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How to Hire a Contractor: Proposals, Contracts, and Payment


This is part 2 of our two-part series on how to hire a contractor. You can find part one here.

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Step 4: Don’t Sign Anything Yet

You’re eager to start the job and have your dream project finished, but don’t rush into things. Before you sign a contract, make sure you understand the proposal. And know the difference between an estimate and a proposal.

An estimate is just estimate. It’s a very general description of the project with a single price. You won’t find details here. It’s a ballpark figure and should be treated as such. Use it to help guide your decision, but know that everything can change.

A proposal is more specific and is a tentative agreement for the project. Here you’ll see options such as color, brand, price and performance. Keep in mind, more options to the project may be available. Some contractors omit these upgrade options from a proposal because they don’t want to scare away potential customers with a higher bid. Ask your contractor to include a separate pricing list for possible upgrades so you can make a more informed decision. There might be something on the market that you’ll love, but the contractor left off the proposal for budgetary reasons.

And always be wary of low bids. If the offer seems too good to be true, it generally is. Now is not the time to look for the lowest bidder. Low bids often mean shortcuts will be taken, or the contractor lacks the proper insurance and credentials.

Step 5: Building Trust

Your contractor is here to help and wants you to be satisfied with the job. If the contractor offers suggestions and opinions based on their expertise, take note and be open-minded. They know what they’re talking about and can recommend products and strategies you may have otherwise missed. While you should be involved with the decision making process, trust that your contractor has your best interests at heart.

Step 6: Go Over All the Contract Details

You did it! You’ve found a contractor who suits your needs and is ready to work. Now it’s time to go over the nitty-gritty details of the contract. Before signing a contract, read it -- all of it. If the wording is confusing, speak up now before you put pen to paper. Here are some important questions that should be addressed in the contract:

  • Who’s doing the job?

A contractor may hire subcontractors to do the actual work instead of using their own installers. This isn’t a bad thing, and doesn’t necessarily mean the contractor is trying to trick you. The contractor may have a long-standing relationship with the subcontractor and trusts their work. If your contractor uses outside help, just make sure the person you hired is closely managing the project.

  • Are permit costs included?

Who obtains the permits? Have inspections been planned? What about provisions for posting zoning notices?

  • Is it clear what products will be used?

Is the specific material (including the name of product and color) listed in the contract? Is there reference to the manufacturer’s warranty? And does the contract confirm that the materials will be installed according to the manufacturer’s instructions?

  • When will the project be finished?

Thanks to Mother Nature, it can be impossible to determine strict start and stop dates, but you can negotiate a “no-later-than” clause (required by some states), and enforce it. You can also reward the contractor for finishing early.

  • Right-to-Rescind?

Usually, you will have three days to cancel a contract without penalty.

  • What are the workmanship warranty terms?

This should be clearly stated in the contract.

  • Who cleans up?

No one wants a messy project. Does the contract require daily cleanup of the site? Picking up trash, even if it the blows onto the neighbor’s yard, is part of jobsite cleanup. You can also include clauses about dress code and music volume.

  • Was that there?

Before construction begins, walk around the job site with the contractor to establish a condition of the place. In some cases damage may be unavoidable but agree on what is and is not reasonable.

Step 7: Payment

Never pay more than 50% of the job’s estimate until work has begun. And never pay in cash. You’ll always want a clear paper trail showing money paid and money owed. But also be aware that if a contractor feels they are not being paid in a timely manner, they will leave the job unfinished and finding another contractor to finish the work can be difficult.

Finding a great contractor doesn’t need to cause anxiety and stress. Asking the right questions and understanding the answers will ensure your project’s success. For more information on finding a contractor, visit our Find a Pro page

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