13 Steps to Hiring a Contractor Who Won’t Rip You Off

With home remodeling, everything hinges on finding the right person for the job and defining and managing the project from the get-go.

With the economy stabilized and home prices rising in much of the U.S. market, homeowners who spent the recession watching 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.

Rip-off artists and incompetents aren’t in the majority, but they are common enough that Spike TV has built a reality show, “Catch a Contractor,” around homeowners’ complaints of botched home construction and remodeling jobs.

So, how do you set up the best outcome for your job? Outside of TV, contractors come in all shapes, sizes and skill levels. Most are professionals who are trying their best to make a living doing work they can be proud of. A few, though, can’t be trusted to cross the street in a straight line. Follow these 13 steps to separate the pros from the bad eggs, avoid misunderstandings and expensive missteps from the outset and get the most for your money:

1. Get recommendations

The absolute best way to find a reputable and 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: describe your project, perhaps including your price range, and outline what you hope for in a contractor. Or just phone friends or ask people for recommendations as you run into them.

Assemble a list of the most-promising names you’ve received. Chat a bit with those who made the recommendations to find out:

  • Why do you recommend this contractor?
  • How did you meet him or her?
  • What kind of work did you have done (to eliminate high-end specialists, for example, if you are working on a rock-hard budget)?
  • Did the contractor finish on time and on budget?
  • Tell me about any problems you ran into with this contractor.

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.

Resources:

3. Track down complaints and disciplinary actions

When calling your state’s licensing agency, ask how to find complaints and government disciplinary actions against contractors.

What You Should Know Before You Hire a Contractor,” a consumer publication by the Virginia Board for Contractors, has plenty of information for homeowners everywhere. In some states, you can check a contractor’s status online. Washington state, for example, lets you verify that a contractor’s workers’ compensation insurance is paid up and find out if the contractor is registered, bonded and insured or has state licensing infractions.

4. Screen for legal problems

Look for lawsuits involving a contractor:

  • Check at your county’s district court for lawsuits naming the contractor or business you are considering using.
  • Search online for mentions of a contractor’s name and the business name.

5. Verify insurance

Contractors need two types of insurance:

  • Liability coverage compensates the homeowner in case the work fails.
  • Workers’ compensation insurance (or industrial insurance) covers workers injured at your job site.

Regardless what a paper policy says, call the agent or state agency to confirm that the premiums are paid up and the policy is in force. If industrial insurance is not paid up, depending on your state’s laws, you could be liable for the unpaid premiums in case of an accident.

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.

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