How to Pick the Best Contractor for your REO, Foreclosure Rehab, or Other Remodel

How do you pick someone (a contractor) to take care of your REO, foreclosure, or other home improvement or rehab needs?

Do you base it on:

the nice shiny truck they came to visit you in?
the neatly pressed uniform they are wearing?
the sharp penmanship on the estimate?
the jokes he or she cracked about the weather?

What is it? What are you basing your decision on? You really need to take a second and reflect on what has been your deciding factors on choosing a contractor for your job.

Don’t base your decision on emotions!

Never let emotions get in the way of good business practices. Now, I’m not saying to be a robot but don’t let the fact that the person coming over to give you an estimate loves the same things you do and is such a cool person. Countless people including me have fallen into this trap and end up with shoddy results because of it.

So, how should I base my decision on picking a contractor for the job?

The following is just a simple list of what you should ask before picking a plumber, painter, carpenter, electrician, or other contractor:

What do you specialize in? (What did you do the most in the last 12 months) This is a super important question that must be asked. Many contractors can do just about everything there is to do in home improvement/construction but can they do your job beautifully and within budget? I had an experience once where I hired a carpenter to do tile work on my house. This person specialized in wood work but said they can do tile as well. This person beat out all the other estimates I got but in the end the results of his work were lackluster. Don’t ask a Burger King cook to whip you up a soufflé. Get my drift?
Will you be personally doing the work? Ask if the person giving you the estimate will be performing the work? These are important questions because sometimes, the person coming out to do the estimate is not the person that will go out and do the work. You will just be wasting your time explaining to the estimator all the tiny details of what you want done only to find out you have to repeat them all to another person that ends up showing up at your door.
Will you be sub-contracting work out? This is a MEGA super duper important question to ask because many contractors sub-contract out work to someone else and never actually do the work themselves. The caveat here is that, lets say you pay the main contractor in full but he never pays the 3 sub-contractors that came and performed work on your property. The main contractor picks up shop and moves to Jamaica.
Guess what?

In most states you are responsible to pay those sub-contractors regardless of the fact that you paid the main contractor in full. Sad but true. The sub-contractors can slap a mechanics lien on your property thus clouding the title, and you cannot move forward with your deal because you have to go to court to fix this mess you could have avoided had you opened your lips and asked “WILL YOU BE SUB-CONTRACTING OUT ANY WORK?” If they do and you are comfortable with it, make sure you put in place a way to know that these sub-contractors are paid timely or see if you can withhold monies until work is completed, etc. Demand proof the sub-contractors were paid. Plain and simple.
Do you have insurance and are you licensed? This is self explanatory. Ask if they have current insurance and that you you want to see a copy of it along with license information. Go to your local state contractors licensing board online and check on their number to see if the license is active and if there are any disciplinary actions ever taken against the contractor. The last thing you want is one of the contractors workers to fall off a ladder and then you find out that the contractor is unlicensed and uninsured. You might get dragged into court because the guy wants to sue you for not having a level floor on which his ladder stood. Crazy but it happens.
Will you clean up after your work? You will be surprised how many contractors do not clean up after themselves. Don’t let this be a cherry on top of your sweet sundae of a remodel project. Make sure you find out if they will clean up after themselves, and if they will be charging you extra for disposal of scraps, etc.
Where will you be performing your work? Ask this question if you do not want your green lawn turned white. Lets say you need some tile work performed on a house. The contractor brings his cutting table. This table requires lots of room and running water. When tiles are cut it produces a chalky milky discharge. If they set up shop on your front lawn guess what. Your grass is screwed. If you have painters painting your house. Ask where will they be cleaning their tools etc. They most likely will wash their brushes and buckets over your lawn and screw your lawn for months. This is another important question.
Do you guarantee your work and parts? Find out how long they guarantee their labor and the parts they have installed. Don’t be surprised later when the new shiny faucet the plumber installed, sprung a leak and they only guarantee their labor and not installed parts. Don’t get caught off guard. Be a sharp investor/home owner.
Do you repair or replace places of access/entry? This is a great question to ask. Let me give you a for instance. A while back we contracted a plumber to come replace the hose bibs (the faucets where you connect the garden hose to) in the front and backyard because they sprayed water all over the place no matter how tight you put the hose on. Now normally the hose bibs can be twisted off and replaced easily but in our case they were welded on so they had to be sawed off and new ones welded on. In order for the plumber to get a good weld they had to bust the stucco around the hose bib in order to get to the underlying pipe. Now who is going to repair the hole in the wall once the hose bib is replaced? Plumbers are plumbers and 99% of the time they will not repair exterior or interior walls. They might need to bust apart tile in your restroom in order to get to the pipes or the concrete of your driveway to get to the irrigation system placed underneath. You might think that the estimate they are giving you covers this repair but I bet it does not. Please ask this question.
How long will the project take? This is an easy one; I am sure you will ask it. Some people don’t and get caught off guard. A good variation to this question would be to ask what will happen if the contractor does not meet your timeframe? Will you be credited for your time? Will they extend the guarantee on parts and labor?
When is payment due? Some contractors want the money due all upfront. Some want it broken down into 3 parts: a percentage to start, a percentage half way and the remainder at finish.

These are just a basic set of questions to ask when picking a contractor. Make sure to always get 3 estimates no matter how nice the person is. Smart investors/home owners always get 3 estimates and ask the questions I laid out before you. You also want to work with someone that is very knowledgeable about the field of work you need done to your property. Listen to that voice inside and you should be ok!

I look forward to your questions, comments or concerns about my article.

Good luck in all you do America! Let’s make 2010 our best year yet.

Photo: kyz

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.