Ready to Remodel? How to Hire a Contractor You Can Trust
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With the economy stabilized and home prices rising in much of the U.S., homeowners who have been content to watch home remodeling on TV may now be ready to do some real-life work on their homes.
That can mean wading into a world both alien and expensive. The contractor you hire will make all the difference to the success and affordability of your project.
Contractors come in all shapes, sizes and skill levels. Most are professionals who do their best. A few, though, can’t be trusted to cross the street in a straight line.
Follow these 12 steps to separate the pros from the bad eggs, avoid misunderstandings and expensive missteps, and get the most for your money:
1. Get recommendations
The best way to find a competent contractor is to ask friends, colleagues and family for the names of contractors with whom they’ve had a great experience. Send your network an email. Or just phone friends or otherwise ask people for recommendations.
Assemble a list of the most promising names you’ve received. Chat a bit more with those who made the recommendations to find out:
Why they recommend the contractor.
What kind of work they had done.
Whether the contractor finished on time and on budget.
Whether there were any problems.
2. Verify licenses
When you have narrowed your list to two or three contractors, ask to see their business licenses. Make photocopies and verify they are current by contacting the board or agency that licenses contractors in your state. Home Advisor provides this handy site to look up your state’s licensing requirements and check out individual contractors. The licensing agency in each state is also the first place to look to find out if a contractor has been the subject of complaints or government disciplinary actions.
3. Screen for legal problems
Look for lawsuits involving a contractor:
Check at your county’s district court office for lawsuits naming the contractor or business you are considering using.
Search online for mentions of the contractor’s name and the business’s name.
4. Verify insurance coverage
Contractors need two types of insurance:
Liability coverage: Compensates the homeowner in case the work fails.
Workers’ compensation insurance: Covers workers injured at the job site.
Regardless of what a copy of a policy shown to you says, you should call the agent or state agency to confirm that the contractor’s premiums are paid up and the policy is in force. Laws vary from state to state, but in some places you could be liable for the unpaid premiums in case of an accident if the contractor’s industrial insurance is not paid up.
Ask each contractor you are considering for a copy of evidence of his or her liability insurance, including the phone number of the agent who sold the policy.
5. Conduct interviews
Sit down for a half-hour or more with each contractor you are considering. Talk over the job, and ask each contractor to outline expectations. Ask the contractor to outline his or her credentials and experience. The Federal Trade Commission has a detailed list of questions you can ask.
6. Turn your back on temptation
Some people find it tempting to hire unlicensed or uninsured contractors. Doing things by the book costs money, and contractors who skip the formalities might charge less.
You might get away unscathed if you hire an unlicensed business. Many homeowners do. But here are a few of the risks:
You’ll get no state help pursuing a bad contractor. In Virginia, for example, using unlicensed contractors makes you ineligible for monetary compensation from a state fund in case of improper or dishonest conduct.
You could be held responsible as the de facto general contractor and thus responsible for any defective work on your home for many years after you’ve sold it to someone else.
You could be on the hook financially for injuries on your job site. Your obligation to pay an injured worker’s medical bills could last for years.
7. Check references
Ask each contractor you’re considering for three references. Take the time to check them, confirming that the contractor really did the jobs he claims he completed. Find out when the work was done, how long it took and whether it was finished on time. You can learn plenty by also asking open-ended questions such as, “What was it like to work with Linda and her crew?”
8. View work they’ve done
Some contractors carry photos to show the quality of their workmanship. But it’s even better to ask the former clients who were the contractor’s references if you can see the work. An in-person look enables you to confirm quality in a way you can’t with photos.
9. Sign a contract
Make sure you and your contractor have the same understanding of the work to be done. Ideally, you or the contractor should write a detailed list of each task with steps to be completed and dates for completion. HouseLogic explains how to draw up the contract and what to include. Critically, the contract should make it clear that any required permits will be acquired by the contractor. Do not get roped into doing it yourself.
10. Be careful with upfront payments
Your contractor may ask for a portion of the payment upfront. That’s often reasonable. But agreeing to make a large upfront payment presents a risk for you.
If you are asked to cover the cost of materials, see if you can pay the supplier directly. This keeps you in control of the money and lets you know whether the contractor is sharing any discount with you or charging you a markup on materials.
Contact consumer protection authorities in your state to find out about any restrictions or rules that contractors must follow. Some states regulate what a contractor may charge upfront.
A payment schedule of 30 percent at the start, 30 percent in the middle and 30 percent upon completion is not unusual. However, it is safest for you to link payments to milestones of work completed.
HouseLogic offers these guidelines:
First payment should be no more than 10 percent of the total job.
Final payment should be enough money — up to one-third of the total cost of the project — to make sure the contractor returns to correct unfinished details.
Money Talks News founder Stacy Johnson suggests waiting a couple of weeks before closing your books on a job. “Make sure you like it, and then make the last payment,” he advises.
11. Beware of low-ball bids
When asking several contractors to make competitive bids, be wary of any that come in far lower than the rest. A little lower is fine, but the “too-good-to-be-true” rule applies here. There’s probably something wrong with a radically lower bid. It often means there will be expensive surprises later in the project.
12. Protect against tail-dragging
It’s not unreasonable for a contractor to juggle more than one project at a time. But this can get out of hand, leaving homeowners waiting for their job to be completed.
To ensure prompt completion of your job, include a penalty for late completion in your contract. In fact, you might add an incentive payment for an early wrap-up.
What’s your experience hiring contractors for home improvement projects? Share with us in comments below on our Facebook page.
This article was originally published on MoneyTalksNews.com as 'Ready to Remodel? How to Hire a Contractor You Can Trust'.
