Even the thought of a beautiful home remodeling project can turn sour at the thought of hiring a contractor. How will I know if they use quality materials? What am I really paying for? What happens if they do a bad job? These are all common concerns, and you are correct in anticipating them. So how do you put yourself at ease during the contract hiring process? Our detailed guide will help avoid the common pitfalls, protect your investment, and make you more involved in the process.
1. Solicit at least three bids
If you wanted to buy an item you have never purchased before, like a didgeridoo, how would you know whether you are being overcharged or if you are paying less for an inferior product? Shopping around is a smart idea, whether you are looking for an indigenous Australian wind instrument or a home remodeling project. Higher bids typically mean that the contractor is using better materials (something you can verify during the contract). Look out for too good to be true bids that are significantly lower. Sometimes these contractors can raise the price during the job, pulling the classic bait-and-switch.
2. Verify Licensing, Insurance, and Bonding
Licensing if one of the first indicators of reliability and responsibility. Not everyone who is licensed is trustworthy, but anyone who is not licensed should definitely be avoided. Insurance protects the homeowner from being liable in the case of damage or injury during the job. If your contractor makes a mistake which needs additional work to repair (and therefore, additional money), then a bond will cover it. These three things protect you, and any worthwhile contractor will have them. Make sure to do this during the bid process, so you can fairly judge each candidate.
3. Check References and Past Work
Would you hire someone without a resume? Of course not! If you can talk to previous clients, that is one step in the right direction. An even better move is actually visit a contractor’s past work. This should be done during the bid process, so you can see which bid will give you the best value or the best results.
4. Detailed contract
Once you have done your homework and settled on a contractor, it is time to create a detailed contract. Many people do not want to do this because it makes it seem like they are suspicious or paranoid. This is a pretty naïve state of mind. Remodeling is an expensive process in which things can go wrong, either on accident or through carelessness. All a contract does is ensure that you and your contractor are on the same page (yes, that pun JUST happened). When your expectations are agreed upon by both parties, then there is less chance of heartbreak. Your contractor might even be relieved. It sets up clear specifications for the job, which types of materials should be used, and how long it should take.
The following items should be covered in your contract:
- A detailed description of the job
- A clear statement of contractor and homeowner responsibilities
- Dates for the start and completion of the job
- Itemized materials list with warranty and price information (if you would like to rely on the contractor’s choice for certain items, it should be stated)
- Complete outline of costs with a total (depending on your state, you may be required to pay a certain percentage up front. Always withhold 10% until completion)
- Terms that define how payment is related to job progression. (use a credit card for more fraud protection)
- Penalties for missed deadlines
- Procedures for any changes in the contract
- Proof of licensing, insurance, and bonding
- Information on the use of subcontractors, and who will supervise them
- If using subcontractors, a lien waiver protects the homeowner financially in the event that the contractor does not pay them
- Grounds for termination by which either party can leave the job without penalty (Laws regarding this may vary from state to state.)
Here are some additional resources on home improvement contracts for California residents.
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Article written by Mike Bowman