Do not try to save money by hiring a non-licensed contractor or someone who is not qualified for the job. Even licensed contractors make huge mistakes sometimes, and knowing what to look out for could save you a major headache.
A contractor almost destroyed my entire house recently. That’s right; he hooked a 20-amp wire up to a 50-amp breaker on a house we’re remodeling and proceeded to tell my husband it would be safe.
Luckily, my husband was smart enough to realize the danger, call it out instantly, correct it himself and fire the contractor … keeping our house from burning down.
If you are thinking about hiring a contractor to do any type of work on your house, do a little extra research before you spend the money.
Licensing and insurance
If you’ll be shoveling out money to have a contractor work on your house, get familiar with your state’s contractor licensing board website, where you can research licenses and file complaints if necessary.
In California, I simply go to their site and then search by license number, business name or personnel name to verify that a contractor is licensed. If you choose to hire an unlicensed contractor knowingly, that’s one thing. If someone tells you they are licensed and they are not, run!
Another option if you can’t find it is to ask the contractor to prove he or she is currently licensed and bonded. General contractors must be bonded so that subcontractors, suppliers and others can be paid if the general contractor decides not to pay up.
Licensed and bonded contractors do cost more than hiring the guy standing in front of Home Depot. But in my opinion, they typically do a more professional job with fewer mistakes than those who are not licensed.
In addition to being licensed and bonded, make sure your contractor carries a significant amount of liability insurance. Accidents frequently happen in construction, and you want to make sure you are not on the line for something that happened to a subcontractor at your house.
Just a few days ago at my house (yes, the one that almost burned down), a subcontractor split his toe open and was bleeding pretty badly. Luckily he will be okay, and the general contractor above him had liability insurance.
Independent review organizations
Unfortunately, just because a contractor is licensed does not mean he or she has integrity. It does not guarantee they will do a good job.
It’s a good idea to check several independent review organizations to read ratings and reviews of their services before hiring. The Better Business Bureau is one option. I’m also a huge fan of Angie’s List. On Angie’s List there are plethora personal reviews about plumbers, electricians, roofing companies, painters and much more.
Since companies don’t pay to be included in Angie’s List, the reviews are honest. They even have coupons and specials for members only. Membership is not free, but at around $15 to $30 a year, depending on your state, it’s absolutely worth it if you’re going to do a lot of work on your house.
Set up ground rules
Getting contractors to stick to schedule can be tough! As they say, remodeling jobs always run late and over budget.
You also want to make sure that the work you’re getting done is up to your standards. This is why getting a contract (preferably in writing) between you and the general contractor is imperative. If you have a good contract and you end up having to take the contractor to court for any reason, getting your money back should not be difficult.
My husband’s grandfather was a very successful general contractor, and he would build in monetary incentives for finishing early and penalties for finishing late into all of his contracts, which made everyone happy. Work was finished early most of the time.
I suggest a similar contract or at least including penalties for work done late. Giving a grace period of a day or two is fine, but you don’t want to be without a kitchen for three weeks! Another idea is to set up a payment plan in the contract. You can pay the contractor in increments at the completion of specific projects.
Contractors often ask for money up front before the work gets started. To a degree, this makes sense, as they often have to buy expensive materials like slabs of granite or roofing materials up front. Yet if they charge you more than 10% up front, you should be wary.
In California and many other states, for example, it is illegal for a contractor to charge a homeowner more than 10% or $1,000, whichever is less.
I can say from experience many contractors do not go by this rule. But it’s still safe to say that in any state, if you pay the whole amount of money owed to the contractor up front, you are putting yourself at a huge risk.
Know laws regarding liens
An inherent risk in hiring general contractors is the fact that in some states, subcontractors have the ability to file a lien on your property if the general contractor (who you pay) chooses not to pay them. Since you typically have no way of directly paying the subcontractors or even knowing when they got paid, your best defense is doing as much research as possible into the general contractor’s licensing, history and reviews as well as knowing your state’s laws.
Unfortunately, you also have to look out for contractors that are outright scam artists. The Louisiana State Licensing Board for Contractors recommends never paying a contractor in cash and keeping a record of all of the payments you have made. If a contractor (or someone who represents himself as a contractor) ever demands cash and suggests that you drive to the bank together immediately to make a withdrawal, refuse to do so. Avoid high pressure sales tactics and scare tactics by getting at least three bids on every project.
These are precautions you should exercise in any service industry, but for the most part there are lots amazing, hardworking, and creative contractors out there ready to help with the job you need done.
What about you? Have any contractor horror stories? What happened? What lessons did you learn about hiring contractors for your home?
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