What You Need To Know To Keep Contractors Honest

In order to close a deal, sometimes you may have to make some renovations or repairs. Therefore, it’s a great idea to have some quality contractors on your team. If you don’t have a full team of contractors yet, before you decide to hire anyone, there are some important things to keep in mind. There are plenty of real estate investors that will tell you to be leery of contractors that are out to rip you off one way or another.

Here are six things to consider before you hire any contractor, minimizing your risk of getting ripped off:

1. Little To No Money Up Front

Some contractors will ask for huge amounts of money up front. I advise only giving a little money up front to pay for the material cost or no money at all. Give them 20 or 25% up front, if you’re comfortable with that. You can create a schedule of payments throughout the process of the job rather than take the risk of getting ripped off.

2. Provide No Tools

If a contractor asks you to provide tools for the job, I’d let that one go. You shouldn’t have to provide a single tool to a contractor. Before you award them the job, have them sign a release saying they understand this.

3. Zero Tolerance For False Change Orders

A change order is when a contractor gives you an initial bid on the job and then comes to you later on down the road with unexpected costs, jacking the price up. Granted, sometimes things happen when working on a repair and adds costs to the gig. For example, if you’re ripping out a shower and finding termites, then there will be an added cost of getting rid of the termites. But what some contractors will do is give you a lower bid up front so you’re inclined to choose them, all the while planning in their head to come at you with false change orders down the road.

You’ll want to let contractors know up front that you have a zero tolerance for false change orders. If they come to you with changes or increased costs down the road, they better be able to back it very well because you’re not falling for any false orders.

4. Have Inspectors Approve Before Making Payment

Since you’re not cutting corners, have an inspector come to do the inspection and don’t make payment to the contractor until this is done. You certainly don’t want to have the inspector give you a red flag and you’ve already paid the contractor, who is long gone with no intention of coming back.

5. Don’t Make Final Payment Until Job Is Complete

Some contractors will try to play on your emotions. They’ll tell you they need payment because their kid needs something or they’re going to get evicted – or something that they think will cause you to fork over the money before the job is complete. Don’t fall for it. It’s not your responsibility to cater to their needs. It’s not personal; it’s business.

6. Pulling Permits

Cutting corners is sometimes appealing when you’re looking to get some repairs done for a good price, but if you don’t know a contractor and cut corners, it could come back to bite you. I advise you to have the contractor show you if they are licensed or not. Be aware that very few jobs require a permit, so it may not be as important as the other tips.

Granted, not every contractor is out there to rip people off. In fact, there are many wonderful, high-quality contractors who walk in integrity. At the same time, there are some out there who tend to make a living ripping people off. Believe the best in people but use wisdom too. Keep these tips in mind and you should do just fine.