Hiring (Dealing With) a Contractor

[Nick Sabat]

Hi,

New to the Forum and BP. Already, I feel the need to contribute. The subject hits home for me in several ways. Property owner Repair (Building) Contracting/Contractors - I've been in the in the Real Estate and the Contracting business all my life - been around a few great people, witnessed a lot of shabby people, (known as Fly by Nighters).

Like most people, as I grew older, I became more experienced. Nothing like an OJT (on the Job Training) Lifelong Course as in Real Estate and Property ownership. You get to know a lot of in's and out's as time passes and projects are completed or tenants move in and out or even yourself, moving from one place to another.

But, here, sticking to the script - Hiring (Dealing With) a Contractor - it is relatively easy to understand: That most people may have a problem with a Contractor or Two over the course of their investing or property ownership careers. Then, again, they may be lucky to have very great experiences with them, (contractors) - And this from both an ownership and contractor perspective, is great to hear.

Yet, some people need to hear it - the what to do's and not to do's when dealing with Building Contractors - whether for repair or new work or even maintenance of a property. (Note: This is not to put you down, because we all can be duped at some point in time in our lives or the other).

You need a contractor - you know one personally and that is great. Or you may need to go out and hunt one down. In any event, as with all contracts, there is an offering, terms of the offering, their acceptance and then, an agreement. When in agreement, always, always get it written down. Whether you are a property owner or a contractor, it is always best to safeguard your position, in this matter.

Performance, under the terms of the agreement. Both parties must perform certain actions to fulfill their side of the agreement. In most cases, the contractor will want a down payment and here lies a problem. Not for the contractor, but for the property owner - to trust the contractor with this money or not. A great big hurdle for many people, especially if they were burnt by a contractor before or they have heard horror stories from friends and family.

There are a few ways to overcome this dilemma - one, buy the materials needed yourself and have them on the job, when the contractor shows up. Two, have the contractor get all the materials together at the warehouse, have the warehouse call you and you pay for the materials with a credit card or by check. Or go with him/her.  When the contractor shows up to do the job, write a check, or pay him cash for down payment of labor costs, whatever you agreed upon (check or cash) and that solves the down payment dilemma, sorta.

Traditionally, Building Supply Warehouses dealt with contractors only. With newer versions of Building Supply houses open now to the public and getting wholesale prices, the contractor is out his/her portion of the retail price on those products. Are they entitled to a markup on those products - well, traditionally he/she is. So, to the contractor who is reading this post, know when going into an agreement of sale, you can ask for a markup. To the property owner, know that this is allowed and acceptable if a contractor asks for a markup on the products to do the job - that is part of his/her compensation.

The other end to this is, higher labor costs, if a contractor knows of his/her loss of markup. In any event, there is still the question of a down payment of labor. It can be half down or a third down - these terms have to be discussed prior to signing the agreement. Generally, half down and half upon completion. Or a third down, third halfway through the job and third upon completion. All this has to be discussed prior to agreement.

Now, if you trust this person - then half down to cover labor and material costs and half upon completion is not unheard of. This covers the down payment dilemma - what happens when a problem with the work, whether due to workmanship or unforeseen circumstances arises? Well, natually all work must cease, or a portion of it, til the problem can be ironed out. If it can be ironed out under the original terms of the agreement, great. If not, then a new agreement must be reached.

If it is a problem with workmanship - then, there really has to be a discussion and any adjustments/corrections that have to be made, costs must be absorbed by the contractor. If, say for instance, we remove drywall and find that a nest of termites lives behind it, in the studs of the wall, then new terms must be reached. This is unforeseen circumstance, that no one could have known, without removing the drywall. Costs must be absorbed by the property owner.

Other unforeseen circumstances could be - agreed to two layers of roofing removed, but turns out there are three. Or that we agreed no wood replacement, but once roof is removed and you can see wood needs replacing. Flooring, wall coverings can all find the same sort of oopsiz. 

This post/article just briefly touches part of dealing with a contractor, there is always more to the subject, but that is too lengthy to get into here - for now, hope you have enjoyed reading this and found it helpful and informative.