1. Referrals: Start with your friends and family and then check in with the National Association of the Remodeling Industry for a list of members in your area. You can also talk with a building inspector, who'll know which contractors routinely meet code requirements.
2. Pre-Screening: Once you've assembled a list, we recommend that you make a quick call to each of your prospects and ask them the following questions:
- Do they take on projects of your size?
- Are they willing to provide financial references, from suppliers or banks?
- Can they give you a list of previous clients?
- How many other projects would they have going at the same time?
- How long have they worked with their subcontractors?
The answers to these questions will reveal the company's availability, reliability, how much attention they'll be able to give your project and how smoothly the work will go.
3. Set up a meeting: Based on the phone interviews, pick three or four contractors to meet for estimates and further discussion. A contractor should be able to answer your questions satisfactorily and in a manner that puts you at ease. It's crucial that you two communicate well because this person will be in your home for hours at a time. On the other hand, don't let personality fool you. Check in with your state's consumer protection agency and your local Better Business Bureau to make sure contractors don't have a history of disputes with clients or subcontractors.
4. Compare Bids: Ask everyone to break down the cost of materials, labor, profit margins and other expenses. Generally materials account for 40 percent of the total cost; the rest covers overhead and the typical profit margin, which is 15 to 20 percent.
5. Talk about payment schedule: For large projects, a schedule usually starts with 10 percent at contract signing, three payments of 25 percent evenly spaced over the duration of the project and a check for the final 15 percent when you feel every item has been completed.
6. Put it in writing: Write up a contract that details every step of the project: payment schedule; proof of liability insurance and worker's compensation payments; a start date and projected completion date; specific materials and products to be used; and a requirement that the contractor obtain lien releases (which protect you if he doesn't pay his bills) from all subcontractors and suppliers. Insisting on a clear contract isn't about mistrust, It's about insuring a successful renovation.