From Spotlight: A Handbook for Homeowners Who Don’t Want to Waste Money

5 Secrets Your Contractor Doesn’t Want You to Know

How to protect your bottom line.

home remodel construction view of front porch with contractor work items boards beams electrical
Image: Jennifer Vinson for HouseLogic

You’ve asked friends to recommend great contractors, picked your favorite, checked references — and maybe even conducted an online background check on their business. So you know you’ve found a top-notch pro for your home improvement project.

But remember that their bottom line is getting you to sign a contract, and they're not going to mention anything that might get in the way. Before you make a commitment, here are five things you need to know to protect your bottom line.

#1 They're Not the Only Contractor in Town

Even if you believe you found the best contractor in the area, don’t hire them unless you’re sure they're right for your project.

You should solicit at least three bids from three contractors before awarding a home improvement project. This way you can make an educated hiring decision by comparing costs, methods, and materials.

What you should do: Make sure you have a basis for comparison when asking for bids. Provide each contractor with the same project details. This may include materials you wish to use and floor plans. Although cost should be one of your deciding factors, other points to consider include scheduling and communication style.

Tip: Once you've picked the best contractor for the job, keep your project on track with an ironclad contract.

Related: 5 Essential Questions to Ask a Contractor

#2 They'll Farm Out the Work to Subcontractors

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 toolbelts.

Instead, their role is to sign clients, manage budgets, and schedule a cast of subcontractors. When they're trying to win your business, contractors can be vague about how involved they'll be — and who will be running the job day-to-day.

What you should do: Inquire who will be in charge of the job site. Ask to meet the job foreman, preferably while they're at work on a current job site, says Stockbridge, Mass., contractor Jay Rhind Builders. “You want to make sure you feel comfortable with them.”

Tip: Don’t underestimate the importance of being nice. It can help keep your contractor and crew on track while improving the quality of their work.

#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 setup costs.

If their business is financially sound and in good standing with their suppliers, they 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. To find out the law in your area, check with your local or state consumer agency.

What you should do: A small deposit is reasonable to kick off a project. But your payment plan should be based on a defined amount of work being completed. This way, if the work isn’t proceeding according to schedule, the payments will be delayed.

Tip: When possible, charge it. Angi suggests using a credit card for home improvement work so that if disputes crop up during the process, your credit card company can help you navigate.

Related: What a Remodeling Contract Should Say

#4 Contractors Mark up Labor and Materials

Contractors don't want to talk about it, but they're going to mark up everything they pay out to make your job happen. That’s fair; it’s how they pay their own overhead and salary. The typical markup on materials will be 7.5% to 10%, but some contractors will mark up materials as much as 20%, according to Angi. Keep in mind that other costs are also factored into their markup, including labor and overhead.

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 their 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 job site when they’re needed. You could save on the overall cost of the project.

Tip: Salvage materials are one way to save on building costs. Just make sure you use upcycled stuff wisely so you don’t harm your home’s value.

#5 Contractors Aren't Designers

Sure, some contractors 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: Depending on the complexity of your project, you may need a number of skilled pros to get the job done. So don’t count on a contractor to design your space and add clever details unless they clearly demonstrate their abilities and have a portfolio of their own work.

Ask a contractor's references about their design skills. Keep in mind, you might sometimes be better off hiring an architect for overall planning, and a kitchen and bath designer for the details.

Oliver Marks

Oliver Marks A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He's currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.