Editor's Note: This story originally appeared on Living on the Cheap.
For most homeowners, the hardest part of any home renovation project isn’t the work itself, it’s finding a competent and reliable contractor to do the job.
Installing kitchen cabinets, knocking down a wall or tiling the bathroom is simple compared with the struggle of hiring a quality contractor who will perform at a high level from start to finish. We’re risking a lot of money, so it’s important to avoid costly mistakes. Since it’s not something we do often, we have few opportunities to practice and improve our skills.
Even for experienced home renovators, hiring a contractor can feel a lot like gambling. Everyone has heard stories about horrendous contractors who tore apart the kitchen and never returned or projects that cost three times the contractor’s original estimate. But there are things you can do to improve your odds.
If you’re doing a big project, you’ll need a general contractor, who may hire subcontractors for specialty work such as plumbing and electrical. Homeowners with renovation experience sometimes work as their own general contractors, hiring specific tradespeople for each job.
While this may save you money, it can be time-consuming and will mean multiple contractor searches instead of just one, since you’ll have to find a specialist for each smaller job.
We spoke to some experts to get their best tips on how to find a reliable and honest home contractor.
Plan ahead
Know what you want before you get estimates. “Start with a plan and some ideas,” says Angie Hicks, founder of Angi (formerly AngiesList.com), which provides referrals and reviews of contractors. “Don’t start by talking to contractors.”
You’ll get a more accurate estimate if you can be very specific about what you want done and the materials you would like to use to make it happen. “Redo the kitchen” could mean replace cabinets and countertops in the same positions, or it could mean tear the walls and floors down to the studs, replace and move all the plumbing and redo the electricity and/or gas lines. That is going to significantly affect your bids, so you must have the details ironed out first.
You need to do a lot of planning and a lot of work before you ever talk to contractors. A major home addition, for example, will require architect’s drawings and specifications. Even for a routine bathroom or kitchen remodeling job, you should have a general idea of your preferred layout and what materials you want to use before you seek bids.
“The more detailed scope of work you have written out before you hire your contractor, the better,” says Brandon Turner, vice president of BiggerPockets.com, a networking and information site for real estate investors. “All the documentation needs to be clear and concise,” says H. Dale Contant, president of the National Association of the Remodeling Industry and president of Atlanta Design & Build. “There should be no ambiguity.”
Interview contractors and check previous projects
Even in this internet age, personal references are far more useful than online reviews, though you should certainly read those, too, as well as seeking referrals from online services such as Angi, HomeAdvisor.com, Google and Yelp.
When choosing a contractor, nothing is more important than references. Ask friends, relatives and co-workers for references. People in your neighborhood who have done similar projects are your best sources.
If you know people in the building trades, ask them, too. Employees of local hardware stores may also be able to provide referrals. Go to see the work if you can, and ask the homeowner detailed questions about what it was like to work with the contractor.
Consider interviewing subcontractors as additional references and asking if the contractor treats them well and pays on time.
General contractors and most subcontractors should be licensed, although the procedure varies by state and municipality. Check the disciplinary boards, Better Business Bureau and local court records for problems. Ask the contractor for a copy of his license and copies of the licenses of the major subcontractors who will work on the job.
Obtain a list of references from previous clients. Then call those previous clients and ask detailed questions: Were they satisfied with the work? Did the project go over budget and why? Did the contractor show up on time? Did he clean the job site when he left?
“If it’s a really large job … you should go a little bit further to verify that they’ve done that kind of work,” Contant says. This includes asking additional questions, consulting more references and doing an in-person visit to a past job.
Someone who did a good job tiling your neighbor’s bathroom isn’t necessarily the right person to build an addition to your home. You want to find a company that routinely does the kind of project you want done.
Interview at least three contractors. Ask a lot of questions and get a written bid from each one. When you compare bids, make sure each one includes the same materials and the same tasks, so you’re comparing apples and apples. Get three bids even if you have a contractor you like because you’ll learn something from each interview.
“Don’t be afraid to negotiate,” Hicks says. While you might do some haggling at the interview, be prepared to do most of the negotiation after you get the bid and before you sign the contract.
Get more than one bid
When you get bids from contractors, you want to find out a lot more than what your job will cost. Ask prospective contractors detailed questions about their experience. How long has he been in the business? What other jobs has he done similar to yours? Will he use subcontractors or employees to do the work?
A one-person company is usually not the right choice for a whole-house remodel. Even if your job is small, don’t rule out a larger company, which may have more employees and be able to do small jobs efficiently. Cannon Christian, president of Renovation Realty in San Diego, advises asking for an employee list to make sure the contractor really has the employees he says he does and won’t be using casual labor hired off the street.
Once you’ve received the bids, don’t think it’s time to start work. You and the contractor will need to hammer out a detailed contract, listing exactly how you want the project completed, what materials will be used and what will happen if you change your mind midway through the process or unforeseen problems arise. The contract should include a schedule of progress payments and a timetable.
Rather than providing only the basics, the contract should drill down to the exact model faucet you’ll include in the kitchen (or provide a specific dollar allowance). It should detail when the work will be done, what will happen if it’s not done on time, what work will be done by the contractor’s employees and what work will be done by subcontractors, what hours the contractors can work at your home and who will clean up at the end of the day.
Here are some more tips when you are working with a contractor
Sign a detailed contract
Make sure your contract spells out exactly what will be done, including deadlines, progress payments, the exact materials that will be used down to the model number and who will provide which materials.
“If you don’t have it documented, it’s your word against theirs,” Hicks says. If the builder’s contract is not detailed enough, write up your own or provide addendums.
Be scrupulous about change orders
Any change in the project, whether you change your mind about products or ask for additional projects, should generate a written change order that includes the new work, materials and cost. Most jobs include surprises.
You may discover repairs that need to be made once walls are opened, or you may change your mind about an aspect of the project. Any time there is a deviation from the contract, make sure you and the contractor sign a change order detailing what additional work will be done and at what cost.
Expect a contractor to be too busy to start right away
“The best folks are the busy ones,” says Christian.
Expect and plan for expensive surprises
If you have $50,000 to spend on your remodeling job, don’t sign a contract for $50,000 because there will always be unforeseen repairs required. Budget at least 10% to cover those.
“No contractor can see through a wall,” Hicks says. “You want to plan for the unexpected.”
Verify licensing and insurance
Ask the contractor to give you copies of licenses and insurance policies, and then call the local or state agency that issues the licenses to verify they are valid.
Be suspicious of bids that are significantly lower than all the others
The cost of doing the same work in the same area is not going to vary significantly. If one bid is significantly lower, ask detailed questions about materials and the scope of work to make sure everything is included.
Get permits
Cities and counties require permits for most remodeling jobs. It’s customary for the contractor to get the permit and add the cost to your bill. Some contractors may offer to do the job for less without permits, but that could cause problems later if the remodeling work is not done to code, or if the city catches you the next time you get work done.
You could receive a fine and be required to remove the faulty work to redo it. “In the end, if you fail to pull proper permits for your jobs, it’s on you,” Hicks says. Be wary of contractors who ask you to get the permits – that’s the contractor’s job. Un-permitted work can also cause problems when it’s time to sell.
Have a payment schedule in the contract, with specific milestones
Most professional contractors ask for a small down payment upfront, then additional payments as specific milestones are reached, with the last 10% due only after all the lien releases have been received, final inspections have been done and all punch list items are completed.
Be wary of a contractor who asks for a large down payment upfront, unless the job requires the contractor to buy a significant amount of expensive materials before getting started.
Don’t pay more than 10% of the job total before the job starts
You don’t want a contractor to use your money to finish someone else’s job. Christian says he will occasionally ask for up to 30% if expensive materials are needed immediately.
Select your finishes on time
You will likely include some major components of the job (tile floor or granite countertops, for example) in the contract, with the specific finishes to be selected while the work is ongoing. If you don’t meet your deadlines to choose materials, the contractor can’t meet his, either.
Get lien releases
Anyone who provides labor or materials for your home can file a lien against your title if the bill is not paid. Before you make final payments to the contractor, ask him for lien waivers from all the materials suppliers and subcontractors affirming they have been paid. “A lien waiver really does protect the customer a ton,” Contant says.
Talk to the contractor frequently
For a big job, you may need to talk every day. If you see a potential issue, speak up immediately. Something that is done wrong will be harder to fix later after your contractor has packed up and moved on to his next job.
Verify insurance coverage
Know what is covered by your homeowners insurance and what is covered by your contractor’s business insurance. Get a copy of the company’s insurance policy.
Expect stress
Having workers in your house, living without a kitchen and having a cloud of dust over everything is challenging for even the calmest homeowners. Expect disruption and make plans to deal with it. “One of the things consumers don’t plan for is the stress of having [the renovation] done,” Hicks says.
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