10 Essential Considerations When Hiring a General Contractor

Hiring a general contractor is a significant decision that can greatly impact the success of your construction project. Whether you’re remodeling, renovating, building an addition, or building a custom home near Fredericksburg, Texas, finding the right contractor is crucial!

Consider the following factors to make an informed choice:

1. Know What You Want

Before you start your search, define your project scope.

What are your goals?

What is the style of the house you want to build? If renovating, what do you want to see changed? Having an "inspiration" file is a good idea - use Pinterest, or Houzz, or magazines to save photos of things that you would like to incorporate into your project! Share these ideas with the contractor!

What is your budget? Try to be realistic here - speak to friends and family members that have built within the last couple of years. How many square feet did they build? What did they end up spending? Is their project similar to what you have in mind on the fit & finish side? Do you want less expensive finishes than them? More expensive?

How are you planning to pay for the construction - a loan? pay from savings? If you will need a loan, have a conversation with the bank to see how much you can be pre-qualified for. Having this information already on-hand will help you create a firm maximum budget!

One other thing to consider here - if you have money to start the project, but not enough to finish the project - DO NOT start before you secure a loan! The process of getting a loan after construction has begun is a huge headache that requires that all work cease for a period of about 30 days minimum, and that every subcontractor that has touched your project sign a lien waiver and a guarantee that they will not do any more work until the loan is finalized! Doing this will completely derail your schedule and cause massive delays!

How quickly do you need to have the project started? Are you willing to wait for the right contractor even if his schedule doesn't match yours? Most of the best home builders will be booked out for months, or even years! If someone says they are available to start right away, ask them if this is due to an unexpected opening in their schedule (it does happen!), or if they have nothing else lined up. A tactful way to ask this could be "What other projects do you have going currently? What projects are you planning to start soon? How is it that you will be able to help us so quickly?" If they have nothing else lined up, is this due to a lack of demand on what they produce? Ask for references and photos of their work!

How long do you think the project should take from start to finish? I recommend asking friends and family here too - what did they build and how long did it take? If you take out a loan, generally you have 12 months to complete the project before the construction loan closes. Can your project be completed in that time? If not, try to structure the loan with a longer construction period. If you are paying cash, can you afford to have a sustained outflow of money for that period of time? Is it worth selling off stocks or other investments to pay for the project, or is it better to borrow and pay it off later?

What is the most important factor for you - quality? Cost? Getting exactly what you want? If cost is most important then you really need to be on top of your budget from the beginning! A good contractor will tell you areas that you can save money. If quality is most important, then you may want to tell your contractor that you plan to spend more money than the average client on the items you will select - plumbing fixtures, light fixtures, countertops, cabinetry, flooring, etc. If you want an extremely customized build, I recommend that you have that conversation up front and have a maximum budget identified to share with your builder so they can help you fulfill your goals while still being mindful of your finances.

Having a clear vision of what you want will help you communicate effectively with potential contractors. This is not to say that you must show up to meet with a general contractor with a fully developed set of plans, but I do recommend that you have the "inspiration" file mentioned earlier, and if you have a sketch of the floor plan you are thinking of and maybe a front elevation (this could be a photo) that will go a long way towards helping the contractor understand your goals!

2. Ask for Referrals

We all know people who have built or remodeled - did they like their general contractor? Was the contractor responsive to calls or texts? Did they feel heard when they talked to him or his team? What went well? What didn't go well? Were they happy with the final product they received? And the biggest question - if they were to do another construction project, would they work with the same contractor again?

3. Check Their Background

Investigate the contractor’s work history. Look for reviews, testimonials, and examples of previous projects. Speak directly to past clients for insights. If the contractor is worth your time, they should have a short list of former clients that you can call for testimonials. If they won't share this list, is it because they don't have any former clients or because they burned bridges along the way. General contractors will be in their clients lives for months, possibly years! I have told some of my clients that I am a marriage counselor with a nail gun as I have helped them work through decisions that they don't agree on! Finding a contractor that will stand with you and support you as you undertake what is probably the biggest financial decision of your life is just as important, if not more so, than any other area of consideration mentioned here! View our completed projects in the Texas Hill Country!

4. Verify Licenses and Permits

Ensure that the home builder holds all necessary licenses and permits. Compliance with regulations is essential. Hiring a contractor that doesn't have a permit for the municipality or state you live in could lead to fines, delays, and quite possibly your contractor going bankrupt if the fines are excessive! You've probably heard the saying, "Trust, but verify." Ask for proof of license for your city, for your county/parrish/province, for your state, or maybe for your country. I build in central Texas - the only licenses currently required in my area are municipal licenses, and each city has different rules for becoming licensed. If you are building in California or New York I can almost guarantee that your contractor will need more licenses or permits than what I do! Have a general working knowledge of what is required in your area and make sure whoever you hire is legal! Get copies of their licenses and all building permits for your records.

5. Insurance Coverage

Ask about liability insurance and worker’s compensation - get copies of proof of insurance from them for both types of policies. This will help protect you from liability in case of accidents. I have worked with some wealthier clients where I contracted with their LLC rather than with them personally. They did this as an extra layer of protection between them and any liability from an injury or accident that occurred on the construction site. If this is an intriguing idea to you I recommend speaking to a lawyer about your personal circumstances. I also secure Builder's Risk insurance for every job that costs more than $50,000. This protects both my company and the homeowner in case something goes wrong during construction - some homeowner's policies have builder's risk insurance included! Speak to your agent to find out if you already carry it, and if you do ask for proof to share with your contractor! For more information on builder's risk insurance I recommend speaking to your insurance agent!

6. Establish clear boundaries

Establish guidelines for the job site. Discuss working hours, access, and rules that are important to you. Perhaps you have young children and it's important to you that they not hear foul language or loud, trashy music. Maybe you want Sunday to be a quiet day that you can just enjoy your home without disturbances. If you are remodeling, you may want the construction team to stay out of certain parts of the house. We showed up earlier than normal on a job we did early in my career and the homeowners had let their cats outside - we were working more than 100 yards away from the house, but one of the cats got spooked and ran away and we were asked to vacate the property until the cat returned! Fortunately, the cat did come back and all was OK, but a simple phone call or conversation the day before would have saved a lot of heartache!

7. Understand the Payment Structure

Discuss payment terms up front. Be extremely cautious of contractors demanding full payment before starting work. Don't pay whatever contractor you hire a dime until you both have signed copies of the contract! Ask about how they handle change orders - these are amendments to the contract due to unforeseen circumstances or changes made by the property owner. For example, let's say you are building a custom home and you originally told your contractor that you wanted Door A to be your front door, so this is what he priced for you in your budget. Now, however, you have been looking through your "inspiration" file and you noticed a door that you like better! This door, Door B, costs $3,000 more, but you have to have it! You should receive a change order from your contractor for the additional cost of Door B, $3,000, plus the additional margin that the contractor will add to the cost of the door. This helps both parties have up to date cost projections for the entirety of the building process.

8. Have a Dispute Resolution Strategy

Include dispute resolution procedures in your contract. Almost all issues can be resolved without legal means! Most contractors want to do a good job for their clients - chances are, if there has been a mistake, it's an honest one and they will want to fix it! Take pictures of the problem if possible and take pictures after it has been resolved. Address any issues that may arise during the project quickly and calmly. If you approach the contractor aggressively, they will probably respond in kind. There's a saying "hurt people hurt people". If you hurt their feelings, they will respond less favorably than if you calmly tell them you have an issue and then calmly wait as they figure out the best way to resolve the problem!

9. Communication Skills

Effective communication is key. Choose a custom home builder who actively listens and keeps you informed throughout the process. Initial impressions are golden here - did they listen attentively as you filled them in on your project? Did they ask good questions for clarity? Did they take any notes? Were they on their phone or tablet during your meeting? Did they seem distracted? Did they seem to care about you and your desires?

We use software to facilitate communication between the clients and the contractors called JobTread. This allows us to show the client the schedule, coordinate their selections to the schedule as a whole, send emails between the client, our office, and subcontractors for very clear lines of communication! Not only does it give the client a snapshot of where the project is at any given time, but it helps us to better streamline the construction process and give all parties a better experience!

10. Warranty and Follow-Up Services

Make sure to ask about warranties on materials and labor. Ask how the contractor would resolve a warranty claim. A reliable contractor stands by their work. One thing to consider - several years ago we did a remodel job where the homeowner chose and purchased all of the plumbing fixtures for the entire project. There was one particular plumbing fixture that kept having issues with the cartridge inside it breaking and beginning to leak. The first time it happened, we covered the cost to replace the cartridge and install it as a matter of courtesy even though we did not buy the fixture. About two weeks later we got a call back for the same issue and we replaced it again (this time the manufacturer paid for the part as it had been installed correctly when we did the repair). Then a month after that we got another call for the same issue. At this point I had to inform the homeowner that we had been warrantying a part that we did not purchase and had never been paid to warranty in the first place, and while we would be happy to fix it for them again, we would need to be paid for our time and expenses. This led to a discussion between me and the homeowner about how exactly the warranty policy works - this may help others too - if the contractor doesn't pay for the fixture, then he is not liable for its warranty. Now, if it was installed incorrectly or broken by the contractor that's a different matter, but if the issue has to do with the fixture itself then the purchaser is responsible for repairing it!

In conclusion, thorough research and due diligence on the part of the client are essential to getting the project started on the right path. Selecting the right general contractor ensures a smooth construction experience for your home. 

Disclaimer: This blog post provides general advice and should not replace professional legal or financial guidance.