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Choosing a Good Contractor

Put Your Insurance Payout to the Best Possible Use

How to Choose a Good Contractor

If you’re looking for a contractor to rebuild large portions of your business in Harvey’s wake, you need to know how to distinguish between fly-by-night contractors taking advantage of desperate owners and seasoned builders.

To help you out, we’ve put together some of the best tips for finding a quality contractor! The key here is that you need to treat this like a search for an employee—not just a service call. Your contractor will be working with you on your business for weeks, or maybe longer. You need to treat this like a job interview, and so should they.

Here are the 9 best tips for finding a quality contractor:

Get at Least 3 Bids

The more bids, the better. Choose from a variety of large and small local businesses. Get recommendations from people you trust, do some Google searching, and then call them up. You’re looking for businesses that have been in the area for at least a couple years, have a physical office, and have a good reputation with local trade associations.

Throw Out the Lowest Bid—They’re Cutting Corners

If one of them has a low-ball price for your rebuild, don’t even consider it. Experts say low-ball prices for large jobs are either a sign of being desperate for work, or an indication that a contractor is cutting corners.

Ask for (At Least) 3 Customer References from Each Bidder

Multiple references gives you a better picture of who you’re hiring.

It also weeds out any newcomers who don’t have a history of doing projects for locals.

Insist on Getting Financial References as Well

Having a poor reputation with banks and creditors is as bad a sign as poor work. Good companies are also willing to be upfront about their financial health. If they’re not financially healthy, move on to the next candidate.

Call Their Suppliers to Make Sure They’re Not Marking Up Supply Costs Too High

When you ask for a quote, you should receive a list of estimated material costs and materials. Ask for their suppliers. Call two or three suppliers to check numbers on what you’re ordering. Some markup is normal; it's how contractors stay in business and cover their overhead. Normal markup is 20-30% for materials. Higher than 50% and the contractor might be trying to gouge you.

Make Sure They Have Workers’ Compensation Insurance & General Liability

They should have both types of insurance.

Don’t take their word for it either—ask for copies of their policies or proof of insurance to keep on file.

See If They’re Willing to Stick to a Payment Schedule

Large projects normally require a payment schedule—and experienced contractors know that. If they ask for 50% upfront, it’s a sign that they’re afraid you’ll refuse to pay or they’re strapped for cash. Either way, that’s bad news. A routine payment schedule for residential projects is 10% upfront, 25% three times over the project, and a 15% payment once you’re satisfied with the results.

Be Wary of Contractors Who Haven’t Been in Business for Longer than a Few Months

Harvey is attracting scammers from all over, offering low-cost projects to business and homeowners in dire straits. Don’t hire anyone who just went into business prior or after Harvey. There’s no need to take the risk, even if they seem legitimate.

Never Agree to Let Your Contractor Receive Your Insurance Benefits Directly

Never relinquish control of your benefits. That’s your only lifeline for all recovery efforts. Letting a contractor get control of your benefits makes you vulnerable to massive markups and other dishonest spending. If a candidate floats the idea of getting access to your insurance directly, shut them down. It’s not a reason to walk away—but it’s a reason to keep a closer eye on their estimate.