Ask any of your friends how to protect yourself against a crooked contractor. They’ll advise you to check the firm’s reputation with the Better Business Bureau (BBB) and plunk its name into your Internet browser to see what turns up.
But all too often, you won’t find much if any information by checking either source. This is especially true if the business is relatively new. You might want to go a step further and check contractor rating services such as Angie’s List. However, what you will find even there is a link to the vendor’s BBB listing (if any), showing how many complaints were resolved or left open in a specific period of time. Subscribers can post comments and rate the contractor. However, if nobody bothers to post a rating, you have little information on which to decide to hire or pass over a contractor.
The January 2008 paperback edition of Angie’s List “Best & Worst Contractors of 2007” offers some specific ways by which you can protect yourself against crooked contractors:
1. Define your project clearly before starting. Have a specific idea in mind before you even pick up the telephone to call a contractor. Search the Internet and take a look at remodeling publications. Put pencil to paper to make at least a rough sketch and notes to give a potential contractor a better idea of what you expect to achieve.
2. Decide which work requires a contractor. What can you do yourself? Most people can manage to replace knobs on closet doors. However, not everybody can handle replacing a large overhead light in the kitchen or creating a bay window.
3. Consider hiring an architect. You might well need an architect or a structural engineer if you’re knocking out walls, adding a room, or trying to accomplish anything else to change the structure of your home.
4. Ask who’s good. Ask friends, neighbors, and co-workers for references based on positive experiences they’ve had with contractors.
5. Research your options thoroughly. Some spots to check: Angie’s List, the National Association of The Remodeling Industry, and the BBB, of course. You’re looking for information on whether prior customers would hire a contractor again. You should also attempt to check out any subcontractors the vendor uses. How often do they work with the contractor? Does he pay them on time?
6. Check licenses. If your property is in a jurisdiction that requires contractors to be licensed, don’t take the vendor’s word as far as whether he possesses a valid license. At sites such as Angie’s list, subscribers can check for a list of agencies by state and category to check on the status of a contractor’s license. You should also look up the contractor’s bonding status and ask for proof of liability insurance. Note that some vendors who are still small businesses but which have been around for a number of years elect to self-insure rather than purchase insurance to save money on premiums. Will you accept a self-insured contractor?
7. Develop a specific budget. Then figure backward to arrive at a proposal you can afford. You should assume a worst-case scenario where the actual cost is 10 to 15 percent above the proposal for unforeseen problems or increases in material or transportation costs. So if you have a budget of $5,000, using a 15 percent overage as the worse case, the highest proposal you could accept would be $4,250. If you feel comfortable with 10 percent, you could give the nod to a bid of $4,500.
8. Read every word of the potential contract. Don’t skip a syllable. Don’t assume the bid includes everything you’ll need. If you’re having your kitchen remodeled, are you sure the proposed price includes installation of all appliances? How will the contractor handle any change orders? Does the document contain a lien waiver to cover payments to all subcontractors? Is there any proof that the contractor is aware of and will comply with requirements of your homeowners’ association if you have one?
9. Be wary of large deposits. Avoid paying more than half the cost of the job up front. In general, you should be concerned about contractors who want large deposits up front to work on your house. Does the contractor take credit cards? Why not?
10. Ascertain the punch list procedure. This refers to how the contractor would deal with the small items still left unfinished at the end of the job. One example is portions of landscaping projects that can’t be completed until the weather is warmer or certain plants are available. You should make a list of the items and estimate their cost. Then withhold that portion of the bid from your final payment until all work is done.