7 Mistakes To Avoid When Hiring A Contractor In Arizona

by Michelle Quackenbush

A recent survey found that over half (52%) of American homeowners plan a renovation project this year. If you're among them, you know that embarking on home improvements can be exciting and daunting. According to the survey, the median renovation budget is around $15,000, so you're probably investing a significant amount -- and you'll want to ensure your project's success.

One of the most critical decisions you'll make is choosing the right contractor to bring your vision to life. However, many homeowners need to avoid common pitfalls during this process, which can lead to stress, financial strain, and subpar results.

In this guide, we'll explore seven mistakes to avoid when hiring a contractor to ensure your project runs smoothly from start to finish.

1. SKIPPING THE RESEARCH PHASE

A common mistake homeowners make is rushing into hiring a contractor without proper research. But to ensure the success of your renovations, it's crucial to meet with multiple candidates and educate yourself on best practices surrounding your project.

If you bypass the interview process, you miss the opportunity to evaluate different approaches, pricing, and expertise. This can result in overpaying or hiring someone whose skills and vision do not align with your needs.

Neglecting to research the processes and steps involved can also leave you vulnerable. It makes it more challenging to ask the right questions, and you risk hiring unqualified professionals or settling for subpar work.

What To Do Instead

Educate Yourself -- Read up on or watch YouTube videos to understand better best practices surrounding your project.
Interview Multiple Contractors -- Search for and interview at least three contractors who specialize in your needed work.
Ask Specific Questions -- Inquire about the processes and materials each candidate will utilize.
Seek Recommendations -- Get referrals from trusted sources like friends, neighbors, and your real estate professional (hint: ME!). I would be happy to share a list of referrals!
Check Out The Contractor—with the State of Arizona: Go to the Arizona Registrar of Contractors website (link below) to find out the status of the contractor's license and whether any complaints have been filed.

2. CHOOSING BASED SOLELY ON PRICE

Once you've interviewed candidates and reviewed their proposals, it's time to choose your favorite. But don't make the mistake of rushing to the lowest bid.

While it's natural to want to save money, selecting a contractor based entirely on price can be costly. Extremely low bids can indicate cut corners, subpar materials, or hidden costs that will surface later. Another favorite is when they have too many jobs and take months to finish.

According to the National Association of the Remodeling Industry, when evaluating bids, make sure you're comparing "apples" to "apples" and consider factors like quality, timeline, and scope. Are they fully licensed and insured? How long have they been in business? Do they warranty their work?

What To Do Instead

Consider Overall Value -- In addition to price, look at experience, reputation, and quality of work.
Ask For Detailed Breakdowns -- Bids significantly lower than others may be too good to be true.
Invest In Quality -- Remember that quality work comes at a fair price, and investing in a reputable contractor can save you money in the long run by avoiding costly mistakes or repairs.

3. NEGLECTING TO CONFIRM CREDENTIALS AND INSURANCE

When you've established a good rapport with a contractor, it's natural to want to believe the best in them. However, neglecting to check references and verify licensing and insurance could come back to haunt you.

Hiring an untrained or unlicensed contractor puts you at risk for safety and code violations, not to mention shoddy workmanship. Without proper insurance, you could be left footing the bill for costly repairs, legal issues, or even medical bills if someone gets hurt on the job. Skipping out on a reference check can be equally problematic. It's your best opportunity to ensure that their promises and your expectations line up with reality.

What To Do Instead

Verify Licensing And Insurance -- Confirm that the contractor is licensed according to the State of Arizona and verify insurance, including general liability and workers' compensation coverage. The State of Arizona does not require handymen to be licensed.
Check Reviews -- Read online reviews and confirm that the business is in good standing with the Better Business Bureau and other relevant trade groups.
Call References -- When contacting references, ask questions and request to see photos of the contractor's completed projects.
Visit Job Sites -- If possible, visit a current job site to observe the contractor's work in progress and interaction with the clients.

4. PROCEEDING WITHOUT A WRITTEN AGREEMENT

A handshake deal might seem friendly and straightforward, but it's a recipe for misunderstandings and potential legal issues. Verbal agreements are difficult to enforce and leave room for miscommunication about project scope, timelines, and costs.

Instead, you should have a signed contract before any work begins. Paperwork can be tedious but don't skip the critical step of carefully reading over your contract, asking questions, and pushing back on any terms that make you uncomfortable. Don't forget to ask for payment receipts and documents for any change orders or issues that arise throughout the project.

What To Do Instead

Insist On A Written Contract -- Outline all aspects, including scope, materials, timeline, payment schedule, warranty information, and a process for handling change orders.
Understand And Agree -- Don't sign anything until you fully understand and agree to all terms.
Keep Documentation -- Once you've made your final payment, request a lien waiver or receipt marked "Paid In Full" to keep on file for legal and tax purposes.

5. PAYING TOO MUCH UPFRONT

Another common misstep is paying a large sum upfront or the entire project cost before completion. This can leave you vulnerable if the contractor fails to complete the work or disappears with your money.

According to the home services platform Angi, deposits typically range between 10% to 33% of the total project cost. The remaining payments should be tied to progress milestones outlined in your contract.

Construction attorneys caution against paying a greater share of the project cost than the percentage of the work that's been completed. If you end up dissatisfied with the outcome, you'll have much less leverage if you've already paid.

What To Do Instead

Be Cautious -- Avoid contractors who demand large upfront payments or cash-only deals.
Establish A Payment Schedule -- Tie payments to project milestones and stick to them.
Pay Only Upon Completion -- Never pay in full until the project is completed to your satisfaction and all required inspections have been passed.

6. FAILING TO GET NECESSARY PERMITS

Shipping the permit process might seem like a way to save time and money, but it can lead to serious consequences. Without the proper permits, you risk violating local building codes and regulations, which could result in fines, forced removal of work, or even legal action.

Additionally, unpermitted work might compromise your home's safety and structural integrity, potentially leading to hazardous conditions or diminished real potential. Homeowners may also find themselves without recourse if issues arise later, as insurance companies often exclude coverage for unpermitted renovations.

If your community has a homeowners association (HOA), remember to also check its requirements. You may need prior approval to make modifications to your home or yard. HOAs have the power to enforce these restrictions with fines and even a lien on your home, so don't skip this important step.

What To Do Instead

Discuss Permits -- Talk about permits and HOA requirements with your contractor before work begins.
Include Permits In The Contract -- Ensure that obtaining necessary permits and approvals is part of your contract.
Verify Inspections -- Ensure all required inspections are completed during the project.
Keep Records -- Keep copies of all permits and HOA approvals and inspect reports for your records.

7. IGNORING RED FLAGS AFTER THE PROJECT HAS STARTED

Sometimes a contractor can check all the right boxes -- until the work begins. Unfortunately, red flags spotted mid-project can be incredibly challenging to address.

If you've already paid a substantial amount or had a portion of your home demolished, you may feel trapped in a bad situation. However, if there are major problems that the contractor is unwilling to address, ignoring them can make things exponentially worse.

Don't be afraid to seek legal or professional advice if issues persist. Taking immediate, informed, and decisive action is crucial to safeguarding your investment and ensuring the project's ultimate success.

What To Do Instead

Review Your Contract -- Make sure you thoroughly understand your rights and the agreed-upon terms.
Document Issues -- Keep detailed records, including dates, descriptions of problems, photographs of subpar work or materials, and any communications with the contractor.
Communicate Professionally -- Arrange a meeting to discuss your concerns, ensuring you remain calm and professional while clearly expressing your expectations.
Request A Resolution Plan -- Ask for a plan to address the issues, set a timeline for resolution, and put everything in writing to ensure you're both on the same page.
Seek Advice -- If the contractor is uncooperative or dismissive, consider seeking advice from a legal professional. You could also contact your local licensing board or consumer protection agency for guidance.

The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.

Sources:

Arizona Registrar Of Contractors -https://roc.az.gov

USA Today - https://www.usatoday.com/money/homefront/moving/home-renovation-statistics/

National Association Of The Remodeling Industry https://remodelingdoneright.nari.org/Homeowner-Resources/Questions-to-ask/How-to-select-a-remodeler

The Washing Post - https://www.washingtonpost.com/home/2024/07/08/how-to-find-good-honest-contractor/

MarketWatch - https://www.marketwatch.com/guides/insurance-services/home-insurance-during-renovations/

LegalZoom - https://www.legalzoom.com/articles/oral-contracts-do-they-carry-any-weight

Better Business Bureau - https://www.bbb.org/all/home-improvement/your-home-improvement-contract

Angi - ttps://www.angi.com/articles/how-much-should-i-pay-general-contractor-prior-starting-job.htm

Bob Vila - https://www.bobvila.com/articles/remodel-without-permit/

Bankrate - https://www.bankrate.com/real-estate/hoa-homeowners-association-rules/

Angi - https://www.angi.com/articles/how-complain-contractors-effectively.htm