It’s not always easy finding a reliable and trustworthy contractor for home improvement projects, but there are several ways to ensure that you hire a quality contractor at a reasonable price.
“Every home improvement project is unique and requires a tailored approach from the right contractor to be successful,” says Matt Ehrlichman, CEO, chairman and founder of Porch Group, a software company for the home improvement service industry.
“Our advice to homeowners when looking for a reliable home contractor is to have a focused plan, conduct thorough research and utilize a trusted network for every project,” Ehrlichman says.
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Here are 14 steps for finding a reliable home contractor:
— Have a detailed plan.
— Be aware of the current cost of labor and materials.
— Ask for references.
— Interview at least 3 contractors.
— Verify licenses and insurance.
— Be realistic about availability.
— Choose the right contractor for the right project.
— Sign a contract and negotiate ground rules.
— Make sure all necessary permits are acquired.
— Expect to pay a deposit.
— Budget for unexpected costs.
— Talk to the contractor frequently.
— Get lien releases and receipts.
— Don’t make the final payment until the job is complete.
Have a Detailed Plan
The first step in any home improvement project is to create a plan. “Homeowners should start by creating a highly detailed and specific plan for the project they’d like to request a bid for,” Ehrlichman says. “A clear and detailed understanding of the scope of your project helps to ensure you’re hiring the right contractor for the job.”
The more specific your plan, the most accurate your cost estimate may be.
Be Aware of the Current Cost of Labor and Materials
Keep price increases in mind when you’re getting estimates. The cost to build an average-size new single-family home is 42% higher now than in 2019, according to Bank of America’s 2022 “Who Builds the House ” report.
One of the key reasons for price increases is because of shortages in building materials. Building material prices are up 19.2% over the last 12 months and have risen 35.6% since the start of the pandemic, according to the National Association of Home Builders.
Ask for References
Use online resources or check with your personal network and community for referrals. Ehrlichman advises checking with neighbors, local hardware stores and past real estate agents for personalized recommendations.
Interview at Least Three Contractors
“Homeowners should request a minimum of three bids from contractors, although five is the best number to aim for,” Ehrlichman says. “A thorough bid process will give you a good idea of the fair market price and may help you identify additions to your project based on a contractor’s offerings.”
Ask lots of questions with a written proposal from each contractor. The most important question to ask is whether the contractor is licensed and insured. “Uninsured contractors may cost less, but the financial and legal risk isn’t worth the savings,” Ehrlichman says.
You should also ask about the contractor’s timeline, work schedule for the job and how they plan to protect your home from damage during construction. “Finally, always ask for references to get a sense of other homeowners’ experiences working with the contractor before making a final decision,” Ehrlichman adds.
Verify Licenses and Insurance
Each state has different contractor license requirements, which you can typically verify through your state’s labor office. Ehrlichman says you can also verify their current certificate of insurance.
“Aside from that, the other crucial qualification is experience,” Ehrlichman says. “Homeowners should ask potential contractors how long they’ve been in business, what projects they’ve worked on and call to check the contractor’s references. Less experienced contractors aren’t necessarily unqualified, but working with a seasoned professional can help bring peace of mind during the project.”
Be Realistic About Availability
Contractors are busy, especially in this economy. You may have to wait to start your home construction project depending on the contractor’s availability.
Home construction prices aren’t the only problem in the homebuilding industry. To meet the demand for labor, the construction industry will need to attract nearly 650,000 additional workers on top of the normal pace of hiring in 2022, according to a February press release from Associated Builders and Contractors, a trade association for construction professionals.
Choose the Right Contractor for the Right Project
To ensure the project is completed the right way, choose a contractor that specializes in the kind of work you want done. Look at the company’s past work to see if it’s the right fit for your home.
Sign a Contract and Negotiate Ground Rules
Your contract should list everything you want completed, including deadlines, payment schedule, the materials and model numbers and who will provide which materials. According to Ehrlichman, a standard contract should include the following:
— Contractor’s business and contact information.
— Contractor’s insurance and licensing information.
— Highly detailed description of the work to be done, the schedule and the timeline.
— Terms of payment.
— Permits the contractor is required to pull.
— Process for how disagreements and changes to the project should be handled.
— Termination clause that protects both parties.
Make Sure All Necessary Permits Are Acquired
Large home projects will likely require building permits. Not having the necessary permits could violate local ordinances and subject you to fines. This can also cause problems when it’s time to sell your home. Be cautious of any contractor that asks you to obtain permits. While you pay for the permit as part of your project cost, your contractor will typically obtain the permit themselves.
Expect to Pay a Deposit
Your contract may require a down payment before adding you to their schedule and to ensure the project moves forward after purchasing materials. You might also be able to negotiate the down payment, including the amount and payment terms. Most states limit how much a contractor can ask for as a down payment before work begins. If your state doesn’t have a limit, the typical down payment is between 10% and 25% of the project cost, according to Angi.
“Payment options vary from contractor to contractor but typically include cash, check and wire transfer,” Ehrlichman says. “In terms of the payment schedule, you will likely either use a deposit and final payment agreement, payments based on the progress of the work or time-based payments. Be sure that the details of the payment agreement are crystal clear in your contract.”
Budget for Unexpected Costs
A cost estimate is just an estimate. Keeping home construction projects on a budget is difficult and any little surprises can add to the total cost. Set aside 10% to 20% of your budget as a cushion for unexpected expenses.
Talk to the Contractor Frequently
Talk to your contractor often to confirm that everything is on track and that your project is progressing according to the set schedule. A good contractor should give frequent updates, and if you see any potential problems, say something immediately. If left unsaid, any issues will be harder to fix later.
Get Lien Releases and Receipts
If your contractor doesn’t pay their subcontractors or suppliers, a mechanic’s lien or construction lien can be placed against your house. In extreme cases, attempts to collect that debt can force the sale of your home to cover the unpaid amount. Request copies of receipts for all materials, plus lien releases from all the subcontractors and the general contractor before you pay.
Don’t Make the Final Payment Until the Job Is Complete
The final payment should only be made if you are completely satisfied with the completed work, as well as after receiving lien releases and receipts. This should also be laid out in your contract and payment schedule.
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Update 06/23/22: A previous version of this story incorrectly described software company Porch Group.