Be Prepared Before You Hire a Contractor to Work on Your Home

One of the biggest mistakes made when hiring a contractor by a homeowner is failure to check the references. I often hear, “Oh, so and so told me about him.” When I ask did you call any of the previous customers? “No”. “Did you checkout any of his previous work?” “No”. You get the picture. When the contractor defaults, the homeowner is amazed. THEN they start to check and find out the contractor didn’t finish his last three jobs, was late or behind schedule, the work was sub-standard, etc. It would have been a lot easier to make a couple of calls before hand. ASK the contractor for at least three past references and CALL them. If they were happy with the work, they will glad to tell you. If not, ask why not and listen to them. You can usually tell if it is spilt milk or a legitimate gripe. If you hear it three times, look for another contractor. If the contractor does not have three references, move on. You are fore-warned. Great price or no, the low price may reflect the fact he cannot get work due to his reputation. You’re going to live with the contractor for months. Make sure it starts off well.

INSURANCE- MAKE SURE THE CONTRACTOR HAS PROPER INSURANCE! So many times an accident occurs on the work site and later on you find the contractor did not have the proper Workmen’s compensation, disability or liability coverage in place. Would you be surprised to know that an employee cannot sue his employer but he can sue YOU if he/she is injured at your home? If the contractor has no insurance, you are on the hook in most states. If the contractor does not have liability coverage and causes injury to someone else, guess who is going to pay? Check their insurance and ask for a paper copy of proof of insurances. You should be named as co-insured. If they refuse or give you a sob story, move on. Legitimate contractors carry insurance, period. I cannot stress this enough.

CONTRACTS- A contract should always be executed before the work begins. Make sure two copies are fully signed with one copy going to each party. Things to include in a typical contract are:

1. Full name, address, phone number, fax number, email address if available of each party. If the contractor is a corporation, make sure his/her name appears on the document.

2. Dollar amounts of insurance coverage required. (If you are not sure, ask your attorney for help)

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3. Clearly written in both numeric and script (same as a check) the full amount of the contract.

4. Payment schedule-Example: Foundation 20%, Framing with shingles 20%, full enclosure including windows, doors and siding 20%, Mechanicals 20% and final payment when completed 20%. It is also a good idea to clearly show the amount of markup allowed for change orders such as 5% overhead and 10% profit. That will keep a lid on extra work costs. It should also state the contractor is to provide a detailed labor and material breakdown for each change order. The most expensive words in construction are “WHILE YOUR AT IT, etc. etc.” Find out how much that door is going to cost before it is installed, not after Contractors are used to this and may complain a little but they will comply if they want the job. Being in a rush costs YOU money. Take your time to check each item of work carefully and you may stay within your budget.

5. Description of Work-This should be a written list of all work included in the contract. “A 16′ x 20″ addition” is not a description. A “16′ x20′ dining room addition consisting of all excavation and backfilling required, all foundation work required, all framing, siding, windows, doors, roofing, and all interior finishes to provide a 100% turn key addition. Roofing shall be x-brand 25 year fiberglass 3 tab shingles, color blue #2345, Siding shall be etc., etc., etc.” Got the idea? Be as descriptive as you can. There can be no argument later on about the windows being double glazed versus single glazed if the contract clearly states what kind are included. Exclusions-Your contractor may request you also include a list of items that are not include in the contract. BE FAIR! If landscaping, topsoil, window treatments, painting and driveway paving are not included, say so.

6. Hours and Day of Work-Clearly state the days of the week and the hours a contractor may work at your home.” 7AM-5PM, Monday-Friday is a good work week. Saturdays by your advanced permission only. No Sundays.” is a good typical work schedule and allows flexibility. Again, foul weather can be a factor that delays the work and you may adjust the schedule from time to time but you don’t really want him/her banging nails on the roof at 7AM on Sunday mornings. You might not mind but your neighbors will hate you. Be somewhat flexible but don’t give away the bank every time the contractor says he got held up on another job or asks to work extra hours because of something he caused to make the delay in the first place. But as I said, be flexible.

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7. FINAL COMPLETION DATE- This is probably one of the most important parts of your contract. Agree to a date that all work will be completed no later than. If the contractor says it will take 3 months, make the date 4 months from the date of the contract. That will allow for weather and material delays but puts a time restriction on the work. Include also what is called a penalty amount for each day past the completion date it takes him/her to finish. $50, $75, $100 a day is typical and can add up really quickly. It will keep the contractor focused on the completion date if he knows you are deducting a $100 each day from his final payment.

8. BUDGET- Your architect can provide you with a price range he/she expects the project to cost. Remember this is only an estimate. You may find your price quotes are way out of line with the architects amounts. Check out why this happened. Get at least three quotes for the work. This way you will have a price range to work with as well. Different sized contractors, different sized prices. If the slightly higher contractor can do the work in 2 months instead of 3, it may be worth it. If one price is very low below the other two, beware. The contractor will realize it sooner or later and only delay or stop altogether because there is not enough money to finish the work. Taking all this information into consideration, you can make an informed decision and chose your best option.

The size of the contract should govern the amount of information required in your contract to properly cover both you and your contractor. If the job is $500, a short concise one pager should do the trick but that sized contract will also require only one payment when work is completed. A $50,000 contract will and should include all the items listed above. One last thing commonly missed between owner and contractors is a set of signed drawings. Ask your architect for two, clean sets of drawings. At the contract signing, each party should initial each page of the drawings and then exchange drawings so each has an original. Any last minute changes should be marked clearly on the drawings and those too should be initialed by each party. This avoids any “I thought that was included” disagreements later on. If it’s not on the drawings or called out in the contract, YOU DO NOT GET IT! Change orders occur on all sized projects. The most expensive words in construction are “While your at it”. If you decide to add or delete any portion of the work, do it in writing. Determine a value before the work is done. It will be impossble to agree afterwards. What you thought was $50 may be $500 or $5000. Being either a credit or a debit, the numbers can shock you. Agree to the number of extra days this will take or save. What you think is 5 minutes of work may take an extra week or two or more and result in a delay in your plans. Put it in writing. If you follow these guidelines, you can have a great project and end with great results. If you end up with a bad contractor, you (and your lawyer) will be glad you followed them. Many people survive their projects because they followed these guidelines and found out they never needed them because they had a great contractor. Just once, get a bad contractor and the time and effort involved in getting the contract and drawings correct, will be worth more than gold.

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Lastly, try to keep a friendly relationship with your contractor but remember he/she is not your friend. They are there to make money and they are entitled to do so if they perform properly. Everyone has bad days now and then. Meet with your contractor at least once a week to review the job progress and determine when he/she thinks they will require a payment. This allows you to check the work and prepare a check in a timely manner. A late Friday night request for money is just not acceptable and should never, ever be honored no matter how badly the contractor needs the money. That is not your problem. Reviewing the payment request for a few days to check on the completed work and the dollar amount of payment requested is quite normal. Do not rush. If your architect is still on the project ask his/hers opinion as to the amount requested. Follow these guidelines and you will have a great on time and on budget project.

Pete

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