A Helpful Guide To Hiring a Contractor: Everything You Need To Know

Your home is one of your most valuable assets. It’s where you relax and rejuvenate, entertain friends, raise your family, grow old, and make memories. Your home is also a reflection of your taste and lifestyle. So, when you embark on a building or remodeling project, choosing the right contractor for the job is critical.

Being in the construction business for many years with a wide array of clients, we've heard loads of stories about bad experiences with contractors. We don't want you to experience those same issues. So we’re here to tell you everything there is to know when you’re hiring a contractor.

7 Common Misconceptions About Hiring a Contractor

When hiring a contractor for a major renovation project or a new home build, you've probably received loads of "advice" from friends, family, and colleagues. It's important to remember that not all of what you hear is an accurate representation of reality. In what follows, we’ll address many typical misconceptions about hiring someone for your home construction project needs.

#1: You Should Always Get At Least 3 Bids From Contractors

A contractor can massage a bid to lower cost in literally hundreds of ways — and most of them are NOT in your favor. Some contractors will give you the lowest initial bid with the cheapest construction methods to remain competitive. However, since you probably don’t want the cheapest possible construction, the difference will be made up in change orders with additional charges once the project starts. Worse yet, you may not even know you are getting inferior quality on the structural details until years later.

Remember that price differences usually reflect the project quality and service rather than what the contractors put in their pockets. The best companies operate at a 10% profit margin in a good year, and the vast majority never make a profit at all. Reputable contractors know that your project is a reflection of their business, and it’s in their best interest to give you the best work and service.

An effective alternative to the bidding process is the design/build model, in which the designer and the builder work together to develop the best plan for the budget. In this scenario, the builder's production department can help the designer or architect “value engineer” the project. It’s your best opportunity to save money because the design + construction connection creates a workplace where regular communication feedback between the two departments results in improved techniques that can save many thousands of dollars.

#2: A Low Price Will Save You Money

With construction, you get what you pay for. So, if a low price is the most important factor in your decision-making, you’ll probably end up dissatisfied and with low-quality work. Contractors often need to win jobs and take deposits to create cash flow and stay afloat. A low bid can win a job, especially if the builder is a good salesperson. If the contractor underpriced the job, however, they have little motivation to finish once your money is spent — even though the job is still underway.

Occasionally, a homeowner can find a sole proprietor who does a great job and is less expensive. However, this is usually at the expense of formal systems, thorough planning, and realistic project lengths. That can work for an involved homeowner if the relationship remains good and they aren't working with a hard deadline. Hiring an unqualified independent contractor for your project is a recipe for disaster and is probably responsible for most of the horror stories in the building industry.

#3: The Contractor Is Licensed and Insured, So They Must Be a Safe Bet

Did you know that you may be liable for damages if an underinsured worker is injured on your project? Besides liability insurance, Worker’s Compensation and other hazard insurance must be in place during a project.

You should know how much insurance the contractor carries, how much of the work will be done by the contractor’s own employees, who Worker’s Compensation insurance should cover, and whether the subcontractors used carry appropriate insurance as well. Also, do the subcontractors subcontract labor? If so — what is the sub/sub insurance situation? In summary, you must know that every person who steps into your home carries appropriate insurance.

#4: This Contractor Has Been Around for a While, and I Don't See Any Complaints Against Them, So They Must Be Good

Most contractors go out of business in their first five years. Given this info, if a company has been around for that long, you’re most likely on the right track with hiring a high-quality, reputable contractor – the company must be doing something right!

However, you still need to do your homework. Does the company have plenty of clients you can contact for references? Do they have a reputation for high-quality work? Does the company have experience with the particulars of your project? Investigate your contractor’s credentials thoroughly to ensure you’re dealing with a qualified professional who can handle the project you envision.

#5: I Can Save Money by Buying My Own Materials

You may be considering supplying your own materials for your remodeling job to help you save money, but most professional contractors won’t be interested in this arrangement. Here’s why:

Compared to a professional contractor, you have a limited understanding of the details of building products and may order the wrong materials or not enough materials. This will cost the contractor dearly in time and hassle and will probably delay the project.
Most professional contractors will not warranty products they did not order. This can cause disagreements in the future if something goes wrong.
The contractor usually receives a discount on the product, so you don’t save nearly as much as you might have hoped.

It might make sense for you to purchase some things, such as appliances or a unique light fixture, but generally, letting the contractor make material purchases is best. Otherwise, your project becomes unnecessarily complicated, will possibly cause warranty issues, and ultimately, you save very little in the end.

#6: I Know What I Want, So I Shouldn't Have To Pay Much for Design

Design work involves much more than drawing up your idea and picking finishes. Considerations like traffic flow, appropriate lighting, structural integrity, local code requirements, and the subtle details and proportions that make a space beautiful are integral to the success of a project.

The design process should also include an assessment of your existing structure and a construction plan. The plan should include detailed specifications and timelines. Most designers will also be able to give you a good visualization of how your project will look when it's complete. You should review this work with the designer and make sure you clearly understand it.

Ultimately, a good design and planning process will save you more time and money than it costs. It will also give you a comforting sense of direction throughout the project.

#7: The Contractor Has Insurance, So I Don't Need Any

For larger projects, you need insurance on the building under construction, also known as a Builder’s Risk policy.

A Builder’s Risk policy is required for bank loans on construction and should be in place on every large project. Make sure your contractor has a Builder's Risk policy in place for your specific project, and if not, talk to your insurance company about purchasing a policy for your project.

More Helpful Tips For Hiring a Contractor

No that you know the most common misconceptions about hiring a contractor, you’re one step closer to finding the right person for your home remodeling project. But before you sign a contract with someone, we have some additional tips and advice for you.

Always Ask for References

Never rely on hearsay or something passed on by an acquaintance – you need to do your own research on the contractor you're thinking of hiring. A good contractor will have at least 25 references that you can contact. You should contact several of them and ask questions about your specific concerns regarding your project.

Professional references, such as suppliers, can also be a good source of information. By calling a few suppliers, you should get a good picture of how solvent the contractor is. Here are some suggested questions to ask references:

Questions for Former Customers:

What type of project did the contractor do for you?
Why did you choose this contractor?
Did they live up to your expectations?
Did you bid this project out? If so, how were this contractor’s prices relative to his competitors? If not, why did you trust this contractor enough not to bid out?
Do you feel you got a good value from this contractor?
How did the design component work out? How flexible was this contractor?
What can you say about this contractor’s communication methods?
How were changes in the project handled?
How were the crews that did the work? Was there anyone you wouldn’t want at your house again?
Was this contractor responsive to your concerns? Could you reach him quickly?
What did you think went exceptionally well with the project, and what could have been better?
Would you have any reservations about recommending this contractor?

Questions for Suppliers:

How long has this contractor worked with your company?
Is any balance 60 days or more overdue? 90 days?
What do you know about this contractor’s reputation in town?

Never "Cost Plus" Without a Clear Understanding of the Budget and the Project Time Frame

In a “Cost-Plus” arrangement, you pay for the contractor’s time and materials with a percentage for the contractor tacked on. This can be successful, but the contractor should deliver a detailed cost and time estimate for all phases of the work, including specifying finishes within a predetermined range of price and quality.

The advantage of paying cost plus is that you can hire a new contractor at any time if you become dissatisfied. The disadvantage is that the contractor has little incentive, except damage to his reputation, to keep costs in line and the project on schedule. Once a project exceeds the budget, you are locked in for all additional costs, even if you change contractors.

Don't Sign a Contract if You're Uncomfortable With Your Contractor

Clear, open, and regular communication with your contractor is the best way for your project to succeed. If you’re having trouble getting answers before construction, you’ll have more trouble once the project starts. If you have doubts about the builder you've selected, do not proceed to contract without addressing your concerns and considering the alternatives.

Always Inspect a Contractor's Work Before Signing a Contract

If you’re considering a large project, be sure to ask to see a completed project and a job in progress. For a current project, look around closely. Is the job site neat and clean? Well-organized? Is the contractor proud of his work? Are the homeowners happy with the project? You can discover a lot by observing your contractor on the job.

Don't Pay a "Fixed Price" Without a Detailed Contract and Scope of Work

Be wary of paying a “fixed price” without a detailed agreement with your contractor. Uncertainty about the scope of work can damage your relationship with the contractor. While it’s impossible to anticipate all the changes that might occur during a project, locking down as many details as possible before starting work is in everyone’s best interest. In addition, for the inevitable changes or additional work that often occur during a project, it is vital to clearly understand the contractor's Change Order process.

Look No Further Than Meadowlark for All Your Contractor & Home Building Needs

If you're looking for a reliable and experienced partner to bring your dream home to life or to transform your existing space into something extraordinary, look no further than Meadowlark. With our unwavering commitment to quality craftsmanship, attention to detail, and exceptional customer service, we’re here to guide you through every step of the process.

From contractor services to custom home building and remodeling, our skilled team is ready to turn your vision into reality. Don't hesitate to contact us today – we can't wait to hear from you!