Know what you want before you get estimates. “Start with a plan and some ideas,” Hicks says. “Don’t start by talking to contractors.” You’ll get a more accurate estimate if you can be very specific in what you want done and the materials you would like to use to make it happen.
Ask friends, relatives and co-workers for references. People in your neighborhood who have done similar projects are your best sources. If you know people in the building trades, ask them, too. Employees of local hardware stores may also be able to provide referrals.
Interview at least three contractors. Ask a lot of questions and get a written bid from each one. When you compare bids, make sure each one includes the same materials and the same tasks, so you’re comparing apples and apples. Get three bids even if you have a contractor you like because you’ll learn something from each interview. “Don’t be afraid to negotiate,” Hicks says. While you might do some haggling at the interview, be prepared to do most of the negotiation after you get the bid and before you sign the contract.
Expect a contractor to be too busy to start right away. “The best folks are the busy ones,” says Cannon Christian, president of Renovation Realty in San Diego, which remodels homes before they’re sold.
Ask what work will be done by the contractor’s employees and what work will be done by subcontractors. Christian advises asking for an employee list to make sure the contractor really has the employees he says he does and won’t be using casual labor hired off the street.
Choose the right contractor for the right project. Someone who did a good job tiling your neighbor’s bathroom isn’t necessarily the right person to build an addition to your home. You want to find a company that routinely does the kind of project you want done. “You don’t want them to use you as a guinea pig,” Hicks says.
Check licenses, complaints and litigation history. General contractors and most subcontractors should be licensed, although the procedure varies by state and municipality. Check the disciplinary boards, Better Business Bureau and local court records for problems. Ask the contractor for a copy of his license and copies of the licenses of the major subcontractors who will work on the job.
Check references. Talk to both clients and subcontractors, who can tell you if the contractor pays them on time. “See if you can talk to current customers,” Christian says, because those clients have the most recent experience working with the contractor.
Read online reviews, but don’t consider that enough information. Angie’s List does not allow anonymous reviews, and the site checks to see whether reviewers actually used the contractor. Yelp and Google also have some reviews. You want to read the reviews carefully to make sure the contractor is the right person for your job and will work well with you. Keep in mind that reading reviews is not a substitute for checking references.
Sign a detailed contract. Make sure your contract spells out exactly what will be done, including deadlines, progress payments, the exact materials that will be used down to the model number and who will provide which materials. “If you don’t have it documented, it’s your word against theirs,” Hicks says. If the builder’s contract is not detailed enough, write up your own or provide addendums. Any change in the project, whether you change your mind about products or ask for additional projects, should generate a written change order that includes the new work, materials and cost.
Get the proper permits. Nearly all home renovation projects require permits. Many fly-by-night companies, as well as some licensed contractors, will suggest the job be done without permits to save money. Not only does that violate local ordinances and subject you to fines if you’re caught, it means the work will not be inspected by the city or county to make sure it’s up to code. Be wary of contractors who ask you to get the permits – that’s the contractor’s job. Unpermitted work can also cause problems when it’s time to sell.
Don’t pay more than 10 percent of the job total before the job starts. You don’t want a contractor to use your money to finish someone else’s job. Christian says he will occasionally ask for up to 30 percent if expensive materials are needed immediately. The contract should include a payment schedule and triggers for progress payments.
Don’t sign a contract for your entire renovation budget. No matter how careful you and the contractor are in preparing for the job, there will be surprises that will add to the cost. “They can’t see through walls,” Hicks says of contractors. Expect to spend at least 10 percent to 15 percent more than your contract.
Negotiate ground rules. Discuss what hours the contractor can work at your home, what kind of notice you’ll get, what bathroom the workers will use and what will be cleaned up at the end of every workday.
Talk to the contractor frequently. For a big job, you may need to talk every day. If you see a potential issue, speak up immediately. Something that is done wrong will be harder to fix later after your contractor has packed up and moved on to his next job.
Verify insurance coverage. Know what is covered by your homeowners insurance and what is covered by your contractor’s business insurance. Get a copy of the company’s insurance policy.
Get lien releases and receipts for products. If your contractor doesn’t pay his subcontractors or suppliers, they can put a mechanic’s lien against your house. You want copies of receipts for all the materials, plus lien releases from all the subcontractors and the general contractor before you pay. You can ask for some of those when it’s time for progress payments.
Don’t make the final payment until the job is 100 percent complete. Contractors are notorious for finishing most of the job and then moving on before they get to the final details. Don’t make the final payment until you are completely satisfied with the work and have all the lien releases and receipts.