Contractor Hiring Tips for Homeowners

We've all heard horror stories about building contractors who don't finish the job, take money and disappear, do poor work and don't fix it, give a low estimate and then charge more, among others. To avoid these types of problems:

Prepare & Plan

It is important to know what you want so you can give a clear picture to the contractor. Be as specific as possible. Have an idea of the size of the improvement, materials, appliances or fixtures and your price range. Depending on the scope of your project an architect may be needed to design the project. Visit showrooms, model homes, and home improvement stores to see recent trends and new products that are available. Be wary of hiring individuals who go door-to-door soliciting business.

Know Who to Call

The most frequently used method to find a reputable contractor is to ask a friend or others who have had work done for a recommendation. Another source is building professionals (i.e., architects, designers). Home improvement stores, lumber yards, and home decorating stores may know reputable contractors in the area. The phone book Yellow Pages and advertisements in local papers are also a source of names.

Meeting Potential Contractors

It is easier to compare the contractor's estimates if the same written scope of work is used for each estimate. A written, itemized estimate related to the scope of work should be requested of each contractor. Additional items to include in your discussion are:

  • Who is responsible for getting and paying for building permits
  • Time frame for the project
  • Responsibility for cleanup and provision of a dumpster
  • References
  • Proof of insurance
  • For comparative purposes a minimum of three written estimates is recommended.

Making a Decision

The contractor's background and reputation should be carefully checked. Contractors are only going to give references of people pleased with their work. Be sure to ask the references:

  • How the heard about a contractor
  • About the scope of work done
  • If the project was completed in a timely manner
  • About problems that came up
  • If they would hire this person/firm again.

The local Better Business Bureau 609-588-0808) and the Middlesex County Office of Consumer Affairs 732-745-3875) can supply homeowners with reliability reports on many area contractors.

Hiring a Contractor

Once a contractor is chosen, a contract is required if the home improvement project is in excess of $200. The contract should include:

  • Legal name and business address, contractor's name, address, phone number and state license number
  • Estimated start and completion date
  • Financial terms (total price, payment schedule, method of payment, finance charges and cancellation penalty)
  • Details of the contractor's responsibility (i.e., cleanup, providing dumpster protection of personal property)
  • Description of work to be done
  • Specification of all materials and products to be used or installed including:
    • Brand
    • Capacity
    • Color
    • Grade
    • Model
    • Quality
    • Quantity
    • Size
    • Year
  • Statement of any guarantee or warranty with respect to products, materials, labor or services
  • Binding arbitration clause enable disputes to be resolved quickly without costly litigation

Depending on the scope of project you may want to have a lawyer review the contract. Prior to accepting a contract, ask to see a copy of the contractor's certificate of insurance to be sure they have workman's compensation and other liability insurance.

Beware of misinterpretations of required follow-up maintenance, discounts offered because your project will serve ad a model, and use of materials leftover from a previous project.

Remember, you have to remain flexible during home improvement projects. Inevitably something unforeseen always seems to happen. However, be sure that any changes to the contracted scope of work are agreed to in writing.

Payments

Once hired, contractors need a percentage of the cost of the project to purchase supplies, order appliance and pay for permits and other construction costs, generally 15 to 20% (and never more than 30).

Many contractors set up a payment schedule, which requires payments to be made at set times or as the actual work is completed. Some contractors prefer to link the payment schedule to inspections. Payment is then made after the job passes certain specified inspections.

Final Payment

It is important to hold the final payment for the project until all aspects of the contract are fulfilled. According to New Jersey State Law, final inspections are required to be satisfactory completed before the final payment is made to a contractor (NJ 13:45 A-16.2). If the contractor is responsible for calling for inspections, request copies of final inspections certificates prior to issuing payment.

Note: It is the property owner's responsibility to ensure that inspections occur at specified times during the construction process. You may have the contractor call to schedule the inspections but make sure that your contractor follows through.

Complaints

The County Offices of Consumer Affairs are equipped to help you resolve complaints against contractors. You will need to contact the office located within the contractor's County. The Middlesex County Office can be reached at 732-745-3875.