July 3, 2018

Hiring the Right Contractor

 

Renovating or expanding a home can be exciting, but also nerve-wracking. There are a lot
of pieces to the puzzle that can make or break the experience and either leave you with a
beautiful new space or a traumatic memory. The outcome has a lot to do with the contractor you
hire for the project. For someone who has never hired a contractor before, the task can seem
daunting. Here is a breakdown of how to go about hiring a contractor for the first time to
promote a seamless experience from start to finish.

Step 1: Finding a Contractor
The first and most basic step is finding a contractor to work with. Begin by asking your
friends and family members for referrals. These are the people that are going to give you the
most honest critique of their contractor, and you may even be able to see the results of their work
in your friends’ homes. Another option would be to ask your realtor. If you are renovating a new
property you just bought or an old one you are planning to sell, chances are the realtor you are
using has some great suggestions for contractors in the area. You could also try websites such as
Angie’s List, which helps you search for professionals with filters tailored to your specific needs.

Step 2: The Interview
Once you have found a contractor that suits your needs, the next step is to set up an
interview with them. Remember, first impressions are everything. What does their truck look like
when they pull up? Is it dilapidated? Is it clean and organized? This is likely an indication of how
they will treat and leave your home. How is their personal appearance? Are they clean and presentable?

If they are dirty, is it because they are coming from a job or because this is how they
take care of themselves? Do they take off their shoes when they enter your home? Respect for
their own appearance will translate into respect for your house. A messy contractor can mean a
messy home and even messier experience.

Get a sense of their craftsmanship. Explain to them what your plans are for your home and
ask their opinions about it. This will help you get a sense of their education about the work they
do, their thought process, and their approach to new tasks and challenges. Show them the area
you are planning to renovate and ask their opinions about the project and how they would go
about it. It is important that they can explain their methods in a way that is easy for you to
understand because this means they are a good communicator and will likely keep you informed
throughout the process.

Pictures are NOT worth a thousand words. With today’s access to photoshop and other
such methods, a contractor can easily present false work to sell you into hiring them. Ask if you
can see a project in person, or give them a small task to do first before hiring them for your entire
project. You want to get a sense of their ability to change and adapt, their style or work, and their
competence in the task.

Step 3: The Budget and Negotiation
It is smart to have a budget set before the process begins. (For tips on setting a budget, see our article ‘How Do You Know It’s Time To Move’ ) Whatever you plan to spend,
make sure there is a 10% pad. This is very important! Be aware that change orders can occur,
and this pad serves as the financial buffer for those expenses. You want your maximum budget to
include this 10% pad so that you are prepared for unexpected expenses.
Beware that, depending on your lender, requirements may be placed on draws. Make sure
you clearly communicate this during your negotiation with your contractor. Often, with a
construction loan, there are several things that need to happen in order to get a draw, and that
draw is dictated by the bank (or lender)  A draw is a release of portions of the loan and can be given after a
predetermined portion of the work is completed or periodically throughout the process. Draw
requests are submitted by the contractor after each of these designated task completions, and are
approved by the lender. When interviewing your contractor, discuss your budget with them in
order to determine if moving forward makes sense.

Step 4: The Contract
In this step, it is important to clearly define the scope of work you expect from your
contractor. Make sure you not only define the initial project, but also the finishing package (wall
colors, fixtures, knobs and handles, etc). Ask for everything you may want, and then work with
the contractor to pare it down to fit within your budget. Protect yourself from a walkaway as well.
Negotiate putting down the least amount of money to get the project up and running. This way,
if the contractor walks away before completion, you lose the least amount of money.
Make sure you are aware of all hidden costs. Ensure that your contractor has all their
licenses. There are necessary inspections required for the project so make it clear who is tasked
with obtaining them. If there are costs associated with these things, make note of that.
Set expectations with your contractor. Make sure they know to respect not only your home,
but you as well. They should keep things cleaning organized, respect your living arrangements if
you plan to live in your home during construction, and respect your timeline. Set rules and
boundaries. For example, they should remove or cover their shoes when coming into your home
so as not to track in dirt, or they should know not to come into personal spaces like your
bedroom or office without first knocking — unless, of course, these are the spaces they are
renovating. Set a schedule and timeline in the contract, with deliverable dates, and stipulate any
allowance of extra time.

Speaking of stipulations, here is an important one; all change orders must be presented, and
approved by you, and payment will only be received upon approved change order. This prevents
surprise fees at the end. Basically, if a change order comes up, your contractor should first consult
with you about it before moving forward. If you do not sign off on it, and do not agree to pay for
it, then they should not complete the change order.

Discuss with your contractor their certificate of insurance, liability, and, if they plan to
bring in any subcontractors, all of their insurance, liability, and professional certifications — such
as electricians and plumbers. Clarify how subcontractors are being paid. Banks will only allow
the draw to go to the general contractor and clarification of the payment to the subcontractors
must be set forth by the lender. Negotiate for omission of responsibility by you to pay the subcontractors. However, if there is no outside lender involved to dictate how the money is
loaned, and your contractor does not have the extra funds laying around the pay their
subcontractors, you can negotiate to pay them directly. This can help you discount your costs
and take the liability off of you.

Warranty! If something goes completely awry, and you are considering suing, make sure
that it is in your best interest. Ensure that you have the right to sue, and that if you do sue, that
the contractor has to come to your court of residence. Seek legal advice in these matters to
protect yourself from further loses.

At the end of the day, we all want to save money. It can be easy to say yes to cheaper
materials and processes that seem like they are cutting huge costs. Make sure, they also are not
cutting corners. Just because you are paying less today does not mean that you will not be paying
more in the future to fix those mistakes. Instead of sacrificing quality and correctness, consider
paring back your wishlist. Save money on superfluous finishes rather than important
foundational pieces of your project. This should be discussed in your negotiation and these
expectations should be set with your contractor. They can also help you in deciding where to
save your money and where to apply it to get the best quality work and the most bang for your
buck. A good contractor will be forthcoming with such things, and not try to scam you or hide
costs from you.

These steps will make the process of finding and hiring a contractor easier, and as a result,
your home renovation should be a breeze.

 

 

 

 

We are not lawyers. The information in this piece should be used as a guideline for hiring a contractor.
Seek legal advice during the contract process if necessary. Understand that bank loans or lenders may have
different rules and expectations, and your experience may vary depending on these rules and expectations.