Blog post for The building Business: Vetting Your Contractor

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Vetting your Contractor

Many people online say that a contractor ran off with their money. Then there are about 20 people right behind them saying, "Never give the contractor a downpayment!" Unfortunately, most contractors will require a downpayment from you. Even if they could finance your job, they won't. Downpayments serve two purposes.

1. To hold your place in their schedule. Contractors are very busy and will need the downpayment to keep your place.

2. Trust is a 2-way street, and they need to know they will get paid.

Usually, they will ask anywhere from 10 to 50% depending on your state regulations. In Texas, there is no cap, but in California, it's capped at 10%. If you are in a state with no cap, I would suggest not paying more than 50% if possible and NEVER pay 100% down! How do you know then that you are to trust the contractor and he will not run off with your downpayment? You can vet the contractor before hiring him and give him the downpayment. Here are some suggestions. Permits Make sure you know exactly who will be pulling permits and when. It is almost ALWAYS the contractor's responsibility to pull all the permits needed. Owners may decide to pull them or pull certain ones, but that all needs to be discussed well beforehand. Subcontractors rarely, if ever, pull any permits.

License and Bonding A license for a contractor should be a no-brainer. Bonding depends on your State. In Texas, Bonding is not required on residential buildings, but it is necessary for California. Do your research, find out the requirements for your State and make your decisions from there. Guarantees Find out what guarantees your builder has. How long will his warranties last? Is it stated in the contract? Do the subs have their own warranties? I will tell you guarantees and warranties are for workmanship only, and most contracts will say that. The manufacturer will warrant materials. INSURANCE

Yes, I put insurance in all caps. This is one of the most important questions you can ask. And the answer should be yes. Also, ask if the insurance covers the subcontractors or has their own either way; no one should be on the property without Liability and Workmans Comp. Period! This is especially important if you are contracting your own home. DO NOT be tempted to hire someone cheaper if they do not have these two insurance policies! Bonus points if they have a commercial policy that covers vehicles and trailers. Insurance is expensive, and it will probably not be the cheapest bid if they have it. Insurance is too important and not worth getting a lower price. Going without is a gamble. Because if something goes wrong such as someone falling off your roof or wrecking into your new build with the tractor, YOU will be paying for it! References The more references they have, the better. I would say 3 or 4 are sufficient, though. Then make sure you call a few of them. Ask questions about how their build went. No build will be perfectly smooth; there will be problems here and there. Ask what issues came up and how did the contractor handle those problems. Same for sub-contractors. How was the communication from the contractor? Did they follow up within 24 hours when they called or texted? Were they respectful to them and their property? Did they explain things well and in non-specialists' terms? Ask questions that will give you an overall view of the contractor to help you decide on whom you want to have complete control of your project. Online presence and portfolios Make sure there is a portfolio to look at. When I started many moons ago, I took pictures with a disposable camera and put them in an album. Some still do it that way. And that is ok. Most, however, will have an online portfolio. If they have portfolios in several places, that is even better. I keep mine on my phone, Ipad, and computer. I also have a video portfolio on my youtube channel. When looking at a portfolio, look and see if they have before and after pictures, or even better, they have progress pictures showing each project's progression. Photos of a finished product only are ok but can be quickly taken online and passed as their own. I prefer before and after photos and progress videos if possible. Make sure the contractor has an online presence. You should be able to find them easily online with a simple Google search. Ask them for their website address. Websites are easily created these days. Even the cheapest contractor can get a free website. It should have the company/contractor's name, address, and phone number; an email address should also be there. I suggest every contractor put the portfolio and direct links to all social media. Be sure to check out those social media pages as well. I try to utilize as many social media platforms as possible. The more places you can see them, the better. You can get an overall view of the business from their sites. Communication Communication Skills are a must for any contractor, no matter how small they are. Communication is the lifeline between you and your contractor. It starts at the moment that the first communication ensues. Whether it was on the website chat, a phone call, or from Facebook, it should be easy to contact them and easy to get an answer. They need a cell phone with voicemail and texting capabilities. The voice box should not be packed for the most part, and even if they do not answer right away, they should call or text back within a few hours. They also need an email address, and the contractor should consistently monitor it. If they have a website, they should have chat capabilities. Mine comes straight to my phone. The more forms of communication they have, the easier it is for you and them. When they talk to you for the first time, watch and listen. Not everyone is great with communication, which is ok, but you can learn a lot from them. Do they speak to you or over you? Do they explain things in layman's terms, or would you need a translator to understand the tradesman lingo? Do they readily answer when you ask questions, or do they skirt around the questions? Are they easily and visibly irritated by your questions? Someone that is irritated answering your questions is either hiding something or will be annoyed at you for the entire project. Contracts Never skip this step. They absolutely must have a contract! Gone are the days of the handshake. If they tell you that they only work on a handshake, you do not need to do business with them. They may very well be telling you the truth. They may be the most honest and trustworthy people on Earth. It does not matter. The contract not only protects you as a homeowner, but it also protects them. Projects can become complicated quickly. Confusion about finances, payment schedules, who is paying for what, and when are all things that can ruin a project if it is not spelled out in a signed contract. Do not settle for a hastily written agreement either. Many guys will write down a simple contract on a napkin if they think it will get them a job. You need to make sure that they continually use contracts on all of their jobs and are not writing one to satisfy you. Safety Safety is a priority. You already asked for insurance, now ask about the safety record for the company. How many OSHA violations have they had? Do they have safety meetings, and how often? How will they ensure the safety of employees on your project? If you or your pets will be there often, how will they ensure that you and your pets will be safe? After they answer these questions, make the decision you are comfortable with. Consider Prequalifying This is not a necessity and some homeowners may think that it's going a little overboard but you can decide to prequalify a contractor. This is a series of questions in packet form. In the commercial industry, a subcontractor must go through prequalification before a finalized decision is made. It does not have to be complicated. Some simple questions are answered along with proof of insurance, bonding if needed, and license. Many of the questions can be the vetting questions we already mentioned. This will make it easy for you to pick a contractor as you can compare answers and make an informed decision. This is not an exhaustive list. Please do this is not a necessity and some homeowners may think that it's going a little overboard but you can decide to prequalify a contractor. This is a series of questions in packet form. In the commercial industry, a subcontractor must go through prequalification before a finalized decision is made. It does not have to be complicated. Some simple questions are answered along with proof of insurance, bonding if needed, and license. Many of the questions can be the vetting questions we already mentioned. This will make it easy for you to pick a contractor as you can compare answers and make an informed decision.