How to Find a Contractor

Renovating your home can be stressful but hiring the wrong contractor can make it a nightmare.  Before hiring a contractor do some research to ensure you have the right contractor for the project and for you.  Remember though that following all the right steps doesn’t mean you won’t have some problems, but it can help to alleviate some of the issues.

Clearly Define What the Project Will Include

Before talking to a contractor, clearly define what the project will include and what results you expect.  If you’re unclear, do some research on the internet to find out what aspects of the project you need to consider.

Make a list of what you expect and what type of materials you want used and present this plan to the contractor(s) when asking for estimates.

Find the Right Contractor for the Project

In California a licensed contractor is needed for any project that is valued at $500 or more including materials and labor.  Even though your project may be under $500, it’s recommended you hire a licensed contractor anyway to save headaches later.

You can check on any licensed contractor through the Contractors State License Board (CSLB). 

Depending on the project, you can hire a general contractor, who can hire subcontractors specializing in plumbing or electrical, or a specialty contractor if your project is plumbing or electrical work only.

Research Various Avenues When Looking for a Reputable Contractor

The best source for finding a reputable contractor is to ask for a referral for family or friends. Ask them what type of project the contractor did and if you can see it. Ask them what they liked and didn’t like about the work and the contractor.

Besides referrals, use other sources as well.  Research contractors online through various online sites such as Angie’s List, homeadvisor.com, and even the Better Business Bureau. Check your state licensing site for any complaints against contractors.

Once you’ve found a sample of contractors, ask the following questions:

·      Have you completed other projects like mine?

·      Do you have a list of references/clients I can contact?

·      Are you licensed to work in my area?

·      How long have you been in business?

·      Do you carry insurance for workers compensation claims, property damage or personal lability?

Most contractors will happily answer these questions and be impressed that a client would be interested in asking them.  However, if a contractor starts to hem and haw or refusing to answer, move on to another contractor.

Get an Good Estimate

If possible, get at least 3 estimates that include cost and a timeline. Be careful of estimates that have high costs or low costs.  Do your own research on material costs so you have an understanding of what the real costs.

If the timeline is too short or too long, move on.  Some contractors are so busy, they may not be able to start your project right away, but if the timeline is reasonable and you’re willing to wait, consider them.  However, if the contractor wants to start right away with a timeline that is too long, move on.  On the other hand, a timeline that is too short means the contractor is not able to do a thorough job for you.

Don’t be afraid to negotiate costs.  However, wait until you’ve chosen a contractor but before you actually sign the contract.

Read the Contract Before Signing

Contracts are usually written by lawyers in legal jargon that most people don’t understand.  However, it’s important to know what you’re agreeing to, especially with major remodeling projects. If necessary, have a lawyer look over the contract. If the contractor doesn’t provide a contract, write one up yourself or have your lawyer write it up.

Also allow some leeway for changes.  It’s difficult to predict every scenario when starting a project; for example, the contractor may start remodeling your bathroom and discover mold in the walls.  This will require an expert to come in and remove the mold before proceeding.  Or the cost of materials or appliances may go up.

Make sure the contractor provides a change order if anything needs to be adjusted after signing the contract.

Get the Proper Permits

Permits are needed for almost all remodeling projects.  Make sure the contractor is knowledgeable and able to explain to you what permits are needed for the project.  Also, the contractor should get the permits, not you. 

Besides breaking various local ordinances, you will need to prove any remodeling projects were completed with approved permits when you go to sell your home. You can also be fined for completing work without a permit.

Work Out a Financial Payment Plan with the Contractor

First, don’t give more than 10% of the project cost as a down payment. After that work out a payment plan with the contractor.  The contractor will need to buy materials and pay the crew as the work progresses, so you will need to provide some money on a reasonable timeline.

However, do not pay 100% of the project until it’s completed. This includes all finishing touches and clean up.

Consult with the Contractor on Ground Rules

Negotiate daily start and stop times, how much notice you’ll get, which bathroom the crew can use, what needs to be cleaned up at the end of the day, etc.

Communicate Frequently with the Contractor

For large projects, you may talk to the contractor every day.  Speak up right away if you see a problem. It’s easier to fix something right away instead of waiting until the end of the project and after the contractor has moved on to the next job.

Finding the right contractor is not easy but with a little work, you can find one that fits your needs and is reputable.  If the contractor you found completes the project to your satisfaction, let your network know.  You can build a relationship with this contractor through referrals and now you have a contractor you can trust for the next project.

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Reasons Why Home Sales Fall Through and What to Do If It Happens to You

An offer is accepted and all parties have signed the required documents to begin the process of selling your home.  Then bam! The deal falls through and you’re back at square one and wondering what happened and what should you do now.

Contracts are not fail proof.  Especially real estate contracts which are full of contingencies that must be met before the deal can be finalized. The most common contingencies that fall through are the following.

Loan Contingencies

Unfortunately, if the buyer is unable to secure a mortgage loan, the seller is the one to suffer.  Hopefully, the seller’s agent has back up offers ready to fill in the gap. If not, then the home goes back on the market which can lead to misconceptions about the property. 

A home that is on the market for 0 to 1 days is attractive to buyers but one that is on the market for weeks or months gives the impression that there are issues with the home even if that’s not the case.

To avoid this pitfall, work with buyers who are already pre-approved for a mortgage loan that meets your selling price or with buyers who are paying cash.  Today, it’s common for buyers provide pre-approval letters to sellers and is highly recommended by real estate professionals.

The Home Inspection Reveals Problems

The home inspection may reveal multiple issues or a large ticket repair that may cause the buyer to back out of the contract.  This leaves the seller with a couple of options: pay to fix the issues or negotiate with the buyer to share the costs.

This is a tricky contingency to avoid.  If you as a seller are aware of issues, make sure you let your agent know so they can be included in the disclosures. Then the buyer is aware of the issues before committing to a contract.

If you are not aware of the issues until the home inspection, then try to negotiate before ending the contract. Make sure your agent is a skilled negotiator. This can save you thousands of dollars.

The Buyer’s Home Sale Falls Through

Occasionally a sale is contingent on the buyer selling a home. If you’re willing to hold off your sale, you can renegotiate and provide more time for the buyer to sell his/her home. Otherwise, there’s not much you can do in this situation.

 The Appraisal Is Less Than the Selling Price

When the home is appraised less than the selling price, you can split the difference with the buyer or lower the selling price to meet the appraisal. 

If the home is located in a market with bidding wars, the appraisal may come in higher in a short period of time so negotiating with the buyer is optimal.  If not, then lowering the selling price may be the best option.

How to Minimize the Risks

Avoiding all risks when selling a home is unrealistic, but you can minimize the potential of a contract falling through.

First, request mortgage pre-approval letters with each offer.

Second, get a home inspection before listing your home. You can make repairs before listing or include any issues in your disclosures.

Third, work with your real estate agent to make sure your selling price is comparable to the market.

Finally, make sure you have an experienced and trusted real estate agent who communicates with you throughout the process and who has strong negotiating skills.

Be an informed seller by knowing your contract and minimizing the risks ahead of time. Work closely with your real estate agent and go sell your home!