In last week's post, I covered points to consider when choosing a contractor. It's such an important topic and a single blog post doesn't really do it justice. Your home is your most valuable financial asset, and you want to protect its value and your financial well-being by doing your due diligence when vetting any home improvement professionals.
A Word of Caution
The cold hard truth is that not all contractors are reputable. The good news is that they're pretty easy to spot -- if you know what to look for. Avoid any contractors that:
- solicit door-to-door;
- offer steep discounts for sending customers to them;
- "just happen" to have materials left over from a previous job;
- only accept cash;
- put the burden of securing building permits on you;
- offer exceptionally long guarantees;
- demand payment in full up front before any work can commence;
Ask the Tough Questions
- How long have you been in business? Look for a well-established company and check it out with consumer protection officials. They can tell you if there are unresolved consumer complaints on file. One caveat: No record of complaints against a particular contractor doesn’t always mean that no previous consumer problems exist. They may not have been reported or the contractor is doing business under several different business names.
- Are you licensed and registered with the state? While most states license electrical and plumbing contractors, only 36 states have some type of licensing and registration statutes affecting contractors, remodelers, and/or specialty contractors. The licensing can range from simple registration to a detailed qualification process, and the licensing requirements in your locality may be different from the requirements across the rest of the state. Check with your local building department or consumer protection agency to find out about licensing requirements in your area. If your state has licensing laws, ask to see the contractor’s license and verify that it’s current.
- How many projects like mine have you completed in the last year? Ask for a list. This will help you determine how familiar the contractor is with your type of project.
- Will my project require a permit? Most states and localities require permits for building projects, even for simple jobs like decks. A competent contractor will get all the necessary permits before starting work on your project. Be suspicious if the contractor asks you to get the permit(s). It could mean that the contractor is not licensed or registered, as required by your state or locality. Know the answer to this question before you ask it.
- May I have a list of references? The contractor should be able to give you the names, addresses, and phone numbers of at least three clients who have projects similar to yours. Ask each how long ago the project was completed and request to visit any jobs in progress.
- Will you be using subcontractors on this project? If yes, ask to meet them, and make sure they have current insurance coverage and licenses as required by law. Ask if they were paid on time by this contractor. A "mechanic’s lien" could be placed on your home if your contractor fails to pay the subcontractors and suppliers on your project. Protect yourself by asking the contractor -- and every subcontractor and supplier -- for a lien release or lien waiver.
- What types of insurance do you carry? Contractors should have personal liability, worker’s compensation, and property damage coverage. Ask for copies of insurance certificates and verify that they are current. Avoid doing business with contractors who don’t carry the appropriate insurance.