The housing market can be a beast to navigate, but in the past year, it’s become even more difficult to lock in a property that is entirely ready for move-in. In June 2021, home prices in the U.S. catapulted...

The housing market can be a beast to navigate, but in the past year, it’s become even more difficult to lock in a property that is entirely ready for move-in.

In June 2021, home prices in the U.S. catapulted by around 25% according to Redfin, the Seattle discount real estate brokerage, and the number of homes for sale decreased by nearly 40%.

With these eye-opening statistics, it’s no surprise that people are turning to contractors to help them turn a fixer-upper into a dream home, or to at least press pause on selling a home and make energy efficient and design upgrades to it instead.

But working with contractors isn’t always the most cut-and-dry task, not the least of which is negotiating their fees. According to Homeadvisor, some contractors’ hourly fees can add up to nearly $4,000 by the end of the project.

And with that kind of money coming out of your remodel budget, you can’t afford to misunderstand any aspect of the home improvement process. It’s easy to get caught up in the jargon and nuances of home renovations and agree to something that you don’t truly understand.

Luke Meyers of Parker, Colorado, is a building consultant for a public adjusting firm (read: he helps folks get insurance payments after significant property damages, like those accrued during a hurricane) and also owns his own painting company. Although Meyers is not a contractor himself, he regularly works with a variety of home improvement specialists and is skilled in knowing what to look for when hiring a contractor.

“Making sure you feel good about a contractor is key,” said Meyers. “You want to bring the right contractor into your home — someone who you feel will do good work and who you can trust.”

Here are six more tips from Meyers to make your experience go smoothly:

1. Quotes vs. Estimates

Before signing on to any project with a contractor, it’s important to understand how much money you’re about to shell out.

Contractors should always be able to provide you with either a quote (sometimes called a  bid) or an estimate for the work about to be done. be aware that a quote and an estimate are not the same thing.

An estimate is an educated guess about how much a contractor thinks a home improvement project will cost. The work could cost more, or it could cost less, but the estimate is a ballpark of what you can expect to pay.

A quote (or a bid), reflects a more exact amount. Quotes generally reveal the more-or-less exact amount you can budget for and expect to pay when the work is completed.

“The dictionary definitions of ‘estimate’ and ‘quote’ say one thing,” said Meyers. “But many contractors use the terms interchangeably, so make sure to ask which they truly mean when trying to firm up a budget for any project.”

While many prefer to receive a quote — the more hard-and-fast number — there isn’t necessarily a “better” way to go when it comes to getting either an estimate or a quote. Just be sure to communicate clearly with your contractor.

2. In-Person vs. Over-the-Phone Estimates

It is a standard practice in the renovations industry to provide either an estimate or a quote, as mentioned above. There are usually two types of ways to receive these critical numbers: over the phone, or having a builder come out to the property in person.

Meyers emphasized that it is nearly always better to have a general constructor visit the proposed worksite when formulating an estimate for a home improvement project.

“During the COVID-19 pandemic, there were a lot of construction businesses that moved to doing virtual estimates, which is understandable,” said Meyers. “The problem with that is that the person on the phone or in the video call rarely gets the full scope of work that way. There may be little details that are difficult to share virtually that could change the entire cost of the project.”

Meyers noted that when he works with contractors to draw up estimates, he always tries to have project managers visit the space in-person. This is because specialists like plumbers, drywall experts, and painters have trained eyes to spot, for example, the smallest cracks that can become big, costly problems down the line. Over the phone, it’s hard to get the same level of observation.

It is in your best interest to have a face-to-face interaction with any contractor before they begin work. The last thing you want is to have a builder raise the estimate at the last minute — or cut corners to meet a quote — because of a previously undescribed or unseen aspect or problem with the project.

3. Are Written Contracts Necessary for Hiring a Contractor?

This is an area of hot debate in the construction industry. In general, it’s good practice to have a thorough written agreement between service provider (aka contractor) and customer (aka you) before any work is done. This helps to protect both parties by ensuring the project is completed, and guaranteeing that you’ll pay for it.

However, not all organizations in the construction industry offer contracts.

“It’s important to remember that some tradesmen may not have the business acumen or language skills to put together a legal contract,” said Meyers. “But just because they don’t offer a contract doesn’t mean they won’t do good work.”

Meyers commented that before any contracts are brought to the table, it’s critical that you feel confident in the person you’re hiring.

If you do go the route of a contract, be sure the document contains:

Start date for the project Quote or estimate of the project Predicted completion date of the project Any additional fees that could arise like increased supply costs during the work

And be sure both parties actually sign the paper, otherwise the contract is void. The contract could also include a payment schedule, which is helpful for both parties.

4. Sourcing Materials

It is not uncommon for a contractor to ask if you’d like to source your own materials or go through the building company’s contacts.

There are benefits and drawbacks to both options.

If you source your own materials, you can be sure to get exactly what you want. If a supplier is out of your first choice, you have the ability to quickly decide on an alternative.

However, sourcing your own materials can quickly become stressful and costly. You need to not only be sure to get enough (plus some extra) supplies, but be able to transport them to the worksite, as well. If you don’t have a pickup truck, SUV, or reliable form of transportation, this can be tricky. Plus, you will generally pay full retail price with this option.

Meyers said that many contractors have partnerships with paint, lumber, and other home improvement supply companies. They may be able to provide supplies at anywhere from 15 to 30% off retail price.

This also means builders and their crew will take responsibility for transporting all materials to the renovation area.

Be careful, though. Some construction workers will take their partnership discounts and in turn, mark the prices up once again to their customers, meaning you hardly get a discount.

Meyers suggested doing some simple math to ensure you’re getting the best deal. Calculate how much it would cost for you to pay full retail price for the materials, then ask the crew what their price is. Hopefully, the construction group’s price is lower than the full retail figures.

5. Hourly Charges vs. Square Footage Charges

There are two main ways most skilled workers charge for home renovation services: hourly or by square foot.

Like with everything else, there are pros and cons to each way of determining a project’s total cost. This is another thing that should be discussed and agreed upon before work begins. You could even put it in the written contract if you have one.

Just because a contractor charges one way or the other does not make them a better or worse person to hire, said Meyers.

But, he also cautioned, when workers give an estimate of the number of hours a job will take, it’s highly unlikely they will complete the work faster than the estimate. After all, time is money for hourly workers.

Tying back to our previous point about the benefits of meeting in-person with a contractor, charging by square feet can be a more accurate way of estimating or quoting a customer. When a painter or remodeling expert can see the physical space and charge by square foot, it leaves fewer questions about cost, unlike charging by the hour, a highly variable estimate.

6. Check Contractor Paperwork

“I always want to make sure any contractor I work with is insured,” said Meyers. “That should include both liability and workers’ compensation insurance.”

Meyers explained that if an uninsured crew begins work on your property and one of the crew gets hurt, you could be on the hook for paying that crewmember’s medical bills and other fees.

The same goes for licensing. Always check to be sure the people you are working with have the appropriate licensing to complete a job. All legitimate contractors, electricians, plumbers, painters, etc. will have licenses, usually from a national association and maybe a local municipality, that allow them to legally do their jobs.

Meyers recommended asking your business of choice to supply you with copies of their insurance papers and licenses prior to beginning any work or signing any contracts.

Any reasonable contracting group will be able to provide both with no issue. After all, it is your property the crew is working on. Make sure you do your due diligence to get it done right.

Colorado-based writer Kristin Jenny focuses on lifestyle and wellness. She is a regular contributor to The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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