Home Improvement Contractors – What Homeowners Should Know

With home improvement fraud and scams on the rise in the United States, homeowners must take the necessary precautions to avoid becoming victims of “fly by night contractors.” For those who still own their properties after seeing the rise in foreclosures across this Nation, it is incumbent on you the homeowner to do the following before you go in search of a Home Improvement Contractor.

Home Improvement Contractors (HIC) in most jurisdictions in the United States is regulated by City, State or County Agencies. For example, in New York City, Nassau and Suffolk County in New York, the Department Of Consumer Affairs regulates the operations of Home Improvement Contractors and Home Improvement Salesmen (HIS). These are representatives or sales people who negotiate contracts on behalf of Home Improvement Contractors (HIC).

There are basically three (3) stages of the home improvement process, namely: The Negotiation Stage; The Contract Stage and The Work In Progress and Completion Stage. In the Negotiation Stage, a homeowner should perform a “due diligence” on prospective Home Improvement Contractors and Home Improvement Salesmen, hereinafter referred to as HIC and HIS respectively. This is where you research and check to see if the HIC is a bona fide and legitimate operator. You start by calling the Agency that regulates HIC and HIS in your area. Ask HIC and HIS for proof of licenses, workmen compensation, general liability insurance, performance bonds, and references.

You should also check with the Better Business Bureau (BBB) with respect to the reputation of such businesses. Check to see any history of complaints and how they were expedited. Make sure that the HIC/HIS has a physical business address, business telephone, fax, email address, website, etc. Beware of “fly by night contractors” that operate out of their trucks, vans, SUV. It is very important also for you the homeowners to get at least 3-5 free written estimates from HIC and HIS. Some HIC/HIS may charge a reasonable fee depending on the size of the job estimate. For example, those estimates that involves blue prints specifications, plans, zoning, etc. However, you should try and negotiate a free written estimate that expressly state in black and white prices, brand names, colors, designs, start date, completion date, etc. Keep in mind that “word of mouth” is the best recommendation. Get references from HIC/HIS and invest the time to check the jobs and speak to the homeowners directly. Ask questions!

In the Contract Stage, before you sign or execute a contract, make sure that you obtain copies of HIC/HIS licenses, workmen compensation, general liability insurance, performance bond (applicable for large projects), and inquire whether the HIC participates in a Home Improvement Trust Fund. This is a trust fund that the Agency requires HIC to pay into so as to protect homeowners from HIC who takes off before a job is completed. You are required also to make sure that all brand names, styles, colors, any oral promises (some high powered HIC/HIS will promise you the moon to get your signature), along with manufacturer’s and labor warranties to be expressly written in your contract. Most importantly, make sure that the HIC/HIS expressly put in writing a start date and completion date, along with giving you your right to cancel (recession rights).

Most contract laws allow you three (3) business days from the date of a contract to withdraw or cancel the contract without any penalty or obligations. So if you gave a deposit to the HIC/HIS, you are entitled to a full refund within a reasonable period of time not to exceed 10 days. Check with your jurisdiction to make sure of this right. With respect to deposits, some HIC/HIS may require a deposit upon the execution of a contract. Be very careful of HIC and HIS who ask for large deposits up front. Beware of HIC and HIS who wants cash or have checks written out to his or her name. Make checks payable to the Business name only. It is advisable to pay using a credit card. If the HIC is a legitimate operator, it is very likely that they accept credit card as a Merchant. However, the Rule is: Do not give a deposit more than what you can afford to lose. In other words, give a very, very small deposit. A bona fide, reputable and legitimate HIC will not ask for a deposit up front. Such HIC has credit accounts with Home Depot, Lowe’s, and other suppliers who will not rely on your money/deposit to buy materials.

If you are not financing the work through the HIC or a third party lender, it is recommended that you pay progress payments to the HIC. Progress payments are incremental payments. In other words, you pay as the work progresses. For example, if you are getting a roof job done, you may want to give a percentage down (one third of contract price) only on delivery of materials and start of work. Then you give another one third payment when the roof is completed and the final one third when the construction debris is removed from your property. It is advisable to hold back at least 10 per cent of the total contract price for at least 90 days to ensure that the work was done properly. For those homeowners who wish to finance their projects through the HIC or a third party lender, make sure that you do not sign any blank bank papers. You should also ask the HIC/HIS whether the amount you finance will cause a lien or second mortgage to be placed on your property. Make sure that the bank does a visual inspection of the work before you sign a completion certificate allowing the bank to pay the HIC.

Finally, the Work in Progress and Completion Stage; this is the most crucial stage of the work. The HIC is ready to walk away from your project, but you want to make sure that the work was done in accordance with municipal building codes and all of your manufacturer’s warranties, warranty on labor, etc., are given to you in writing. This is where you will be asked by the HIC or HIS to release final payment. If you finance the work, the HIC/HIS will ask you to sign a completion certificate which they will take to the bank to get a release of the funds at your permission. Some banks will do a visual inspection to make sure that the work was done. However, it is very crucial that you make sure that the Municipal Building Inspectors give a green light for your project. In other words, they must sign off on the job stating that all work was done professionally and in accordance with municipal building codes. Some jobs may require a certificate of occupancy (CO).

Make sure that you have this CO in your hands before you release final payments to a HIC/HIS. Last but not least, if the HIC hires Sub Contractors such as an electrician or plumber to do work on your property, make sure that they are paid by the HIC. Failure to pay them may result in the Sub Contractors filing a mechanic’s lien against your property. This is legal. While the work is in progress, make sure that the workers are on time on the site. A normal work day for construction workers are from 8:00 am to 6:00 PM. Some industrious workers will work until it gets dark. Beware of workers that show up for a few minutes and take off. There are many HIC who start 20 jobs and cannot finish one. Some HIC take from “Peter to pay Paul” and stall your job in the process. This is why it is crucial that you get a start date and completion date in writing.

If the HIC fail to complete the job within that time, you the homeowner may legally hold back money or charge the HIC for each day that elapsed. If your work is an exterior job that involves ladders, scaffold, etc., make sure that they are erected properly and reasonable standard of care is exercised by the workers. In other words, if a scaffold or ladder fall and injure a neighbor or passerby, they may have a civil claim or lawsuit against you the homeowner. This is why you must ensure that the HIC has proper insurance such as general liability insurance before they start work on your project. If you the homeowner permit the HIC to advertise their companies by erecting a sign on your property, you may request a discount on your contract for such favor.

I hope that this post will help you to select the right Home Improvement Contractor for your project, and most of all, you will not become a victim to the criminals out there who masquerade as Home Improvement Contractors.

Patrick Pearce is Founder, President and CEO for Southeastern Development & Consulting Group, Inc., a Florida Corporation.

Patrick Pearce earned his BA degree from the City University of New York and his law degree (JD) from Hofstra University School of Law in Hempstead, New York.

Home Improvement Marketing – What Works, What Doesn’t, What Might and Why

Home improvement companies large and small know that getting their message heard by homeowners in need isn’t easy. Home improvement contractors are everywhere, and each is vying for attention. Open any given value pack mailer or local coupon publication and you will see page after page of home improvement ads. From lawn services, landscapers, deck, pool & patio contractors to roofing, siding and windows, carpet, bathroom, sun room and basement remodelers, the list goes on and on.

So as a contractor, how do you get your message heard? What marketing works, what doesn’t, and what aren’t we sure about? The answers depend somewhat on your local market and your budget, but here I provide some sure things that can be done no matter what your market or budget, and some tips on making the most of all of your efforts.

What Works

When I say ‘What Works’, I am talking about items that I have personally used to market my clients that I wouldn’t hesitate to employ for any home improvement company. These are methods that have proven time and time again to be worth the investment. There are very few ‘sure things’ in home improvement marketing, but I’ll bet on these methods every time.

Website – Now more than ever, the standout method of marketing that continues to show solid return on investment (ROI) is your website. Day after day, night after night, your website – if done right – can generate lead after lead. I’ve seen home improvement companies that do ZERO cold-calling and canvassing, and still generate millions of dollars in revenue due in part to their investment in a well-done, highly-optimized website. The key, however, is the ‘well-done’ part. Frankly, any jackleg contractor can get a website – maybe even an attractive one. But without the proper construction and search engine optimization techniques, it will serve as little more than an online brochure. Do yourself a favor and find a search engine pro that can analyze your site and help make changes that will get it working to generate quality leads.

Pay-per-click (Google) Advertising – Your website, as well-optimized as it may be – can’t possibly achieve top ranking for all of the key words and phrases that you need to reach your audience. Today’s searchers in many cases are using broad terms like ‘lawn service’ to find what they need. And at last check, on Google the term ‘lawn service’ yielded 9,400,000 results. If you’re part of one of the large franchises, you have a chance of being found. But if you’re Joe’s local lawn service, fagettaboutit. Your only hope in that broad search is to have your site pop up in the Sponsored Listings, or pay-per-clicks. Setting up Google pay-per-click advertising takes a little know-how, but is certainly available to anyone.

Signage – Contractors are on the road and in neighborhoods far more than they are in any office. They are out and about, all over their covered area day after day. Outfit those trucks – whether they are pick-up trucks, step vans or large vehicles – with nicely done signs, and you have yourself a rolling billboard. Forget the subtle vinyl lettering or magnetic sign – spend a little more on a colorful wrap (no need to wrap the whole thing – doors, the back window, and/or tailgate will do) and you will surely get noticed. In addition to vehicle signs, be sure to put a yard sign at every single installment. A yard sign is as good as a personal referral. And in today’s busy society when time spent talking to your neighbors can be few a far between, it allows the opportunity to broadcast to an entire neighborhood that one of their own has put their trust in you for their latest project. I’ve even seen home improvement companies provide incentives to homeowners for keeping the signs in their yard for extended periods of time. Well worth it.

Ratings-based Organizations – Organizations like the Better Business Bureau and Angie’s List allow their members and/or the general public to rate their experiences with contractors. And while many contractors shy away from these organizations for fear of bad ratings, my experience has been positive with these services. That is, of course, if you are reputable contractor. If you’re a successful contractor who has built a business based on referrals and quality workmanship, these services will speak for themselves. And when you do get you’re A+ rating, use it. Post it on your website and in ads, and it too can serve as a virtual referral.