7 Mistakes to Avoid When Hiring a Contractor
A recent survey found that 25% of
Canadian homeowners have a renovation project planned in the coming year.1
If you’re among them, you know that embarking on home improvements can be both
exciting and daunting. According to home services platform HomeStars, the
national median renovation budget is around $12,000, so you're probably
investing a significant amount—and you'll want to ensure your project’s
success.2
One of the most critical decisions
you'll make is choosing the right contractor to bring your vision to life.
However, many homeowners fall into common pitfalls during this process, leading
to stress, financial strain, and subpar results.
In this guide, we'll explore seven
mistakes to avoid when hiring a contractor to ensure your project runs smoothly
from start to finish.
1. SKIPPING
THE RESEARCH PHASE
A common mistake homeowners make
is rushing into hiring a contractor without proper research. But to ensure the
success of your renovation, it’s crucial to take time to meet with multiple
candidates and educate yourself on best practices surrounding your project.
If you bypass the interview
process, you miss the opportunity to evaluate different approaches, pricing,
and expertise. This can result in overpaying or hiring someone whose skills and
vision do not align with your needs.
Neglecting to research the
processes and steps involved can also leave you vulnerable. Not only does it
make it more difficult to ask the right questions, but you also risk hiring
unqualified professionals or settling for subpar work.
What To Do
Instead:
● Educate
Yourself — Read up or watch YouTube videos to
gain a better understanding of best practices surrounding your project.
● Interview
Multiple Contractors — Search for
and interview at least three contractors who specialize in the type of work you
need.
● Ask Specific
Questions — Inquire about the processes and
materials each candidate will utilize.
● Seek
Recommendations — Get referrals
from trusted sources like friends, neighbours, and real estate professionals.
We’d be happy to share a list of referrals!
2. CHOOSING BASED SOLELY ON PRICE
Once you’ve interviewed candidates
and reviewed their proposals, it’s time to choose your favourite. But don’t
make the mistake of rushing to the lowest bid.
While it's natural to want to save
money, selecting a contractor based entirely on price can be a costly mistake.
Extremely low bids may indicate cut corners, subpar materials, or hidden costs
that will surface later.
When evaluating bids, make sure
you’re comparing “apples” to “apples” and considering factors like quality,
timeline, and scope. Are they fully licensed and insured? How long have they
been in business? Do they warranty their work?3
What To Do
Instead:
● Consider
Overall Value — In addition
to price, look at experience, reputation, and quality of work.
● Ask for
Detailed Breakdowns — Understand
what's included and what's not in each bid.
● Be Wary of
Low Bids – Bids that are significantly lower
than others may be too good to be true.
● Invest in
Quality — Remember that quality work comes
at a fair price, and investing in a reputable contractor can save you money in
the long run by avoiding costly mistakes or repairs.
3. NEGLECTING
TO CONFIRM CREDENTIALS & INSURANCE
When you’ve established a good
rapport with a contractor, it’s natural to want to believe the best in them.
But neglecting to check references and verify licensing and insurance could
come back to haunt you.4
Hiring an untrained or unlicensed
contractor puts you at risk for safety and code violations, not to mention
shoddy workmanship. Without proper insurance, you could be left footing the
bill for costly repairs, legal issues, or even medical bills if someone gets
hurt on the job.4
Skipping out on a reference check
can be equally problematic. It’s your best opportunity to ensure that their
promises and your expectations line up with reality.
What To Do Instead:
● Verify
Licensing and Insurance — Confirm that
the contractor is licensed according to local requirements and verify
insurance, including general liability and workers' compensation coverage.
● Check Reviews
— Read online reviews and confirm
that the business is in good standing with the Better Business Bureau and other
relevant trade groups.
● Call
References — When contacting references, ask
questions and request to see photos of the contractor's completed projects.
● Visit Job
Sites — If possible, visit a current job
site to observe the contractor's work in progress and interaction with clients.
4. PROCEEDING WITHOUT A WRITTEN AGREEMENT
A handshake deal might seem
friendly and straightforward, but it's a recipe for misunderstandings and
potential legal issues. Verbal agreements are difficult to enforce and leave
room for miscommunication about project scope, timelines, and costs.5
Instead, you should have a signed
contract in place before any work begins.6 Paperwork can be tedious,
but don’t skip the important step of carefully reading over your contract,
asking questions, and pushing back on any terms that make you uncomfortable.
Don’t forget to ask for payment
receipts and document any change orders or issues that arise throughout the
project, as well.
What To Do
instead:
● Insist on a
Written Contract — Outline all
aspects, including scope, materials, timeline, payment schedule, warranty
information, and a process for handling change orders.
● Understand
and Agree — Don't sign anything until you
fully understand and agree to all terms.
● Keep
Documentation — Once you’ve
made your final payment, request a receipt marked “Paid in Full” to keep on
file for legal and tax purposes.
5. PAYING TOO
MUCH UPFRONT
Another common misstep is paying a
large sum upfront or the full cost of the project before the work is completed.
This can leave you vulnerable if the contractor fails to complete the work or
disappears with your money.
Upfront deposits shouldn’t exceed
10% to 15% of the total project cost.7 The remaining payments should
be tied to progress milestones outlined in your contract.
Legal experts caution against
paying a greater share of the project cost than the percentage of the work
that’s been completed.8 If you end up dissatisfied with the outcome,
you’ll have much less leverage if you’ve already paid.
What To Do Instead:
● Be Cautious —
Avoid contractors who demand large
upfront payments or cash-only deals.
● Establish a
Payment Schedule — Tie payments
to project milestones and stick to them.
● Pay Only Upon
Completion — Never pay in full until the
project is completed to your satisfaction and all required inspections have
been passed.
6. FAILING TO GET NECESSARY PERMITS
Skipping the permit process might
seem like a way to save time and money, but it can lead to serious
consequences. Without the proper permits, you risk running afoul of local
building codes and regulations, which could result in fines, forced removal of work,
or even legal action.9
Additionally, unpermitted work
might compromise the safety and structural integrity of your home, potentially
leading to hazardous conditions or diminished resale potential. Homeowners may
also find themselves without recourse if issues arise later, as insurance
companies often exclude coverage for unpermitted renovations.9
If you’re under the jurisdiction
of a condominium or homeowners’ association, don’t forget to check its bylaws,
as well. You may need prior approval to make modifications to your home or
yard. Ignoring these restrictions can lead to fines or delays—so don’t skip
this important step.10
What To Do Instead:
● Discuss
Permits — Talk about permits and association
requirements with your contractor before work begins.
● Include
Permits in the Contract — Ensure that
obtaining necessary permits and approvals is part of your contract.
● Verify
Inspections — Make sure all
required inspections are completed during the project.
● Keep Records
— Keep copies of all permits and
inspection reports for your records.
7. IGNORING RED FLAGS AFTER THE PROJECT HAS STARTED
Sometimes a contractor can check
all the right boxes—until the work begins. Unfortunately, red flags that are
spotted mid-project can be especially challenging to address.
If you’ve already paid a
substantial amount or had a portion of your home demolished, you may feel
trapped in a bad situation. However, if there are major problems that the
contractor is unwilling to address, ignoring them can make things exponentially
worse.
Don’t be afraid to seek legal or
professional advice if issues persist. Taking immediate, informed, and decisive
action is crucial to safeguarding your investment and ensuring the project's
ultimate success.11
What To Do Instead:
● Review Your
Contract — Make sure you thoroughly
understand your rights and the agreed-upon terms.
● Document
Issues — Keep detailed records, including
dates, descriptions of problems, photographs of subpar work or materials, and
any communications with the contractor.
● Communicate
Professionally — Arrange a
meeting to discuss your concerns, ensuring you remain calm and professional
while clearly expressing your expectations.
● Request a
Resolution Plan — Ask for a
plan to address the issues, set a timeline for resolution, and put everything
in writing to ensure you’re both on the same page.
● Seek Advice —
If the contractor is uncooperative
or dismissive, consider seeking advice from a legal professional.
BOTTOMLINE
Hiring the right contractor is
crucial to the success of your home improvement project. By avoiding these
common mistakes, you can significantly increase your chances of a smooth and
successful renovation experience.
Remember, taking the time to
thoroughly vet contractors, communicate clearly, and plan carefully will pay
off in the long run. Your home is likely your most significant investment, and
it deserves the care and attention that comes with making informed, thoughtful
decisions about who works on it.
If you’d like help finding a
contractor or want to know how planned improvements could impact your home’s
resale potential, reach out for a free consultation!
The above references an opinion and is for informational purposes
only. It is not intended to be
financial, legal, or tax advice. Consult the appropriate professionals for
advice regarding your individual needs.
Sources:
1.
FinanceIt -
https://www.financeit.io/2024-canadian-homeowner-reno-report/
2.
HomeStars -
https://go.homestars.com/l/209902/2023-09-19/3knlc8/209902/16954201083uIFaZeZ/Reno_Report___2023_final.pdf
3.
Canadian Home
Builders’ Association -
https://www.chba.ca/finding-a-renovator/
4.
The Globe and
Mail -
https://www.theglobeandmail.com/life/home-and-garden/before-starting-work-check-your-liability/article571895/
5.
Forum Law -
https://www.forumlaw.ca/do-verbal-contracts-hold-up-in-court/
6.
Canadian Home
Builders’ Association -
https://www.chba.ca/legal/
7.
HGTV Canada -
https://www.hgtv.ca/kenny-brain-advice-on-hiring-a-general-contractor/
8.
The
Washington Post -
https://www.washingtonpost.com/home/2024/07/08/how-to-find-good-honest-contractor/
9.
HUB
SmartCoverage -
https://www.hubsmartcoverage.ca/blog/what-do-i-risk-if-i-dont-get-permit-during-renovations/
10.
Condo
Strategies -
https://condostrategis.ca/en/blogue/condo-renovation/
11.
Angi -
https://www.angi.com/articles/how-complain-contractors-effectively.htm
