RENOVATIONS PART 5: Contractors' obligations

You've decided to stay put for a while until the real estate market stabilizes. So, to make the old place more livable, why not build a new family room addition, master bedroom suite, deck or remodel the kitchen or bath?

The hands sweat, the heart thumps. Where to begin? You've heard all the horror stories: unlicensed workers who run off with the money before they finish the work. No building permits or insurance. Inferior quality. Messy job site. They don't show up on time - and on and on. So how do I pick the right firm?

Referrals

If it's a smaller job, such as painting a home's exterior, laying a patio or replacing a deck - go to the suppliers.

Lumber yards, name-brand paint stores, wholesale plumbing supply houses, ready-mix concrete companies and other vendors keep lists of their favorite contractors within their trades and specialties.

Some are semiretired and like small jobs that they can get to at their own pace.
Homeowners just like you are a great source to help ease your anxiety. When you interview a company, ask for the names and phone numbers of their last two or three clients.

If they prevaricate, I would move along to the next company. Otherwise, ask those customers for their overall assessment of the work. Did the workers show up when promised? Was the job site kept clean and safe? How about overall quality? Was the work completed according to the agreement? Were they nickeled and dimed over every little unanticipated problem? You'll quickly get a sense of whether you're dealing with a professional.

Credentials

The contractor should have workers' compensation and general-liability insurance coverage plus the proper license for your project. You can call the local building authority and check this out yourself. Describe the scope of your job to make sure it matches the licensure of the company you're interviewing.

Also, ask whether there are negative reports or complaints on record.

Money

Here's the biggest tripwire.

Most folks get in trouble by letting the contractor get "ahead" of them in money paid versus work done. The general rule of thumb is: no money up front, unless it's for supplies and materials delivered to your address. Have them give you a percentage of completion schedule for a big job, like an addition.

For example, when the framing is done, 33 percent of the total will be disbursed, drywall 65 percent, and so on. That way, you'll know that if something goes wrong, there will be enough dollars left to finish the job.

Alternatively, you could hire a home inspector, a bank or a title company to help you with the monthly draws.

Bids

Get at least two competitive bids for your project.

The hard part is the old apples-to-apples thing. Some bidders will try to confuse the issues by including extras and/or alternatives. So let the first guy set the specifications. Photocopy the list of inclusions off his bid sheet (absent the prices and the name) so that subsequent companies can follow suit.

Economics

Most contractors aren't very busy, so at least for the foreseeable future, you'll get some really competitive bids.

But this is a two-way street. The company must make a reasonable profit and pay the overhead to provide the kind of quality and service that you expect. Remember the old cliché: You can have good or you can have cheap, but you can't have both. So be tough but fair.