Hiring a quality contractor, believe it or not, takes a very specific strategy that if you don’t understand can lead to disasters!
I might have exaggerated a bit, but by working in construction for so long, I’ve seen the good, the bad, and the ugly.
That’s why I’ve compiled this guide packed with golden nuggets and effective strategies to hire the right contractor, how to negotiate the price down, and how to make sure you are in control of your project and not the people you’re hiring.
Before even reaching out to some new contractors, you need to do these things first to ensure that you’re going to have a smooth project.
Doing these successfully is going to avoid a lot of issues in the future that can occur with even the best contractor. Nowadays you have to be very careful because construction is unfortunately one of the industries out there who’s price can rack up very quickly if you take your eyes off for a minute.
Have a Detailed and Clear Set of Drawings
Depending on your project, you are likely going to need a comprehensive set of drawings.
If you are only doing some touch-ups or updating, for example, some painting and carpeting, you may not really need drawings, but a sketch would still be useful.
If you are going to do a major construction project, you are going to need drawings anyway to submit to your city or county for permits.
The reason I bring this up is that having a clear and detailed set of drawings is going to prevent issues in the future of how something was supposed to be built and the specifications around it.
If you can, get an architect to do your drawings for you.
Create a Word Document with a List of Your Requirements and Specifications
Next, along with your drawings, create a simple word document with a bulleted list of additional information that may not be captured in the drawings.
For example, here is where you can add special comments like the type of tile in each room, final paint selections, wallpaper designs, etc.
This is going to help you get a better-quality project at the end with fewer questions and confusion from your future contractor. It’ll also ensure that you get a more accurate price in the beginning.
Here is an example of a Scope of Work:
Once you hire a contractor, if you make a change after, they will likely charge premium rates since they don’t have any competition anymore. So be careful to include absolutely everything they will work on to avoid extra costs on the project.
Find Good Contractors to Give You an Estimate for Your Project
Here is where the fun begins.
Finding a good contractor can seem like a 50/50 chance. Contractors are notorious for being difficult to work with and for leaving projects unfinished. So it’s important you spend some quality time finding the right contractors and negotiating their prices.
Let’s get to it.
Use the Blue Book Network
Depending on your type of project you might want to go into the bluebook network and find quality contractors. It is free for you and it’ll allow you to get some of the highest caliber contractors you can find.
The Bluebook Network is more geared towards commercial so if you are doing a commercial project like a restaurant, store, office, etc., this is by far the best place to go to.
Find Them Through Home Advisor
Home Advisor is a trusted source for residential contractors. It’s very good because they genuinely utilize the reviews and also allow for previous customers of contractors to write about their experiences with contractors.
If you go to Home Advisor, you can input all of your information about your home-improvement projects and it will select the best contractors based on what you need to be performed in your home.
Just make sure when they give you the list of recommendations that you take a good look at their reviews.
If you have followed the two recommended methods above, you might not need to jump onto Google to do a search for contractors in your area.
But if you can’t find someone through the Bluebook Network or Home Advisor, you can always use Google to research for contractors in your area.
Just be very careful when you go this route because you really need to have some sort of reviews or recommendations from someone when it comes to contractors.
Ask them for either referrals that you can call, for the addresses of some projects so you can see them firsthand, or at a minimum ask them to show you some pictures or a portfolio of their past work.
Get 3 Bids (minimum)
You are going to quickly find that you can easily come up with hundreds of contractors to do your project. But now the question is, how do you narrow down the choices?
First I recommend you get at least three bids. If you have time and patience to get more, by all means get five or six if needed.
This actually might be a good idea because you will be able to have more negotiation power when you get to one of the next phases which we are going to talk about.
Hire Based on Expertise (not price)
As you get to talk to some of your potential contractors, make sure to meet them in person and get a good feeling about the company and the contractor.
Ask them questions about their experience, ask them for referrals like we mentioned above, and ask them for specifics on how they will do certain things.
Make sure you submit the plans and specifications exactly the same to all contractors so they can give you an apples to apples comparison.
Once you start getting pricing back, it’s going to be very tempting to get the cheapest or lowest bid, but very often you do get what you pay for.
Often times cheaper contractors don’t have the correct insurances, or in some cases, even legal workers.
Make Sure They Have Insurance
This is a quick one, but just make sure they have general liability insurance, and Worker’s Compensation insurance.
If you are hiring a licensed contractor, and you are the owner, this creates a general contractor and owner agreement. This protects you as the owner in case someone gets hurt.
I would say the more important insurance they need to have is the general liability. In case they break something on the job or cause some sort of damage, which tends to happen a lot, this will cover it.
How to Negotiate Pricing
When you get to the negotiation part, we have developed a very simple strategy that you can implement in your own project when it comes to negotiating the price.
I AM Builders is a licensed general contractor and we are always getting pricing and negotiating from our subcontractors, and this is the exact same method we use:
- Get as many bids as you can in writing. Read through the details, scope of work, terms and conditions, and make sure your construction project matches everything they are describing. (IMPORTANT) If you are getting multiple contractors for different parts of the project, look for overlaps in the work they are doing. For example, the drywall company might also install the doors in their price, and you might also have a door company giving you a price. So just make sure you don’t double pay for some parts of your project.
- Determine who is the lowest price. This is going to be the low bidder. Your goal is to use this price and negotiate a lower price with all of your other competing contractors. Call each contractor and tell them what the lowest price you have is. Let them know you are ready to start right away if they can beat your price.
- Now, you will now have a better low. Call the other contractors back and ask them to beat that price. Keep repeating the steps until nobody is willing to go lower on their price.
Keep in mind that the final contractors you select for this negotiation process should be all the potential contractors you would actually hire. There is no use getting a very good price from someone if they don’t seem very professional and you don’t really want to hire.
Create a Contract or Use Theirs
Once you have selected your contractor or contractors, create a contract for them.
We normally recommend you consult an attorney for this part, but if you want to keep it simple, you can create a Microsoft Word document describing the work they are going to be performing.
If they are going to be using Drawings, make sure you reference the drawings in the contract.
Many contractors will already have their own standard agreement, which is fine, but just make sure you read through all the fine print.
Congratulations, you have just hired your contractor.
Construction projects are very time-consuming and somewhat challenging, but by using the steps we’ve shown above, you are going to remove a bunch of headaches you might have had in the process.
Remember, contractors are notorious for being difficult to work with, so keep that in mind when you select one.
There are some really good contractors out there, and by using all the methods above, you are going to filter out the bad ones and use reviews and certain criteria to select the perfect contractor for your specific project.
Good luck and we wish you the best on your project.