Negotiating the Contract
Having negotiated several Residential Construction Contracts over the years, I would say there are 3 key ingredients to a successful agreement-
• Good communication by all parties involved.
• A well written contract.
• And a certain degree of trust.
Good Communication
Most importantly I have always advocated clear and concise communication on both sides of the table. This means negotiating with honesty, integrity, and all the necessary disclosures up front.
Both parties being able to listen, as well as convey their ultimate goals in a way that everyone understands is imperative.
Most Contractors will pre screen all of their leads to some degree before the first meeting is set up. It’s not at all uncommon for me to spend 16 to 20 hours putting together a proposal on larger projects. Between the phone calls, meetings with clients, and meeting the project team on site for job walks to ensure that everyone is on the same page, to preparing all of the necessary documents needed on a legal Contract, the hours add up very quickly.
For this reason some contractors will offer to negotiate to a certain point before they need to start charging for their time.
After all, no one should be expected to give away their professional services for free.
Once the client has established a commitment to move forward with the contractor, he or she can do the necessary footwork and due diligence to get the agreement finalized.
Some of the things the homeowner can do to prepare for negotiations for a remodel or new home construction are-
Collect Photos
Collect photos of designs and products that you like. (It doesn’t hurt to illustrate the things you absolutely don’t like as well.) Websites like Pinterest and Houzz.com are invaluable sources for design ideas.
Go shopping!
You need to realize that there is a lot of work that needs to be done on your part as well. Having most, if not all, of your products selected up front helps to ensure you’re getting apples to apples prices from all of the parties who will be bidding for your project. When I go to the table with someone who refuses to do what’s needed on their end, I consider it a pretty sure sign that they’re not serious about the project and are just tire kicking and/or cannot be expected to do what’s needed on their part to facilitate a smooth flowing project. Often when this happens I will politely dismiss myself and move on to the next prospect.
Remember- you need to be able to convey your intentions and priorities in a way that is clear and concise. Anything you can provide will make everyone’s job easier.
Eliminate any doubts early on.
Do a thorough background check on your Contractor before you spend too much time with them. Don’t be afraid to ask for references up front and follow up by checking their references. If a contractor refuses to provide references, find out why, and then make sure this is someone you are comfortable moving forward with. You may consider it justifiable if the contractor says he or she wants to respect the privacy of their past clients by not giving out their contact info. How you proceed from there is a judgment call.
They may be able to provide testimonials on their website or social media platforms. I think it’s noteable to mention that testimonials on facebook, houzz.com, Angie’s list, yelp, and other outside sources can be posted by anyone and are less likely to be hand picked by the Contractor such as those on their Company Website.
Go to the Contractor’s License Board website and check their license status. Make sure the license is currently active and all the necessary bonds and insurance are in force. The lower the license number, the longer they have been in business. If they say they’ve been in business for 20 years and their license number is relatively new, ask why.
Remember you want to be able to establish a relationship based on trust. The more you can find out about your Contractor up front, the less you have to worry that you may have gotten involved with someone who is incompetent, makes false promises, or may have compromised integrity.
A Well Written Contract
A good Contractor knows this is one of the most important things they can do to minimize any misunderstandings and misguided expectations. A well written and detailed contract is the single most important tool for preventing disputes. Avoid Cost plus Contracts. A thorough contract should at least include-
• A detailed scope of work to be performed.
• Products to be used in the project.
• A detailed finish schedule itemizing what finishes will be applied, i.e., paints or stains on cabinets, wood species,cabinet hardware, moulding profiles, type of paint and how many coats on walls, ceilings trim, etc.
• Allowances on items where selections haven’t been made.
• The projected time it will take to finish the job.
• The Owner’s name, address, project name, Contract date
• A signature line for ALL legal owner’s and the Contractor including the date of signatures.
• A reference to the plans that the work will be based on.
No one should ever expect an accurate, enforceable contract that doesn’t include a complete set of drawings. Including Engineering, (if required), all of the necessary sheets and documents required by the governing jurisdiction’s Building Dept. to acquire a permit.
I would advise being extremely concerned if anyone agrees to provide pricing with no drawings referenced unless the job is very small or it’s only a “ballpark” price being given at that point.
My Contracts are preliminary and not to be considered final until they are stamped by the project Engineer and approved by the Building Dept. I deal with 16 different jurisdictions. All of which have multiple plan checkers with multiple interpretations of the Building Codes. So it’s not unusual to have the scope of work increase because the Building Dept. requires us to do things that are beyond the normal requirements.
After the job has started it is important to have at least weekly, (twice a week if possible), walkthroughs with your to Contractor make sure everything is being addressed. Keep the communication lines open and make sure you have a clear understanding of what needs to be done on your part so there are no surprises or unnecessary delays.
A Certain Degree of Trust
You’ve just hired a Contractor to do a very expensive remodel on your home. Your space is about to be invaded by multiple Sub Contractors and their workers. By now you’ve taken the time to get all of your questions answered and everyone is clear on scheduling and any other limitations that need be implemented.
Hopefully you’ve done your due diligence by checking all of the available resources.
At this point a mutual trust has been established and you’re relatively certain you’ve hired the right person to do the job.
I hope you found this information helpful and if there’s anything in this series you would like to see covered, please let us know by leaving a comment below.