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Having a clear, comprehensive contract with your general contractor is one of the most important aspects of a successful home remodeling or renovation project. It can make all the difference between a project you’ll be pleased with for years to come, or one that turns into an expensive headache. A contract protects you, your budget, and your property, so make sure to consider the following as you negotiate your agreement:

Be absolutely certain that your contractor has the proper licensing to meet your city’s requirements and any licensing required to do specialized work, such as electrical or plumbing. Ask that your contract includes license numbers and information.

While the contractor’s proof of insurance documents may not be attached to the contract itself, you can request that his or her insurance details are stated in the contract. Find out what the proper amount of liability insurance is for your area, and be sure that any contractor you hire has that coverage.

Haphazard scheduling is one of the most common sources of problems on a home remodeling job. While delays due to material availability or weather may not be avoidable, and minor delays are almost certain to occur, you should still have schedule details defined in your contract. Key dates to include are the expected finish date and important milestones along the way.

Scope of work
Detailing the scope of work to be done will help you to stay in control of both timing and costs. Depending on what your project entails, work details could be a short or long list. The work for a room addition that requires a number of different subcontractors will be much more detailed than the scope of work necessary for a more straightforward task, such as having new flooring installed. Whatever the type of project, be sure everything is in writing before your project begins. Details could include material specifications, types and colors of finishes, expectations about site maintenance and cleanup, definitions on who is responsible for various permits and permissions, and much more.

Having a payment schedule in writing means that you and your contractor agree on when payments are to be made, which eliminates billing hassles. You should tie payments to certain milestones, completion percentages, or the delivery of products such as new windows or carpeting. No matter how you determine your schedule, payment should never be made in full for an unfinished project.

Most reputable contractors in all trades offer a warranty for work done. Before you sign a contract, make sure your contractor’s warranty clearly spells out what is and is not covered, and the length of time for various coverages.

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Know what you want before you get estimates. Nowadays it’s only your imagination and personal preferences that can define the scope of work and budget for your project.  Start with a plan and some ideas and don’t start by just talking to contractors. You’ll get a more accurate estimate if you can be very specific in what you want done and the materials you would like to use to make it happen.

Ask friends, relatives and co-workers for references. People in your neighborhood who have done similar projects are your best sources. If you know people in the building trades, ask them, too. Employees of local hardware stores may also be able to provide referrals.

Interview at least three contractors. Ask a lot of questions and get a written bid from each one. When you compare bids, make sure each one includes the same materials and the same tasks, so you’re comparing apples and apples. Get three bids even if you have a contractor you like because you’ll learn something from each interview. “Don’t be afraid to negotiate,” Hicks says. While you might do some haggling at the interview, be prepared to do most of the negotiation after you get the bid and before you sign the contract.

Expect a contractor to be too busy to start right away. “The best folks are the busy ones,” says Cannon Christian, president of Renovation Realty in San Diego, which remodels homes before they’re sold.

Ask what work will be done by the contractor’s employees and what work will be done by subcontractors. Christian advises asking for an employee list to make sure the contractor really has the employees he says he does and won’t be using casual labor hired off the street.

Choose the right contractor for the right project. Someone who did a good job tiling your neighbor’s bathroom isn’t necessarily the right person to build an addition to your home. You want to find a company that routinely does the kind of project you want done. “You don’t want them to use you as a guinea pig,” Hicks says.

Sign a detailed contract. Make sure your contract spells out exactly what will be done, including deadlines, progress payments, the exact materials that will be used down to the model number and who will provide which materials. “If you don’t have it documented, it’s your word against theirs,” Hicks says. If the builder’s contract is not detailed enough, write up your own or provide addendums. Any change in the project, whether you change your mind about products or ask for additional projects, should generate a written change order that includes the new work, materials and cost.

Get the proper permits. Nearly all home renovation projects require permits. Many fly-by-night companies, as well as some licensed contractors, will suggest the job be done without permits to save money. Not only does that violate local ordinances and subject you to fines if you’re caught, it means the work will not be inspected by the city or county to make sure it’s up to code. Be wary of contractors who ask you to get the permits – that’s the contractor’s job. Unpermitted work can also cause problems when it’s time to sell.

Don’t pay more than 10 percent of the job total before the job starts. You don’t want a contractor to use your money to finish someone else’s job. Some contractors may ask for up to 30 percent if expensive materials are needed immediately. The contract should include a payment schedule and triggers for progress payments.

Don’t sign a contract for your entire renovation budget. No matter how careful you and the contractor are in preparing for the job, there will be surprises that will add to the cost, because no one can see through walls. Expect to spend at least 10 percent to 15 percent more than your contract.

Negotiate ground rules. Discuss what hours the contractor can work at your home, what kind of notice you’ll get, what bathroom the workers will use and what will be cleaned up at the end of every workday.

Talk to the contractor frequently. For a big job, you may need to talk every day. If you see a potential issue, speak up immediately. Something that is done wrong will be harder to fix later after your contractor has packed up and moved on to his next job.

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