10 Due Diligence Steps Before Hiring a Contractor

Real Estate Agent with Sequim & Port Angeles Real Estate

(More on FreeRealEstateLaw.com)

 For clients who want to hire a builder/contractor, I recommend some due diligence before signing the contract. After practicing real estate law for 20 years, I saw so many nightmares that could have been solved with these simple steps. These are the steps I compiled over many years. You're welcome to print this and hand it to clients, or simply forward an email of the article to them. You do not need to give me credit. I gladly give you permission to post this on your website or otherwise use it, so long as it is used to help good people avoid problems and have happy results in the construction of their new home.

Let's be very clear about this. There are many many outstanding builders and contractors out there. The problem, as with any profession, is that you only need to get one bad one to live through a personal nightmare. Use these practical rules to find and hire a good builder, and you'll save $1,000s in attorney's fees, not to mention other costs, stress, and sometimes even divorce (yes it has happened).  

  1. Do not simply open the Yellow Pages and pick a Builder.
  2. Do not choose a Builder simply because he seems nice.
  3. Do get a reliable referral to a good Builder. That means the referral comes from someone who is known to be reliable and who knows the Builder.
  4. Do your due diligence on the prospective Builder. Investigate thoroughly.
  5. Look at some of his houses, inside & out, and talk to previous customers. Be careful. You can still be fooled here. You can find one or two happy customers with every builder.
  6. Check on his state license/registration, which can easily be done on the Internet Here (Washington State) Use the State's checklist, also, but notice they don't tell you what NOT to do, which is where many of the traps are.
  7. On the same State Internet resource, you can check the Builder's status, infractions, bond, and pending lawsuits. DO IT! Believe it or not, the vast majority of people do this only after they get into trouble with the Builder.
  8. Check your local county superior court clerk's office for pending lawsuits against your prospective Builder. This can be done on the Internet by searching his company and personal name (in most counties in the U.S.)
  9. After all this, interview your prospective Builder/Contractor, and see if you like him. If you don't, I strongly recommend you keep looking. Gut feelings are important. You've spent a lifetime learning how to read people. Don't ignore that lifetime of experience now. Here you should judge the book by its cover.
  10. Ask for a copy of his standard contract and take it home to review it. Get a professional opinion on that contract. It seems every Builder uses a different contract, and many of them are grossly one-sided. There are several critical contract issues you want unambiguously addressed in the contract.
Best regards,
Chuck Marunde, J.D.
Sequim & Port Angeles Real Estate, LLC
618 S. Peabody St., Suite I

Comments (3)

Nicole Kraus
Signature Realty Associates - Dover, FL
Your tips ROCK!!  Thanks for sharing, will be sure to copy this and stick it into my tool chest.....
Aug 17, 2007 05:22 AM
Susan Trombley
Trombley Real Estate - Wake Forest, NC
Broker/Realtor, Raleigh, Cary, Wake Forest, Youngs
You could not have said it any better. And now a days you have to look out for that cash flow. Does the builder have to many specs homes and not enough money to build your new home before he closes his doors?
Aug 17, 2007 05:25 AM
Joan Snodgrass
Midamerica Referral Network - Kimberling City, MO
Great information Chuck.  Especially pertinent as I personally have to contract with a builder on some home remodeling right now.
Aug 17, 2007 06:57 AM