Hiring a contractor to do a major home renovation is difficult for most of us. We're risking a lot of money, so it's important to avoid costly mistakes. Since it's not something we do often, we have few opportunities to practice and improve our skills.
Even for experienced home renovators, hiring a contractor can feel a lot like gambling. But there are things you can do to improve your odds.
"All the documentation needs to be clear and concise," says H. Dale Contant, president-elect of the National Association of the Remodeling Industry and president of Atlanta Design & Build. "There should be no ambiguity."
You need to do a lot of planning and a lot of work before you ever talk to contractors. A major home addition, for example, will require architect's drawings and specifications. Even for a routine bathroom or kitchen remodeling job, you should have a general idea of your preferred layout and what materials you want to use before you seek bids.
"You need to know what you want before you start talking to your contractor," says Angie Hicks, founder of AngiesList.com, which provides referrals and reviews of contractors. "Sometimes people forget this step."
You can't get an accurate estimate until you know exactly what you're going to do. "Redo the kitchen" could mean replace cabinets and countertops in the same positions, or it could mean tear the walls and floors down to the studs, replace and move all the plumbing and redo the electricity and/or gas lines. That is going to significantly affect your bids, so you must have the details ironed out first.
"The more detailed scope of work you have written out before you hire your contractor, the better," says Brandon Turner, vice president of BiggerPockets.com, a networking and information site for real estate investors.
The best way to find a good contractor is ask everyone you know, seeking referrals from homeowners who have had similar jobs done. Ask your friends, relatives, co-workers, fellow church members and neighbors. Even in this Internet age, personal references are far more useful than online reviews, though you should certainly read those, too, as well as seeking referrals from online services such as AngiesList.com, HomeAdvisor.com, Google and Yelp.
When you get bids from contractors, you want to find out a lot more than what your job will cost. Ask prospective contractors detailed questions about experience. How long has he been in the business? What other jobs has he done similar to yours? Will he use subcontractors or employees to do the work?
Ask for copies of licenses, insurance and references from previous clients. Then call those previous clients and ask detailed questions: Were they satisfied with the work? Did the project go over budget and why? Did the contractor show up on time? Did he clean the job site when he left?
"If it's a really large job … you should go a little bit further to verify that they've done that kind of work," Contant says. This includes asking additional questions, consulting more references and doing an in-person visit to a past job.
Once you've received the bids, don't think it's time to start work. You and the contractor will need to hammer out a detailed contract, listing exactly how you want the project completed, what materials will be used and what will happen if you change your mind midway through the process or unforeseen problems arise. The contract should include a schedule of progress payments and a timetable.
"The amount of time you spend documenting … what-if scenarios pays off down the road," Hicks says.
Here are 12 ways to improve your odds of getting the job done right, on budget and on time when you hire a contractor:
Get permits. Cities and counties require permits for most remodeling jobs. It's customary for the contractor to get the permit and add the cost to your bill. Some contractors may offer to do the job for less without permits, but that could cause problems later if the remodeling work is not done to code, or if the city catches you the next time you get work done. You could receive a fine and be required to remove the faulty work to redo it. "In the end, if you fail to pull proper permits for your jobs, it's on you," Hicks says.
Call references, and go look at the work. When choosing a contractor, nothing is more important than references. Go to see the work if you can, and ask the homeowner detailed questions about what it was like to work with the contractor. Consider interviewing subcontractors as additional references and asking if the contractor treats them well and pays on time.
Sign a detailed contract. Rather than providing only the basics, the contract should drill down to the exact model faucet you'll include in the kitchen (or provide a specific dollar allowance). It should detail when the work will be done, what will happen if it's not done on time, what hours the contractors can work at your home and who will clean up at the end of the day.
Be scrupulous about change orders. Most jobs include surprises. You may discover repairs that need to be made once walls are opened, or you may change your mind about an aspect of the project. Any time there is a deviation from the contract, make sure you and the contractor sign a change order detailing what additional work will be done and at what cost.
Have a payment schedule with specific milestones. Most professional contractors ask for a small down payment up front then additional payments as specific milestones are reached, with the last 10 percent due only after all the lien releases have been received, final inspections have been done and all punch list items are completed. Be wary of a contractor who asks for a large down payment upfront, unless the job requires the contractor to buy a significant amount of expensive materials before getting started.
Select your finishes on time. You will likely include some major components of the job (tile floor or granite countertops, for example) in the contract, with the specific finishes to be selected while the work is ongoing. If you don't meet your deadlines to choose materials, the contractor can't meet his, either.
Get lien releases. Anyone who provides labor or materials for your home can file a lien against your title if the bill is not paid. Before you make final payments to the contractor, ask him for lien waivers from all the materials suppliers and subcontractors affirming they have been paid. "A lien waiver really does protect the customer a ton," Contant says.
Expect and plan for expensive surprises. If you have $50,000 to spend on your remodeling job, don't sign a contract for $50,000 because there will always be unforeseen repairs required. Budget at least 10 percent to cover those. "No contractor can see through a wall," Hicks says. "You want to plan for the unexpected."
Verify licensing and insurance. Ask the contractor to give you copies of licenses and insurance policies, and then call the local or state agency that issues the licenses to verify they are valid.
Be suspicious of bids that are significantly lower than all the others. The cost of doing the same work in the same area is not going to vary significantly. If one bid is significantly lower, ask detailed questions about materials and the scope of work to make sure everything is included.
Hire the right contractor for the job. A one-person company is usually not the right choice for a whole-house remodel. Ask detailed questions about previous jobs like yours and request references from customers who had the same project done. Even if your job is small, don't rule out a larger company, which may have more employees and be able to do small jobs efficiently.
Expect stress. Having workers in your house, living without a kitchen and having a cloud of dust over everything is challenging for even the calmest homeowners. Expect disruption and make plans to deal with it. "One of the things consumers don't plan for is the stress of having [the renovation] done," Hicks says.