How to avoid bad contractors
While this subject has little to do with mortgage financing, I’m really tired of hearing the horror stories from people all across Canada getting taken to the cleaners by unscrupulous contractors. With a background in real estate appraising, I think I’m reasonably well qualified to give advice on the subject so here goes.
I’m going to make this fairly short and sweet.
Finding the right contractor
One of the best ways to find a good contractor, whether its for a small renovation or a total new home construction, is to ask friend, associates, fellow workers, etc. Another great way is to go take a drive through some new subdivision and view some of the new homes under construction.
Once you’ve found a potential contractor, I’d suggest that you follow these simple steps to help determine if your chosen contractor is the right one or is he one of the many scam artist out there.
- Get references, and check those references, don’t take the references and assume that because he has references he must be good. If your selected contractor will not or does not have any references, walk away.
- Check with the local Better Business Bureau to see if there have been any complaints about the contractor. If there have been complaints about the contractor but the references seem to be fine, I’d do a little more investigation into the complaint with the bureau before I wrote the contractor off. There are some very unreasonable people out there and the complaints may have come from a person who no matter what a person does, cannot be pleased.
- If the reference and the better business bureau check out, ask him to see some of his more recent work. Again, any reputable contractor will have no problem showing you some of his work, and if he doesn't, say bye bye.
Best way to pay your contractor
Now let’s assume the contractor you’ve chosen checks out to this point. Your next issue is going to be payment terms. Not sure why I’m writing this tip and it’s certainly not a new tip, but for goodness sake don’t hand over any money before work is complete. If your contractor asks for the money up front, and will not start until he gets the money, I’d say it’s time to give him the boot.
Want a great way to deal with doling out the money? Hire a real estate appraiser to do construction inspections.
The idea is simple; a real estate appraiser is called in to do inspections of the construction every time the contractor is requesting money. If the appraiser determines that the required percentage of work has been complete, you release money. If not, only a percentage of the requested funds is released, pretty simple.
Another great suggestion is to hire the appraiser to review your construction quote estimate as well. In most cases a real estate appraiser will be able to tell you if the quote is a reasonable estimation. Worst thing is getting a quote which seems to be good only to find out that the quote is in no way enough to finish the job.
A real estate appraiser will probably cost you about $75. to $100. per inspection, depending on the complexity of the inspections, but its well worth the money.
To sum it up, find a contractor using friends, associates, co-workers etc. Get references and check those references out. If all is good, hire a real estate appraiser to review your estimate and complete construction inspections.
Follow these simple steps and I’ll guarantee that the possibility of you being ripped off by an unscrupulous contractor will be dramatically reduced or even disappear completely.
Additional tips.
Don’t pay cash for work. Always have a paper trail.
Consider paying sub-contractors yourself.
Make sure all work is done with building permits.
If it’s too good to be true, it is!
