Smart Homeowners: 9 Tips Before You Hire a Contractor

If you own a home, then chances are at some point you will need to hire someone to do repair work on your home.  Unfortunately for homeowners, hiring a contractor or handyman to perform work on your home often comes with risks. To protect yourself and your home, below are nine things to consider before you hire a contractor: 

1. Get recommendations.  Ask you friends, family and neighbors if they have recently used a contractor, handyman, plumber, heating/air company, or an electrician and, if so, would they use that person or company again.  Ask your friends and family whether their project was completed on time and within their budget.  Find out whether the contractor’s estimates were accurate.    

2. Consult the internet.  Check out potential contractors on a search engine.  Internet reviews from satisfied, or unsatisfied, customers can tell you a great deal about a potential contractor.  Review several websites that rate contractors and see what others have said about contractors you are considering.  Also, check with the Better Business Bureau to see if any complaints have been lodged against potential contractors.  

3. Ask for references.  Request the names and phone numbers of some recent clients for whom your contractor has completed a similar job.  Ask your contractor’s references if they were happy with the finished product.  Ask whether anything has come up since the job was completed and if the contractor addressed the issue.  Find out whether the final cost was reflective of the contractor’s estimate and whether the job was completed on time.  

4. Find out if your contractor is licensed and insured.  Under North Carolina Law, if a contractor engages in projects where the total cost is more than $30,000.00, they are required to be licensed with the North Carolina Licensing Board for General Contractors.  You can find out if your contractor is licensed at www.nclbgc.org. Plumbers, heating and cooling contractors, or anyone performing sprinkler work must be licensed with the State Board of Examiners of Plumbing, Heating, and Fire Sprinkler Contractors (www.nclicensing.org).  Additionally, electricians must be licensed by the NC State Board of Examiners of Electrical Contractors (www.ncbeec.org).  If your potential contractor does not fall into any of these categories, then they are not required by law to be licensed.  Regardless as to whether your potential contractor is licensed, check to see if they are properly insured.  You specifically want to ensure that your contractor has property damage insurance and worker’s compensation insurance.  These insurance policies will protect you in the event that something goes wrong on your project or someone gets injured.  If your contractor has less than 3 employees, they are not required under North Carolina law to carry Worker’s Compensation Insurance.  Request certificates of insurance or declaration pages to confirm the insurance is in place.  

5. Get Multiple Estimates.  Get two to four estimates from different contractors.  Remember the old adage; you get what you pay for.  This doesn’t necessarily mean that you have to hire the most expensive contractor, but if one estimate is significantly less than all of the other estimates, that is a red flag.  That contractor may plan to use less quality materials or cut corners.  The contractor may have also intentionally underbid the job in an attempt to obtain your business, only to increase the price later.  

6. Get it in writing.  Never pay a contractor before you have a written contract outlining everything the contractor is going to do to your home.  The more specifically the work is identified, the better.  The contract should also specify the cost of all materials that will be used and provide start and completion dates.  Find out whether the contract price is an estimate, which may change during the course of the project, or a total cost for completion.  If the contract price is an estimate, then make sure the contract specifies that the job cannot exceed a specific amount.  Additionally, specify in the contract that no changes can be made, except in writing.  Make sure the contractor is providing a warranty on labor and materials and that it is spelled out in your contract, including: who you need to contact to make a claim under the warranty; any limit on the amount of the warranty; and the length of the warranty.  The contract should also spell out all of the contractor’s duties.  For example, if you are having flooring replaced, then the contract must specify whether the contractor will be moving furniture and putting it back once the job is complete.  You will also want to specify whether the contractor is responsible for clean-up and disposal of all construction materials at the conclusion of the project.  Finally, under North Carolina law, any promises made before you enter into the contract, but are not included in the written contract, are not binding on the contractor.  So, if you want to ensure that the contractor fulfills all promises made, then make sure those promises are included within the contract. 

7. Set a payment schedule in the contract.  You never want to pay a contractor more than 50% up front.  Depending on the size of the job, your initial payment is ideally going to be no more than roughly 30% of the total cost of the project.  The contract should specify that each subsequent payment is only due after certain phases of the project have been completed and set out a time frame for each such phase to be completed.  If a bank will be providing a construction loan, make sure you have the right to approve each disbursement.  If the time comes for your next payment, or your contractor demands a subsequent payment from you, but the previous phase has not been completed, then you have the right to refuse payment until the contractor completes the phase for which you have already paid.  Always pay your contractor in a way that is traceable, i.e. with a check, credit card, or debit card.  Do not make the final payment to your contractor until you have verified that all work has been completed and is acceptable.  

8. Extras.  Be aware that when you ask for upgrades or additional work, you are going to have to pay for that additional work.  Often, once a project gets started, it is tempting to ask for upgraded materials or some extra work to be done.  If your contractor agrees, then you should find out how much the extra work or material is going to cost and get it in writing before the work is done.

9. Maintain good records.  Keep a copy of your contract, all payments you have made, any additions or edits to the contract, and all correspondence with your contractor.  Even if you have had a conversation in person or over the phone, make sure you document that conversation with an email or letter to you.

Published by Natasha M. Barone on November 2, 2016