Hiring a General Contractor – What You Need to Know Before Signing a Home-Improvement Contract

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how to hire general contractorDon't have the skills? Hire out!
Whether you are building, remodeling, or just doing a few home improvements, it can help to hire a general contractor. There are those who point out that you can be your own general contractor, and this is true. However, if you don’t have the time, skills, or the inclination to be your own general contractor,…

Whether you are building, remodeling, or just doing a few home improvements, it can help to hire a general contractor. There are those who point out that you can be your own general contractor, and this is true. However, if you don’t have the time, skills, or the inclination to be your own general contractor, it is always possible to hire someone.

A general contractor can simplify the process. You hire the contractor, and he or she hires everyone else that works on your project. However, you do need to be careful.

If you look through your local phone book or visit the online websites of local businesses, you’ll likely dozens of contractors to choose from for a variety of jobs like electrical work, plumbing, or general contracting. The trick to getting the job done right and not paying more than you should is selecting the right contractor from the very start.

Finding and hiring the right contractor is not an easy task. You can’t simply make one phone call and hire the first person on your list. Nowadays you need to do some legwork to help ensure you are making the right choice. Otherwise, you are putting yourself at risk for dealing with shady contractors who not only don’t do the work correctly they may also take your money and run. In some cases, you have little recourse against scams without having to go through a lot of red tape.

Tips for Hiring Contractors

Start Early

how to hire general contractor
Don’t have the skills? Hire out!

If you are in a hurry to get everything done, you may not be as thorough with your selection process as if you had more time. As soon as you start putting money away for your project, you should start the process of contacting people to do the work. Even if you can’t start early, you may still be able to find a 24-hour plumber at a reasonable rate. But you should still shop around.

Investigate Licensing and Insurance

Before going through any other steps, find out which contractors are properly licensed to do the work. You can you the Contractor’s License Reference Site where you can find out the requirements by state and check to see which contractors are legitimate before moving forward.

You want to make sure that the general contractor you choose is properly licensed and insured in your state, as well as bonded, where necessary. Ensure that the general contractor only works with others who are properly licensed as well. You want to make sure that any contractor you hire is likely to be following state regulations. It’s also a good idea to do some background research on them by reviewing their profile on the Better Business Bureau, or other review boards.

Hire Specialists When Possible

It can help to find a general contractor that specializes in your project. Check around for those with experience. You want someone who knows your project. Even if the general contractor doesn’t specialize, it’s still possible to work with a general contractor who knows how to work with specialists. Find out who the contractor plans to hire, and find out whether these sub-contractors are specialists.

Get Referrals

Ask family, friends, and co-workers that you trust for contractor referrals. This can help you weed out the bad and focus on the reliable. It can be a smoother process if you know what you are getting going into it than if you were hiring a complete stranger.

Another way to get reviews and referrals. Use Angie’s List, which is a contractor review and referral program. You have to sign up to join, but you get access to reviews and referrals for local area contractors. Find reliable contractors and doctors when you join Angie’s List today – Use promo code LOCAL to save 15%.

Get Estimates in Writing

You have the advantage of sizing up talent by requesting estimates for the job to be completed. An estimate should be free and you should definitely request more than one estimate for the same job. Most experts recommend getting at least 3 estimates from different contractors before you hire someone. Once you have the estimates in hand, make sure the sheet lists the products, materials, and costs of labor.

What to look for in the estimate: You’ll want to be sure the estimate includes the materials being used (including the product name or part number if they are expensive or premium products). The estimate should also include a timeline or any project milestones.

Take the estimates and compare each, but do not rely solely on the cost of the estimate for deciding on a contractor. Lower or higher prices do not mean the work is any better or the contractor is legitimate. Be wary of contractors that seem to offer a much lower rate than others. They might be low-balling, or you could end up with inferior quality products or labor. On the same note, higher prices do not always equal higher quality products or work. An itemized estimate including the quantity and type of supplies can help you understand the materials being used, and referrals can help you get an idea of the quality of work they perform.

When you narrow down the estimates, you can proceed with screening the individual contractors.

Request References

When you have narrowed down your choices, you need to ask the contractor for a list of references for past jobs that are similar to yours. Place calls to the customers familiar with the contractor’s work and ask them about the process. Don’t be shy about making contact with these people but do listen to what they have to say. Any sign of shoddy work, you should consider finding another contractor. You should also look up the contractor on the Better Business Bureau website and check for complaints filed.

Review the Contract

Don’t rely on a handshake and a promise to get the job done. Get everything in writing and make sure the contract includes the timeline, costs, payment schedule and any other agreed upon detail. Do not sign any contract that is not completely filled out. Make sure the contractor understands your budgetary concerns and what exactly you want to accomplish.

In some cases, it might be possible to stipulate a cost cap on the project. Your contract should also include your responsibilities. You need to know what you are responsible for, as well as what the contractor will accomplish.

Payment Schedule

When you agree to the terms of the contract make sure it clearly states how you will pay for the work. Typically, a customer would put a percentage down to start the project and pay in increments as milestones of project completion are reached. Final payment should never be made unless the job is completely done to your own satisfaction. Reputable contractors will work to make the job complete before demanding final payment. Be sure to pay for the work using checks and ask for receipts for each payment being made.

If you make a conscientious effort to hire the right person for the job, you lower the risk of getting taken for a ride and losing money. Once you find a good contractor, keep their number for future use and share their contact information with your friends and family. It will make projects down the road much easier to initiate.

Listen to Your Gut

If you want to know about someone, one of the best ways is to look him or her in the eye. This is especially true if you are doing business. While you can’t always avoid being swindled this way, meeting with potential contractors can help you get a gut feeling about them. If you have doubts about someone, don’t hire him or her. Instead, hire a general contractor that you feel you can trust. Meeting the contractors, and watching how they conduct themselves as they look at your project area, can give you a good feel for what to expect.

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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Robert says

    Nice article. Personally I have found word of mouth referrals to be very helpful when finding contractors to do work. If you work around a lot of people (as in an office) sometimes that can be a great way to find someone to do what you need – just ask around the office.

    Also, getting a couple of bids is important too. You will be surprised how much bids can vary. One thing that helps is if you will buy the materials. Most build in price + contingency for this. However, if you get the materials you take them out of the equation.

    For smaller jobs I recommend trying it yourself. You save the most that way and feel the personal satisfaction. Thing like hanging ceiling fans or tiling a backsplash are actually easy – so go for it.

    • Ryan says

      BMT, I try to do smaller jobs as well – we just painted almost all of our home’s interior in preparation for placing it on the market. We stripper wallpaper in one bathroom, sanded the walls, put on primer then two coats, then painted the master and guest bed rooms and the common areas. We actually had to hire some painters to do one wall and patch the ceiling because it was two stories and we don’t have the equipment. So these tips came in handy for that job!

      I can do other things – like ceiling fans, caulking, small electrical work, etc., but I need to hire the pros when it comes to the major jobs, or if I don’t have the tools or equipment.

  2. Kimberly says

    It’s also important to keep in mind that the cheapest contractor won’t always end up saving you money. I learned that the hard way when I hired a cheap contractor to re-do my bathroom and he ended up doing real damage to the plumbing. Not only did I have to hire a new, more expensive and qualified contractor to start from scratch, but I had to get the plumbing fixed in both upstairs bathrooms!

  3. Kris says

    And shop around for a few quotes. This way you’ll be able to hear bout your project from a few different perspectives and you might find out a few things that you never even thought about.

  4. Lance says

    Firstly, you must start by researching contractors online and physically as well. Make sure that the contractors are fully licensed and above board. Secondly, you must ask for quotes from multiple contractors, as the most expensive or the cheapest are not always the best. Thirdly, make sure to sign an agreement with respect to total payment and the payment schedule before work commences. Lastly, check if the contractor posses adequate insurance cover that is in date.

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