Mistakes Homeowners Make When Hiring a Contractor

Mistake #5: Not sticking to the scope of work for all contractors

For each fixer upper project, you must have a scope of work which is the information you give to each bidder about what you want done. The scope of work tells each contractor exactly what you want done to your fixer upper in detail including the type of paint you want used. This will ensure that each contractor is giving you an estimate for the same job so that you can compare apples to apples. Bear in mind that most contractors have their own ideas of what to do to a fixer upper home and it is very easy to not stick to the scope of work. If you are changing the scope of work, make sure that you change for all contractors who are giving your estimates.

Mistake #6: Not specifying enough details in scope of work

If possible, your contractors may cut corners. If homeowners do not specify the quality of materials used, the general contractor may use substandard materials on your fixer upper. So, make sure that you at least specify the followings:

• quality of materials
• agreed price
• how the contract is to be paid and installment details (if applicable)
• time frame to complete the project

Mistake #7: Not obtaining written estimates

Most cheap contractors don't want (or cannot) give written estimates and many homeowners wanting to save money would go along with no written estimates. However, if you don't get written estimates, you are opening up yourself to low work standard and many contractor scams. You should never enter into a verbal contract. Have the contractor agreement in writing and add a written agreement for more work for more money.

Mistake #8: Hiring unlicensed or unregistered contractors

Many real estate investors opt to hire unlicensed or unregistered contractors because they are much cheaper. If you know what you are doing (e.g. know the contractor and know that he or she won't scam you) then you may be safe from scam. However, so many homeowners get scammed by contractors who are unlicensed and unregistered and they could do nothing about. Some cities, counties or states require that contractors (general contractors and others) be licensed or registered. If your area needs the contractors to have licenses, then contracts that are signed by unlicensed contractors or unregistered contractors are invalid and unenforceable. Some areas also require that contractors have general liability or workers compensation insurance. Your local insurance agencies can tell you what your state requirements are.

How to ensure that the contractor have insurance?

Some scamming contractors go through great length to fool homeowners about their licenses and insurance situations. When your contractor gives you a copy of their insurance, don't just trust that it is real. You should call the insurance agency that the contractor says insures them and have that insurer send the letter of insurance to you. You have to make sure that the contractor's insurance is current and paid up.