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How To Work With Contractors So You Don’t Get Screwed
Joe: Hey, it’s Joe. The next question I get a lot is, “How do I work with contractors when I’m rehabbing a house so that I don’t get screwed?” And I’ve been screwed more than once by contractors and I had to learn this through the, sort of the hard knocks method.
Joe: First of all, what I did was, I took an old inspection form that I got from a friend of mine and I created, it has a list of all the different things they look for on an inspection. And so I take that list and then I combined that list with a contract to the contractor. And for those of you who are in my mentor program, you have access to these contracts, so just go to your contract zip file in your member site and you’ll be able to find these agreements.
Joe: But the list that I got from the inspector is something that the contractor can fill out as a line item thing. So they can go in there and say okay, we’re going to spend this much money on the second bathroom and you know, we’re going to replace the sink, we’re going to do this and we’re going to do this. And they can line item each thing and give you a price on each thing that they’re doing.
Joe: And then when they do the work on that, you pay them for that job. So, if you’ve got a whole house that’s being done, you can pay them as line items get done. And this is the way lenders do it, construction lenders, do it as well. They’ll do feed like that. So as the work gets done, you pay them. Now, one of the problems that you have sometimes with contractors is they don’t show up. You know, they’ll be in the middle of a job and then they don’t show up. So in my contract I ask them to agree to this. If they don’t show up over a three-day period and they’re working on a job, and you can change the dates depending on how flexible you want to be with them, but I think three days is plenty of time to be able to, you know, come back if you’ve disappeared for more than three days, I’m going to assume you’re gone. And if you’re gone, you’re not going to get paid for that line item. I’ll pay you for everything else you’ve done, and we’ll do it by line item, but I won’t pay you for that work that you’ve been working on. So, don’t, you know, don’t expect to get paid for it. And, don’t put a lien against my house. Don’t put a mechanic’s lien against my house because I’ve had that situation happen before, too, where I had to get rid of a contractor because they didn’t show up and then they put a lien against the property on work that they didn’t even do.
Joe: I got it resolved, but I had to get an attorney and I had to go through that process to get rid of it and then, you know, before I was able to go, turn around and sell that property. So don’t do that.
Joe: Anyway, having the right contracts and setting it up properly before you start makes all the difference. You know, whatever you’re doing, whether you’re working with buyers or sellers or contractors or anybody else, any other vendors that you’re working with in your business, try to set expectations up up front so that they all know how you work and what you do and what they can expect from you. And if you do that properly then when things arise that are normal in a transaction or normal in a relationship, there’s always going to be issues, you’ll have a way to deal with those issues.
Joe: Anyway, I hope that helps.