As Professional Remodelers we often times get called by disgruntled homeowners. The homeowner is frustrated with their previous contractor due to things ranging from incompetence all the way to stealing materials and supplies and/or disappearing. As professionals we have often times been faced with picking up the pieces of a botched remodel job. Of course we don’t mind, but the story is often times tragic and at best frustrating and costly. We wrote this article to outline a few common mistakes and pitfalls we have experienced through the lens of our clients regarding nightmare scenarios of hiring a less than credible contractor.
1. Not Asking for Referrals / Not Doing Research
In regards to a remodeling job, pretend you’re home is your business and you are the owner of that business. As sole owner you are the highest stake holder in the deal by far. You’re doing a major overhaul to your home aka business and you need to hire a manager to run the show. Would you hire someone to undertake this type of feat without looking into the person deeply and asking for credentials of past work performed? Doubtful, yet this is the type of thing we see all of the time in our industry.
The guy with the coolest website or the strongest sales skills gets the job even though once the job starts the knowledge and resources to complete the job are severely lacking. The best way to check on a potential hire is word of mouth. Ask your friends, your family, your co-workers, and everyone in between what made the experience positive in hiring this general contractor. Ask how the general contractor communicated and handled problems. Would they use the same general contractor again. When you do this you are getting an unadulterated version of a clients experience whom you supposedly trust or at least know well enough to ask.
You presumably have gotten some recommendations from your friends and family and now it is time to go one step further and begin to do some digging. Visit the general contractor’s website, check their social media pages like Facebook or Instagram or Yelp and Houzz. Give them a preliminary blind phone call or email and see how the communication is right off the bat if you wish. Nowadays with the advancement of the internet it is really easy to look at consumer reviews of that general contractor and get tons of information relatively easy.
2. Not Interviewing Multiple Contractors
Let’s revisit the above analogy that you are the sole owner of a business. Once you have narrowed down to 2-3 potential hires max based on what your peers have told you and on what you have read online and possibly a quick initial phone call, would you still hire that person without an interview? Hopefully not. It is important to sit face to face and ask questions to really get the feel for someone on a more intimate level. It is important to ask the correct questions and determine affectively the personality of the general contractor by the answers that they give you and how they communicate those answers.
Below are 10 quick questions to ask a potential general contractor that you are looking to hire:
- Are you licensed and do you have general liability coverage?
- How did you get into the business and when? Did you begin as a trade such as carpenter, plumber, electrician.
- How does communication between you and I work? Methods and Frequency.
- How will you guarantee your work? Do you offer a home warranty?
- Can you provide written lien waivers to customers?
- How and how often do you invoice during the project?
- Do you handle permitting, planning, and inspections?
- Have you done a project similar to this one? What were some of the challenges on that project?
- Who will be at my job site daily managing the project and who is ultimately responsible? Is anyone going on vacation during the duration of the job?
- Describe a typical work day.
This isn’t an exact science. This is ensuring that your personalities jive and that the answers line up and that expectations are at least loosely set from the start. At this point you are usually in a good position to begin to consider a decision.
3. Paying Cash for the Full Job Upfront
It is a major red flag if the contractor requires that you pay the full job upfront regardless of scope or price. There should always be a little bit of contingency for you, the client, to withhold for the end of the job to ensure there is some sort of accountability on the part of the general contractor. Usually this contingency is 10%-20% depending on the size of the job.
You should expect to pay a deposit upfront that is anywhere from 10%-75% of the full job amount depending on job size. The bigger the job the smaller that percentage that needs to be paid upfront usually is. The remainder of the payments should be paid in installments as the job progresses to be followed by the contingency payment once the job is completed 100%.
This is called a Draw Schedule and is usually laid out in phases by the contractor prior to starting the job. If your job is in the 10’s of thousands and your contractor doesn’t have at least a loose draw schedule planned out that is another red flag or poor preliminary planning. Have major benchmarks to indicate when a phase is starting or ending so you know at a glance how far or close you are to having to submit a draw, or payment, to the contractor.
In addition to having a contingency built in and a draw schedule, the general contractor should have multiple methods of receiving payment. Cash should be avoided that way there is a paper trail of all payments made by you.
4. Not Getting It In Writing
We saved the most crucial mistake for last. This failure is the root cause of many issues during the construction process. Not only does a written contract hold the general contractor accountable for the agreed upon work, but it adds clarity to what exactly the “agreed upon work” is. It gets everyone on the same page and underscores the expectations of both parties to perform their part of the contract. When you have handshake and “he said, she said” agreements there is a lot of room for error. More than you would want in a construction agreement. Let’s dig in a little further.
A construction contract will have in it:
– Change Order Process
– Issue resolution Process
– Triggering of certain events like payments or material orders/deliveries
– Project Timeline
– Terms and Conditions regarding the work
– Warranty Information
– Communication Methods
– Dispute Process
– How Liens on the project will be handled
Without a written contract the general contractor is not legally obligated to you to stay under or at the budget, finish the work according to project timelines, nor deliver the quality of work expected. On the other side of the argument is you as the client don’t have an agreed upon set of expectations for you to follow in order for the general contractor to do his job properly. The agreement falls apart from the inside out and the damage is often times severe.
Another function of a written contract is that it acts as a channeling device that forces the general contractor and the client to consider and come to terms on issues that they potentially wouldn’t have considered at the beginning of the project. Even if these project specific issues were discussed, by the time you get to that stage of the project both parties would have forgotten the verbal conversation from weeks or months earlier. A contract allows for the organization and documentation of the agreement needed to execute the project.
Finally, with contracts there is the risk factor that must be managed when two parties enter into an agreement. Contracts clearly spell out the obligations of the parties to the contract therefore eliminating a significant portion of risk to either party. Some risks to the homeowner include the contractor either disappearing, steals money or material, or does a poor job regarding craftsmanship. Some risks to the contractor is he/she does a quality job and the client doesn’t pay or the client makes the general contractor’s job much harder by communicating incorrectly or inefficiently. Either way, both parties don’t get what they want and the job becomes a nightmare.
If a contractor does not require a written contract and you don’t have a bid/estimate/proposal in place that is agreed by both parties you are asking for trouble if you move forward with the project. You can’t win. Find another general contractor!
As a homeowner a major home remodel can be a daunting task. Hiring a qualified local general contractor that you can trust to run your project professionally and efficiently is a big decision to make. Rest assured that if you avoid the 4 costly mistakes above the chances of you having a rotten remodel experience go down significantly. After all, you should enjoy the remodeling process as well as enjoy the finished project! Have fun!