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How to Hire a Home Improvement Contractor for Less

Posted on 4/25/2012 8:01 EST

This may be the time of year when you look at your home afresh and notice all the improvements you'd like to make. Of course, the prospect of some tax refund cash itching to be spent might be just the spur you need. But unless the projects are small or you know a lot about home remodeling, hiring a contractor may be a necessity. Unfortunately, home improvement contractors don't come cheap. Here are some tips on how to hire a contractor for less.

Photo by sxc.hu/michaelaw

Get general contractor recommendations.

The first place to start looking for a contractor is among home-owning family and friends. Chances are someone in this network has hired a contractor of some sort in the past and can make a recommendation based on work done well - or not.

Gather and compare quotes.

According to ConsumerReports, a good rule of thumb is to get a minimum of three comparison quotes. This means having three separate contractors come to your home to see the work that needs to be done, talk to you about your requirements, and write up a quote, or estimate, that includes a timeline, cost of labor and materials, subcontractors that are needed, etc. Carefully compare each portion of the three quotes and be sure the items listed are the same; if not, ask for a do-over to reflect your preferences.

Get an over-run percentage.

In addition to a quote, ask a potential home improvement contractor to provide an over-run percentage in writing. LifeHacker explains that this limits your liability for expenses above and beyond the contract to whatever you and the contractor agree upon; something between 10% and 15% is a reasonable figure. This arrangement helps you keep the project from spiraling out of budget.

Have the contractor itemize each task.

An itemized quote will help you identify what is costing the most and what is costing least. By looking at a quote this way you can see areas where you may be able to cut costs. For example, if you're doing a kitchen remodel and the contractor provides a quote for a granite counter, you can shave the estimate (and the final bill) by getting a price for laminate counters instead (this assumes you don't specifically want granite).

Complete certain tasks yourself.

Scrutinizing the itemized contractor quote and picking out specific components that you can complete on your own is another way to cut contractor costs. Back to the kitchen example: If your remodeling contractor puts a backsplash into the quote, consider doing it yourself to save labor costs.

Verify insurance, licenses, and certifications.

This is a no brainer. Always, always check for proper insurance, licenses, certifications, and even permits that are necessary to the project. This will save you a lot of money and hassle in the long run. Imagine the expense you'll incur if you hire a roofing contractor without insurance and he falls off the roof.

Photo by sxc.hu/sanchezcl

Negotiate costs.

A quote isn't set in stone, which is one reason for the above-mentioned over-run percentage. Don't be afraid to negotiate contractor costs. If the contractor really wants or needs your business, chances are there's some wiggle room in the quoted cost. Keep in mind the message contained in our blog post What is the Best Time to Buy What: Contractors are more likely to negotiate deals in January when most people are strapped for cash after the holidays and demand for home improvement contractor work is low.

Agree on a payment schedule.

Do not pay in full upfront. If you do, there's no guarantee the job will be completed. A payment schedule specified in the contract is your best option. Make payments as you go, with the largest amount reserved for payment upon completion. A small percentage paid upfront is perfectly acceptable - your contractor will need to buy supplies to get started, and small payments in between start to finish are also reasonable.

Sign the contract.

A quote usually forms the basis of bid that includes even more specific details. Once you negotiate all the terms and accept and sign the bid (the contractor must sign, as well), you then have a contract and your project can begin.

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