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Working with contractors: How to hire a qualified pro

Finding the right contractor is a job in its own right. Here's what you should know.

contractor with new homeowners
SDI Productions/Getty Images

When the pandemic descended on the US, some of us retreated to the sofa for a Netflix binge. Others baked bread. And more still looked around their homes and saw room for improvement.

More than half of US homeowners made "substantial improvements" to their living quarters this year, according to a July survey commissioned by Selective Insurance. Whether you're retiling a bathroom or adding a home office, finding the right professional is crucial when it comes to protecting your home and budget

Of course, before you sign with a contractor, it helps to have an idea of what you want to accomplish. Best practices include identifying examples of work you like (photos or videos), your ideal timeline (considering how long you can survive in a construction zone or afford to stay elsewhere) and, most importantly, your maximum budget. Although contractor laws vary by state, there are a number of universal guidelines to keep in mind. Read on to build your knowledge. 

Skills and credentials: How to choose a contractor

You may have seen the term "contractor" used in various capacities, but not all building professionals have the same expertise. In general, they fall into three categories: 

  • Handyperson: These utility players are great for minor repairs like patching drywall or replacing a broken light fixture. Although a handyperson probably won't charge big bucks for small jobs, keep in mind that hiring an unlicensed professional could lead to additional costs if something goes wrong. As such, you should only hire a handyperson recommended by a trusted source.
  • Remodeler: A remodeler is a construction pro with a specific set of skills. Also known as a subcontractor, a remodeler may specialize in tiling, carpentry, flooring or another type of renovation.
  • General contractor: A general contractor manages larger home renovation projects or new construction. While a GC may have an area of expertise like flooring or plumbing, their primary role is to keep a project on track, hire subcontractors, coordinate schedules, oversee progress and keep the project running smoothly and on budget. GCs usually charge a fee that's equal to a percentage of the total project cost. 

If you don't know anyone personally, you can ask family, friends or colleagues. Or ask around in places that contractors hang out. "Another good source of references are supply stores," said Aaron Schnabel, GC and co-owner of Artisan NW Homes in Issaquah, Washington. "Contact plumbing supply for plumbers, lumber stores for framers or finish contractors and electrical supply for electricians." Schnabel also recommends reaching out for community recommendations through social media. "The Nextdoor app, Facebook remodeling groups and local real estate agents can be good sources of trusted contractors."

Verifying contractor credentials

Before you hire a remodeler or a GC, it's essential to verify their credentials. Visit your state's Department of Labor and Industries website to look up contractor candidates by name. (You can also Google "verify a contractor + (your state)" if you're having trouble locating a search tool.) Once you find the contractor's information, make sure they meet the following state requirements.

  • Licensing: A contractor should have an active license number on file that lists the building tasks they can perform. You may find that many handypersons aren't licensed. That said, some states require them to carry licenses for specific jobs like window washing, gutter cleaning and lawn care. Search for the job's license requirements on your state's Department of Labor website to learn whether a hired pro needs a license to secure the position.
  • Surety bond and savings: A bond is a guaranteed agreement between you, your contractor and their surety company that a job be completed as specified in a contract. As a homeowner, a bond gives you financial recourse if the contractor fails to complete the project -- or you aren't satisfied with the work. In either case, you can file a lawsuit against the contractor's bond. The amount of coverage contractors must have varies by state (and your DOL website should have all of the specifics).
  • Insurance: As a business owner, a contractor must carry liability insurance to cover any damage to your property that may occur during the project. Like surety bonds, the amount of insurance required varies by state, and it's a good idea to contact the contractor's insurer directly to learn what's covered under the policy -- and, more importantly -- what isn't.
  • Workers' compensation: GCs are required to provide workers' compensation for subcontractors in case of injury on the job. Every state has its own requirements based on the type of employment (e.g., full or part-time) and crew size. You can look up your state's law here

While the information above is required for any GC to do business, it's important to understand its limitations. "A license does not imply any expertise," Schnabel said. "It really just implies the ability to fill out a form competently. It's more a sign of business management skills than anything." 

That noted, there are other ways to check in on a contractor's business track record -- and help you suss out potential issues, including:

  • License violations: Contractor duties and abilities are clearly outlined in their license description. Any violation is cause for concern -- for example, if a GC installed electric wiring without hiring a properly licensed electrician. Depending on the severity of the offense, the contractor may pay a fine or have his license suspended.
  • Lawsuits: If a past client has sued the contractor, the type of lawsuit and its outcome should appear under their licensing information.  

How to hire a contractor

Once you've narrowed down your list of candidates, there are a few steps to take as you begin your project. 

Interview candidates

Contact a few building pros to vet their experience and interest in your project. Ask questions you already know the answers to, including how long they've been in business, whether they've ever received a license citation and how much insurance they carry -- all of which you should have learned in your research. Honesty is a valuable asset, and a GC who fibs about their basic business practices probably isn't the right person for the job. 

"When bidding on a project a contractor should provide a detailed summary of the scope and cost of the project," Schnabel said. "It can be in the total cost of the project or an itemized breakdown of all the individual costs."

Other questions to ask include: 

  • How many subcontractor bids will you get for each stage in the project (note: a good GC will provide at least three competing proposals for every job)
  • Do you offer building and product warranties?
  • Can you provide a list of homeowners' references? Where can I see examples of your work? 
  • How will you communicate changes in scope and price? Will I have final approval?
  • In addition to a written contract, what else can I expect from you before the project begins? Will you provide detailed drawings, a construction schedule and price lists for all labor and material? 
  • Once the project is complete and paid in full, will you and any subcontractors release the right to place a lien on my property? 

Consult a construction attorney

Even the most thorough interview is no substitute for legal expertise. Though it may be overkill for a smaller project, hiring a construction attorney can lend credence to your project, ensure that there's a mutual understanding between you and your GC and help protect your interests. Construction law firms specialize in drafting and reviewing building contracts. A thorough GC is likely to hire an attorney to draft the building contract to ensure that the terms are clearly defined and all state laws are met, and it could be worthwhile to add the cost of a legal pro into your construction budget. Most construction lawyers charge a flat fee for document review, and they can advise you of any issues in the contract before you sign.  

Signing an agreement

Once you've found a trustworthy contractor, now comes the exciting part of signing an agreement. In general, a renovation contract should include written confirmation of all the questions you asked during the interview phase, especially: 

  • A full description of the work to be performed and its total cost, including charges for estimates and labor
  • A description of how many subcontractor bids you can expect for each stage of the project, including your right to approve or reject any choice
  • A detailed list of all necessary materials and products, including color, model, size, and brand name
  • Estimated start and completion dates
  • A payment schedule that includes the down payment, subsequent payments and final payment. The GC should also include accepted methods of payment, e.g., credit card, check, etc.

Monitoring progress

Home renovation is a complicated process with lots of moving parts. As a responsible homeowner, you should always take an active role, and there are few ways to keep yourself in the loop. Ideally, your contractor will communicate regularly with you about how things are going, and you can always reach out more often if you have questions. Schabel encourages homeowners to watch out for warning signs along the way. "Someone who is difficult to get ahold of or who can't keep a schedule would be a red flag for me," he said. "Also, someone who can't keep the scope details accurate or changes them without communication. And definitely, someone who can't provide quality workmanship after an opportunity to fix mistakes is a big red flag."

There are a few other ways to monitor progress: 

Verify pulled permits

Call your local permit office or check online to ensure that your contractor has applied and been approved for the necessary permits to complete the work. 

Examine the work

It's your project -- don't be afraid to look at it! While a contractor may hold the reins while your renovation is underway, you have to live with the result. Document each stage by taking photos and asking questions if something looks off. If you aren't satisfied with your GC's explanation of an issue, ask a construction lawyer for their perspective, and include the photos in your request. 

Pay as you go

A trustworthy contractor won't ask you to pay for unfinished work. As you pay for completed progress, audit invoices from your GC by asking for written subcontractor invoices and compare them to the amounts billed by your GC. It's also a good idea to ask for receipts from your GC and subcontractors to ensure that everyone is getting paid on time.

Wrapping things up

Wrapping up a long-awaited renovation can be an anxious time, but it's important not to forget a few critical items amid the excitement. Make sure you check off the following items as you close out the project:

Passing inspection

Any renovation work requiring a permit must also pass city inspections before your GC can move on to the project's next phase. Ask for copies of approved inspection reports before parting ways with your contractor.

Lien release

Once you've paid in full, your GC should provide you with a written lien release for themselves and subcontractors (depending on the wording of your contract). 

Payment receipts

Keeping records of your payments is essential for legal and tax purposes, and if you don't have them yet, request written copies of each paid invoice from your GC and subcontractors. 

Contractor reviews

If you're happy with your contractor's work, leave reviews that allow other homeowners to benefit from your experience, including the Better Business Bureau (BBB) website, social media channels and any other outlet requested by the contractor. 

Dealing with issues

Disputes happen. Whether you're dealing with a miscommunication or arguing about something more serious like the budget, remember to engage your GC calmly and professionally. Failing that, refer back to your signed contract to reinforce your rights under the agreement. If the issue escalates, talk to your construction attorney about the next steps. If you haven't hired a legal pro, you can also report any contractor issues to your state's Department of Labor.