A REALTORS®’s Guide to Working With Contractors

Imagine, you want to update your bathroom. You find a contractor online who is offering a great deal on the work you want done. They come in, do the job, and, unfortunately, you’re not happy with the results. The paint is streaky, the tiles look haphazardly placed, and the light fixture is crooked. Now, you’re out thousands of dollars.

As a REALTOR®, you’re a trusted advisor during the real estate transaction. As such, homeowners, buyers and sellers value your referrals to other industry professionals like contractors, because your
insights help protect one of their most valuable assets – their home. According to a 2023 study by JW Surety Bonds, one in ten Americans have been a victim of a contractor scam. How can you ensure that your clients keep their homes and themselves safe from scams?

We spoke with two Chicago-area contractors, Jeff Kida, president of DDS Design Services, and John Habermeier, founding partner of Synergy Builders, who shared how to find the right contractor for a job, best practices for working with a contractor, how to identify scams and more.

How to Find a Contractor for a Job

Habermeier shared eight easy-to-follow steps to find the right person for a renovation project.

1. Define Your Project: Clearly define your project goals, budget and timeline before reaching out to contractors. Having a clear idea of what you want will help you communicate effectively with potential contractors.
   
   This may be the time, Kida added, to bring in an architect or designer. Not only will they be able to develop a plan before bringing in a contractor, but they can also advise on what to look for in contractor bids for your specific project.
   
2. Ask for Recommendations: Ask friends, family, neighbors or colleagues who have recently completed similar remodeling projects for their recommendations. Personal referrals are often a reliable way to find reputable contractors.
   
3. Research Online: Use online resources such as website reviews, forums and social media platforms to research local remodeling contractors. Look for contractors with positive reviews, high ratings and a good reputation in the community.
   
4. Check Credentials: Verify that the contractors you’re considering are properly licensed, bonded and insured. Check their credentials with the Secretary of State, Better Business Bureau and industry associations to ensure they meet regulatory requirements.
   
   For instance, both DDS Design Services and Synergy Builders are members of the National Association of the Remodeling Industry of Greater Chicagoland, which provides a directory of their members and certification information.
   
5. Review Portfolios: Ask potential contractors for portfolios of their past work. Look for examples of projects similar to yours to assess their quality of workmanship and design aesthetics.
   
6. Request References: Ask potential contractors for references from past clients! A remodeling experience is more than just a before and after; ask specific questions about communication, reliability, professionalism and overall satisfaction with the results.
   
7. Interview Multiple Contractors: Just as homebuyers and sellers interview multiple REALTORS® to find the right fit, the same should be done for contractors. Get project and pricing estimates. Pay attention to how well they listen to your needs and communicate their ideas.
   
8. Get Detailed Estimates: Request detailed written estimates from each contractor, outlining the scope of work, materials, labor costs and project timeline. Be wary of significantly low or high bids compared to others, as they may indicate hidden costs or inferior quality.

How to Establish a Communicative, Trusted Relationship

Now that a contractor has been identified for a job, start with these steps.

Establish Clear Communication Methods: First, both Habermeier and Kida agree, it’s important to set yourself up for success by communicating clearly, frequently and immediately. As Habermeier shared, one of the first things you should do is discuss expectations, concerns and preferences upfront to avoid miscommunications down the road. Kida echoed that sentiment, sharing that when communication stops is when things can go downhill.

Set Goals & A Budget: Next, Habermeier said, set realistic goals and a realistic budget. Work with your contractor to discuss your financial constraints and create a realistic timeline to complete the project. However, Kida stressed the importance of having a contingency fund. Contractors, unfortunately, do not have X-ray vision, and there’s always a possibility that a problem that needs to be corrected could be uncovered.

Receive A Written Contract: Then, have your contractor provide you with a written contract, according to Habermeier. This contract should outline the scope of work, materials, costs, payment
schedule and a project timeline in writing. Having this documentation helps prevent disputes and provides clarity for both parties. Kida said this can coincide with a pre-construction meeting, which will help set expectations.

Trust the Experts: When it’s time to start working on the project, Habermeier said it’s important to put your trust in the hands of the expert, within reason. Trust the expertise of your contractor and allow them to make decisions, but still stay involved with the project.

Schedule Daily Project Reviews: Kida suggests staying up to date on the project by holding a project review at the beginning and end of each day with either the contractor or lead worker. Then, if any concerns arise, keep lines of communication open, and don’t be afraid to voice any concerns of issues in a prompt manner.

Remain Flexible: Flexibility will be key when work is happening on the project, Habermeier explained. You never know when unexpected issues may arise during the renovation, so being flexible and willing to accommodate adjustments is in the best interest of everyone involved.

Create A Good Relationship with the Contractor: Continue to foster a positive working relationship with your contractor by making timely project payments, which will also help keep the renovation on track, and express appreciation. A simple thank you or positive feedback will go a long way.

How to Make Safety a Priority

When it comes to home renovations, there are two areas of safety to consider: financial and personal.

From a financial perspective, it’s smart to start with an insurance certificate naming you as “Additional Insured” from the primary or general contractor and the sub-contractor. This insurance extends the contractor’s business insurance to you, so they will need to add you as an additional insured on their coverage. This confirms the contractor is and will be insured during the project, but also insures you in the event of an accident or theft. It also provides the insurance information a homeowner may need in the event of a dispute. Kida suggests that a homeowner should make it clear that no work will begin without the certificates in hand.

If you live in a condo building, get the condominium board or HOA involved from the beginning to meet their requirements and expectations.

When it comes to personal safety, the insurance certificate is the first line of defense. From there, there are additional steps to take that will help mitigate risk, including:

• Remove any art, valuables or collectibles from the rooms adjacent to where the renovations are taking place.
• Create a basic work zone for the contractor so they do not unexpectedly enter other rooms of the home.
• Keep cash, jewelry and other valuables secured away or safely relocated out of the home for the duration of the renovation.
• Discuss expectations with the contractor around when they should and should not be in your home, including who will be with them.

How to Identify a Scam

As previously mentioned, one in ten Americans have fallen victim to a renovation scam. So, what steps can you take so that you or your clients don’t become victims of a scam? There are some key things to look for when meeting with a contractor, according to Habermeier.

Unsolicited Offers: Be cautious of contractors who approach you unsolicited, especially if they show up at your doorstep or contact you via phone or email without prior inquiry. Legitimate contractors typically rely on referrals, advertising or online platforms to find clients.

High-Pressure Sales Tactics: Beware of contractors who use high-pressure sales tactics to push you into making quick decisions or signing contracts on the spot. Scammers may create a sense of urgency to prevent you from researching their credentials or seeking alternative bids.

Lack of Credentials or References: Avoid contractors who are unable or unwilling to provide proof of their credentials, such as licenses, insurance and certifications. Additionally, be wary if they hesitate to offer references from past clients or if the references provided seem unverifiable.

No Written Contract: Refrain from working with contractors who refuse to provide a written contract. A lack of a written agreement leaves you vulnerable to potential disputes or changes in the project scope.

Unrealistic Low Bids: Exercise caution if a contractor offers an unusually low bid that seems too good to be true. These bids may indicate that the contractor intends to cut corners, use subpar materials or engage in fraudulent practices, such as demanding additional payments for unexpected expenses.

Demanding Upfront Payments: Be wary of contractors who demand large upfront payments or ask for payment in full before starting the work. Legitimate contractors typically request a reasonable deposit or progress payments based on the project’s milestones.

Lack of Communication or Follow-Up: Take note if the contractor is unresponsive, unreliable or fails to communicate effectively throughout the hiring process or during the project. Poor communication
can lead to misunderstandings, delays and substandard workmanship.

Unsatisfactory Work Samples: Pay attention to the quality of the contractor’s previous work by requesting portfolios or visiting completed projects, if possible. If the work samples appear subpar or inconsistent, it’s a red flag indicating potential incompetence or dishonesty.

No Physical Address or Established Business: Exercise caution if the contractor lacks a physical address, operates under multiple company names or has a limited online presence.

Negative Reviews or Complaints: Research the contractor’s reputation by checking online reviews, ratings and complaints filed with consumer protection agencies or the Better Business Bureau.
Pay attention to recurring complaints about poor workmanship, unprofessional behavior or fraudulent practices.

Share these steps with your clients so they’ll continue to enjoy their home when the dust settles (both metaphorically and physically) on their renovation.