Protecting your investment means staying on top of maintenance and repairs when you own a home. Deferred maintenance has a tendency to increase project costs and scope. Peeling paint on a home's exterior, for example, can lead to wood rot -- which might lead to wood-destroying insects or water penetration, which in turn could lead to interior damages.
If you are ready to tackle household repairs, there are a few cardinal rules experts recommend when hiring contractors. Choices matter! Look for referrals from family and friends. Check qualifications and credentials where needed (proper licensing and/or certifications). Pull up their reviews online, giving preference to A-rated Better Business Bureau members and those who are highly ranked on Angie's List. Don't give contractors money upfront (as a general rule). And above all, require them to be properly insured (liability and worker's compensation) and bonded.
What's the Difference Between a Contractor Being Insured and Being Bonded?
"Bonding protects the consumer if the contractor fails to complete a job, doesn’t pay for permits, or fails to meet other financial obligations, such as paying for supplies or subcontractors or covering damage that workers cause to your property.
Insurance is different. There are two common types: liability insurance and workers' compensation. Liability insurance covers such situations as contractor-caused damage to your property, although it doesn't typically pay for repairing or replacing shoddy work. That is the reason for the bond. Workers' compensation provides payment to injured workers for lost wages and medical services, regardless of who was at fault. Workers’ compensation coverage will also provide benefits to the contractor's family in the event of a work-related death."
Working With a General Contractor
When the scope of work calls for multiple trades, there can be tremendous value in hiring a general contractor (GC). Often, a GC brings the credibility of a solid reputation in the local marketplace, backed by a legitimate business entity (registered with the State and in good standing), and equipped with the credentials described above (insured, bonded, rated and reviewed). It isn't uncommon for a GC to specialize in one or more trade areas themselves, but a customary practice is to subcontract ("sub-out") pieces of a large job to skilled and qualified tradespersons. This brings efficiency and speed to the table, combined with the benefit of keeping a single point of accountability between the consumer and the GC for the entire job.
The Trust Trap
When a GC puts his/her good name on the line, the trust the consumer has for the GC is naturally extended to his/her subcontractors. The interaction between the consumer and a subcontractor should never endeavor to cut the GC out of the conversation or solicit additional side jobs. When it does, this is a violation of trust, and quite frankly, revealing a character issue that should trigger a giant red flag warning in the mind of the consumer about that subcontractor. If a subcontractor is willing to bite the hand that feeds them (the GC), then they will also bite the consumer's. And it isn't a matter of if... it's a matter of when. Because leopards don't change their spots.
Consumers may naively fall into this kind of trap, assuming that such conversations are somehow condoned or endorsed by GC. Or, they may be tempted by bait pricing (undercutting) that causes them to forget about the due diligence steps they took when they initially hired the GC. And it is in the moments of when things go poorly that folks realize the mistake, and subsequently, the difficulty they might encounter with any recourse.
What To Do
If you find yourself in this position as a consumer, the best thing to do is to alert your GC that you've been approached/solicited directly by their subcontractor. Bottom line: whether it occurs during the initial project or after the project concludes, the subcontractor should not be looking to drum up gigs out of another contractor's book of business. If it is a blessed activity, the GC will advise you of such. If the tradesperson is engaging in subversive activity, it will probably spell the end of the working relationship between your GC and that particular subcontractor.
Why It Matters
There are several ugly truths that tend to emerge in these scenarios. As real estate professionals, we hear the horror stories and deal with the collateral damage caused when these situations occur.
The first thing a consumer should realize is that this person they are now considering doing business with has already demonstrated their willingness to steal. Thieves don't abide by the same moral compass that honest folks do. That cheap price they promised to win the side job is likely going to come at the expense of 1) failing to complete the work and absconding with money, 2) inferior craftsmanship, or 3) substandard or questionable sourcing of materials.
The second thing to understand is that consumers who unwittingly participate in these arrangements make themselves accomplices to the subcontractor's crime against the General Contractor (and others in the food chain that might be getting stolen from). GCs who earn their reputation in the marketplace by doing things right -- paying for advertising to generate new clients, earning referrals and repeat business, legitimately sourcing quality supplies, and taking care of the customer -- deserve loyalty from their relationships. If consumers understood the deep level of betrayal -- and equated it to robbing a mom & pop store, or losing a hard-won account to an unscrupulous poacher in their own line of work -- they would be quick to decline and report. Unfortunately, it seems many consumers are oblivious to how things work in contracting scenarios.
The criminal mindset always seeks to justify and rationalize criminal behavior. In defense of their actions, and perhaps to persuade you to use them after being confronted, you might hear things like:
- "It's ok. Everybody does it."
- "You can trust me. Bob and I go way back."
- "Because you are Bob's customer, I can get you a great deal."
- "I'll charge you 1/2 of what Bob quoted. He's way overpriced."
- "There's no conflict of interest now that the other project is finished."
- "I saw you needed xyz work done... Want me to take care of it for you?"
- "I don't work with Bob anymore. I make way more money on my own."
- "I have to take care of me. Can't fault a person for trying to get an honest day's work can you?"
- "Bob doesn't own you. You can do business with whoever you want."
- "Bob will never have to know. It's really none of his concern."
- "Bob isn't taking on any more jobs right now."
- "Bob doesn't really care for you like I do."
- "I know you prefer me to Bob. I can help you with just about any project."
Don't get played. Remember the golden rule. If you wouldn't want someone to treat you a certain way, don't do it to other people.