4 steps to prevent a remodel gone wrong (© Steven Errico/Getty Images)

With the real-estate market in the doldrums, many remodeling contractors are trying to drum up business by offering discounts to homeowners. But that remodel "bargain" could turn into an expensive headache if the newly installed kitchen cabinets are crooked or the basement contractor disappears after the deposit check has been cashed.

"I see a lot of homeowners who are eager to get to the end result of a finished product, but they're not as eager to do the proper pre-planning and pre-screening of contractors,” says Monica Higgins, founder of Renovation Planners, a Los Angeles-based certified construction-management firm.

"The reality is, with remodeling jobs, you need to go through a thorough process in order to get to a satisfying finish," she says. "Too many homeowners are hiring contractors for jobs, and they're finding the work doesn't meet their expectations."

There are ways to help prevent or remedy a remodel job gone wrong. Here are four steps that experts say homeowners can take to help resolve a bad situation.

1. Do your research before the job starts
Performing due diligence beforehand reduces the chances of having shoddy work done on your home, Higgins says. This includes contacting several potential contractors until you have a list of at least three strong candidates.

Read:  10 things contractors won't tell you

"Don't just call a few people and decide which one you like best," Higgins says. "You may need to interview 10 companies or more to come up with the list of three contractors you'd feel comfortable working with."

Once you have your potential contractors, ask them hard questions, Higgins says.

"Many homeowners have a tendency to only ask a remodeler if they're licensed and how much they charge," she says. "Those are important things to know, but there are so many more questions that should be answered."

counter top

Bing: Search & decide

Higgins suggests doing a little research to find out if the contractor has ever filed for bankruptcy under any company name, past or present.

"Also, ask how long have they been in business, and if they've worked in your community before," she says. "If the contractor has worked in your neighborhood previously, they'll probably want to protect their local reputation and do a good job."

Check out the contractors' references and examine their recent work, Higgins says.

"Look at their current works in progress, and, if possible, look at work the contractor did five to 10 years ago to see how the job held up," she says.

See video related to: 1e9fdaf4-95a9-4c56-86e0-a3efad60017f
This video requires the Adobe® Flash® Player. Download a free version of the player.

Another way to prevent problems down the road is to make sure the contractor knows your expectations. Many times, the homeowners are dissatisfied because the finished work wasn't what they envisioned, Higgins says.

"Ask the contractor if they can create computer-generated pictures to help you understand what the finished product will be," she says. "It's easier to make changes to a digital model than to the actual construction."

When you're ready to select your top choice, check with your state license board to verify that the company and its workers are properly licensed.

Also ask the contractor to provide proof of adequate insurance, says attorney Joe Cavasinni, chairman of Reminger Co., L.P.A.'s Construction Liability Practice Group in Cleveland. Adequate insurance for contractors includes two types of coverage: general liability insurance, which protects against injury or damage done by the company; and worker's compensation, which protects workers from injury on your property, Cavasinni says. These policies don't protect against poor workmanship but can offer protection — both for the company and the homeowner — if a major problem arises.

"It's not uncommon to find that some contractors who don't fulfill their contract will go out of business before the homeowner can pursue their complaint," Cavasinni says. "Then, they resurface a few months later under a different name."

With a proper policy in place, the homeowner could pursue a claim through the contractor's insurer instead of trying to hunt down that company, he says.

2. Document everything
Once you select a contractor, work with him or her to craft a written timeline for completion, including milestones to be met along the way, says Bob Gullo, president of Electronics Design Group, a technology systems contractor in Piscataway, N.J.

"Document whether or not they are coming to work on the days they're scheduled to come, and if not, if they are calling to let you know beforehand," he says. "If you leave them a message, note how long it takes them to return your call. If they're not very responsive, it should be an immediate red flag."

Make sure that they're using products they promised to use and that they're not cutting corners. Homeowners also should regularly review the cost of materials, Higgins says.

"Look out for cost overruns, so that you're not unpleasantly surprised when the final bill comes in," she says.

3. Raise concerns immediately
If you discover problems, promptly bring documented concerns to the attention of the supervisor or general contractor on site, Higgins says.

"Use your notes for reference and say to them, 'I'm not happy with this work and here's why,'" she says.

It's possible a problem could arise that's beyond the contractor's control. For example, he or she may find unexpected structural damage that must be addressed before the project can move forward. If that's the case, it's probably up to the homeowner to deal with the problem, Higgins says.

Read:  4 tips for hiring contractors (and 10 ways to avoid scammers)

However, promptly address the issue if regular work seems to be delayed without a good reason, or the work doesn't look as if it's going according to plan. Whatever makes your project take longer to get done right is going to cost you money, she warns.

"Give the contractor a chance to respond, but keep it within a short window — about 24 to 48 hours," Higgins says. "Set the expectation that you're giving them a certain amount of time to fix the problem, but you won't let it go unresolved."

4. Escalate if necessary
If the work problem hasn't been adequately resolved in a reasonable time or the contractor is unreachable, the next step may be legal action. Review your contract to determine how to proceed.

"Many contracts will state that before a party can file suit, the homeowner must try to solve the conflict through mediation," Cavasinni says. "This is when all parties involved meet with an independent third party for the sole purpose of trying to resolve the claim."

Professional Services

Find local plumbers, electricians, contractors and more.

Usually the homeowner starts the process by making a formal demand for mediation with the contractor, according to the terms of the agreement, Cavasinni says. Then, during mediation, each party makes its case. The mediator goes back and forth to try to get both parties to settle the claim.

"If everyone agrees to resolve the issue, then great, there's no need for one party or the other to file a lawsuit," he says.

However, "the mediator does not make a binding decision about who wins or loses," Cavasinni says. If the parties are unable to settle their differences, the next action could be arbitration or even a lawsuit.

The homeowners’ signed contract will often indicate whether they can file a lawsuit in state court, or if they agree to file a claim in arbitration instead, using an entity such as the American Arbitration Association, Cavasinni says.

"Arbitration is probably best thought of as a private trial," Cavasinni says. "Instead of trying a case and having the jury decide who wins and who loses, and how much money is owed (as with a regular lawsuit), arbitration typically involves a three-member panel of arbitrators."

An arbitration panel's decision is binding on the parties, Cavasinni says.

Going through arbitration or a lawsuit may be worthwhile only if a large amount of money is involved, because attorneys' fees may not be recoverable, even if the homeowner wins, Cavasinni says.

And according to Cavasinni, the cost of a lawsuit could reach up to $30,000 or $40,000, with the case taking up to two years or longer to be resolved.

"I tell my clients that if there's a way to fairly and reasonably resolve the claim without resorting to litigation, I would do that," he says. "Once you get into litigation, in large part the only ones who win are the attorneys."