Inside Money: Tips for hiring a home contractor

January 2014You’re probably battening down the hatches for winter and planning to spend more time inside your home. Problem is, now is when you notice all the things that need to be done to spruce up the house.

If you’re ready to tackle some of the repairs and upgrades, make sure you hire a reputable home improvement contractor. This will take some homework, but in the end, it will save you money, headaches and hassle.

You love your aunt’s new kitchen? Your neighbor’s finished basement? You remember a window installer’s truck down the block a few months back?

Yes, references are the best place to start.

Ask family and friends about the contractors they used in their homes. If they were happy with the work, there’s a good chance you will be, too.

If you don’t have someone to ask, look to industry associations. Contractors who are members of reputable groups, and who are established in your area, are probably more reliable than others.

Check out the National Association of the Remodeling Industry (, National Association of Home Builders ( and the National Kitchen and Bath Association ( Don’t forget your local Chamber of Commerce.

Also try calling your town’s building inspector or local hardware store to see whether they can make a recommendation.

Before you bother calling for an estimate, thoroughly check the contractor’s background.

In New Jersey, home improvement contractors must register with the state annually. According to the state’s website, contractors without valid registrations will not be issued municipal permits and cannot perform work in the state.

Find out if a contractor is registered by calling the New Jersey Division of Consumer Affairs at (800) 242-5846 or visit While you’re on the line, ask whether there are any consumer complaints against the company.

Other pros, such as electrical contractors and plumbers, also need to be licensed by the state. (See the info box below for a list of licensing boards.)

Next, make a stop at the Better Business Bureau’s website ( to see whether it has received complaints against the contractor.

Finally, do a web search on the company name and the company owner. You never know what you may learn.

Get three estimates for the job, and make sure they all include the same specs so you can compare apples to apples. Contractors should list the materials, who is responsible for permits, details on cleanup and debris removal, and whatever guarantees or warranties come with the work. If you get a very low bid, be suspicious.

A good contractor will be happy to share his past customers’ names and numbers with you, and show you photos of jobs he has completed. Make sure you call the references, and ask the contractor if you can see any jobs he’s currently working on. Talk to those homeowners, too.

Once you pick the winner, closely examine the contract before signing. According to New Jersey law, improvements that cost more than $500 require a contract. It must include the legal name and business address of the contractor, the start date, the completion date, a detailed description of the work and the total price. The contract also must list the contractor’s registration number, and you must be supplied with a copy of the contractor’s general liability insurance policy and the insurance company’s phone number.

Make sure the guarantees and warranties are listed in the contract, along with details about permits, brand names of materials and who cleans up when the job is done.
In New Jersey, you have a three-day “right of rescission,” which means you can cancel a contract for any reason before midnight of the third business day. If you cancel, put it in writing and send it using registered or certified mail, return receipt requested.

Be wary of any contractor who asks you to pay a job in full before it’s complete. It’s customary to pay a third when you sign the contract, a third at the midway point and the balance upon completion. There are no exceptions.

There are many red flags to watch out for, and, unfortunately, too many shady contractors who give the rest of the industry a bad name. Here’s what you should watch out for, courtesy of the New Jersey Division of Consumer Affairs and the Federal Trade Commission:

Beware of those who:

  • Solicit door-to-door.
  • Tell you there’s no need for a contract.
  • Offer you discounts for finding other customers.
  • Only accept cash.
  • Want more than one-third paid in advance.
  • Ask you to get the required building permits.
  • Pressure you to sign immediately.
  • Only have a P.O. box as a business address.
  • Offer exceptionally long guarantees.
  • Suggest that you borrow money from a lender the contractor knows.
  • Are not registered or licensed by the state.