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The Secret to Finding a Great Contractor

(that 3 out of 4 Homeowners Don't Know)

By:
two women sharing a secret

For many homeowners, hiring a contractor ranks alongside scheduling a root canal in terms of anticipated pain. In fact, when the Consumer Federation of America released their 2010 list of the Top 10 Consumer Complaints, they ranked the Home Improvement / Construction industry as the 3rd worst industry, due to poor workmanship and failure to meet schedules.

The problem for homeowners is not finding professionals that are willing to take their money; the problem is finding a competent, trustworthy contractor that will stand behind their work.

After hearing from readers, we set out to understand what it takes to find a great contractor by talking with homeowners, contractors and attorneys. Then, we invited 2,000 people that had registered at FurnaceCompare.com to answer a 9-question survey about their experiences with heating contractors -- and we analyzed their responses to figure out how the most satisfied homeowners had selected their contractors.

The answer, perhaps surprisingly, did not involve social networking, secret societies, or earning new degrees in the electrical sciences. It turns out that the happiest homeowners were the ones who checked their contractor's references before they hired them. And how many homeowners didn't bother to check? You guessed it: 3 out of 4.

Why some homeowners think checking references doesn't matter

The biggest problem with checking references is that the contractor chooses which names to give you. Every contractor we interviewed told us the same thing -- they only use their most satisfied customers as references.

"I'm not going to send you a name and a phone number of a job that didn't work out well," said Chris Stock, a Philadelphia builder whose company, The Stock Group, installs heating and cooling systems. "Why would I?"

Consumers recognize this bias: as one survey respondent told us: "Contractor references will always be satisfied customers. Contractors will not provide references to contact unsatisfied customers!"

Worse, one contractor, who asked not to be named, admitted that he used his family and friends as references when he first started his business, until he had enough satisfied clients to call on.

So if there's a built-in bias, why should you check references?

The case for checking references

"I can't tell you how often people just hire somebody off the street," said Andrea Goldman, an attorney at Rosen Law Office in Newton, Massachusetts who focuses on construction, business and employment law.

The case for checking references is straightforward:

  1. Shoddy contractors often have a hard time providing valid contact information for 3 happy clients. One homeowner interviewed for this article told us this story: "I needed to hire a roofer for my home. The first reference I called said 'I don't believe in giving out references' and then hung up. I couldn't reach the roofer's other references. I hired the guy anyway, and then spent months trying to get him to finish the job correctly."
  2. Even happy clients may have had aspects of the job that they weren't happy about. Talking to them allows you to ask detailed questions about the part of the project that concerns you the most: pricing, schedule, quality, etc.
  3. It's a good idea to ask contractors for a reference from a project that hit an unexpected snag. Everyone has those sorts of jobs -- what you care about is how well the contractor handled the situation when it occurred. As Nick Bailey, the owner of Bailey Construction Services in Des Moines, Iowa said: "This is a business of surprises. Just because I give you a reference doesn't mean we didn't have some bumps along the way."
  4. If you're good at reading people, you can learn as much from the tone of someone's answers as the content of the answers themselves.

Beyond theoretical reasons, our survey linked checking references with higher levels of satisfaction. 94% of the people that checked references declared themselves "Very Satisfied" with the outcome, and the remaining 6% described themselves as "Somewhat Satisfied". Contrast that with the people that did not check references: only 63% described themselves as "Very Satisfied", 29% as "Somewhat Satisfied", 2% as "Somewhat Dissatisfied", and 6% as "Very Dissatisfied".

How common is it for homeowners to ask for references?

While slightly less than 25% of the respondents to our survey checked references, the contractors we talked to give widely varying estimates.

Stock said only 2-3 percent of his clients ask for references. Nick Bailey said about a third of his potential clients ask to speak to his references.

One explanation for this range of responses is how homeowners find each contractor.

Stock said most of his business comes through referrals from real estate agents, friends or neighbors, which provide a built-in reference. "People are coming to me already knowing they like something about me," he said. Carl Kurtz, the owner of the Philadelphia-based company, Kurtz Mechanical Contracting agrees. He said he doesn't advertise his business, relying instead on referrals from other contractors, or from homeowners who were happy with his work.

Nick Bailey does a lot of advertising, so many of his inquiries come from people who heard about him through his ads and not through a friend or family member. This may explain why a larger percentage of his potential clients asked for references.

So how do you check references, anyway?

man on phone

Let's assume you have already received multiple bids from local heating and cooling contractors, and you already threw out the bids that came from contractors who didn't have the necessary licenses and insurance policies. You still have three or more companies in the running. This the point at which you should call references.

  • Make a list of the aspects of the job that are the most important to you. Do you need the project done by a certain date? Ask the contractor if you can talk to past clients who had a tight deadline. Do you own an older house? Ask the contractor if you can speak to a client whose house is a similar age.
  • Begin by asking each contractor for references from projects that are similar to your own project. At a minimum, request a commerical reference if you're getting bids for a commercial job, or a residential reference if this is a new system for your home. It's even better if the project mirrors your own: new ductwork if your job will require new ductwork, a new high-efficiency water heater if that's what you're planning to install. Make sure to ask each contractor for at least one project that had an unexpected problem, so that you can ask the reference how the contractor handled that problem.
  • Call three references for each contractor you're serious about. Bailey said most of his clients call two or three of his references, and some even ask for a tour of houses he's worked on in the past.
  • Once you have a contractor's reference on the phone, your first question should confirm that the contractor actually did the work he or she claimed. Attorney Andrea Goldman said homeowners should describe the job they're asking the contractor to do, and ask the reference if they have experience with the contractor doing that kind of work.
  • Before you call, make a list of questions you want to ask, listing the most important at the top in case you only have time for a few. "Talk about specifics," advised Goldman, and avoid asking questions that could result in yes or no answer.

Here are some questions to consider asking:

  • How well did the contractor keep to the timeline you originally agreed on?
  • Did any issues come up about the price of the project, or the payment schedule?
  • Did the contractor keep the work area neat?
  • Do you have any concerns about how well the system worked after it was installed?
  • If there were problems after the install, did the contractor come out quickly to fix them?
  • Were there any surprises that the contractor discovered after the project began? How were those handled?
  • How would you compare this contractor to contractors that you've hired for other jobs?
  • Would you hire this contractor to do a similar project again?

Is there anything you can't ask a reference?

In the corporate world, there are some questions you shouldn't ask a job candidate. You can't ask their age, their religion, and a whole host of other questions. We wondered whether there's anything a reference for a job candidate -- or, in this case, a contractor -- shouldn't say. For example, if a contractor doesn't get hired because of a negative comment made by one of their references, can the contractor hold the reference responsible for the lost work?

Goldman said this is not a major concern. "It's not against the law to say somebody's bad," she said. "It's just you don't want to trigger something where they're going to make some claim against you." She pointed out that it's unlikely the contractor will find out why they didn't get the job, so the risk to the reference is fairly small.

Even though it's not illegal for a reference to say negative things about a contractor, some people are reluctant to say something unflattering about another person. You need to find out whether they think the contractor did a good job, but if they're being evasive you may need to ask them in a more tactful way. Try asking whether they'd hire the contractor for a similar job in the future, or ask them to compare this contractor to others they have hired.

What about using online review sites?

The internet has had an effect on the contractor selection process. Online review sites like Angie's List and Yelp make it easier for potential clients to get the skinny on contractors without having to make a single phone call.

But it's important to take online reviews with a grain of salt. Sometimes a contractor's competitors leave bad reviews in an attempt to drive customers to their own businesses. In addition, sites like Yelp give more prominence to the reviews written by regular users of the site. One contractor told us a single bad review of his business eclipsed a dozen good reviews, because the person writing the bad review was a regular Yelper.

"Everybody has a bad review of some kind," Bailey agreed.

A single bad online review shouldn't sour you on a contractor completely, but a series of bad reviews that cite the same problems should make you concerned. If you're not sure whether an online review is credible or not, ask the contractor about it. And, in such cases, it's all the more important to call references.

Conclusion

It takes a lot of time to thoroughly vet a contractor before you hire them. But it's time well spent. You'll have years to enjoy a well-installed boiler or air conditioner, years to appreciate the system's efficiency when you're paying the utility bills.

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