Pre-Qualification Requirements for Home Improvement Contractors

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Contractor Prequalification For Home improvement

You have a project plan and are excited to start calling contractors for bids. Wait! You’re still not ready to call contractors, because you haven’t identified which contractors will qualify to work on your project. It isn’t as simple as just opening the telephone book and calling. Or it shouldn’t be. You will save yourself a lot of effort if you use a more structured approach. There are some key attributes that you will want to be validated for all of the contractors before you ask them to bid.

  1. Contractors who do professional quality work
  2. Contractors who will bid the project and not charge for estimation visits
  3. Contractors who do not put your home at risk
  4. Contractors who respect your person, property and time

Starting out at the top of the telephone listing simply won’t tell you if you’re finding the right people. So how do you go about finding the information to qualify the contractors?

Identifying Local Contractors

The first task involves using a resource or two which will identify most of the local contractors serving the particular speciality needed for your project. “Word of Mouth”: One valuable resource are your friends or neighbours who may have had similar work done in the recent past.

They can provide contractor contact information and you likely would be able to view the actual results of the contractor’s work with someone you know. Of course, friends will also tell you if the contractors were less than satisfactory. “Word-of-mouth” accomplishes two things, identification of a contractor as well as a single review of their work quality. The recommendation of “word-of-mouth” isn’t everything you need to know, but it does identify a potentially viable candidate for further investigation.

Print Directory Listings

The good thing about directory listings is that they often list almost all of the contractors serving a particular speciality. They do not, however, give you any data about the quality of the contractor’s work, unless you consider the contractor’s banner ads to always be accurate. I recommend using this resource only if you are having trouble finding sufficient candidates using other sources.

Online Service Directories

Today, homeowners have ample access to specific information about contractors compiled by online services such as Angie’s List, ServiceMagic, Homeadvisor, BuilderPro, Yelp!, and a host of others.

Not only can homeowners easily find many potential contractors for any job, but almost all of these services also offer ratings or reviews of the contractor. These services combine the best of print directory listings with the personal reviews of prior clients (extended word-of-mouth).

Which online services are best for your particular need varies depending on what geographical market area your home is located. As an example, Legacy Roofing Service in New Jersey has a well-established system in place, however, in Northern Alabama, their listings are not nearly as comprehensive. Some services require contractors to pay for listing and job referrals, some have free listings, some do background checks and some require membership fees from the homeowners. Unless you already have a membership in a paid service, you can easily make do use only the free services.

Some of the information we will need later in the process can also be referenced at most of these sites (e.g. trade licensing, bonding and liability insurance levels). Regardless of which service you decide to use, a good approach is to search for all of the contractors within the target speciality and rank them by user ratings.

Most listing sites will allow for you to sort according to user ratings, highest rating first in descending order, which is very helpful and saves a great deal of time. I generally recommend that you select at least 10 contractors initially because some will fall out as you do more research. Double check that all of the top 10 have more than just one good review, which can yield a better contractor rating than they currently deserve.

The goal is for 5 contractors to survive the pre-screening process. Why? Because I always assume 1 or 2 will drop out when it comes time to bid. I always want to have a minimum of 3 bidders for contract negotiations. One thing to note is that some listing services (e.g. ServiceMagic, will not display contractors who do not purchase a membership listing. That could be a problem in markets where the listing service may not have 10 candidates in the trade speciality. You may need to use more than one service to reach the desired list of 10. Such services do, however, tend to have a lot more information about the contractors on their site, including license numbers, insurance levels and so forth.

Using “Red Flags”

You have your 10 contractors selected and it is now time to further validate their suitability for your project. I use the concept of “red flags” to indicate potential problems or concerns with a contractor. In your online research of each contractor, any of the following items may be a cause for concern.

Company name doesn’t match any registered business

Part of the investigation you will want to perform is to validate that the contractor company is a real enterprise. In order to be valid, most states require that the business is registered with the state.

That is 100% the case when the company type is a corporation (shown by “Inc.” as part of the name) or limited liability company (shown by LLC as part of the name). If a company isn’t registered with the state it is a red flag and something to further investigate.

The company doesn’t list a street address

When a company doesn’t list a street address, perhaps showing a P.O. Box or no address at all, they don’t want you to know something. Often it simply means that the company is small, perhaps working out of the owner’s home, and they do not have a commercial address.

That in itself is not a deal killer after all smallest contracting businesses get started that way. However, reputable small contractors will list their home address rather than use a P.O. Box.

Another possibility for companies who do this is that they want to make it more difficult for process servers, or people wanting to sue them. In these cases, this is a serious red flag. Sign no contracts with companies unless you actually know their physical address.

The company has behaviour issues in some reviews

What do you do when you see a company with good reviews mixed with some reviews which relate some behavioural issues? A real example (paraphrased) follows. Company A: “…Company A didn’t show up, I called the owner and had to leave a message. He didn’t call back, but I was able to get him 2 days later when he explained that he had a personal emergency in his crew and wasn’t able to do the work for a few more days. When I asked for a date commitment, he started yelling at me on the phone and hung up..” Company A had many reviews with high ratings, as well as some examples similar to the above.

Clearly, they were capable of doing a good job, but if the workplace pressure rose, they would lose their compass. That business has earned a serious red flag, and regardless of whether their work is otherwise acceptable, no homeowner should ever accept verbal abuse from a contractor. Consider the behaviour transgressions to be a leading indicator of other problems.

The company has professionalism complaints

Many companies do a good job when it comes to the trade work, but can often ignore the remaining work that it takes in order to be fully professional.

These unprofessional offences are usually related to a lack of respect for the homeowner’s person, property or time. So many times, I have seen variations of the below review. Company A: “…Company A’s workers showed up unannounced and made a complete wreck of my living room, they laid down carpet runways but didn’t stick to them, so I have greasy footprints across my light carpet. They cleaned off in the powder room and left a mess for me to clean up.

The work was of acceptable quality, there is just a lot of cleanup to do.” Note that these are just the things that are surfaced in online reviews. I guarantee that if Company A did these things, they did a whole lot more than that since their attitude does not respect the homeowner’s person, property or time. Consider lack of professionalism to be an indication of other potential problems.

The company doesn’t have direct contact information

A contractor should be easy to contact. After all, the reason they have paid for listings is so that they can be found by potential clients. In cases where the company doesn’t list a direct telephone number or uses an answering service, you as a potential customer have to know that the contractor isn’t making you a priority. At the very least, you should note as a potential red flag.

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