This week I have a few quick tips for dealing with contractors. These tips come from a 2017 article written in Consumer Reports called “Home Renovations without Aggravation—Learn how to combat shady contractor practices and avoid common and costly mistakes many homeowners make.”
Although the article addresses home renovations, most of the information in the article is also relevant for those of us who will be building new homes.
That Consumer Reports article highlights information from a recent survey of 300 general contractors from around the United States. The survey was conducted by the Consumer Reports National Research Center.
In the survey, contractors admitted to some shady practices that are found in the construction industry, including:
-contractors using unskilled laborers to carry out their work
- winning jobs with lowball bids and then jacking up the cost later with “unforeseen problems.”
That brings me to the first quick tip, which I know you’ve heard before, but it bears repeating
1. To decrease your risk of hiring shady contractors, don’t just get references, also check credentials, including proof of insurance and the contractor's license.
Even if your contractor is recommended by a friend or family member, you still need to check the credentials of those professionals.
In the survey, almost 1/5 (20%) of general contractors lacked either a state license or the proper insurance, and 9% lacked both!
You should also ask whether the contractor you hire will be delegating portions of your job to one of his project managers. If so, make sure to vet that manager, too.
Now, choosing a contractor with a license and insurance doesn’t guarantee that you’ll end up with quality work, but contractors with those credentials are statistically more likely to be reputable. Plus the survey found that fully accredited contractors are better at holding down costs when unexpected problems arise.
You can go to contractors-license.org for a list of licensed contractors by state.
2. Always negotiate. The Consumer Reports National Research Center found that only
4 % of the general contractors surveyed said they are never willing to negotiate the price of a job, 66% are somewhat willing, and 30% are very willing.
Get bids from at least three contractors, that way, you’ll have a better idea of what a fair price is and you’ll have some bargaining power. For example, if your favorite contractor is the highest bidder, you can ask him if he’s willing to lower his price to either meet or come closer to the prices of his competitors.
75% of general contractors reported offering a median discount of 10%.
3. Plan, plan and plan some more, but be prepared for cost overruns and surprises. When the survey asked general contractors about job-related problems that led to delays or cost overruns, they said that many of the culprits included structural damage and work not meeting code requirements. Consumer Reports recommends adding at least a 10 percent cushion into your budget and schedule to cover those surprises.
4. Get everything in writing. No matter how much faith you have in your contractor, a written contract will protect both of you. It should specify the full scope of the work and a detailed breakdown of both labor and material costs for each part of the project. For example, the electrical costs shouldn’t be a single dollar amount. The contract should list the number of outlets, switches, and light fixtures, including all model numbers. It should also state a start and completion date. Consumer reports recommends asking for a penalty fee of $50 to $100 for every day past the deadline. Just be careful with that because you don’t want contractors cutting corners and doing subpar work just to meet the deadline. The written contract should also include a payment schedule.
5. Watch out for building allowances. An allowance is the amount of money the contractor has allocated for you to spend on different fixtures, fittings and appliances. Many contracts will have a flooring allowance, a lighting allowance, an appliance allowance, to name a few.
Sometimes contractors will give clients bids that include allowances that are too low so they will have the lowest overall bid, when competing for a job. So make sure your allowances seem reasonable before signing the contract. Or avoid allowances all together by listing specific fixtures and fittings in your contract, like we talked about in tip #4.
6. Get a written guarantee for their work. Nine out of 10 general contractors in the survey said they provide a written guarantee for their work. The median time for which the work was guaranteed was 15½ months. 14% of contractors promised to cover their work for more than three years.
I was also happy to find out that many states protect homeowners from faulty contractors’ work for several years. But only if the contractor you hired was licensed by the state.
7. Make a plan and stick with the plan. I’ve given that tip before too. Realize that changing your mind after the work is underway is one of the biggest mistakes homeowners make. According to the survey, change orders inflate the budget by an average of 10 percent. Not only because subs charge an additional fee to be called back out to the job site to make the changes, but because general contractors often tack on an extra fee for changes.
Here's a link to the Consumer Reports article if you'd like to read it in its entirety.
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That’s all I have for you this week. Thanks for stopping by. I hope come back next week for another edition of Build Your House Yourself University--BYHYU.
Please remember that the purpose of this podcast is simply to educate and inform. It is not a substitute for professional advice. The information that you hear is based the only on the opinions, research and experiences of my guests and myself. That information might be incomplete, it’s subject to change and it may not apply to your project. In addition, Building codes and requirements vary from region to region, so always consult a professional about specific recommendations for your home.