4 tips for hiring contractors (and 10 ways to avoid scammers)

To protect yourself — and your money — here are 4 tips to ensure that your next remodeling project goes smoothly.

By Popular Mechanics

We love building for ourselves, but some jobs just need to be subbed out. Unfortunately, a competent, honest remodeling contractor is no easy find. There are thousands of reliable, trustworthy contractors out there — but there are quite a few toolbox-wielding knuckleheads, too. Here’s what you should keep your eye on:

1. Avoid sleazy or shady tactics.
The first thing to do is make sure you're not being scammed. Beware these 10 red flags:

The contractor ...

1. Provides credentials or references that can't be verified.
2. Offers a special price, but only if you sign a contract today.
3. Accepts only cash, requires large deposits or wants the entire cost up front.
4. Asks you to write a check in his name (not to the business).
5. Won't provide a written contract or complete bid.
6. Refuses to apply for building permits, and asks you to get them.
7. Offers exceptionally long warranties.
8. Proposes to do most or all of the work on weekends and after-hours.
9. Gives you a low-ball offer that sounds too good to be true.
10. Has "Will work for beer" painted on the side of his trucks.

2. Check the construction work.
When you meet with contractors, ask each to bring photos or drawings of completed jobs that are similar to yours. When possible, ask to visit a completed project. Get in touch with the homeowners involved, says construction manager Amy Johnston, author of “What the Experts May Not Tell You about Building or Renovating Your Home.” Ask pointed, pertinent questions such as:

• What was the original construction budget?
• What was the final construction budget?
• How would you describe the quality of the work?
• Was the job site kept clean and organized?
• Was the project completed on time?
• Were any liens filed on your property?
• Would you work with this contractor again?

Vetting a contractor through customers works both ways — word-of-mouth recommendations have long been one of the most reliable means of finding competent contractors. Seek references from neighbors, friends, architects, colleagues and real-estate agents. You can also find local contractors, along with ratings and reviews, from online sources, such as Angie's List.

3. Check the paperwork.
Check to make sure contractors are licensed and insured. A good pro should volunteer documentation. If you have doubts, contact the Better Business Bureau and check for complaints. When comparing competitors' bids, make sure everything is spelled out. This includes the scope of the work, materials specified, warranties, references, time frames, cost overruns, payment schedule and price.

Once you have chosen a contractor, obtain a written contract that includes the items specified in the original bid, plus the final price, payment terms, sales tax, permit fees, the specific work to be performed, materials to be used, warranties, start and end date, change-order processes, final review and sign-off procedures and debris removal. Once the job is under way, make sure the necessary building permits are on display.

4. Check the bills.
When advancing money for materials, ask the contractor if you can pay the supplier directly. Always pay with a check, never by cash. Take a carrot-and-stick approach to completed work — pay incrementally as each significant phase of work is completed. Be careful about paying for work that hasn't been finished. Before making the final payment, do a visual inspection of the entire project and make a punch list of any repairs or uncompleted work. Put all change orders in writing; avoid verbal contracts.

A small but important technicality: Request signed lien releases from all major subcontractors and suppliers before making final payments. A lien release guarantees that the contractor has fully paid his materials suppliers. Former contractor Tom Philbin, author of "How to Hire a Home-Improvement Contractor Without Getting Chiseled," tells the story of a Memphis, Tenn., homeowner who had some work done on his house. "The job went smoothly and he paid the general contractor all the money for the job. But the contractor hadn't paid his supplier, who slapped a lien on the homeowner. The homeowner ultimately had to pay an additional $20,000, even though he had paid the contractor in full." Get those lien releases.

By Joseph Truini, Popular Mechanics