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A Crash Course for Hiring a Contractor

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Jessica
10.21.13

While it may not be quite as serious as marriage, finding the right contractor to work on your home is a big deal. It’s a financial commitment, they’ll be hanging around the house a lot and you might even have to share a bathroom with them.

Whether you’re redoing your kitchen or adding a deck, finding Mr. Right – or Ms. Right – can be a challenge. Not to mention, a scary story or two about a neighbor’s bad experience may have made you a little gun shy.

Follow these ten tips to ensure that your home and your contractor are a match made in heaven.

1. Understand the Project 

Do some homework on what it’s going to take to complete your project so that you are comfortable talking about it with potential contractors. If you understand the project, you will be better equipped to spot red flags and avoid situations where someone is trying to take advantage of you. The BrightNest library is a great resource for first steps.

2. Ask Around

Your best bet for a referral is from someone you know, such as a friend, relative, real estate professional or building manger. If your inner circle comes up empty, continue your search online by using a reliable review service such as Angie's List.

3. Ask for an Itemized Bid

Reputable contractors should be fine with this. An itemized bid breaks down the cost of a project into detailed line items (i.e. plumbing, painting, carpentry, etc.) and will make it much easier to compare contractors as well as see what parts of your project cost the most so you can make intelligent adjustments.

4. Get More Than One Bid

Don’t settle for the first contractor you meet. Shop around and get bids from at least three people. Don’t necessarily settle for the lowest number, either. Consider things like reputation, the quality of the proposed materials and how the contractor charges for extra costs that you will likely incur along the way.

5. Do a Background Check

Find someone that strikes your fancy? Ask them for references and start calling around. Are their previous customers satisfied? Did any problems arise? Also check them out at the Better Business Bureau to see if any complaints have been filed against them.

6. Confirm Your Contractor’s Licenses and Insurance

It’s important to make sure your contractor is licensed to work in your state and city (if the state and/or city requires a license). The Contractor’s License Reference Site can help you determine what licenses they need, and if they actually have them. Ask for a copy of their insurance information and make sure they are covered for general liability and worker’s compensation. Once you hire a contractor, ask to be listed as an “Additional Insured” on their general liability policy.

7. Don’t Take Out Permits for Your Contractor

If there’s a problem, you’ll be the one on the hook. Your contractor is responsible for taking care of this.

8. Agree Upon a Good Payment Plan

Ask the contractor during the interview process how he or she handles payments. Payments should be made to a company via check (not to an individual, and not in cash). An initial deposit of 10-15% is reasonable (sometimes higher for smaller projects), but you should not pay for raw materials. It’s normal to then make payments in installments, with a final payment of 10-15% delivered when the job is finished.

9. Make Sure the Contractor Obtains Lien Waivers

A lien waiver is proof that the contractor has paid for the labor and materials for the work completed on your project to-date, and didn’t spend your money on other expenses. Do not pay your contractor without seeing lien waivers that equal the entire amount due. This will ensure that you are not liable for payment to a subcontractor or supplier if your contractor can’t pay his bills. Your contractor should provide you with a lien waiver for his work as well.

10. Make Sure the Contract is Comprehensive

We recommend that you do not hire a contractor without a signed contract. Your contract should include things like your agreed payment schedule, proof of insurance, a start and end date, lien release requirements and specific materials that will be used. Remember, if it’s not in the contract, the contractor isn’t legally obligated to do it.

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