Six Contractor Red Flags, Part Two: The Other Three Red Flags

Among the first steps in any successful home construction project is finding the right contractor.  Believe me: it’s a dirty industry that can be difficult to navigate for even the most seasoned homeowners and general contractors.  Here are the final three red flags of our two-part article.

4. Discounts for Cash Payments

It always surprises me when customers ask if this is an option.  The monetary value of one’s work does not change based on the method of payment.  I don’t do poorer work if paid in cash, so it stands to reason it also wouldn’t cost less.

There’s only one reason for a laborer to offer discounts for cash payments: they don’t intend to report it as income next April 15th. And if they’re willing to lie to one of the most vengeful organizations in the USA, what makes you think they’d be honest with you?

Sure, a legit contractor will take cash, and you’ll still get an invoice and receipt, and they’ll still have to show it as income to their bookkeepers. But you’re having a laugh if you think it de-values their service.

5. Excessive Down Payment (and sometimes no down payment)

If you live in a state where residential construction down payments are capped by law, you needn’t worry. Here in Kansas or Missouri you have no such luck. There is no standard for down payment amounts, and all the garbage consumer-oriented home improvement websites suggest numbers completely void of contractual context.

I won’t pay a sub more than 20% up front. If more is needed for costly special-order or non-refundable items, those costs fall under my next construction draw for special order items, which comes the Friday after the down payment if needed.  It’s conceivable that a contractor and homeowner could agree to roll special order purchases into the down payment, so in that situation the initial payment could be considerably more than 20% of the contract price.  Every agreement will be different.

Many remodeling contractors don’t offer financing, so down payments and scheduled draws are what keep the project going. That said, I’ve always felt 25% was a bit much, especially if the contractor has the experience to properly price the work and evenly distribute the draws. 30% or more is right out as a down payment only. I do know some local Kansas City “handypeople” who still ask for 50% up front, and people still give them the money before they never see them again.

Down payments of 25% or more may be a red flag, but but the payment schedule might justify it with proper documentation.

What about contractors who brag about no down payments? Congratulations, they’ve just agreed to finance your project with no financing terms!  This could be due to lack of experience, in which case you should be wondering what other experience they lack. This could also be due to to an olde tyme concept known as “trust,” in which it was agreed upon verbally that one person would provide quality service, and the other would pay a fair price. Keep the faith, brothers!

I say trust but verify.  I trust that I will provide you with excellent service, and I trust you will pay me for said service, because I have verified that all scope of work and terms of payment are recorded in a binding contract and signed by all parties.

And that’s a segue…

6. No Contract

This is very personal for me, and my syntax shall reflect it.

Chapter 1: On a Hope and a Prayer.

I used to work for a remodeler who claimed to be able to do it all, flaunting his unverifiable decades of experience (although given his age, he could have legitimately spent only one year in every discipline and sub-discipline and be telling the truth).

He worked without a contract. I inquired one afternoon why he continues to work without a contract when a majority of jobs ended up in strife with the homeowner, or complete non-payment. He gave me some line about people not wanting to see big contracts and how they intimidate people and prevent sales.

Here’s how it usually went down for a mid-grade kitchen or bath remodel:

Meet the customer, discuss the project. If there’s evidence of a religious tendency, bring it up and talk about being a pastor or whatever in his local religious cult; gain trust. If not, talk about himself and other similar projects he’s done (with no evidence of degree of success), and brag about what he can do, regardless of what the customer wanted (since they’ve not yet been asked). Write none of it down, and formally agree on nothing. Start ripping stuff out. Homeowner asks about cost, reminding him it’s been a week since last asked. He jokes about being able to keep it under a million, and if that is met with push-back, assure them it will be “reasonable” and he’ll give them a break on the cost.

Editor’s Note: HOW THE F*** DO PEOPLE KEEP ACCEPTING THAT AS AN ANSWER?

Get them the specific items they asked for, and show them receipts for what they asked, but add a sickening amount of unapproved, non-disclosed add-ons that add potentially thousands of dollars in unexpected, non-approved costs.

As the relationship goes completely pear-shaped, get as much work hastily completed before being fired and removed from the property. Provide a bill. Witness sheer rage as the homeowner looks at an absurd total.  Maybe they’ll pay some of it, maybe none at all, but usually most of it.

Get in a weeks-long argument over who said what, and then then the homeowner comes to the realization that there is no evidence to provide to a court.  His gift of bullshit wins again.

Chapter 2: Why do I Even Have to Say This?

I hate to victim blame, but it is your fault. Stop letting people touch your property without a contract, service agreement, or work order, and they’ll go away in no time.

Would you buy a home without a contract and warranty? A vehicle? Any electronic device or accompanied service? Then why do so damn many of you happily let people into your homes to rip it apart and hopefully rebuild it without any written agreement?

What should be in a good remodeling contract? Google it. Most Johnson County homeowners don’t seem to be to concerned with any of it, so I’m not going to waste my finger-tapping.  Those of you who have better business savvy already know.

I provide detailed scope of work, specific exclusions, detailed specifications and product selections, floorplans and elevations as needed, time line, and draw schedule with contract total.  My terms are eleven pages long, a great majority of which protect the homeowners’ investment and my compensation, as well as the specific work standards incorporated by reference.  If there’s a question not answered in my construction contract, I’d be beside myself with disbelief and disappointment.

And there you have it. This is certainly not an all-inclusive list, and all states and counties will be different in requirements; always check with your applicable state and local governments.  Happy remodeling!

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