Breaking Up with a Contractor is Hard to Do

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Fix and flip houses long enough and sooner or later you’ll become disgruntled with a contractor. Or, they’ll become disgruntled with you. Here are some key indicators that a divorce with your contractor is eminent:

  1. Contractor displays a lack of attention to detail.
  2. Contractor is unable to complete a job on time as promised.
  3. Contractor is unable to complete a job on budget.
  4. Contractor calls you an idiot.
  5. Contractor doesn’t call you at all.

Why does this happen? Human nature I guess. You’ll likely discover that once a contractor has won your business they can become complacent. They miss the small stuff. They get busy with other customers and neglect your project.

I once employed a project manager named Edward. We worked together for over two years. Then one day he just disappeared. I should have saw it coming. The last few jobs he did for me were sub-standard. I remember scheduling a final walkthrough with him for a property located over an hour from my office. When I showed up at the house the painters were still there painting. I asked Edward if he understood the definition of the word final. Nothing ticks me off more than when I schedule a final walkthrough with my project manager and the job is not complete.

Of course, a contractor may elect to divorce you. Here’s why they would choose to do that:

  1. You don’t pay on time.
  2. You don’t pay enough.
  3. The contractor found a BBD (a bigger, better deal).

Neglecting to pay your trades promptly is bad. I like to pay mine within 7-days of job completion. Likewise, if you squeeze contractors too much on price then they’ll ditch you and your project when a more lucrative opportunity comes along. And even if you pay on time, and pay fairly, nothing will stop a contractor from seeking out the bigger, better deal.

Eventually I would learn that my Edward got a bigger, better deal. I found out from the landscaper that he moved to Canada to build log cabins for a wealthy land developer. Thus, I can’t blame Edward for leaving me. No doubt his new employer offered a steady paycheck, benefits, perhaps even a brand new cordless drill and extension ladder.

Still, a phone call, text message, heck, even a Dear John letter would have been nice. But you know what they say, “better to have loved and lost a good contractor than to have never loved at all.”

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About Author

Marty (G+) is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.

3 Comments

  1. Marty,
    Solid information for both parties.
    Treating contractors with respect is huge.

    Respect them enough:
    to pay promptly and in full
    to lay out a proper scope of work
    communicate effectively with them
    to work with them on a problem, not belittle them
    let them know your workmanship expectations up front
    to see there side of things on any point of contention so you can work out a solution
    to fire them promptly and pay them for work completed if it will not work out. Nothing is worse then dragging them along, or getting dragged along.

    Jason

  2. Agreed. Unfortunately, there are also plenty of first dates that never become a relationship. Maybe it’s just me, but the work ethic is not what it use to be.

  3. After 30 years witnessing other contractors businesses implode, the number one reason for this occurs is directly related to poor business practices on both sides of the transaction.

    The first two reason given: 1.You don’t pay on time, 2.You don’t pay enough,
    are actually the fault of the contractor’s improper business practices.
    This lack of business smarts lead to, 3.The contractor found a BBD (a bigger, better deal) or goes out of business in favor of getting a regular job.

    If contractors knew how to write and follow thru on a contract the above three examples would never crop up.

    1.You don’t pay on time, the work totally stops until you do.

    2. a proper quote is worked up, taking into account a fudge factor which if not needed can be gifted back or used to go beyond the customers expectations.

    3. Will never crop up, because the job they are working is the next BBD.

    Now equipped this info, if you want to retain your excellent contractor for life you may have to make him a better contractor by cooperating with him to write a win win contract.

    Of course there is one issue beyond your control, some contractors let their profits go to their heads, opting to take up activities that are mentally or financially destructive. In which case you will be happy you helped write that win win contract which should include a non performance clause for both parties. I would also suggest an incremental waiver of liens per payment made, with proof of payment to subcontractors, or what I call sub waivers.

    When both sides run their business like a business things will go a lot smoother. No problem being friendly outside of business, just don’t let one realm slide into another.

    Just my 2 cents I learned the hard way.

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