How to Work With a Contractor

Follow our tips to ensure that your home improvement project comes in on time and on budget.

Starting a home renovation project is exciting. But working with building contractors can mean big headaches: a two-week delay between removing your old bathtub and installing a new one; a kitchen island that ends up costing more than expected; or, worst of all, the contractor who disappears with your down payment and your dream.

Fortunately, there are ways to protect yourself from delays, cost overruns and outright fraud. Follow these tips for hiring and working with a contractor.

Where to look

• You can get matched with a prescreened contractor in your area through companies such as ServiceMagic. You submit a request online that includes details of the project or work you need done. ServiceMagic gets back to you with three or four service professionals, as well as ratings and reviews from customers, and you pick the contractor you want to work with.
• You can also ask friends or family members. Ask around, especially if you know someone who recently had a similar project done and is happy with the result.
• If you can't get a referral, look for a contractor who is a member of a local builders' association or similar industry group. Using the phone book as a source isn't a good idea because many states only license electricians and plumbers, so anyone with a van and a toolbox can call himself or herself a builder.
• Get references and take the time to follow up on them. Ask the contractor's previous clients whether their jobs were completed on time, if there were any surprises, and if they would use the contractor again.
• When you ask for quotes, be explicit about what you want done. The more specific you are, the more likely you are to get reliable quotes.

How to choose

• Get quotes from at least three contractors. It's standard, and the competition will prevent contractors from giving you an estimate based on what they think you're able to pay.
• Don't automatically pick the lowest quote. Sometimes a low-ball offer indicates inexperience, and that can lead to cost overruns later on.
• Carefully compare the quotes, especially the description of materials. Be on the lookout for terms like "or equivalent." You should have the right to approve any substitutions if a material specified in the quote is not available.
• Be prepared to wait a few weeks or even months for the right person. It's tempting to take the guy who can start right away, but good contractors are often busy.
• Pick someone with whom you have a good rapport. Remember, this contractor and his or her crew will be coming into your home -- maybe for weeks -- so you're going to have to get along.

Get it all in writing

• Always draw up a contract before the work begins, and include a start date and estimated completion date. Often you can include a clause that gives you a discount if the work isn't done on time.
• Make sure your contract specifies that any additional charges or expenditures must be authorized by you in advance. Cost overruns happen, but you should not be surprised when you're presented with the bill.
• Ask if the contractor is fully insured, and ask to see the papers. Otherwise, you could be on the hook if one of the workers is injured on the job or if the crew damages your property.
• Specify that the contractor is responsible for getting the necessary permits for the work.
• Obtain a written guarantee of the workmanship and materials.
• Agree on who's responsible for clean-up and garbage removal.

Paying the piper

• Your down payment is only an assurance to the contractor that you won't hand the job to someone else before the start date, so it needn't be larger than 10 percent of the total cost of the job, up to a maximum of $1,000. Some states limit the amount the contractor can ask for up front, so know your rights.
• Stagger the remaining payments and tie them to specific stages of the project, so you can hold back if the work is progressing slowly. Outline this payment schedule in the contract.

As your project moves along, ask for regular progress reports and keep a good line of communication open with the contractor. If you don't know one end of a hammer from the other, you might consider hiring a home inspector to keep an eye on things.

A home equity loan or line of credit is an inexpensive way of financing a renovation project. Some lenders will advance you as much as 125 percent of the appraised value of your home, less existing mortgages.