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How to hire a contractor

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A renovation project is a great way to give your old home a fresh look. However, if you don't take the time to hire the right contractor for the job, you could be out a lot of money and your home could end up looking worse than when you began.

To find the best contractor, many people will head to sites like Yelp and Angie’s List, which allow people to review local businesses. While these review sites provide valuable, unvarnished opinions on potential hires, it’s still up to you to do your due diligence before you sign on the dotted line.  

To make sure you get the right company for the job, here are some crucial questions to ask before you hire a contractor.

Can they give you references?

A good contractor should be able to give you the names of a few previous customers willing to vouch for the contractor’s work. Of course, most contractors will be able to point you to at least one or two happy customers, but this step can still be valuable. Just by asking for references, you’ll begin to gauge how upfront and forthcoming the contractor is. If he seems like he’s giving you the runaround at this stage, you’re better off looking for someone else.

Just by asking for references, you’ll begin to gauge how upfront and forthcoming the contractor is.

Are they licensed and insured?

Anyone can slap up a shingle and call themselves a contractor. But if they aren’t licensed and insured, you could be on the hook for any mistakes they make, including if they injure someone or do damage to a neighbor’s property. Make sure your renovation dreams don’t turn into a legal nightmare:  Ask to see the contractor’s credentials before you hire them.

How long have they been in business?

Quality work comes from years of experience, so finding someone who’s been in business a long time is crucial. A contractor with long ties to the community is also more likely to be invested in the project, instead of simply looking to get paid. Finally, an experienced contractor should be well-versed in local permits and building codes, which means your job will get finished faster and with less red tape.

Is this an estimate or a fixed price?

Some contractors will give you a lowball estimate that will seem to grow magically and substantially once work actually begins. During the bid process, make sure to ask each contractor if the price quoted is fixed or if it’s just a rough estimate.  

What’s included in the bid?

Even with a fixed price, a contractor might still surprise you with added costs, like licenses, permits, or other fees. Make sure to ask if the fixed-price bid includes everything, or if there are other fees that might come up. You’ll also want an itemized list of labor and materials before you sign a contract. This will help keep the contractor honest and prevent any confusion about costs.

Will he handle the job himself or have someone else do it?

There’s nothing wrong with your contractor hiring a subcontractor to do some of the work. Sometimes a specialist’s touch is just what’s needed on a project. But if your contractor does farm some of the work out, make sure the contractor will be present while that work is being done, and ask to see the subcontractor’s license and insurance documents as well.

What sort of permits are required?

A contractor should be well-versed in local building laws. You don’t want to find out halfway through the job that work has to shut down while the contractor tries to secure the necessary permits from the municipality. And while some contractors might try to convince you that you can save a few bucks by skipping the permits, be warned: this could come back to haunt you when you try to sell your house a few years down the road and you fail the building inspection. So make sure you get all the proper paperwork filed up front.

How much is required up front?

Contractors will generally require part of the fee up front, but how much they expect can vary quite a bit. One third of the total cost is generally an acceptable amount, but be wary of any contractor that asks for more than this. You have little leverage over a contractor that has already been paid the bulk of the contract.

Will they sign a lien waiver?

A lien waiver is a legal document that can protect you should your contractor have financial troubles. Let’s say the company failed to pay a supplier for the new tile laid in your home. The supplier could put a lien on your house and go after you for the money. To prevent this, make sure a lien waiver is included in your contract.