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Hard lesson in choosing contractor

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Posted: Thursday, May 14, 2009 10:00 pm

Q: I recently bought a bank-owned home. It was in a great neighborhood, good school district, and seemed perfect for my kids and me. It did need some work, but it was mostly cosmetics I wanted to upgrade before we moved in, such as changing the kitchen tile floors, the kitchen counters, and the bathroom sink and fixtures.

My Realtor gave me some referrals to contractors to get bids from during escrow, but after closing, a friend of mine referred another guy who offered to do much more for the same price. I checked his license, called his past clients and even went to see work he had done before - everything checked out.

Now, it's four months after closing and I still haven't been able to move in! My contractor does maybe one project a week, and everything takes way longer than it should, although all that's left is for the bathroom sink to be installed. I called him on the carpet and he reacted very angrily, so much so that now I'm concerned about him having the key to my house. At this point, I wish I'd chosen another house.

A: I don't actually think your problem arose during your transaction, nor do I think it has anything to do with the house you chose, per se. It sounds like you did the right things there: you were willing to buy a fixer; you found one where the repairs needed were largely cosmetic; and you even went the (smart) extra mile of obtaining bids during escrow. Presumably, you did this last step with the intention to make sure you were aware of what it would cost to put the place in your desired condition before you made your final decision whether to move forward with the sale; it follows that you must have been comfortable with the amounts bid during escrow or you would not have closed the deal.

No problems there.

The problem arose after closing, when you decided to get more aggressive about what you got for your money. This happens all day, every day to some poor unsuspecting homeowner - you get two or three bids all around one price point, but then some seemingly wonderful contractor falls from the heavens offering either (a) to do the same work for a much lower price, or (b) to match the other guys' (or gals') pricing but throw in those extra projects you didn't think you'd be able to afford for a few more years.

A bunch of those quaint old sayings apply. "You get what you pay for" and "if it sounds too good to be true, it probably is" come immediately to mind. Oh and my personal favorite: "There are two types of professionals you don't want to hire at a discount: your plastic surgeon and your contractor."

OK, maybe I made that last one up. But it speaks to the point - the point of obtaining multiple bids is not just to keep meeting new contractors in a race to find the lowest possible price out there. The point is to meet different pros, get their input and opinions on what and how to approach your projects, and suss out their different levels of professionalism and personalities until you find one you feel you would work well with. For example, if a would-be contractor drives up in a jalopy of a pickup, with receipts practically falling out of the door jambs and sends you a poorly chicken-scratched "proposal," you know what sort of professionalism you can expect from his work if you hire him.

Seasoned homeowners know that the cheapest bid is not always the one to go with. If it's substantially cheaper than several others, you've got to wonder why and how he can come in so low. In your case, it might be that he can do this by cramming a bunch of jobs in, rather than focusing on one until it's done.

Further, in my experience, contractors who receive repeat business from Realtors value their reputation - a lot - as it is the lifeblood of their continued success. So they are more likely to go the extra mile to make sure you're happy; they really don't want to let down the Realtor who made the referral in the first place.

Finally, with a multiproject job like yours, it's best to leave some significant chunk of the agreed-upon price (one-third is common) to be paid after all the work is done and the permits signed off by the city inspectors. That way, the contractor stays motivated to wrap the job up and do it well - both of which are preconditions to receiving that final payment.

Know this - it could have been much worse. He could have run off with a ton of your money or done less work. If I were you, I'd call up one of your Realtor's referrals, have him or her spend an hour or two installing that sink, ask your Realtor to help you find a good locksmith to change your locks, move in and start enjoying your home. Consider this last four months to have been tuition - the price you've paid to learn some very good lessons about selecting contractors.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.

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