bid.
• Include a change order cap — Some contracts include a provision that limits total change orders to a percentage of the contract value (typically 10% to 15%) without requiring renegotiation of the entire agreement.

Negotiating Change Orders Effectively

When you do receive a change order, approach the negotiation professionally. Acknowledge that the issue is real (if it is), but be clear about your expectations for fair pricing.

Start by comparing the change order rates to the original contract. If the original quote priced framing labor at $45 per hour, the change order should use the same rate. If tile installation was quoted at $12 per square foot, additional tile work should be priced comparably. Inconsistencies in unit pricing between the original contract and change orders are a common source of overcharges.

If you believe a change order is priced unfairly, say so directly and provide specific reasons. "The labor hours on this change order seem high for the scope of work" is more productive than a vague objection. Contractors respect homeowners who engage with the details.

The Bottom Line

Change orders are an inevitable part of renovation work, but they don't have to derail your budget. Legitimate change orders address real conditions that couldn't have been reasonably anticipated, are documented in detail, and are priced consistently with the original contract. Suspicious change orders lack specificity, carry inflated pricing, and arrive in high volumes.

Your best defenses are a detailed original contract, a thorough pre-renovation inspection, a realistic contingency budget, and the willingness to review every change order carefully before signing. Treat each change order as a small negotiation: ask questions, request documentation, compare pricing, and never approve anything verbally. A fair contractor will respect this process, and the ones who don't are telling you something important about how they do business.