Issue # 30 January 13, 2001
Repairs and Remodeling
Over the past few months I have been involved assisting a client with problems relating to an extensive remodeling of their newly purchased home. They purchased a large older home in an exclusive high-end neighborhood and are adding to and total renovating. Following the work falling considerably behind schedule and failing to meet the owner's expectations, I was called in to give an unbiased opinion as to the condition of the work and advise the client on what actions should be taken.
Observed were structural inadequacies along with substandard material and workmanship. In order for the client to achieve what they desired, they had to remove the contractor from the job and basically start all over. Their contracts are mostly inadequate to protect their interest, they have paid far in excess of the value of the work completed, and paid 100% for a new detached garage which has not been started.
It boils down to this. The contractor is liquidating assets and appears to be in financial trouble, the unsatisfactory work will require redoing and paying for a second time. This will be an expensive education for this family. Hopefully you, as a realtor, will be able to assist your clients to avoid such a catastrophe.
Here are some recommendations you should advise your clients to follow when contracting for repairs and/or remodeling their homes:
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Get more than one price for the work. At least three are advisable. Make it clear to the contractor that you are getting other prices for comparison.
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| Never ask for or accept competing contractors recommendations of other contractors to talk with.
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Do not conduct business with any contractor without first investigating his or her reputation and experience. Price and claims of competence alone are not an indication of the contractor's competency or ability to complete your project.
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When searching for a contractor, it is best to seek referrals from family, friends, neighbors and coworkers who have had work done. Ask if they are satisfied with their project and with the contractor that they hired.
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| Also check with local trade organizations such as the local Home Builders Association or their Remodelers Council for the names of members who offer contracting services. Membership in these organizations may indicate a contractor's commitment to customer service and quality construction. This is usually a good sign that the contractor is an established member of the local building community.
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Check with your local or state consumer protection agency or Better Business Bureau to find out if any complaints have been filed against the contractor that have not been resolved. However, do not automatically assume that if there is no record of complaints against a particular contractor that there have not been any problems. It may be that such problems exist but have not been reported.
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Check with your state's licensing agency or local building inspectors to verify that the contractor has the appropriate license (if required) and a clean record.
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Ask for a copy of the contractor's insurance certificates for liability, worker's compensation and errors and omissions. Verify that the coverage is in-force and adequate for your project.
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When evaluating bids from contractors, make sure that they are based on identical project specifications for material and workmanship.
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Although it is common practice to make a down payment when you sign a large contract, you should be especially wary of any contractor who asks for full payment or an overly large payment before the job has begun.
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| A payment schedule should be part of your written agreement with the contractor and may be tied to the start or the completion of the job. Be aware that it is a common practice for many contractors to attempt to be paid as much as possible before performing work to protect their interest. You should attempt to limit this as much as is possible to protect your interest.
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You should have a written contact (with drawings if the project is large or complex), specifications clearly establishing the quality of the material and workmanship and a schedule with start and completion dates.
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If you sign a contract in your home that is offered through door-to-door solicitation, always remember that the Federal Trade Commission's "cooling off" rule gives you the right to cancel the agreement within 72 hours, provided that you have not allowed the contractor to begin work on the project.
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| Always follow the recommendations above prior to allowing work to commence irrelevant of how much of a hurry you or the contractor might be in. A reputable contractor is usually too busy to start your work immediately. If he or she wants to or demands to start immediately, you should check them out even closer.
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During the course of the work, if it is an extended project, never make a payment if you think the material or workmanship is substandard or the contractor is failing to meet the schedule. Get help from a reputable consultant or home inspector before, not after your project becomes a disaster.
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If the work involves plumbing, electrical, heating, air conditioning, structural additions or modifications, or a detached building with any one dimension of over 12 feet a permit and inspections are required. Other work over certain dollar amounts may require permits and inspections. If your contractor tells you differently, be wary and check it out.
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Be aware that there are codes and industry guidelines that set out minimum performance criteria that responsible contractors will follow or exceed. The National Association of Home Builder's book, Residential Construction Performance Guidelines for Professional Builders and
Remodelers, can be purchased by calling (800) 223-2665. Check out their web site at
NAHB.com.
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If you are buying a home, which appears to have had additions and/or modifications, ask for copies of the permits for the work or check with the local inspection department where records of such are available. If permits and inspections can't be verified a home inspector or reputable licensed contractor should inspect the work and it may need to be inspected by the local code inspector.
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