Noemi Cardoso has excellent advice for homeowners who are in the process of renovating their home or for new investors. I particularly think her advice to check the contractor's current projects to see the materials and subs they use. Insurance is another important item to ask the contractor about.
Homeowners in the process of overseeing their first property renovation are in for a real treat as they get a crash course in working with contactors. While most are professionals who are dedicated to doing the best possible job, there are some out there waiting to take advantage of a homeowner's naiveté. Here are some steps to take before hiring a contractor.
1. Get references and check them—Most contractors will have good references, but a homeowner needs to know as much as possible about a contractor's work ethic before they sign on the dotted line and commit to spending several thousand dollars on a project. When calling a reference ask specific, pointed questions about the quality of the contractor's work. If they have a tendency to not show up for work, or worse, disappear in the afternoon that contractor is not a good choice. These types of problems can significantly impact the profitability of a project.
2. Get all bids in writing—Everyone wants to do business with someone based on a handshake and a smile, but the reality is that the memories fade and a good faith agreement can be misinterpreted by the homeowner or the contractor. A contractor is only human, and by taking the time to get all agreements in writing, everyone will have clarity in the event of a disagreement.
3. Work with licensed and insured contractors—Make sure that the contractor has current and valid insurance in place before allowing them to start the job. Don't hesitate to ask the contractor for a certificate of insurance.
4. Visit one of their work sites—By visiting one of their worksites a homeowner can gauge the quality of their work and see how vigilant they are about keeping work areas clean. Before visiting one of the worksites, a homeowner needs to make sure they have permission to do so.
5. Don't pay them until the job is complete—One of the biggest perils a new real estate investor can face is that their contractor causes delays by failing to show up for work when they say they will. A contractor may request to have their payment released early, but in order to avoid quality issues, don't release payment until the job is done. Set up progress payments that release payments once certain jobs are complete. Obviously, some money will need to be released for materials or the project probably won't get started but creating a good payment plan can assure everyone is satisfied.
The vast majority of contractors are honest, but by clearly defining expectations a homeowner can stop problems before they come up. Following these simple steps can help ensure interaction with a contractor is a positive one, and that everyone is just as happy at the end of the project.