Tips for hiring a contractor

10 Tips for Hiring a Contractor

You've drawn up plans for a new addition to your house. You’re expanding the master bedroom with French doors swinging open to the yard and a walk-in dual-head shower with subway tiles.

Making changes to your home can be exciting, but it’s very important to exercise caution when hiring a contractor. Renovating your residence is an investment, and you want to be sure that the contractor you bring in is someone who will protect your investment by getting the job done in a timely and cost effective manner with stellar results.

Here are a few tips to keep in mind when looking to hire a contractor:

1. Ask your friends and co-workers

The first place you should check when seeking a reputable contractor is your community of friends and family. Perhaps you have a friend who recently had a remodel or addition, or maybe one of your neighbors down the street just completed a major renovation. Having a first hand referral about a contractor from someone who can tell you how the job progressed is ideal because you are starting with a more reliable connection.

2. Do some research online

If you can't find a contractor through personal connections, do some research on reputable websites on the Internet that specialize in locating highly rated contractors. HomeAdvisor, Service Magic and are a few no cost sites worth your time, which allow you to read reviews of contractors in your area.

It's worth noting that even after reading positive reviews of a contractor online, it’s important to be diligent and double check the quality of their work by following the tips below.

3. Receive bids

Once you’ve narrowed down your list to four or five choices, you should receive bids from those contractors who seem qualified.

It's easier to evaluate your bids if you ask contractors to break the costs into materials, labor, and overhead/profit. A general rule is that materials should account for 40 percent of the total cost, and the profit margin is often between 15 to 20%.

It's important to keep in mind that bids may vary widely because contractors may be using different brands and qualities of building materials.

The lowest bid on the list may not be the best choice for this reason. Additionally, a very low bid may indicate a contractor who has a hard time keeping clients.

4. Evaluate prior work history

It's critical to pick a contractor who is experienced with the type of project you’re hiring them to do. Ask to see previous work they’ve completed in this area. For example, if it were a complete kitchen remodel you’d want to find out whether they’ve had plenty of experience in this arena. If possible visit a site and talk to previous clients to see how the job progressed.

5. Ask about suppliers

Another way to investigate a contractor is to ask them which shops they regularly use to purchase their materials. By visiting local lumberyards and tile shops in your area you can inquire about the reputation of a particular contractor who is a regular customer. If it’s a small shop and they don’t know the contractor or don’t come up with a positive response, you may not be dealing with an experienced professional.

6. Find out how they conduct daily operations

Some contractors delegate their daily work to a foreman and only show up once a week or less to check on operations. Ask specific questions about how much time they will spend on the job and if it’s going to be someone else who is handling the project, ask to meet the foreman who will be in charge of the job, and factor your decision on your impression of the foreman as well.

7. Inquire about the need for permits

Most cities and counties require construction permits for even very minimal renovations. It’s up to your contractor to obtain the necessary permit before beginning the work, and they should be very familiar with the process. If the contractor doesn’t mention permits or tells you that you don’t need one, this should raise a red flag.

8. Check State licenses and insurance

Contractors are typically licensed and bonded for the work they do. You can check on their credentials before hiring them by contacting you local building department or consumer protection agency. Additionally, before settling on one contractor ask to see proof of insurance, otherwise, you could wind up liable for an accident hat takes place on your property. Contractors typically have a combination of personal liability, worker’s compensation and property damage coverage.

9. Ask about how they structure the payment schedule

Payment schedules can vary depending on the size of the job, but they tend to be divided into at least four to five different payments. For larger projects, expect to pay 10% when signing the contract, with three payments of 25% over time, and a final 15% once every last tiny item is completed. Smaller projects may require 25% up front. If possible, ask to have each payment tied to a particular milestone in the project, in order to keep it moving smoothly.

If a contractor tells you they need 50% upfront, that may be signal that they are having financial problems, which is not a positive indication.

10. Get a detailed written contract

Finally, don’t ever hire a contractor without receiving a contract that spells out the specific details of the project, including a start date, completion date, payment schedule, materials and products to be used as well as a working schedule with progress outlined. Don’t be afraid to ask for as much detail as possible; should anything go awry, a well-written contract will go a long way toward protecting your investment into improving your property.