Definition:
Change orders are formal, written agreements that modify an original construction contract, specifying alterations in the scope of work, materials, costs, or completion timelines.

Example:
During a home renovation, Maria decides she wants hardwood floors instead of the tile initially specified. Her contractor issues a change order outlining the new flooring material, updated costs, and adjusted project timeline, which Maria approves before work continues.

Explanation:
In real estate construction or renovation projects, change orders document adjustments clearly and formally. They occur when homeowners, builders, or contractors request modifications to the original construction plan. Each change order should clearly specify the new scope of work, additional costs or savings, project timeline impacts, and have signatures from both parties involved.

Change orders help manage expectations, prevent disputes, and ensure transparency. Without properly documented change orders, projects risk misunderstandings, delays, cost overruns, or legal disputes.

Importance:
Understanding change orders matters significantly because they directly impact budgets, timelines, and quality of real estate projects. Homebuyers or owners should carefully review, question, and understand each change order before approving it to avoid unexpected expenses or delays. Builders or contractors benefit by clearly documenting project modifications, ensuring fair compensation and avoiding disputes with clients.

In short, change orders provide clarity and accountability in real estate construction projects, protecting all parties from misunderstandings and ensuring smooth, predictable project outcomes.