We’ve all heard of remodels gone bad, where the relationship between the home or small business owner and the contractor goes sour and they fight it out in court. Here are six questions every homeowner should ask their prospective contractor to try and avoid the potential mishaps.
Like I mentioned in the "Remodel-astrope's Blog Post ", the scope of work is a vital piece of information to make any construction project run smoothly. If the exact details of what you want done in each space isn't written down and signed by you and the contractor then, it probably isn't going to happen. The reality of the situation is, that although you might have mentioned it, or added it, small details are easily overlooked and passed over. Let's say you go to a car dealership, ask for a second-hand car, and they give you a price without collecting any of the specifics you are looking for (brand, shape, year, mileage etc). You would never agree to drive off the lot in whatever car they handed you. If you are set on a fixed price contract with a general contractor, the more specific you can be on scope, the better.
At Bamboo, we use 3D visualization to help you figure out exactly what you want. We are able to provide this service to you, at a generally low cost even if you don't live in the Austin area or decide to use a different general contractor at the end. We call it a virtual remodel – creating a virtual prototype or mockup of your remodeled space. If you aren’t able to do a 3D visualization, our advice would be to list the materials, finishes and everything you possibly can, then add it to the contract. Always have a contract, never do a remodel on a handshake.
Some general contractors get fed up with projects or mishaps, take the money you've given them, cut their losses and leave. Its happened before, and it will happen again. Our first advice would be to only pay an initial deposit and make sure you have an agreed upon scope and schedule, signed by both you and the contractor. Have a fair payment plan set in place with phases and completed work. Only once all of the tasks in the first phase are done, should you pay them and then move on. It may be worth building in penalties based on delivery schedules, so if it isn’t done by a certain date then the general contractor would have to start paying a fine.
At Bamboo, we never walk away from a client, and we pay our Pros above market rate so they are incentivized to do good work and stay on the job. Each individual Pro gets reviews in Bamboo, so their good and bad behavior is tracked. We also operate on a "pay as you go" basis to ensure each task is done, and done right, before you have to pay for it.
Many people don’t realize this, but if a contractor feels like they have been badly treated, they can file a lien on your property – even without you knowing about it. This essentially means they have a monetary claim against it, and if you are trying to sell your house, you will have to settle it before you are allowed to.
At Bamboo, we have every Pro who works through our platform sign a legally binding lien waiver. It is a standard part of the Pro user agreement. We also make sure that our customers only pay for what is done in their house, using our smart technology to track phases of projects. Our project managers check in weekly to make sure the timelines are going as planned, and tasks are being completed as planned.
Just like you can’t have bug free code in software or a perfect essay in college, it’s impossible to have a perfect remodel – the question is whether your expectations for quality and your GC’s expectations line up. Quality also tends to correlate to price – because the best tile layers and carpenters can command higher rates than run of the mill folks. Note that all the website guarantees (Home Advisor, Thumbtack, etc) do not cover work quality – for example, the $1M Property Protection on Thumbtack says: “Installation problems or incomplete work are not covered.” The best advice we can give is to go to well-reviewed GCs and subcontractors, who value their reviews and want to avoid bad ones.
At Bamboo, work quality is a big deal for us, so we do cover it (see our work quality guarantee in our standard contract). We do this because we recognize how important the remodel is to you, we are the GC (not just a matchmaking service), and we are far more involved and vested in the success of the remodel. We do daily check-ins on the project with our offshore construction operations team, and our goal is to find any problem as quickly as possible – rather than having to fix it at the end or redo work. Many GCs operate a “slash and burn” strategy on customers, the same way that many limo companies that hang out at airport arrivals often have low customer satisfaction.
Every general contractor and subcontractor will say they have insurance, that doesn’t mean it’s true. When we spoke to the original founder of a well known remodeling brand (on TV a lot), he said that validating insurance was one of their greatest challenges for their GCs and subcontractors. To understand why, you need to know that insurance for remodeling is really expensive for the contractor (particularly worker’s compensation insurance), and it’s calculated as percentage of the net labor rate for people working on the project. Depending on the state, it’s typically around 10% to 15% for the labor categories in remodeling, though roofing in California can be up to 70%. That means for every $10 the contractor pays the guy on the roof, the contractor is supposed to pay another $7 to the state insurance pool. Worker’s compensation insurance covers medical injury and lost earnings for the crew. To be safe, you should ask to see the certificate of insurance from the GC, and you should then call up the provider and check that it’s valid. Worker’s compensation insurance certificates may be annual, but they are paid for monthly or quarterly, so an unscrupulous contractor can cancel the contract to save money (even though they still have the certificate they printed)..
At Bamboo, we organize insurance for all our projects, and assume that our Pros don’t have any. We are a real investor backed company, not two guys and a clipboard.
Change orders are also considered a main point of contention in any remodel. Once your kitchen is demolished and your half way through, you aren’t in a great negotiating position with a GC and will usually just end up paying whatever they ask for if something needs to be changed. The problem is the arbitrary nature of these change orders – how do you know that $3000 is a fair fee to move the toilet or change the direction of the tile? These problems are similar to what happens when your scope is badly defined. The best you can do is to try and argue for a “cost plus” structure for any changes, where the fees are based on actual labor hours and material costs.
At Bamboo, our whole contract is “cost plus”, so if you change your mind, you’re just going to pay for the extra hours at the rates you already agreed. You can see the extra hours in additional tasks in the plan, and we show you all the numbers. An investor once told us we needed change fees because “that’s the main way GCs get you to plus up their margins” – that’s just not the kind of company we are building.
Many remodels are stressful, but in the end it comes down to trust between you and the GC you have chosen. You can try to mitigate some of the risks in contracts, but if expectations are misset and the GC has little to lose whether you are happy or not, there’s a high probability of drama.
“Working with Bamboo App on our remodel project has been a breathe of fresh air. The use of technology to facilitate the project moving forward while also giving the homeowner oversight into the scope of work, timeline and budget is a true revelation for the industry.