Working with a Home Improvement Contractor

[A picture of couple working with a contractor]

Owning a home is often the biggest investment people make in their lifetimes. One of the best ways to protect this investment is with regular maintenance, repair, and improvements. While there are small projects that can be completed by the homeowner, other bigger projects need the assistance of a home improvement contractor.

HUD's 203(k) Rehabilitation Program and Title I Home Improvement Loan Program provide homeowners an opportunity to make those repairs and improvements and allow the use of a contractor.
Homeowners are advised to take certain precautions before signing any contracts and hiring any contractors for home repairs.

A picture of a couple signing an agreement

Be Careful of What You Are Signing

1. Get multiple estimates.

Talk to several contractors and get at least three bids and compare contract details: scope of work, necessary materials, local inspections, and time required to complete the job. Question significant differences between the estimates.

2. Be sure the work can be performed at the price set.

Ask for estimates for all components of the improvement, including soft costs such as employee wages, insurance, permits etc. Make sure to gain a clear understanding of the total improvement costs, timing for completion and all financing details.

3. Avoid wild bargains.

We all love a bargain. An offer of a reduced price because they're "doing work in your neighborhood" or have "left over" materials is a warning sign.

4. Look for contracts with unusual incentives, bonuses, or requests.

Make sure you fully understand the request and your potential liability before you agree to or accept terms from salespeople who offer you trial purchases or some form of bonus for allowing them to use your house as a model for advertising purposes.

5. Get everything in writing.

Get all contracts in writing, including any changes or updates to the original work order and estimate. Be wary of contractors who will not provide a written estimate, accept only cash payments, or request full payment up front.

6. Read and understand the details of any contract before signing.

Take your time making a sound decision. Do not let a salesperson pressure you to sign anything. Be wary of salespeople who use scare tactics to scare you into signing for repairs that they say are urgent. Seek the advice of an expert as to how urgent such repairs are and always get a second opinion on so-called urgent repairs before a final decision is made.

7. Check their insurance and bonding.

Do not do business with a contractor who does not carry the appropriate insurance coverage. Obtain and retain a full copy of the contractor's insurance and liability coverage. If the contractor is not insured, you may be liable for accidents that occur on your property.

8. Never consolidate existing loans through a home improvement contractor.

[Construction Contractor shaking hands with couple]

Know Who You Are Working With

Most states and localities have contractor licensing sites for consumers to verify licensing information
Get recommendations from friends or relatives and check referrals provided by the contractor.
Check on-line resources: Better Business Bureau, local business databases, etc. for status and evidence of past complaints.
If your contractor is going to arrange for financing of a loan, call the lender directly for details. Always verify the lender's information prior to providing any personal details such as your Social Security Number or financial information.
Homeowners should always do their own research regardless of who referred the contractor.

Understand What You Sign When The Job Is Complete

The contract that both you and the contractor sign should clearly state the type and extent of improvements to be made and the materials to be used. Before you sign, get the contractor to provide a detailed breakdown of the terms in simple language.

Never sign a completion certificate until all the work called for in the contract has been completed to your satisfaction.
By signing the completion certificate, you approve the work and materials, and you authorize the lender to pay the contractor the money you borrowed.
Be careful not to sign a completion certificate along with a sales order or contract execution.

Home Improvement Contractor Complaints

You may file a complaint with the Contractor's State Licensing board in your state. To report any contractor complaints under HUD's 203(k) or Title I Programs, call toll-free (800) 347-3735 or (800) 877-8339 TTY/ASCII.

Resources

[A picuture of a nice manufactured home] Program Information