The 10 Most
Important Rules
of
Choosing and Dealing With a Contractor
By: Razmik “Raz”
Vartanian
10th
of September 2004
 3-
Are you building a home from the ground up? Make sure the
contractor has built a complete project in the past. Experience
counts; a ground up construction or a major remodel is a very
different animal from room and bathroom additions.
4-
Visit his/her place of business. Not all contractors have an
office, but you need to make sure you are not dealing with
fly-by-night operation.
5-
Your construction loan package will include paper work for the
contractor to complete. How does he handle that? The following is
a list of warning signs.
a-
Doesn’t have the time to complete the
lender’s line item cost breakdown and insists on using his own.
b-
Doesn’t understand why the lender should be
asking for credit references.
c-
Doesn’t see why the construction loan
lender should need to see the construction contract?
d-
Insists that in his experience non of the
above are necessary and that this lender don’t know anything about
construction loans.
6-
Be wary of the contractor who prefers to give a “complete package”
price. No construction lender will accept that and neither should
you. The line item cost breakdown does not have to be completed on
every single line, but the more the merrier. Read it carefully, it
will dictate the quality of the home you end up with.
7-
Demand a material’s list. You don’t need the contractor who
doesn’t have the time for this. Some lenders don’t require this
and when they do little attention is paid to it.
Insist
on a complete list of all materials and fixtures. Go to the
showrooms, choose them and list your choices by make, model and
/or quality. This list should be signed by the contractor and you
and be made a part of the contract.
Saying
“A good kitchen will cost so many dollars per foot” doesn’t mean
much when you go to the showroom at the end of the project only to
find out that you hate what the construction loan budget has
allowed for.
8-
As a part of the construction loan process the contractor will be
asked to provide evidence of Liability Insurance as well as
evidence of Workman’s compensation.
He/She
may very well not have Workman’s Compensation Insurance if he/she
does not directly employ anyone. However, complaints about
Liability Insurance are a sure sign of trouble.
9-
As material costs are rising, payment of deposits on some
deliveries may be required by suppliers and some construction
loans will allow that. But be aware of the contractor who asks for
up front money.
10-
Construction loan disbursements are made in stages. Never ever pay
a contractor before your local county or city inspector has signed
off on that stage. The lender’s inspector only verifies percentage
of completion not compliance, so his approval does not mean that
your local authorities will also sign off.
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