Hiring a contractor for a remodeling or repair project at your house can be a daunting process. Contractors have bad reputations, and often for good reasons. As a careful consumer, you want to make sure you hire a quality contractor at a fair price. While there are no guarantees that a contractor will follow the terms of an agreement, following these steps can help you build a solid foundation before you sign on the dotted line.
Step 1: Check License Status
Make sure your contractor is licensed. In some states, all contractors must be licensed. In other states, only specialty contractors, such as electricians and plumbers, must be licensed. Your state’s Secretary of State Office should be able to tell you which contractors require a license and have a database of currently licensed professionals in your state. Unlicensed contractors are often less expensive, but you relinquish many, if not all, of your legal protections if you hire an unlicensed contractor.
Step 2: Check Reviews
It’s important to check several online review sites and the Better Business Bureau. Some review sites, including Angie’s List, offer a mediation procedure for unhappy customers. If the customer is ultimately satisfied or the money is refunded, the negative reviews are removed. As a result, a list of glowing reviews may not always be completely accurate of customers’ experiences. By cross-referencing several review sites, you’ll get a more comprehensive picture of customers’ experiences with a particular contractor. Include the contractor’s Better Business Bureau listing as part of your review process. You might also ask the contractor for a list of customers you can contact, but keep in mind that you’ll only be given contact details for satisfied customers, so this might not give you the most complete information you need.
Step 3: Check the Contract
Many contractors will write a contract that allows significant leeway in both pricing and timeline. As a customer, you are not obligated to just sign whatever is presented. If you are not happy with the terms and timeline, ask your contractor to make changes. Once you sign the contract, you are as legally obligated to follow the terms as your contractor is.
Step 4: Check the Payment Schedule
As a general rule, you should not pay 100% upfront for any project. An initial payment as a deposit or to material allowance is reasonable, but should not be more than 15% of the total project budget. As an alternative, you can ask your contractor for a list of needed materials and purchase them directly. If you choose to purchase your own materials, your contractor should not need any upfront payment other than a small deposit and should only receive payment as the work is completed. It’s better for you to set payments for specific aspects rather than percentages of work. For example, if you are having a new deck built for $5000, your payment schedule may be:
ï New posts set – $1000
ï Floor decking installed – $1000
ï Handrails installed – $1000
ï Staining completed – $1000
ï Project 100% complete and signed off – $1000
This schedule is clearer to both parties than one that lists payouts at 25%, 50% and 75% complete or “substantially complete,” which is a favorite phrase among many contractors and is often vague and open to interpretation.
Step 5: Check the Timeline
Contractors hate timelines. Many contractors are working on multiple projects at the same time, and timelines limit their ability to do so. However, as a homeowner, you are entitled to set a timeline, both to ensure that work stays on schedule and to provide a solid reason for breaking the contract if the work does not progress at a reasonable pace. It’s highly recommended to include a “liquidated damages” clause in your contract, which stipulates a payment from your contractor or deduction in the final payment for every day that the project exceeds the contractual end date. For a larger project, you may also want to have a timeline of benchmarks along the way. While some delays are inevitable, especially for outdoor projects, a contractual timeline will help keep the work on schedule.
Step 6: Check the Permits
In many states, even minor construction projects require county or city permits. While many contractors want to work without the hassle and expense of permits, you are advised not to go along with this request. Permits are not designed to simply make money on fees or to slow the work, but will help you ensure that the work is done correctly. If your contractor asks you not to pull a permit, then you might want to rethink your hiring choice.
Step 7: Check the Insurance
Never hire a contractor that doesn’t have adequate liability and worker’s compensation insurance. If you do hire someone without insurance, you become the responsible party and are liable for any accidents that happen on your property. Don’t rely on the photocopy your contractor shows you. Instead, ask for a faxed or emailed copy directly from the insurance company on the day before the work is set to begin. Unfortunately, some contractors will sign up for a policy and then let it lapse, while still handing out the original documentation.
Planning and paying for a major construction project or even a small repair job can be a headache, but hiring a contractor doesn’t have to add to your stress. Some due diligence and negotiation with your contractor can help you design a contract that protects you and keeps your contractor on track.