10 things contractors wont tell you - MSN Real Estate

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real estate 10 things contractors wont tell you

Learning a few tricks of their trade will help you ensure you get the job done right and at a fair price.
By SmartMoney

1. My license is laughable. When you hire a general contractor to build an addition onto your house, you probably assume youre 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. Thats 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. Read: 4 tips for hiring contractors (and 10 ways to avoid scammers) 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 whos been in business under the same name for more than three years. 2. Our contract favors me When its 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 jobs 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, thats 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 dont hand him the last 15 percent on his final day, Levine says. Its 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. Theyd tell me the truck broke down, the wife was sick, the cement company couldnt deliver. Ill never get my money back. Zarrilli took the dispute to the Monmouth County Prosecutors 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 its one of the worst possible outcomes when youve 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 Zarrillis 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 dont exist in my world. Before hiring a contractor, youll probably solicit various bids. If one comes in much lower than the others, its natural to think youve lucked out, but thats not necessarily the case, says Lisa Curtis, former director of consumer services for the Denver district attorneys 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 theres the contractor who quotes a price that includes windows he knows are of poor quality; once the job is under way, hell 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. Ill be back when I feel like it. So you found yourself a good contractor. Terrific but heres 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 contractors 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.

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One way to guarantee that your job wont 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 contractors interest to finish the job, Pendleton says. 6. Your last-minute changes are my retirement fund. Steve Velasco, now a project manager for a Southern California civil engineering firm, once worked as a carpenter on a residential job in which the homeowner, just after the house had been fully framed, pointed to a peak in the roof and casually asked, Wouldnt a window be nice there? As Velasco recalls, The architect told us to go ahead and do it, and suddenly, he had spent $10,000 of the homeowners money. Why so much? Because making changes in the middle of construction is the most expensive way to proceed, since work has to be undone and redone to accommodate the new plan. Indeed, Baker has described while youre at it as the four most expensive words in the English language. Architect Richard Hornberger advises that you spend time on the front end devising a plan, then commit yourself to living with it. And if you need to make a change, do it the way architects do: Give the contractor a proposal request, in writing, he says. Then, in writing, you get back a change order that lays out what will be done, how much it will cost, and how much additional time it will take. 7. If it looks good, I dont care if its done right. Unless you have X-ray vision or the time to spend days watching your contractors in action, all you may ever know about your job is whether it looks good in the end. Evelyn Yancoskie, director of consumer affairs for Delaware County, Pa., knows of at least one family in her area who got a new roof that, indeed, looked just fine. But the roof was lacking a key element: an ice shield, a three-foot- wide rubber lining thats crucial for a roof in this part of the country. The contractor figures that nobody will miss it anyway, Yancoskie says. But if you get a cold winter, any water that gets into the gutters will freeze, back up onto the roof, and go underneath the shingles. Without a shield, the ice under the shingles melts and leaks into your house. Contractors may also cut corners by skimping on insulation, but packing it with care so that it looks filled in; leaving out plumbing lines and pumps that give you hot water fast; and using low-quality wood, but laying it beautifully so that you dont notice. Guys will use substandard plywood, shingles, siding, Herr says. In situations where homeowners arent likely to ask whats going on, contractors use subpar materials. Or just do a subpar job. What can you do to prevent this sort of behavior? Check with your states department of consumer affairs to see if, like New Jersey, it requires its contractors to be registered meaning theyre insured, must use certain approved language in contracts, agree to list specifics about materials being used, provide start and end dates for a project, and generally operate with full disclosure about their practices. Registration (with a state board) is really key legal protection for consumers, says Jeff Lamm, a spokesman for the New Jersey Division of Consumer Affairs. Otherwise, you should always get multiple estimates on a project and never settle on a contractor without checking references carefully. 8. I delegate to novices. Herr recounts the tale of a family that wanted their kitchen redone in time for Easter. One night before the holiday, a subcontractor was sweating to install the garbage disposal. When asked why the job was giving him so much trouble, the worker replied, When they showed me this morning at Home Depot, I thought I understood. The story points out a big problem: Its not just your contractor you have to worry about but also the subcontractors whom he hires to do the actual work. You need to know in advance who the subcontractors are, Herr says. You cant let the contractor sub anything out without your permission. Levine suggests taking things a step further: Visit homes in which your contractors carpenter has done the finishing work, and if you like what you see, get it in writing that that particular guy will be hired. Look to see if there are tight joints in the molding, if cabinets are screwed into the walls rather than nailed, if margins between doors and frames are even all around, Levine says. Those are signs of a good finish carpenter, and they serve as a litmus test. A general contractor who has a real pro doing his finish carpentry is probably hiring real pros to do other stuff as well. 9. If I come knocking, youre better off not answering. Courtney Yelle was in his Bucks County, Pa., yard raking leaves when a gleaming pickup truck pulled into his driveway. Yelle says that a clean-cut workman emerged and told him it looked as if his driveway needed to be repaved which, Yelle admits, was the case. But before he would commit, Yelle, former director of Bucks County Consumer Protection, said hed need a written estimate along with the workers phone number and address. The guy said hed leave it in the mailbox, according to Yelle, then backed out of the driveway and disappeared forever. Yelle says that the worker was a seasoned scam artist who approaches peoples homes offering to do jobs at bargain-basement prices, often on the premise that he has leftover materials from a nearby project. In reality, if he does the job at all, hell do shoddy work with low-grade materials, says Wendy Weinberg, former executive director of the National Association of Consumer Agency Administrators. While it sounds like common sense to be suspicious of solicitors, clearly these curbside con artists can be convincing: Curtis estimates they bilk homeowners out of $20 million per year in Colorado alone. 10. Im an environmental disaster. Say you have a contractor in your home, replacing those ugly acoustic tiles that have covered the rec room ceiling for 20 years. Early into the job he realizes that the tiles contain asbestos. If hes responsible, hell insist that the poisonous materials be taken out by a licensed asbestos-removal contractor. This will take time and could cost you thousands of dollars; if hes less than honest, hell ask for an extra few hundred bucks to do the job himself. The problem with the latter solution: Even if the contractor doesnt make a mistake and release particles of cancer-causing dust into the air in or around your home, the long-term repercussions are serious and may have legal consequences for you. Contractors who arent licensed to deal with such materials cant dispose of them at licensed (and, thus, safe) facilities, says Ross Edward, a spokesman for the Massachusetts Department of Environmental Protection. If hazardous materials arent disposed of properly, they could leach into soil and ground water. And if your contractor gets caught dumping toxic materials this way, you may be liable, since the pollution came from your property. These days, Edward says, the homeowner has just as much responsibility for the environment as any factory owner. This article was written by Michael Kaplan for SmartMoney.

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