Pause That Contractor Hire! Look For These 9 Things First

It’s a decision that carries a lot of weight: Who should you hire to spearhead your bathroom remodel, beautiful kitchen makeover, or other major home improvement project? Your contractor will be responsible for not only how the finished product looks, but also whether your home will be structurally sound and up-to-code when all is said and done.

According to a survey of 1,000 homeowners by insurance.com, 7% experienced fire, flooding, or other damage, or damaged their neighbor’s home as the result of a home improvement project gone wrong. In addition, many states require contractors to obtain special trade licensing which determines the type of work they’re legally allowed to perform.

The decisions your general contractor makes and their level of skill could significantly impact the value of your home, so how can you be sure your contractor will realize a remodel to boast about, finish on time, or finish at all? This guide will provide you with a checklist to ensure your contractor hire is a solid one — we’ll cover licensing, insurance requirements, bid and scope-of-work details, pricing schedules, and more.

A contractor with a red helmet and a plaid shirt crossing his arms and smiling with construction plans and supplies in front of him.
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Make sure you actually need a contractor before you hire one

Before you do any hiring, make sure you actually need a general contractor (GC) — rather than a handyman.  A general contractor is necessary for complicated projects that require different kinds of specialists (electricians and plumbers, for example). A GC will have their own crew of workers to complete these big projects.

A handyman, however, might be a better choice for small repairs and projects. Think of tasks that can be done in a day or two — such as replacing doorknobs or other hardware. A handyman will do the work personally, while a general contractor will be managing a team of people to get the job done.

Proper licensing

Since 2015, the BBB has received over 1,500 complaints about scams in the home improvement category, with people reporting losses up of tens of thousands of dollars. So you may come across questionable contractor candidates in your search, and you need to be able to vet each one. To start, make sure your contractor has all of the legal paperwork in order, affirming that they are allowed to do the work at hand.

If your contractor must be licensed to perform the type of work you’re asking them to do — you could run into a lot of trouble down the road if it falls outside their abilities. If you plan to sell your house someday, an unlicensed contractor — and the work they’ve done — might not be considered valid in real estate transactions. You can find a complete list of the licensing requirements for every state from Angie’s List.

You can also look up licensing via your state’s Department of Labor or ask the contractor to provide proof. Your state’s government site may have a portal where you can check the license number and verify that the contractor is in good standing.

A couple using a laptop together in their kitchen to look for a contractor.
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Insurance to keep you and your home legally protected

Construction is a dangerous field and accidents happen. According to a 2018 report from the Occupational Safety and Health Administration, 21% of worker fatalities were in construction. The key is making sure that if something bad does happen, you — and your contractor — are legally covered. If any damage is done to your property, or if your contractor, you or someone else in your family is injured during the remodel and your contractor isn’t insured, you could be on the hook for the repairs.

First, review your own insurance coverage. Your homeowners insurance policy should include personal liability, but it probably only covers a small amount, which is why you want to be sure your potential contractor carries his or her own policy. Ask the contractor to show proof of insurance — here’s what you’re looking for:

General liability

Dan Ferrera, a general contractor in San Luis Obispo, California, who has won Best of Houzz 3 years in a row, says his own company (Ferrera, Inc) carries a $4 million general liability policy. This should cover any personal injuries or property damage the contractor might cause to you, others who live in the home, and your property.

Inland marine policy

Ferrera also recommends checking for an “inland marine” policy, which would cover any theft of materials or equipment on the job site.

Workman’s comp

Workman’s compensation should cover the builders involved in the project, in the instance they get hurt. The requirement for this insurance varies by state — see what your state requires and make sure to get a copy of the policy certificate.

Auto insurance

Automobile insurance must cover all work vehicles. Ferrera notes that a lot of general contractors don’t insure or keep track of their employees’ vehicles — this can create a huge risk if an accident occurs onsite.

Supplemental coverage for equipment

The policy should also cover incidents that are caused by the contractor’s equipment, i.e., if the contractor trips over the toolbox and sprains their ankle. If they get injured on something that you own, they could claim it was your fault, which could result in a lawsuit.

On your end, clear stray household items out of the way — all clutter, like baby toys and pet items, should be moved out of any areas where construction is happening. This will minimize the risk of injuries.

The view over someone's shoulder while they pull $100 U.S.D. out of their wallet.
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Spot-on pricing

Get bids from a few different contractors — this is a smart way to understand the ballpark range of costs for your proposed construction project. Be wary of any contractors whose bids are very high or very low; you know what they say about things that sound too good to be true! A very high bid suggests the project might be out of the contractor’s comfort zone. Investigate this by asking for details about how they plan to execute the work.

Additionally, when you do ask for the bid, make sure it’s a fixed price bid. With an estimate, the final amount could be much higher in the end.

When you request the bid, ask for an itemized one. That way, you can review the type of building materials suggested in the bid, and make sure those materials are the ones you want in your home.

The kinds of materials and where they are sourced from can make a significant difference in the bottom line pricing, and if the estimate is shockingly low, it’s possible the contractor is planning on using cheaper and less desirable materials.

No payment structure red flags

Discuss the distribution of the money owed to your contractor before any work begins. You shouldn’t pay more than 30% upfront, and even that might be too much. Kim Wirtz, a top agent based in Illinois with 28 years of experience, thinks you should only pay a contractor upfront if it’s a large job — $10,000 or more. Otherwise, she warns, “Contractors that require money upfront are usually the ones that are kind of struggling. They can’t afford to buy the materials, the paint, things like that.”

Instead, Wirtz recommends you pay the contractor 50% of what was due when 50% of the project was completed, and to your standards.

Finally, she emphasized that the final amount owed — 10% or so — should only be paid once all the work is complete and it meets your approval. This way you know the work will get done as quickly as possible, and you can confirm that it meets your standards and initial requests.

Good supplier relationships

Another way to vet a contractor is to reach out to their suppliers. Since contractors typically use the same suppliers over and over, they should have long-established relationships with them. These contacts can provide valuable insight into the nature and quality of a contractor’s work.

A construction worker nailing something in with a hammer.
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Reputable crew

Speak with some of the contractor’s subcontractors or crewmembers, to gauge the relationship they have with their crew. Chances are if the same workers have been hired over and over, both parties have a good rapport and working style together; This bodes well for the success of your project.

Vision for the project

It’s important to choose a contractor you click with, who is easy to communicate with, and who really understands your vision for your remodel. If their itemized bid includes materials you explicitly said you didn’t want because they think their idea for the remodel should usurp yours, then they didn’t listen — a red flag.

Your contractor should be able to roll out your ideas and give informed suggestions. You’re working as a team, and Wirtz emphasized that a remodel is a collaboration — and a very expensive one at that.

If your first meeting with your contractor didn’t feel great — if you felt uncomfortable or uneasy at all — you shouldn’t make the hire. Your project is too important and too costly for you and your contractor to have a less-than-ideal rapport.

Ferrera also stressed the importance of written communication: Your general contractor should be able to write a clear and detailed project scope, and describe how they plan to execute it. In addition, there should be a detailed project schedule with major milestones for you to sign off on as the work progresses.

Great references

Wirtz notes that you should check the Better Business Bureau and confirm the contractor has an A rating. She also notes that a quick Google search can save you a lot of headaches later: “People like to post negative things, or speak up when they have a bad experience,” so if they have five stars on Google or Yelp, they are probably reliable.

Word-of-mouth remains one of the best ways to find and hire great contractors. Ask your family and friends, check Facebook groups for your neighborhood or ask your neighbors in person, and perhaps most importantly, talk to your real estate agent for recommendations. We bet your agent gets this question a lot!

Working through these 9 questions will ensure that you find the best contractor for your home and you’ll be on your way to a brag-worthy remodel in no time.

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