Are You Making These 11 Mistakes When Hiring a Contractor?

One of the biggest mistakes you can make when hiring a contractor is choosing one based on price alone.

Hiring a contractor is nothing to take lightly. Regardless of your project’s scale, hiring the best workers and knowing how to deal with contractor mistakes is crucial.

Today, we’ll explore these topics and more. While we’ll be focusing on larger scale, commercial construction projects, these tips will still be helpful to homeowners looking for contractors.

Hiring a Contractor: Avoid These 11 Mistakes

#1. Automatically Choosing the Cheapest Option

One of the biggest mistakes you can make when hiring a contractor is choosing one based on price alone.

While you definitely want to get the best deal possible, you also need to remember that you get what you pay for. Contractors charging ultra-low prices may cheap out on materials, workmanship, and after-service care.
The smarter approach? Judge contractors based on things like their references and quality of work instead.

Further, approach price negotiations with an investing mindset and the goal of spending your budget in a way that saves you from financial and reputational costs down the road.

At the same time, though…

#2. Assuming That ‘Costly’ Automatically Equals ‘The Right Pick’

When hiring a contractor, it’s also wise to remember that paying a premium doesn’t necessarily mean you’ll get the results you want.

Make sure the contractor you hire is the right fit for your project. Approaching discussions with the mindset outlined above will make this much easier.

#3. Not Asking the Tough Questions Upfront

No matter how big or small your project is, make sure you carve out some time to actually speak with your potential contractors.

This tends to be a given for larger companies, but homeowners looking for contractors often feel pressured into feeling like their “standard” window or flooring replacement project isn’t “important” enough to warrant “bothering” a contractor with too many questions.

While you do want to be respectful of a contractor’s time, neglecting the tough questions altogether can lead to miscommunication — and that wastes time for everybody down the road.

If there are any special requests you have, ask upfront. Any potential deal breakers (tardiness, etc)? Ask upfront to make sure your contractor is on the same page.

#4. Failing to Fact-Check

You need to know how to protect yourself when hiring a contractor — and fact-checking their claims or recommendations is a key part of that.

Try as you might, contractors who know their stuff will always be able to spot gaps in your understanding of their specialty.

Some contractors will unfortunately take advantage of this and recommend services you don’t need or propose unsuitable approaches for the sake of making their job easier.

Use competition to your advantage here by getting your bidding contractors to fact check each other. This is as simple as telling one bidder what another company proposed and asking what they think as well as how they would do things differently.

Once you’ve heard a few different proposals and counter-arguments, do some research using online resources to properly weigh the options.

#5. Neglecting to Follow-Up with References

When hiring a contractor, it’s important that you don’t just marvel at the provenance of their references or past clients. Try to actually speak with past clients, specifically individuals who worked directly with the contractor in question.

This may be tougher to do — but still not impossible — if you’re a large commercial company and those references are your competitors. If you’re a homeowner hiring a contractor, though, you should have no problem speaking with other homeowners that have used them.

#6. Not Getting Key Details in Writing

When it comes to key details that can make or break your project’s success, relying on informal agreements is simply not good enough.

Many people don’t realize this until they find themselves wondering how to deal with contractor mistakes because informal agreements were forgotten until it was too late.

Be very clear about what you want, when you want it — and then bake the most important aspects into your contract.

#7. Not Getting Anything in Writing

Don’t just toss your contractor some cash and hope for the best. Yes, many people (even fairly large companies) do business like this. But in the case of a dispute, they have nothing to work with. The ‘he said, she said’ game is just a waste of everyone’s time; put things in writing.

#8. Not Knowing How to Protect Yourself When Hiring a Contractor

The biggest construction companies in the world (click here to read about some of them) have watertight legal measures in place to protect themselves.
Even if you’re not building a skyscraper, you still need to know how to protect yourself when hiring a contractor.

If you stand to lose a lot of money or face legal drama if a contractor mishandles your project, be proactive and review the contract with a lawyer.

There are common legal mechanisms like the liquidated damages clause that you can use to protect yourself in the event of something going wrong.

This goes back to the previous point about asking tough questions up front; it may be uncomfortable to suggest legal protections when hiring a contractor but it simply must be done in some cases.

#9. Not Doing a Background Check

Beyond checking your contractor’s references, you need to look into their documentation. Check for the following:

  • A proper license for the kind of work they’re doing
  • Worker’s compensation insurance (this is key; without it, workers that get injured on the job can come after you for compensation)
  • Other necessary forms of insurance (liability, etc)

Also, make sure the contractor has an actual permanent address. Depending on the security your project requires, a background check is not out of the question, either.

In essence, don’t just assume your contractor has all their ducks in a row. Do the research.

#10. Paying Too Much Up Front

It’s normal to pay a deposit of 10-20% of the total project’s cost after hiring a contractor. This gives them assurances and also some of the capital required to buy materials and get started on your project.

Anything above this range is too much. After your 20% deposit, the rest of the payment should be divided and released when the project passes specific milestones. Always keep at least 10% of the money for the end, the final milestone being your review of the project.

#11. Not Thinking Beyond the Project

Getting your project done is probably your primary focus when hiring a contractor. But it’s also important to think long term — as in, warranties. If something needs to be repaired down the road, does your contractor have provisions for that? What about any third-party materials they’ve worked with — how does the warranty work for those? These are the questions to ask.

Hiring a Contractor: The Bottom Line

Above all, it’s important that you be proactive when hiring a contractor. Instead of worrying later on about how to deal with contractor mistakes, take the time to ask the tough questions, find the best-quality workers, and protect yourself legally.