You think of your contractor as an ally and partner — but he’s a primarily a businessman who may not reveal all. Here’s how to level the playing field.
1. He's desperate for your business

As tough as the economy has been overall, the construction industry has been in far worse shape. While the national unemployment rate has hovered around 8%, for construction workers it’s been a whopping 17% and higher.

What you should do: It doesn’t mean you should play hardball with your contractor on his price (because he might cut corners on the job if you do), but if you ask for an itemized bid, and explain that you're getting them from a few contractors, he's going to sharpen his pencil and give you his most competitive price.

2. He's going to farm out the work
General contractors often don’t do the physical work themselves. They might have been carpenters or plumbers, but now that they run their own businesses, they’ve retired their tool belts.

Instead, their role is to sign clients, manage budgets, and schedule a cast of subcontractors. When he’s trying to win your business, a contractor can be pretty vague about how involved he’s going to be — and who will be running the job day-to-day.

What you should do: Inquire who will be in charge of the jobsite. Ask to meet the job foreman, preferably while he’s at work on a current jobsite. “Maybe he’s a chain smoker or doesn’t speak English or who knows what?” says Stockbridge, Mass., contractor Jay Rhind. “You want to make sure you feel comfortable with him.”

3. A big deposit is unnecessary -- and possibly illegal

When you sign a contract, you’re usually expected to pay a deposit. But that’s not for covering the contractor’s initial materials or set-up costs.

If his business is financially sound and he’s in good standing with his suppliers, he shouldn't need to pay for anything up front. In fact, many states limit a contractor’s advance. California maxes out deposits at 10% of the job cost, or $1,000 -- whichever is smaller.

What you should do: If your contractor is asking for, say, 25%-30% of a job that’s not even due to start for a while, offer to give a more nominal amount (5%-10%) with the contract and the rest on the day the work commences.

4. He's not only marking up labor, but materials too

No contractor wants to talk about it, but he’s going to mark up everything he pays out to make your job happen. That’s fair; it’s how he pays his own overhead and salary. Keep it in mind that the 10% to 20% mark-up applies not just to materials but labor costs, too.

What you should do: If you can handle buying items such as plumbing fixtures, cabinets,countertops, and flooring, ask your contractor to take them out of his bid price. Be sure to agree on specific numbers and amounts of what you’ll be buying, and that you’ll have the items to the jobsite when they’re needed. You could save 10%-20% or more from what your contractor might charge.

5. He’s not the design whiz he claims to be

Sure, there are contractors who have strong design abilities. Chances are, however, they’re spending a lot more time running their businesses than honing their design chops.

What you should do: Don’t count on a contractor to design your space and add clever details, unless he clearly demonstrates his abilities and has a portfolio of his own designs. Ask his references specifically about his design skills. Otherwise, you’re better off hiring an architect for overall planning, and a kitchen and bath designer for the details. The cost of those design professionals usually is compensated by efficient planning and problem-free design work.

Compliments of National Association of REALTORS