From Popular Mechanics On Contractor Selection

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4 Tips for Hiring Contractors (and 10 Ways to Avoid Scammers): DIY Guy

We love building for ourselves, but some jobs just need to be subbed out. Unfortunately, a competent, honest remodeling contractor is no easy find. There are thousands of reliable, trustworthy contractors out there—but there are quite a few toolbox-wielding knuckleheads, too. To protect yourself—and your money—here are 4 tips to ensure that your next remodeling project goes smoothly.

By Joseph Truini
Published on: November 7, 2008











(Photograph by John Lund/Marc Romanelli/Getty Images)


1. Avoid sleazy or shady tactics.

The first thing to do is make sure you're not being scammed. Beware these 10 red flags:

The Contractor ...
• Provides credentials or references that can't be verified.
• Offers a special price, but only if you sign a contract today.
• Accepts only cash, requires large deposits or wants the entire cost up front.
• Asks you to write a check in his name (not to the business).
• Won't provide a written contract or complete bid.
• Refuses to apply for building permits, and asks you to get them.
• Offers exceptionally long warranties.
• Proposes to do most or all of the work on weekends and after-hours.
• Gives you a low-ball offer that sounds too good to be true.
• Has "Will work for beer" painted on the side of his trucks.

2. Check the construction work.

When you meet with contractors, ask each to bring photos or drawings of completed jobs that are similar to yours. When possible, ask to visit a completed project. Get in touch with the homeowners involved, says construction manager Amy Johnston, author of What the Experts May Not Tell You About Building or Renovating Your Home. Ask pointed, pertinent questions such as:

• What was the original construction budget?
• What was the final construction budget?
• How would you describe the quality of the work?
• Was the job site kept clean and organized?
• Was the project completed on time?
• Were any liens filed on your property?
• Would you work with this contractor again?

Vetting a contractor through customers works both ways—word-of-mouth recommendations have long been one of the most reliable means of finding competent contractors. Seek references from neighbors, friends, architects, colleagues and real estate agents. You can also find local contractors, along with ratings and reviews, from online sources, such as Angie's List.

3. Check the paperwork.

Check to make sure contractors are licensed and insured. A good pro should volunteer documentation. If you have doubts, contact the Better Business Bureau and check for complaints. When comparing competitors' bids, make sure everything is spelled out. This includes the scope of the work, materials specified, warranties, references, time frames, cost overruns, payment schedule and price.

Once you have chosen a contractor, obtain a written contract that includes the items specified in the original bid, plus the final price, payment terms, sales tax, permit fees, the specific work to be performed, materials to be used, warranties, start and end date, change-order processes, final review and sign-off procedures, and debris removal. Once the job is under way, make sure the necessary building permits are on display.

4. Check the bills.

When advancing money for materials, ask the contractor if you can pay the supplier directly. Always pay with a check, never by cash. Take a carrot-and-stick approach to completed work—pay incrementally as each significant phase of work is completed. Be careful about paying for work that hasn't been finished. Before making the final payment, do a visual inspection of the entire project and make a punch list of any repairs or uncompleted work. Put all change orders in writing; avoid verbal contracts.

A small but important technicality: request signed lien releases from all major subcontractors and suppliers before making final payments. A lien release guarantees that the contractor has fully paid his materials suppliers. Former contractor Tom Philbin, author of "How to Hire a Home-Improvement Contractor Without Getting Chiseled," tells a story of a Memphis, Tenn., homeowner who had some work done on his house. "The job went smoothly and he paid the general contractor all the money for the job. But the contractor hadn't paid his supplier, who slapped a lien on the homeowner. The homeowner ultimately had to pay an additional $20,000, even though he had paid the contractor in full." Get those lien releases.

reveivl

I got a problem with that one.

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From where does knowledge come? If you need to know what is in a box, you could ask someone (not reliable), you could pray, (not useful), you can consult with the scripture (not helpful) or you could open the box (science)

Winchester

So do I. As well as the never pay in advance.

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Ryan

Chris Johnson

It's American guys, Canada is different than down here.

A supplier usually gives a lien release waiver for you to present to the client, a lot of times the check (cheque for you two) is made out to both parties (you and the supplier).

If you are worried about your mark up, don't be, people don't seem too concerned about it, they don't recieve a detailed list of materials and costs, just a one pager stating the amount and when it is current to.

The other way (if you are concerend about mark up) is to pay the supplier in full prior to the draw, now the supplier submits a lein release saying they have been paid in full, no amounts.

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Chris

copusbuilder

I live in America and I have a problem with that one as well?

If a customer came to me in the midst of a job and told me they wanted to pay my suppliers I would tell them to kiss my ass.

If they wanted to do this and tell me at the start of the job I would consider it a sign to tell them "to kiss my ass."

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AkA Richard Cranium

SLSTech

Most contractors will take issue with at least 1 of the items listed above.

As for the paying only the suppliers I have to laugh. Ok, so they pay the supplier but how about the subs? Most of the sub vs gc threads on here are about non payment or slow payment.

I know a few contractors that have the customer write checks directly to all suppliers & subs. They are then handed the lien release right there. They say it works for them & sell it along the lines of not robbing Peter to pay Paul & they are protected from liens.

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Bodger

I agree. I can understand a homeowner asking for lien releases from suppliers, but if one told me that they insisted on paying my suppliers directly, I too, would tell them to forget it.
If a potential client came up with that request whilst we were still in the process of finalizing contract arrangements, I'd tell them to go ahead and do the work themselves as well, then they wouldn't have to worry about a mechanic's lien from the contractor either.
I consider my references, credit rating and track record of satisfied clients to be sufficient that if any client is worried about me not paying suppliers, they're probably looking to clip my mark-up. Or at least know what it is so they can use it for leverage to cop a few extras. Maybe I'm just paranoid.

wyoming 1

I am with you boys if a customer said they will pay the supplier I would take that as a sign of we are going to try to cheat you every way we can. My responce would be oh well why don't you hire some guys, buy some tools, get some insurance, and cut me out all together.

I dont totally agree with the donot pay anything up front but I also donot like to see the $ to far ahead the work and vise versa.

One more whats wrong with the will work for beer sign you know how many lead that generates

BMAN

Sure you can pay for your own materials. While you are there please do your own take offs, call to check on the orders, call back when they send the wrong crap, organize the delivery schedule etc etc. All the things that go with dealing with suppliers now just shifted to the checkwriter

RobertCDF

I have let people pay before... I dont care if people "know what I make" I rarely do this but when I have it has gone off without a hitch. My contracts are the total cost only with no break out for material vs labor. So they are not going to "see my markup". I would prefer not to do this but sometimes you work with the client depending upon the situation.

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Robert Shaw
Colorado Springs Custom Decks
Colorado Custom Decks
Custom Composite Decks

Stone Mountain

My brother is a GC up here. In most of his jobs, he negotiates a management fee prior to the start of the job, so the customer pays all trades and suppliers directly. My bro gets his feee monthly, and thus doesn't have to pay anyone except his own people, who are site supers, or handyman labourers.
One way he does this is that ALL of his trades are licenced, insured companies, not just single individuals.

By the wya: he still gets stiffed sometimes.

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chris klee

we have been doing a job as cost plus. the home owner writes the checks to suppliers and subs, we charge a CM fee. it actually works pretty well but it is a bit more of a headache to deal with all that

Bodger

...and oh yeah, forgot to mention, speak Spanish or you'll end up with the wrong stuff...