Some time in your life you are going to hire a contractor. Probably more than you think.
It is very important that you understand the ins and outs of hiring a reputable contractor
because it can be very complicated. If you do not have the knowledge or know how to deal you
may wind up paying for something that is not done correctly or not completed. Remember, not
every contractor is honest, nor are they all licensed. By following these pinciples you can
ensure that your contractor is licensed, honest and most important you can protect yourself.
Knowledge is very important when it comes to dealing with a contractor.
The following information can be used as an outline for choosing a reputable contractor. By
utilizing this information, you can potentially eliminate problems by choosing the right
contractor the first time. Before committing to a construction project of any kind you
should know the following.............
Questions to ask Yourself.
What work needs to be done? Will the work add value to the property?
How much do you have budgeted for the work? What inconveniences will be experienced while work
is being done?
You should get at least three competitive bids for your project. Bids will vary from contractor
to contractor. Sometimes these bids will vary dramatically. Going for the lowest bid is the
basic idea but, beware of the "low ball" bid. This can result in unsatisfactory work that will
cost you more in the long run. Make sure that the bids include quality materials that are guaranteed
by the supplier or manufacturer. Competitive bids are free of charge and will ensure you pay a
competitive price for your project.
Ask to see their current license. Most states require that contractors be licensed. You should
also verify licensing with your Local State License Board.
Ask for proof of insurance. Take the information and call the insurance company to verify that it
is currently up to date. Also, if they have other employees, ask if they have workman's compensation.
This is required by law. If the contractor is not insured you could be liable for any accidents. Don't
put yourself in this situation.
Ask for references!! This can be one of your most valuable resources. You can ask specific questions
about the contractor such as, "Was the job done in a timely manor?, Was the work satisfactory?,
Would you refer the contractor to friends or family?" Also, contact local consumer agency such as
the Better Business Bureau or the state registrar to see if any complaints have been filed. Numbers and Local State License Board
are listed here.
Signing a Contract
Make sure that you understand every detail of the contract before signing. The contract should include
complete information on the contractor (ex. name, address, phone numbers, license numbers, etc...)
and description of the job (ex. materials, time schedule, clean up after completion, total price,
payment terms, etc...). NEVER pay everything up front. The best way to pay for your project is in
two separate payments called "draws". One draw in the beginning of the job and the other after the
job is completed. This is a happy medium that gives you protection and at the same time allows the
contractor to have enough money for needed business supplies and payroll. Sometimes in larger commercial
jobs two draws would not make much sense. In this situation several draws should be made as the work
progresses. The goal is to find a balance that does not put either the contractor or the client at risk.
Also, any warranties need to be in writing. Don't take anything for granted. Get a copy of the contract
for your records.
During and Completion
Get involved with the contractor and his crew. Tell them exactly what you want. When the job is done do a
final walk through and make a punchlist. Have the contractor touch up or fix anything that is unsatisfactory.
Follow Up Upon completion the job should be done up to your standards. The contract and labor warranty are
very important things to remember, the contractor should guarantee the labor side of the warranty against
certain defects. A one to three year warranty is not uncommon. So, You should be covered by labor
(contractor warranty) and there will be a manufacturer warranty that covers the material side of the
contract. Another thing to remember: if problems arise during or after the job is completed you can
call the state registrar of contractors. If there is no state registrar then call the agency of the
level of government that is in charge of that division. They will be able to give you numbers to assist
you with your problem. The BBB. is a good number to call also but, they are generally there only to take
and keep records of complaints. We want to give you numbers to call for agencies that can take action and
help you directly with your problem.
When Things Go Wrong
We receive many emails every year from homeowners that have picked the wrong contractors and
after certain turn of events are in trouble, with few places to turn for help. Steps can be
taken to protect you from problems that may arise from situations, whatever the specific case
may be. We previously discussed a list of procedures that
consumers can follow to protect themselves. Now we will begin discussing what to do if
that worse case scenario should arise. Stuff happens as they say, and it is better to be prepared
with knowledge than to be unprepared. I think the saying, "hope for the best, but plan for the
worse is a very wise statement".
If you wake up one day and find yourself in a bad situation with a contractor because of no fault
of your own there are a few things you can do to resolve the situation. First let me say that
this letter is not intended for consumers or homeowners that create problems for themselves and
then use this system to get out of responsibility. The contractor is not always the problem.
So this is not a letter intended to bash contractors, it is
intended for educational purposes for bad scenarios.
The first thing that needs to be done is a good solid analysis of the
situation. If the problem has arisen from a personality conflict or a misunderstanding it can
usually be resolved through increased communication without any mediation from a 3rd party or
any legal action. This is always the best way to resolve the situation if it all possible. If,
after analysis you come to the conclusion that the problem cannot be resolved through
communication it is time to explore other options.
If Your Contractor Is Licensed
Registrar of Contractors: The registrar of Contractors is the entity that handles all licensing
of contractors through state or local governments. The Licensing Board was created to ensure
that contractors have the education and abilities required to do the work required. It also
provides a system of tracking and accountability for the thousands of contractors that are
licensed and registered in the United States.
Licensing requirements differ from state to state in difficulty along with the amount of knowledge
and training needed to qualify for a given license. Usually requirements involve a written test
in addition to payment for the license itself. Usually a number of years experience in a particular
trade or field is required to qualify for the license. The state puts obstacles in place to ensure
that the people passing the tests are skilled to some degree and for the most part it works.
Hopefully this will give you a little background on why contractors are licensed and will help explain
why it can be an important part of dispute resolution.
The license is the key to contractor's credibility as a skilled tradesman, so if it is revoked the
contractor is required by law to reveal this to any consumer that hires him. Or, the contractor is
forced to bid on smaller less profitable projects that are less of a "risk" to the consumer and the
government. Any contractor caught advertising as a licensed contractor without a license by the board
will be fined and could be banned from even applying for a licensed in the future.
The state registrar of contractors accepts complaints and claims against contractors through a legal
process set up by the state. If a representative from the state investigates a claim and finds that
the contractor is at fault, the contractor's license can be suspended or revoked. Keep in mind that
the Registrar makes a fair assessment without prejudice to the consumer or the contractor, so the
ruling can go either way depending on the circumstances. So, in many cases the contractor will suggest
calling the registrar to ensure that he is not taken advantage of in a situation. So it works both ways,
but nonetheless it is a very effective tool for the project owner to use if problems
What Exactly is a Pre-Screening Service
This is the question of the decade. With the advancement of technology and the evolution
of the Internet numerous companies have surfaced claiming to pre-screen their contractors.
The first question that comes to mind
is what exactly do they do pre-screening companies do and why would I need one. The answer
to the first part is supposedly the screening services pre-screen the contractors to ensure the
contractors are qualified. The process goes something like this: When a project owner
needs a contractor the project owner submits the project requirements through the Internet.
The lead is then verified and forwarded to three of the screened network contractors. Within
a few days the project owner will receive calls or emails from interested contractors with a
competitive bid. Sounds pretty good and the concept are solid, but there are a few things
project owners should know before jumping headfirst into one of these networks.
The Bigger Question
The bigger and more important question surfaces when one gets into the details of the screening
process. We know from experience that it is difficult to do a thorough screening on contractors.
Usually, when a company chooses to offer pre-screening services they try to set a standard for
their member contractors. The contractor must pass a series of tests to be deemed pre-screened
and enter the network. The contractor must submit paperwork to prove that he or she does in fact
meet the requirements of the particular governing state. Financial records and credit scores are
also checked to ensure financial stability. Obviously a contractor that is stable and reliable
will not be in financial trouble or have a low credit score. Lastly the pre-screening company
checks the number of years in business and a successful portfolio of projects. Basically the
screening company covers most of the things that any good consumer willing to do the legwork
should cover. One thing to note is "pre-screening" companies cannot predict the future and
therefore it is difficult to stop all possible potential problems. So, there is no guarantee
that it will be smooth sailing. One of the advantages of using these services is the fact that
they do shoulder some of the liability during the bidding and construction process, after all
the screeners are stating that they have checked the contractors credentials and the contractor
is credible and qualified. If something were to happen on the job it would give some additional
recourse of action to the project owner.
Great Concept, But Wait
This is actually a great concept and one that is needed in the construction industry. The problem
is making it work from a business perspective. Obviously there is a cost to do this screening
legwork that must be absorbed by someone. This someone is the contractor and in turn he will
then pass the cost on to the project owner. The absorbed cost happens when the contractor pays
to be a part of the service with membership dues and a fee to bid on the project and/or a
percentage of the bid amount. Now here comes the sticker; (your knew it was coming right :)
when the contractor bids on a project from the screening system he or she will tack on that
increased cost in the bid amount. That's right, the consumer is usually the one that ends up
soaking up the cost of the pre-screening option. The problem with this is that most of the
services boast about how it is FREE to the project owner. Everyone should know by now that
nothing is Free and there has to be an incurred cost somewhere. We think it is important
that everyone understands exactly how it works and what the fees are going to be.
It Might Be Worth It
Now, we are not saying it is not worth the extra cost, obviously it was going to cost you time and
money to do it on your own and you may not want to get involved in the screening process. If that
is the case then this might be something of use to you, it does lessen your legwork and your
responsibility. One thing to keep in mind is the doubt that the screening process would be done
as thoroughly by the screening company as it would be by the project owner. As the old saying goes
if you want something done right then do it yourself still holds true in most situations. They might
do a fair job of making sure everything is good on the surface, but there is that possibility that
some things would stay hidden and fall through the cracks. As with any business it becomes a numbers
game and no company is going to look out for you as much as you.
Once again, we wish you the best in hiring your perspective contractors. The best policy is to educate
yourself and learn as much about the entire process as possible. We are dedicated to educating and
informing consumers about the new things going on out there and will continue to run stories on things
we feel are interesting and educating.
Remember, always hope for the best, but prepare for the worst.