In the course of maintaining a home, you will most likely need repairs or improvements that require professional help, and you’ll need to call in a contractor. To ensure that the relationship with a contractor goes smoothly, follow these suggestions:
Shop around. Talk to friends or check with the local homebuilders association for reliable contractors. Call their references and, if possible, inspect their work. Check with the Better Business Bureau or the state Attorney General’s office to see if any complaints have been filed about the contractor.
Bid the job competitively. Unless the job is very small or urgent, have at least three contractors compete for the work. Make sure that contractors are providing bids (firm prices) rather than estimates (rough calculations) for the work. Ask about hourly rates for any extra work.
Hire a professional. Make sure the contractor is licensed and registered with the state. Get a copy of the license to make sure that it’s current. Make sure that the contractor has personal liability, worker’s compensation, and property damage insurance coverage. Get a copy of these documents to make sure that they’re current.
Read the contract. Make sure that you have a detailed written agreement that reflects your understanding of the work to be completed. Before signing the work contract, be sure you understand and agree to the terms of your loan contract and how you will pay. Be sure that your work contract allows you at least three business days to cancel.
Don’t pay in advance and NEVER pay in cash. On larger jobs, or at the contractor’s request, you may make progress payments. The amount of these payments should be written into the contract. Hold a substantial amount of the contract (up to 30 percent) for the final payment to ensure that the job is completed to your satisfaction.
Keep a written record. Your records should detail the progress of the work, payments made, approved changes in the work, and important conversations with the contractor. These records could help resolve disagreements at the end of the project.
Know how to settle a dispute. Some contractors may attempt to require that you submit any dispute to binding mandatory arbitration, meaning that a third party arbitrator would decide the outcome of your dispute, eliminating your right to present your case in court. While there is nothing wrong with voluntary arbitration, consumers who have this as their only option lose their right to sue the contractor if there’s a problem that can’t be resolved.
Exercise caution with contractors who …
Shop around. Talk to friends or check with the local homebuilders association for reliable contractors. Call their references and, if possible, inspect their work. Check with the Better Business Bureau or the state Attorney General’s office to see if any complaints have been filed about the contractor.
Bid the job competitively. Unless the job is very small or urgent, have at least three contractors compete for the work. Make sure that contractors are providing bids (firm prices) rather than estimates (rough calculations) for the work. Ask about hourly rates for any extra work.
Hire a professional. Make sure the contractor is licensed and registered with the state. Get a copy of the license to make sure that it’s current. Make sure that the contractor has personal liability, worker’s compensation, and property damage insurance coverage. Get a copy of these documents to make sure that they’re current.
Read the contract. Make sure that you have a detailed written agreement that reflects your understanding of the work to be completed. Before signing the work contract, be sure you understand and agree to the terms of your loan contract and how you will pay. Be sure that your work contract allows you at least three business days to cancel.
Don’t pay in advance and NEVER pay in cash. On larger jobs, or at the contractor’s request, you may make progress payments. The amount of these payments should be written into the contract. Hold a substantial amount of the contract (up to 30 percent) for the final payment to ensure that the job is completed to your satisfaction.
Keep a written record. Your records should detail the progress of the work, payments made, approved changes in the work, and important conversations with the contractor. These records could help resolve disagreements at the end of the project.
Know how to settle a dispute. Some contractors may attempt to require that you submit any dispute to binding mandatory arbitration, meaning that a third party arbitrator would decide the outcome of your dispute, eliminating your right to present your case in court. While there is nothing wrong with voluntary arbitration, consumers who have this as their only option lose their right to sue the contractor if there’s a problem that can’t be resolved.
Exercise caution with contractors who …
- Go door-to-door, telling you they just finished work at a neighbor’s house
- Approach you, identifying a problem with your home that you hadn’t noticed
- Use high-pressure sales tactics like asking you to sign something right away
- Offer you special discounts on materials they say are leftover from other jobs
- Only accept cash payments
- Ask you to get the required building permits
- Refuse to give an estimate up front
- Give you only a cell phone number or post office box instead of a physical address
- Tell you they can help you get a loan from a lender they know
- Misrepresent the terms of any financing they arrange
- Demand payment for the entire job upfront
Additional Resources
- The National Consumer Law Center www.consumerlaw.org/publications/guides/index.shtml
- The National Association of Home Builders
www.nahb.org/category.aspx?sectionID=844 - Freddie Mac
http://www.freddiemac.com/corporate/buyown/english/owning/remodel.html
Summary
Maintaining your home is another important part of being a homeowner. Timely maintenance, repairs, and improvements help protect your home, provide your family with greater comfort, and enhance your home’s value.
