How to Hire a Contractor

Fox Business has a piece on how to hire a contractor. They list crucial questions to ask before you hire a contractor as follows:

• Can they give you references?
• Are they licensed and insured?
• How long have they been in business?
• Is this an estimate or a fixed price?
• What’s included in the bid?
• Will he handle the job himself or have someone else do it?
• What sort of permits are required?
• How much is required up front?
• Will they sign a lien waiver?

I've hired several people to do work on my various rentals over the past few months, so I have at least a somewhat informed opinion on this issue. Here's what I have to add:

• Get references from friends and/or your network. My real estate agent/mentor, Bob, found me a general contractor who does much of his own work. Bob hadn't worked with him in the past but had heard of him through his network. We hired him when he came in $9,000 cheaper than another option to put windows and siding on place #1 (that's him up on the scaffolding in the pic). And he turned out to be AWESOME!!! We used him subsequently on work needed on property #2.
• Be sure you know what is (and isn't) included in the bid. Some contractors give you one-line bids and others a few paragraphs. Either way, whatever they provide probably needs clarification. I have them itemized as much as possible, then I can bid out portions to others if I want to. For example, the contractor above is great on general work, but he is high on painting. So I have someone else bid on that part of the job and they usually win.
• You have to know who is doing the work. I want the person I know/trust/am working with to do the job. If it's someone else, I want to meet him and see if I like/can work with him. Thankfully, my guy does his own work (with his father).
• I generally pay 50% upfront which gets us the bulk of materials. There's then another 25% for the final wave of materials and then 25% at the end of the project. I have paid as much as 70% upfront, but that was only because I was going on our cruise and I knew he'd need round #2 funding before I got back.
• Most of all, make sure the person you hire is honest, willing to "do the right thing", and is responsible. You will be likely giving them thousands of dollars, so this is certainly not too much to ask in this situation. My contractor went above and beyond what was required -- giving me several fixes for free -- and as such I was very happy with him. To show my appreciation, I sent him a $100 gift card to a nice restaurant to take his wife out to eat.

Anyone else have thoughts on what to do when hiring a contractor? 

Comments

[Matt]

"What sort of permits are required" is the biggest indicator of an honest contractor. If the contractor says they home owner is required to pull the permits, it usually means don't go with them. If the homeowner pulls the permits then the home owner is responsible to fix it if it does not pass inspection and if you think the contractor is going to fix it for free your wrong. If the contractor pulls the permits then the contractor is responsible because it is there business name on the permit and sometimes dealing with a inspector in a well established city can be a real pain. Inspectors want deficincies fixed that are not required or part of the scope of the project.

[Sarah]

I'm glad it worked out in your case, but if someone is MASSIVELY underbidding the market, that's grounds for real skepticism.

[Canadian Budget Binder]

I'm very picky about who I hire around the house now. When I had the rood done I called in about 8-10 companies and asked for references I could call and do a drive by as well. I did make one mistake and that was to use the home inspector that our agent referred. Next time, I'll just do the work myself and call in a tradesman.