Contractor Selection Process

Your contractor selection is one of the most important decisions you will make during the remodeling process.

It is always preferable to hire a contractor that someone you know has already worked with but that's not always the case.

Fear not though, the contractor selection process need not be as difficult as some suggest if you follow a simple but methodical plan.

You must have a comfort level with your final contractor selection. No matter how you feel about the company's qualifications, you must feel that you can have open dialog comfortably with them. It is your real estate investment and in your best interest to be thorough in selecting the right contractor.

Depending on the size of your project, they will become like family. They will be in your home, your intimate space for quite some time. You must be sure you're contractor selection is the right choice. It could mean the difference between a successful project and a very stressful failed attempt at one.

If you're working with an architect or designer, they will probably have suggestions. You can also look into builder associations for references.

Getting Down to Business

Since we have already developed our basic scope, it is time to get down to business. You should get estimates from a minimum of three contractors five is better. Make sure that you give each of them the same list of items to price. That way we make sure we are comparing apples to apples.

The bids should be in writing and detailed enough for you to see that everything you have requested is included. If the contractor is vague and doesn't give you what you ask for in terms of pricing; red flags should be going up; cross them off your list.

If there's an area of the project that is not quite yet defined, you can have them include what is called an "allowance". Usually you have to have some idea of what you would like to do but not all the specifics.

Now we must assess the pricing to see where it stands with regard to original concept budget. If we are way over budget, we need to look at what we can do without or what can be scaled back. Again if you are working with an architect or designer, they may be able to help you achieve the same look at a lower cost.

Hiring Your Contractor

Now that you have narrowed down your search to one or two, it is time to ask some questions to make our final contractor selection. Here is a list of questions you should ask.

  • How long have you been in business?
  • Are you licensed?
  • Do you have all necessary insurances? (Workman's Compensation and General Liability)
  • How is your company organized? Who will supervise our project?
  • What days/hours do you work?
  • How many employees will be working on our project?
  • How long do you expect our project to last?
  • What measures will you take to protect our property during construction?
  • Have you done similar type projects to ours?
  • Can you give us at least three references with telephone numbers?
  • Do you have any projects that we can visit?
  • Will you be obtaining a building permit?
  • What type of contract will we be working with?
  • How will we be billed?
  • What are your payment terms?
  • Will you provide a written schedule?

Be thorough. If the contractor is reluctant to answer any of these questions, move on they are not for you. These questions are meant to show the character of the company and owner. They should want to answer these questions and provide you with the written documentation.

Once you are ready to make your choice, be sure to obtain copies of all necessary paperwork. Get a copy of their license, registration, insurances and W-9. (Not all states require contractors to be licensed but if yours does be sure to get a copy of it.)

Do not let them convince you that you don't need any of these items. You do and it is your right to ask and have them prior to letting anyone work on your property. On a side note, you should also check your homeowners' policy to see if you have coverage for anyone working on your property.

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Red Flags

  • Contractor asks for large deposits. Never give more than a 10% deposit unless you have an agreement to pay the job in 3 or 4 installment payments.
  • Don't let the billing progress faster than the percentage of completion. If you have been billed for 50% of the contract be sure that half the job is done.
  • You don't need a building permit. The only time you usually do not need a permit is if you are doing a cosmetic remodel only i.e. repainting the interior of your home, replacing carpeting etc.
  • You don't need inspections. In most states, if you need a building permit, you need inspections. Inspections are done usually at intervals of rough framing, plumbing, electrical and hvac, after insulation and once completed. Inspections are in place to protect you don't let any contractor convince you otherwise.
  • We don't need a written contract. A handshake is fine.
  • You are asked for cash payments.

Any or all of the above should make you leery of this company and be out looking for another contractor. Again this is one of the most important decisions of the remodeling process. Make sure you do your diligence. Don't worry about offending anyone. If they are reputable, they will be happy to oblige.

You should also look at this as an opportunity to build a long-term relationship with the contracting firm as well as any of the subcontractors. It will benefit all parties in the long run. You will have a trusted group of contractors you can call on if the need should arise and they will have a customer for life who will also refer them to others.

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