10 things contractors won’t tell you
Learning a few tricks of their trade will help you ensure you get the job done right and at a fair price.
1. “My license is laughable.”
When you hire a general contractor to build an addition onto your house, you probably assume you’re getting someone who has spent years learning his craft, giving him the proper credentials to saw a hole in the side of your den. In reality, you could be getting a madman with a toolbox who answers to no one. That’s because only 27 states have any state-licensing requirements — and where regulations do exist, they vary. In California, one of the stricter states, aspiring contractors must have four years’ experience, prove their financial solvency and pass a written exam to become licensed, whereas in South Carolina, they need only two years of experience along with an exam and submission of financials. Maybe the disparity helps in part to explain why the Better Business Bureau received 1.1 million inquiries in 2006 from people seeking “reliability reports” on specific contractors — to ensure they were trustworthy enough to hire — ranking them third among industries for that request, according to the Council of BBBs.
So how should you shop for a contractor? Ask for and check references, of course. One good resource is Handyman Online, a referral service that can connect you with contractors in your area who are legitimately licensed, carry liability insurance and have at least three references. And Tom Pendleton, owner of McLean, Va.-based consulting firm The House Inspector, offers this advice: “Close to 95 percent of home-improvement contractors go out of business or change their name within three years” due to consumer complaints or mismanagement, he says, “so you want a contractor who’s been in business under the same name for more than three years.”
2. “Our contract favors me …”
When it’s time to sign on the dotted line, most contractors will present you with a boilerplate agreement based on one created by the American Institute of Architects. It lays out the job’s details, including its scope, materials to be used and a payment schedule. Not surprisingly, according to Mark Levine, co-author of “The Big Fix-Up,” a consumer guide to home remodeling, some contractors will set up a schedule that puts your payments ahead of the work. “When (a contractor) has received 50 percent of the money for 25 percent of the work, that’s when he stops showing up as often,” he says.
Levine suggests a plan such as paying 10 percent down, 25 percent when plumbing and electrical work are done, 25 percent after cabinets and windows are finished, and 25 percent for flooring and painting. “And don’t hand him the last 15 percent on his final day,” Levine says. “It’s called ‘retainage,’ and you should keep it for 30 extra days just to make sure everything is working the way it should.” In addition, if the job is big enough — say, $50,000 or more — Levine suggests investing in four hours of attorney fees to devise a contract that includes a fair payment plan, with retainage, and stipulates that disputes will be settled through arbitration (the quick and easy way to do it).
3. “ … so I can take your money and run.”
Mark Zarrilli decided to enhance his Wall, N.J., home by putting a new path around his swimming pool. It was an $11,000 job, and he paid $7,000 upfront to the contractors — supposedly for materials. “They brought somebody in to do the preliminary brickwork, then played a duck-and-run game for three months,” Zarrilli says. “They’d tell me the truck broke down, the wife was sick, the cement company couldn’t deliver. I’ll never get my money back.” Zarrilli took the dispute to the Monmouth County Prosecutor’s office, who charged the contractor with theft by deception. (The contractor eventually pleaded guilty.)
Mark Herr, former director of the New Jersey Division of Consumer Affairs, calls this alleged scam “spiking the job,” and it’s one of the worst possible outcomes when you’ve signed a contract that includes a front-loaded payment schedule. “By completing a little bit of the work, they can face only civil rather than criminal charges,” Herr says. You might get sucked into such a scenario if your contractor tells you — like Zarrilli’s did — that the upfront cash is for materials. “Typically,” Herr says, “that happens because the guy needs to pay upfront for goods since he has no credit, probably because he screwed up somewhere else.” Your pre-emptive strategy: Offer to have the materials delivered to your house and to pay for them C.O.D.
4. “Bargains don’t exist in my world.”
Before hiring a contractor, you’ll probably solicit various bids. If one comes in much lower than the others, it’s natural to think you’ve lucked out, but that’s not necessarily the case, says Lisa Curtis, former director of consumer services for the Denver district attorney’s office. Because of the fixed costs of materials and labor, a stunningly low bid is a red flag.
Common tactics include starting a job based on a bargain-basement price, then telling the customer that the work is more complicated (and more costly) than originally thought. Then there’s the contractor who quotes a price that includes windows he knows are of poor quality; once the job is under way, he’ll present his client with what is clearly a better window and talk him into upgrading. “Ultimately,” Curtis says, “you may pay more than you would have with a reputable person who started off at a reasonably higher price.”
5. “I’ll be back when I feel like it.”
So you found yourself a good contractor. Terrific — but here’s the bad news. When contractors are busy with multiple jobs, as the best in the business inevitably are, you can pretty much expect the schedule for completing your job will go out the window. “If the contractor’s got too many jobs going,” Pendleton says, “the workers might only be in your house for two hours when they should have been there all day.”
One way to guarantee that your job won’t stretch to Wagnerian lengths, he says, is to hire a contractor with a lead person or project manager, “a working supervisor who is on the job from beginning to end.” If the job drags, the contractor still has to pay that person, so it “becomes in the contractor’s interest to finish the job,” Pendleton says.
I just love threads that turn into bar room brawls. It just lets all the aggrivation of the day flow right out and I find myself smiling again.
MSN, your article smellslike it was written by a computer tech nerd that thinks hammering and nailing are dirty words. Your throwing contractors a bad line and many don't deserve that. Most contractors are generally decent. When you hire someone you just met to do a job for you, don't be so nieve that everything will turnout ok. Think of the process you may of went through to get a job in your own field. Personally I feel we give way too much information out to strangers as it is, but you need to research a little about what your throwing cash at. People try to take advantage of others because of issues they have and if it is a contractor doing the taken then the person hiring him did not do his job well by checking him out first. Now after an issue happens where someone got taken, it almost always will guarantee that the next candidate in line will pay for the first ones bad ethics in work related self respect and the respect of others. Try not to throw the entire field into the stink hole because of a bad experience. No matter what type of labor field you look at, you will find people that are the reason the stink hole truly stinks.
In the fields I have worked in, include, Lumber industry, Trucking industry, Building and construction industry. I can see a bad contractor sticking out from the rest pretty easily and any type of second thought feeling you may get needs to yield your final decision made on hiring him. The line I like to use most when I can see a questionable contractor is...You can never shine up a tird.
hey, i am in trouble now for second time .
my house burned down, my insurance told me one company that can take care my house and told me that all i have to do is let him take care it, after i sign a contract with contractor #1 this people was stealing from my house and when i report it to the president of the co i was told that isn't my problem that all in my house was reported by the insurance to be lost/damaged by the fire. i mention this to insurance and they do not do anything. after they did cleaning and demolition, they told me that i have to sign another contract because was supposed to start the reconstruction part, I did signed, But after some issues and son information from friends I found out that i was getting money out of my scope to be on the benefit of the contractor, a lot of thinks started to be discovered, this contractor make me sing a contract with someone else who was using another contractor license, then i try to report this and no one care about, after all i had to re-hire this contractor with what he told me was his real information because if i don't do it my insurance was stepping out, the cancel my ALE , and told me that i was on my one for the rent, i did hire this man again under contract and he told me that the work was to be completed 30 days after i sign the contract, 2 weeks after our contract time was pass i had to move out of the house that i was renting because they require lease, the contractor told that the house was going to be ready that week, that go to a hotel for 1 week and we will be at the house, 1 1/2 pass i still in the hotel, he now tried to call the bank and add his name in the check that we will be getting to pay him from the bank, called the county and stop my last inspection because i do not want to sign a document that he just talk to me about letting him get all payments that he invoice the bank with his name too, he wanted to receive and send documentation to the bank has well and when i told him that we will not sign he called the county and told them that i do not wanted to pay. no lawyer wanted to help me, now i got one that asked for 1 thousand just to make couple letter, and i did that. i contacted the board of license, the county, BBB, city hall, an architect no one is really helping me, PLEASE IF U KNOW WHAT CAN I DO PLEASE TELL ME. North Carolina resident
Wow look at all the "Honest" contractors coming online to say how the poor old customer is screwing them over. I have 6 friends who ALL have horror stories about contractors. 2 of them went "bankrupt" and shutdown shop after only completing HALF the job. Sorry in this economy anyone with a hammer and saw thinks they are a contractor. I am currently going thru an issue right now!! I have been nothing but nice, paid over 75% of the funds even when only 10% of the work was completed. I mean I was then told by one of his subs that he was going to walk on the job if he hadn't shown up to bail him out!!. Seriously?!?!?!?!
Same standard game. No one shows up for days/weeks. I call, text, email and no response. A million different excuses why they didn't come out like they SAID they were after we cancel appointments to accommodate them.
I found out from 3 other contractors, the inspector, AND MY LAWYER that my contractor is trying to charge me extra for items that are required for code and are actually included in the contract already. (He didn't pour the foundation right, etc, etc). I'm not trying to screw anyone but don't lie to me and charge me extra for items that were REQUIRED by you. If you failed to plan and didn't know your job then live with it and move on to the next job with the knowledge. Don't try and rip me off. Sorry I think more contractors screw customers. You want to charge for things that anyone would assume is included in the bid and then get indignant "You know that was extra!!!" Did you get a change order in writing?? Did you amend the contract showing the change order was signed and approved?? Are you trying to get a change order for something that you should be doing anyway without charging extra since the customer won't know better anyway?!?!? A change order is the golden ticket. You bid low knowing you are going to make it up on something you will find when you have a huge gaping hole in the property. What is the customer going to do? You have most of the money already and they are now stuck with a "Whoaaa we didn't realize we would have to follow code here so you need to give us an extra $4000 or we will just quit this job and you can try and sue us for the funds you paid. And oh yeah find/pay someone else to finish what we started. Have fun trying to collect from us and double paying for the job. :P".
Unless you work with a big name contractor your risk of getting raped is 50/50 in my mind. Plus then they get indignant when the customer doesn't want to pay for something they feel they shouldn't (and both a lawyer and the city has said you should not have too) and try and slap a mechanic's lien on the property. Really??? Will go to arbitration / court immediately if you try that with me. Plus expect to defend yourself in a civil suit right away and I will also pursue any criminal/legal charges I can. Expecting you do your job right is not unrealistic expectation from the customer. To many hacks make the good contractors get a bad rep so do your job RIGHT and everything will go well. If my job wasn't so far overdue and done RIGHT the first time I would have gladly paid the additional funds requested even though I found out later I should not have too.
if u want a car that handles well, has good power, premium interior - you pay more for it
if u want a pair of boots (or shoes) that are comfortable, will last, and keep your feet warm/dry - you pay more
nowhere is it more true than in construction that you truly get what you pay for...i have turned down more jobs lately (both commercial and residential) when a client shows me a one line-item competing estimate and wants me to match their price, and my profit margin and overall earnings are continuing to climb. My clients see a detailed estimate of all materials, subcontracted work, my fee, and my charges for supervision and management, accompanied by a written proposal detailing exactly what is included, excluded, quality/specifics of materials, proposed duration, clauses for unforeseen conditions, and change order procedures (to include allowable charges and fees).
There are bad contractors out there who make it bad for all. But there are many more bad homeowners and owners who expect us to finance their fancy, then change things for next to nothing because they could not communicate their "vision". Here's the trick - as contractors we need to make sure our clients understand exactly what they are getting. As homeowners/owners, you need to make sure you understand exactly what you are getting - if you don't, ask questions - we are more than happy to explain things - even if it takes a few times. It makes for an overall satisfying experience for you, and a quality and profitable job for us (yes, we are in business, like many others, to make money).
As a reputable contractor for 26 years it find it laughable that anyone these days gets caught in the messes that you suggest and the use of a Lawyer to assure a good end result only creates more problems. Enough with Lawyers already.
Find a friend that had a good experience and do your homework. I have a friend in Spring Lake that is a Computer Programer that was able to build his own home with little knowledge of the business. He asked those he knew who they would recommend and has had little trouble acting as his own GC.
As for retainage. This might be fine in building a Hospital or Shopping Mall but why should a plumbing, concrete or electrical sub-contractor have to wait until a project is complete to get his full payment?
Why do we pay taxes for inspectors? If it's passed inspection its Ok and should be paid for.
Every downturn in our economy brings on more fear based articles like this. Be proactive and you will find reputable people.
MSN, you should be ashamed of yourself for writing such a biased, poorly researched, fear-based article. PONO CABINETS' article is correct and should be published in its entirety.
I am an Interior Design who specializes in building and remodeling. I have worked in the construction industry for 45 years and have been privileged to work with great builders and remodelers. They have several things in common: 1. They are not cheap. After they pay all the government entities that want a piece of your remodeling pie, so they have to charge more. 2. They comply with all local, state and federal building codes. (see #1) 3. They are busy. (How many of you expect to call your doctor and expect to get an appointment tomorrow?) If the contractor is any good, he is not sitting around, honing his web site waiting for your call. 4. They try to understand and price what you are telling them you want; unfortunately, the average customer does not know what he/she wants.
The solution is simple: Hire a Designer or an Architect or a Design/Build Remodeler. Pay them to help make selections, drawings, specifications and prepare all the contract documents. Then, if you still think that the cheapest remodeler is the same thing as the best remodeler, go for it! At least you have prices based on the same set of specs.
Oh, and as for licensing . . . anyone can pay to get a license. Experience is the only teacher; the rest is just hearsay.
The "retainage" statement is laughable. Easy enough for a grand stander to suggest a client keep 15 percent of a project for 30 days. For what? Try this with Ford or any other company for that matter. It's what warranties are for. I've already paid out all of my expenses on the project have lien releases to prove it.
In short, this article infers that most contractors are simply con artists that have nothing better to do than screw people and ruin their own reputations. And that couldn't be any further from the truth.
Thank goodness, I thought I had fallen into a parallel universe. Poor contractors. As a home owner, my experience has been telling. Three experiences with contractors. The first one took advantage and took items from my home. The second one was hit hard by the recession and after a good beginning, tried to over-charge for his services. The current contractor does a great job for a reasonable price. A friend recommended him.
The MSN article did not mention taking recommendations from friends and checking the work history. That's always a great idea.
Thanks nailgun for your explanation of the mess we're in. Unfortunately, people forget, especially if they are Republicans.
1) Payment schedule, while negotiable before the job starts, should be: 25% to 35% due and payable, in cash or certified check, on the day the job starts; another 25% due on the same basis either when the job is 1/3 done or the day the bulk of the materials are delivered; another 20% - 25% due and paid when the job is 2/3 done or the day of "final close-in" of the exterior or of interior walls; final payment due and paid at completion of job plus 10 days (for inspection/walkthrough with punch-list/correction of minor problems).
2) No work commences - at any point - until a full description in writing is signed by both contractor and payee/customer. Description should include a projected start-date and a probable finish-date.
3) In addition, a part of that same written agreement will be an agreement that any and all disputed over payment, workmanship and/or completion will be subject to a binding arbitration process administered by the state licensing board (or similar organization), and that a "workman's lien" is explicitly accepted and agreed to by the payee/customer until all payments have been made to contractor.
4) Whenever and wherever possible, doing work of any kind for doctors or lawyers or their spouses (or their close relatives/friends, for that matter) should be avoided like the Kiss Of Death - I've never worked for one of them who didn't, sooner or later (mostly sooner) try to screw me to death, including, on one occasion, my own family (general-practice) doctor.
Those are minimum guidelines, remember...
I've been a remodeling contractor for 19 years now, and while homeowners can really be sneaky sometimes, I've never had much trouble getting paid for my services. Here's why: first, I write a tight contract and stick to it; second, I keep excellent communication with the homeowner on all aspects of the job...scheduling, extras, problems; third, I do what I say I'm gonna go, and I keep the quality very high, so there aren't any complaints; lastly, if there are issues, I resolve them immediately. Happy customers usually know they gotta pay you.
As for homeowners, the single most important thing they can do to protect themselves is to CHECK REFERENCES. Plus some common sense should tell anyone not to give a guy all his money up front, then wonder where he's gone to.
Lastly, I'm a proud Democrat who endured the failing policies of Bush/cheney et al for eight years. If you don't think their policies failed then you weren't paying attention. Obama? Well, 6 months in office is not long enough to make a judgment, so I'm willing to give the guy adequate time before I get negative about his performance. That's only fair.
Instead of writing to dispute the article...you should be at the work site doing what your were hired to do, coordinate and get it done. Bunch of cry babies. Without the home onwer wanting to spend the money, you wouldn't have a living.