In 2004 in the U.S., homeowners spent $544 billion dollars building, remodeling and, improving their homes. Roughly 85% of these costs on average over the past five years was paid to contractors.
Yet, when hiring this work, many people will do less research than they will if buying a new TV or camera. Too frequently, logical, smart people make common mistakes every day contracting trade work, needlessly costing themselves thousands of dollars. I should know; I am one of them.
So I offer to you my advice. This is my list of 10 Don’ts from my personal list of foolish mistakes made during the course of many home building and addition projects – including my own home.
1. Don’t Set the Size of Your Project According to the Size of Your Budget
If I can identify the one mistake that has caused most of the problems we have encountered in building and remodeling houses, it is this one. Trying to do too much on too little, causes you to believe the contractor who says sure you can do all this work for an unrealistically low price, to hire subcontractors with too little experience, and to get taken by the con artists.
2. Don’t Get References and/or See Previous Work
Why do homeowners consistently spend enormous amounts of money on home repair or building projects without getting references and seeing a contractor’s previous work before hiring him? You’re not being rude by asking for these things. You’re not insulting the contractor. You’re being smart.
3. Don’t Get More than One Bid
The popular wisdom regarding bids is to get five, throw out the lowest and highest bids, and negotiate the ones in the middle. That’s excellent advice and fine in theory. But if you remotely have any kind of life at all, you’ll find this advice next to impossible to follow.
My advice: Unless you are hiring a general contractor, get about two or three bids for each trade. If one of the three is totally out of line, dismiss it. If one of the three is a bit higher or lower than the others, ask some probing questions to find out why. Most importantly, make sure everything is covered and that allowances – the amount contractors estimate for things like lighting or plumbing fixtures that you select – is reasonable. If not, eliminate that bid from consideration. If you have two that are reasonably comparable, you are likely in the right ballpark. The next step is to question the contractor that everything is covered and to ask for references.
4. Don’t Get a Written Quote or Estimate
You’d be surprised how often written quotes are not provided, especially on small jobs, where the contractor is the only employee, and on change orders. In any case, get the quote in writing. It protects you from extra charges and incomplete work. Once the contract is signed, the contractor loses the right to quibble about the terms later. This includes you too. You have just signed a contract. Just as if the contractor misses something, if you forget an item, clause, or caveat, you too are out of luck, so make sure you read the contract thoroughly and do not just sign it.
5. Don’t Get Written Time Frames or Deadlines with Penalties for General Contractors and Construction Managers
This won't be easy, but still try it. Work with the general contractor or manager to set the terms and reasonable cushion for rain delays and unexpected events. Also define "completion." I recommend using the issuance of a final occupancy permit by the local municipality for building or large additions or when the final inspection passes. For smaller projects that aren't inspected, agree to a definition such as when everything is working and the punch list (small remaining items) is complete.
The penalty can vary from a reduction on the percentage paid on the final draw (for a construction or general manager), forfeiture of the remaining payment, or an agreed upon dollar fine or percentage of the job in total – all to be deducted from the remaining and final payment.
6. Don’t Get Lien Waivers After Each Payment or Pay Directly
If you are working directly with the contractors, rather than using a general contractor, you should pay each trade directly. There are construction managers who coordinate a job, but legally you are still the General Contractor, and you will sign all contracts and pay all contractors. You may elect to use a title company for paying the trades if you are using a General Contractor, but I don't feel it's necessary if you plan to pay each contractor directly.
When you give a payment, require a signed lien waiver in return. This is the sub-contractor’s official acknowledgement of a payment - deposit, partial, or final. The rule: No waiver, no payment.
7. Don’t Have a Clear Plan or Understanding of What You Want
The first rule of home remodeling or building is “Nothing Goes as Planned.” No matter who makes the mistake – the architect, trade, you - all of these situations will cost you time and money generally. You will make matters worse if you cannot quickly collect the information you need to make a decision and then make it. And don't remake the decision.
Once the project is underway, you may realize something needs to change as to not compromise the entire project or the appeal and functionality of your house. Make it and move on, but remember, the more you change things, justified or not, the more you delay your project and overrun your budget.
8. Don’t Go By Every Day and Visibly Inspect the Work
Being visibly involved and interested in a remodeling job – and especially in a building or addition project – helps in two ways. First, you know progress is being made, and you can potentially spot problems and errors before they become too big to fix or too extensive to be manageable. Second and admittedly more cynical, everyone works a bit harder when the boss is around. Even if you hire a general contractor or project manager, it is your house and your money, so you are the boss.
Even if your project is a small job, this rule applies. If you are home all day, do not stalk the contractors or watch over their shoulders. Let them work, but pop your head in, ask a question, give a compliment. If you are not home, check that night and ask questions or give feedback – positive included – the next morning when the trades arrive. If you use a project manager or general contractor, contact them throughout the week with questions and ask for a daily site report or weekly log. The important point to all of this is to let them know that you care about the work and that you are following their progress.
9. Withhold Payment until After Appropriate Inspections Pass.
The key to getting contractors to do what you need them to do is to maintain the leverage of paying them. You must be careful not to pay ahead of the work completed. Some contractors will require a downpayment. Try to avoid this if you can, but for some trades, this is a necessity, especially those that must get supplies in advance – masons, carpenters, drywallers, and often electricians and plumbers. Others do it to ensure your commitment because they will turn down other jobs in order to schedule yours.
Before you make another payment, or any payment for that matter, be sure that your payouts are proportionate to the work done to date. For example, if the framer has only framed a third of the house, do not pay half of the contract. In addition, there are plenty of small things in most of the trades that take time, are often done at the end, and are not immediately obvious to one not in that trade. In addition, do not make an interim or final payout until key inspections have passed, especially the final inspection.
10. Don’t Treat Good Contractors Well or Cut Losses Quickly with Bad Ones.
Another reason not to overpay a contractor, or to pay in advance of work completed, is it becomes harder to get rid of him if he does not perform because you lose leverage and because if you fire him, you will have to pay someone else to do the work you already paid to the original contractor.
It is a tough call to fire someone because you essentially have to start over with that trade. However, if someone is doing a lousy job or ripping you off, get rid of him fast. Conversely, treat the good ones well. Give them repeat business. Refer them to others. Be loyal. When they need it, cut them some slack.
Because considerable amounts of money are involved, you owe it to yourself to study up before taking on this work. It’s simple advice, yes, but being reminded and forewarned of how easy it is to fall into these traps will hopefully prevent you from making these mistakes. I have learned something in each home remodeling and building project we have done - usually through mistakes. Hopefully, you can now avoid some of these critical, yet common, mistakes and save yourself considerable headache and frustration. Despite the amount of stress and frustration involved in a home building or remodeling project, the investment in your home will be worth it. Good luck!