How To Hire A Contractor : Get It In Writing | Make It Right (2022)

Did You Know:

Most contracts don’t allow for extra costs without prior approval but Contractors (depending on the contract) cannot charge more than 15 percent above the original quote without being liable to the homeowner. A good contractor will know ahead of time of any major changes regarding your renovation and make sure you approve them.

The days of handshake contracts are OVER. Nowadays, a contractor isn’t a contractor without a proper contract.

Before hiring a contractor, review their proposal and quote. They should include every detail concerning the job, as well as their contact information. If anything is vague or unclear, it’s never a good sign. It’s best to move onto another contractor. Here’s my cheat sheet on how to hire a contractor.

A Contractor Needs a Proper Contract

A contract should be typed, legible, easy to read and ALWAYS reviewed by a legal representative. There should be no fine print. And remember – trust your instincts. If it doesn’t feel right, it probably isn’t.

Terms

It isn’t a bad idea for homeowners to include some terms in the contract, such as the times the property is available to them and that the contractor agrees to clean up at the end of each work day. This helps maintain clear lines of communication and expectations.

Building Permits For Renovations

Municipal governments issue permits for renovations, electrical work, plumbing and heating and cooling jobs.

Unless stated otherwise in the contract, it is the homeowner’s responsibility – not the contractor’s – to obtain all of the proper permits for work completed on their property.

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“It isn’t a bad idea for homeowners to include some terms in the contract.”

How To Hire A Contractor : Get It In Writing | Make It Right (1)

By getting the proper permits homeowners ensure that municipal inspectors will examine the work completed on their home and that it meets minimum building code.

Read more about why you need a building permit.

Payment Schedule In Your Contract

Before any work begins, a contractor will ask a homeowner to secure the job with a down payment. It shouldn’t be more than 10-20 percent of the total cost of the job. Homeowners should never pay a contractor more than 10-20% before they’ve even stepped foot in their home.

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There are exceptions to the rule but they need a good reason, such as pre-ordering custom specialized materials, like cabinets.

Remember:

Construction scheduling isn’t perfect and sometimes delays happen. If a delay does come up in the work schedule, a good contractor will set up a change order, sign off on it, then ask the homeowner to sign off on it and then provide the homeowner with a revised construction schedule, along with a revised bill

Payment Should Be Tied to Milestones

Homeowners should avoid payment schedules based on time. The best renovations are the ones that move forward at a good steady pace – conditions permitting – and the best payment schedules are tied to work completed.

That means that any payment made to the contractor after the initial deposit must be in relation to how much work is completed but always make sure you “hold back” 10% on invoices to be paid at the very end of the job when all items are complete.

Mike’s Tip:

Homeowners should agree to pay no more than 10-20 percent of the total cost of the renovation as an initial deposit, or on the first day when work begins. A second payment should be given when all electrical, plumbing and HVAC work is complete, followed by a third payment of when the insulation, vapour barrier and drywall have been installed. Another payment is given when priming and painting is finished, with the final 10 percent given once the homeowner is sure they are satisfied with the work completed. Homeowners can wait up to 30 days after the renovation is done to provide the final payment. This helps ensure that any problems that might arise within the first month get fixed.

Move Mountains With Milestones

Payment schedules tied to specific milestones keep jobs moving forward. The most common milestones or stages are: Rough-in, drywall and completed.

  • Rough-in Stage:

The rough-in stage refers to the point in a home renovation when anything that has to do with the foundation, subfloor, framing, sheathing and roof are done, and all the electrical and plumbing has been roughed-in.

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Roughed-in:

When everything but the finishes and fixtures have been installed related to electrical, plumbing and in some cases, HVAC. At this point, walls, flooring and ceilings have not been installed to allow for any changes or modifications, but all of the mechanics that go behind them are complete.

  • Drywall Stage:

The drywall stage is the point in the renovation when the drywall can go up and the contractor can start closing in on the job – that means all electrical, plumbing and HVAC is done.

  • Project Completion:

The last stage is usually called completed, but the project isn’t exactly 100 percent complete – it’s more like 90 percent. That’s why only 90 percent of the total budget should be in the contractor’s possession at this point.

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Hold The Payment

It’s a good idea for homeowners to hold onto the last 10 percent of the total budget as retention to make sure everything has been completed properly – they are permitted to do this by law. Once they know it is – usually no more than 30 days after the contractor has finished working on the job – they can deliver the final payment.

It’s important that homeowners do not make a payment until each stage or milestone is complete. Contractors will work more efficiently if it means they will get paid sooner. If they have already been paid for work they haven’t done, they are less likely to make it a top priority.

The Fair Exchange Of Power

A contractor’s power is their work and their skill. A homeowner’s power is money. A contract that ties payments to completed project milestones sets out all the rules for the fair exchange of these two powers.

If a homeowner hands over more money than the value of the work completed on their home, they can become vulnerable to the contractor postponing their job. In most cases, the contractor will work on other jobs that they still need to collect on. A good contractor wouldn’t do this, but then again, a good contractor wouldn’t ask for 50 percent of the budget for 15 percent of work.

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Respect

It goes a long way but it’s a two-way street – you have to give it to get it. Doing your due diligence is necessary, but at the same time, you have to be respectful. Not just with your contractor, but also with all the trades that work on your property. It’s not smart to be rude to people working on your home.

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FAQs

Can you negotiate a contractors quote? ›

Can you haggle with your builder? The short answer is – you can definitely try! Many builders expect some kind of negotiation on price and often there is a small contingency planned into their quotes although this isn't always the case.

How should you communicate with the contractor? ›

4 Keys to Communicating with Contractors
  1. Plan Ahead. There is a lot of planning in a successful construction project. ...
  2. Embrace Technology. Technology has a core place in the contemporary construction industry. ...
  3. Be Collaborative. ...
  4. Prioritize Clarity. ...
  5. Leave a comment.
10 Feb 2022

Why don t builders get back to you? ›

The most common reason for builders not getting back to you, is because they have no systems in place to organize their work load. This leads to builders simply forgetting about you.

What should you not say to a contractor? ›

Seven Things to Never Say to a Contractor
  • Never Tell a Contractor They are the Only One Bidding on the Job. ...
  • Don't Tell a Contractor Your Budget. ...
  • Never Ask a Contractor for a Discount if You Pay Upfront. ...
  • Don't Tell a Contractor That You Aren't in A Hurry. ...
  • Do Not Let a Contractor Choose the Materials.

Do contractors expect you to negotiate? ›

Many general contractors are willing to negotiate their prices and terms if they're competing for a job. It is helpful to be up-front with contractors and let them know what you expect from the process: Prepare to answer the contractor's questions, as this will help craft a more exact estimate.

How do you deal with a slow contractor? ›

If your contractor is dragging his feet, follow these tips:
  1. Document Communications. It's best for homeowners to communicate with contractors in writing so there is a record of the conversation. ...
  2. Keep A Record of the Timeline. ...
  3. Do Not Make Remaining Payments. ...
  4. Hire A New Contractor. ...
  5. Take Legal Action.

How do you deal with a contractor? ›

Here are seven smart ways to stay on top of the job and maintain strong communications with your contractor and construction team.
  1. Avoid Allowances. ...
  2. Establish Good Communication. ...
  3. Keep a Project Journal. ...
  4. Track All Changes in Writing. ...
  5. Check the Work. ...
  6. Pay Only for Completed Work. ...
  7. Be a Good Customer.

What is written communication in construction? ›

More specific to the construction process, written communication includes specific documents or media, such as: Requests for information/interpretation (RFIs) Proposal requests. Change order requests.

How do you spot a rogue builder? ›

Spotting a rogue builder

If you are suspicious, try to check up on the company – have they left paperwork with the home owner, do they have a company name displayed on vehicles visiting the property? Have you noticed tradesmen giving your neighbour lifts in a vehicle? Have you actually seen any work going on?

What are cowboy builders? ›

From Longman Business Dictionary ˌcowboy ˈbuilder British English informal a house builder with no proper training or official QUALIFICATIONS who does work of a low standardDo-it-yourself decorators and cowboy builders are ruining Britain's historic towns.

Why are they called cowboy builders? ›

Cowboy builder refers to the term cowboy with the meaning of reckless, unreliable: A house builder with no proper training or official qualifications who does work of a low standard.

How do you tell if a contractor is ripping you off? ›

10 Signs of a Bad Contractor & Tips on Finding a Great One
  1. Making Extreme Promises. ...
  2. They're Unfamiliar With Required Permits. ...
  3. Asking for Payments in Cash. ...
  4. They're Not Responsive When You Contact Them. ...
  5. They Don't Want to Provide a Written Contract. ...
  6. Constantly Changing Their Pricing. ...
  7. Showing Up to the Job Late.
21 Sept 2022

Is it normal to pay a contractor half up front? ›

The exact deposit amount contractors ask for upfront varies and is especially dependent on the size of the project. For relatively small jobs, like a $16,000 bathroom remodel, contractors may ask for a 50% deposit. For large jobs, like a $100,000 full-home renovation, a 10%–20% deposit is more typical.

Why is it so hard to find a good contractor? ›

Another reason you may have a hard time finding solid contractors is that your interests don't happen to line up. Most contractors want to provide good quality work that they can be proud of, along with fair wages to support themselves, their family, and their employees.

How do I ask a contractor for a better price? ›

How to Negotiate with a Contractor
  1. Set the Right Tone. ...
  2. Talk with Previous Clients. ...
  3. Get Multiple Bids. ...
  4. Get Details in Writing. ...
  5. Be Clear About Your Budget. ...
  6. Ask for Help Trimming Costs. ...
  7. Be Creative About Reducing the Price Tag. ...
  8. Know Who to Call if Things Go Sideways.
10 Jun 2021

Should you tell a contractor your budget? ›

If you have ever asked yourself if you should provide your contractor with a remodel budget, the answer is YES. Remodeling contractors ask you for your budget for several reasons, all of which are meant to help you.

What should a contractors estimate include? ›

It includes quotes received from suppliers for raw materials, proposals from subcontractors for their portion of work on the project, and estimates of labor costs, taxes, and other overhead. It also includes a markup of the contractor's profit.

How do you turn down a contractor quote? ›

As far as how to notify a contractor that he or she didn't get the job, a short handwritten letter, brief email or a quick phone call should suffice. Most contractors appreciate hearing why you didn't choose them, if you're comfortable providing that type of feedback.

How many quotes should you get from contractors? ›

Aim to get at least three quotes for your home improvement or remodeling project. Then, follow these seven quick steps to learn how to respond to the quote and hire a general contractor in your area.

Can a builder charge more than the quote? ›

Quotes and estimates

A quote is a fixed price, so you'll know what you're getting and how much it will cost. An estimate is just a rough guess, so you could end up paying more. The contractor can't charge you more than the price on their quote unless: you ask for extra work that's not included in the quote.

Can contractor change price after contract signed? ›

Considerations When a Vendor's Prices Go Up

Generally speaking, neither you nor the vendor has the right to unilaterally change the agreed-upon terms. But some contracts are crafted in anticipation of future changes in the size and scope of projects, with the flexibility for price adjustments.

How do you tell a contractor you are unhappy? ›

How to Convey Your Dissatisfaction to Your Contractor
  1. Speak up right away. You must tell your contractor early on that you don't like something. ...
  2. Maintain an understanding demeanor. You don't like the work and you're worried you'll offend your contractor. ...
  3. Get changes to the project in writing (even if only by email).

How do you politely turn down a project? ›

  1. Offer Specific Reasons. Once you've made the decision to turn down a project, it's important to let the rejected client know specifically why you can't or won't do the project, but keep your explanation short and simple. ...
  2. Be Professional. ...
  3. Be Firm. ...
  4. Refer to Someone Else.

What are good questions to ask a contractor? ›

5 Essential Questions to Ask Before Hiring a Contractor
  • Would You Please Itemize Your Bid? ...
  • Is Your Bid an Estimate or a Fixed Price? ...
  • How Long Have You Been Doing Business in This Town? ...
  • Who Are Your Main Suppliers? ...
  • I'd Like to Meet the Job Foreman — Can You Take Me to a Project He's Running.

How do I ask a contractor for a lower price? ›

How to Negotiate with a Contractor
  1. Set the Right Tone. ...
  2. Talk with Previous Clients. ...
  3. Get Multiple Bids. ...
  4. Get Details in Writing. ...
  5. Be Clear About Your Budget. ...
  6. Ask for Help Trimming Costs. ...
  7. Be Creative About Reducing the Price Tag. ...
  8. Know Who to Call if Things Go Sideways.
10 Jun 2021

What should a contractors estimate include? ›

It includes quotes received from suppliers for raw materials, proposals from subcontractors for their portion of work on the project, and estimates of labor costs, taxes, and other overhead. It also includes a markup of the contractor's profit.

How do you turn down an estimate? ›

Explain the reason for the rejection, such as the estimated cost was too high or that another company had more experience with the particulars of the project. You may also say if there was something wrong with the bid, which can help the contractor to avoid making the same mistake in the future.

How far off can an estimate be? ›

An estimate is just an estimate, and it can be reasonable for the final cost to be anywhere from 5% to 20% above the estimate. That's why it's always important to stick to your budget and account for a bit of cushion before you begin any project.

Can I refuse to pay a builder? ›

By law, customers can only withhold a 'reasonable' amount of payment on a job. For example, if a customer is unhappy with the installation of a single plug socket on a full kitchen refurb then they can only withhold the amount required to fix that issue.

Can a builder charge me for material price increase? ›

Under a fixed price contract, unless there is a contractual provision which allows you to, you cannot pass on a price increase. Under a cost plus contract, you can pass on price increases as you are charging the client for the actual cost incurred, at the time you incur it.

What to Know Before Signing a contract with a contractor? ›

If they are already included, review them carefully to make sure they sufficiently protect your rights.
  • Scope of Work. This section describes the work that the contractor agrees to perform. ...
  • Timing of the Work. ...
  • Payment. ...
  • Changes to Scope of Work. ...
  • Warranty. ...
  • Dispute Resolution. ...
  • Attorneys' Fees. ...
  • Contractor Default Provision.

What do you do when a contractor wants more money? ›

Ask the contractor to explain why the price rose so dramatically from the initial estimate. He will likely say something about unexpectedly high expensive labor and materials. Request an itemized invoice, explaining that you do not feel comfortable remitting any payment until you can further examine this issue.

Can you cancel a contract after signing it? ›

The General Rule: Contracts Are Effective When Signed

Unless a contract contains a specific rescission clause that grants the right for a party to cancel the contract within a certain amount of time, a party cannot back out of a contract once they have agreed and signed it.

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