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How to Vet Good Contractors

Wednesday, August 02, 2023

How to Vet Good Contractors

Trust But Verify

Once you've narrowed down your potential contractors, be sure to interview them in person. This allows you to get to know them better and ask any questions you may have.

Some of the key questions we ask:

  • ​​What keeps you from staying on time and on budget?
  • ​What do you need from us to be successful?
  • ​How do you handle delivering bad news?

The Truth Is Easier To Remember...And Manage

You need to find contractors who will always tell you the truth, even if they have bad news. Personally, I need people who won't sugar coat the situation. Give to me straight. Right between the eyes. 

Make sure you call at least three past clients. Ask them about their experience.

Here are the key questions we ask:

  • ​What keeps you from staying on time and on budget?
  • ​What do you need from us to be successful?
  • ​How do you handle delivering bad news?

You need to find contractors who will always tell you the truth, even if they have bad news. Personally, I don't need people who will sugar coat it. Give to me straight. Right between the eyes. Please.

Make sure you call at least three past clients. Ask them about their experience.

Here are the key questions we ask:

  • ​Did the contractor meet the deadline and budget?
  • ​Was the work quality done to your expectations?
  • ​Would you hire the contractor again?

OK. Let's See Some Identification

Contractors must have all the necessary licenses and insurance coverage required by the state and our own insurance carriers. These licenses and insurance protect you and your investment in case of accidents...and I promise...they will happen.

Here's a quick check list to help:

  • Get proof of licenses from the contractor
  • Get evidence of insurance from the contractor
  • Contact the contractor's insurance broker and request an Evidence of Insurance certificate
  • Confirm contractor's insurance broker the contractor is covered for the project type. Every once in a while we find the roofer we're about to hire is only covered for carpentry.​
  • Pull the contractors license information from your state's website and compare with what the contractor gave you. Every once in a while, we find a contractor who has provided a fake license.

Put it In Writing

If you ignore everything in this article, do not ignore this topic. You MUST put your relationship IN WRITING. You must also demand your contractors have written agreements with their subcontractors. Both agreements MUST have a Hold Harmless clause. This protects you against a someone getting hurt (or worse).

First HUGE reason...Your insurance company will not pay a claim on an accident if there isn't a fully executed agreement between you and the contractor? A while back a friend of mine was running a rehab on a large apartment complex. Unfortnately, one of the subcontractors slipped, fell and was injured, badly. My buddy had an agreement with his General Contractor, but the GC failed to have a hold harmless agreement with his subcontractor. My friend is now litigating a couple of lawsuits, one against him personally and the other against his company. His insurance company inserted a little clause in their policy which clearly states the insurance company is not responsible for claims from contractors and/or subcontractors who do not have a written agreement with the policy holder (my friend). These lawsuits will likely ruin him. He will be lucky to keep his house. 

Second HUGE reason...An agreement lays out how you will operate together with your contractor and their subcontractors. It sets expectations regarding how and when the contractor is paid, project timelines and project budgets. Your agreement should also cover your breakup with the contractor, aka termination. The more clear you are in your agreement, the easier it will be to communicate with your contractors and end the relationship, if they fall short. 

Hit Singles Before You Swing For The Fences

We rarely, if ever, hand a new contractor a full rehab project without testing them out on a smaller gig first.

If you have a big rehab project coming up and need a carpenter, give your newbie carpenter a contract to build a deck or frame out a room on a smaller project first. You probably have a winner if they deliver the project on time and on budget.

Hire Slow & Fire Fast

Take your time to find and check out your new contractors. Be crystal clear about your quality standards, timeline, and budget. If you see the project quality isn't up to your standards, the project is behind schedule, or over budget, hold them accountable. We typically give our contractors one (and only one) chance to correct the issue. After that, if we still have problems, fire them immediately. This isn't a popularity contest. Rip off the band-aid and forward.

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