Question 1

What not to say to a general contractor?

Accepted Answer

Avoid these seven common mistakes when dealing with contractors: 1. Never tell a contractor they are the only one bidding on the job. 2. Don't disclose your budget to a contractor. 3. Avoid asking for a discount if you plan to pay upfront. 4. Refrain from telling a contractor that you aren't in a hurry. 5. Do not let a contractor choose the materials.

Question 2

Why do general contractors charge so much?

Accepted Answer

The value of a good general contractor lies in their ability to provide high-level service that enhances your overall experience, with quality home improvement services that necessitate substantial investments in hidden details, often resulting in higher costs due to the allocation of significant resources, including time, expertise, and money.

Question 3

How do I hire a local contractor?

Accepted Answer

When hiring a contractor, follow these checklist tips: Get multiple estimates, hire local and licensed contractors whenever possible, check their past work, take your time making a sound decision, verify their insurance and bonding, ensure everything is documented in writing, understand your right to cancel, and avoid paying up-front.

Question 4

What is the normal markup for a general contractor?

Accepted Answer

As a general contractor, your profit margin typically ranges from 7% to 20% or more, representing the amount remaining after covering all job costs, and this margin is often calculated as a percentage markup.

Question 5

Where is the best place to find independent contractors?

Accepted Answer

Utilize the following resources to locate professionals with the qualifications and reliability you require: LinkedIn, WorkMarket, staffing agencies, Stack Overflow, Chamber of Commerce, and professional organizations.

Question 6

How do you ask a contractor for a quote?

Accepted Answer

Clearly communicate your requirements to the contractor, request their best estimate, ensuring they understand the extent of the work, and provide a detailed timeframe for the repair, noting that most general contractors typically won't provide a quote for projects more than three months in advance.

Question 7

Is it normal to pay 50% upfront?

Accepted Answer

Establish clear and consistent upfront payment terms, with 25-50% as the standard for most industries, or consider arranging a series of installments, disbursing portions of the final bill at various project completion stages, as it's uncommon for clients to pay 100% of the bill in advance.

Question 8

Is it normal for a contractor to ask for 50 down?

Accepted Answer

In the realm of contractors, it's customary to request a 50% down payment from homeowners, followed by an additional 25% at the midway point of the project (referred to as a "progress payment"), and the remaining 25% upon project completion.

Question 9

How do I protect myself when paying a contractor?

Accepted Answer

When hiring a contractor, protect yourself by obtaining proof of bonding, licenses, and insurance, making decisions not solely based on price, requesting references, avoiding excessive upfront payments, ensuring a written contract, remaining cautious of pressure and scare tactics, considering specialized professionals for guidance, and trusting your instincts.

Question 10

What to do if a contractor ignores you?

Accepted Answer

If you're unable to reach the contractor by phone, consider using a friend's phone, as caller ID might be causing them not to answer your calls; additionally, send a letter stating that if they refuse to honor the written or verbal agreement, you will inform everyone you know about your dissatisfaction.

Question 11

How many quotes should I get for home repairs?

Accepted Answer

Obtaining quotes from potential contractors, while exciting and somewhat nerve-racking, is a critical initial step in assessing the ideal general contractor for your project and estimating the associated costs; strive to gather a minimum of three quotes for your home improvement or remodeling endeavor.

Question 12

What percentage do most general contractors charge?

Accepted Answer

On average, general contractors typically charge around 10% to 20% of a project's total construction costs, with larger general contractor companies potentially charging up to 25% of the project's costs, and your subcontractor's pricing serves as a primary reference for determining your markup.

Question 13

What is typical contractor overhead and profit?

Accepted Answer

This is quite near the industry-standard "10 and 10," representing 10% for overhead and 10% for profit; using this example, your combined overhead and profit, also known as gross profit or margin, would amount to 20%.

Question 14

What is the best company type for a contractor?

Accepted Answer

To reduce personal risk, general contractors may opt to establish a limited liability company (LLC) or corporation, which are legally distinct entities from the business owner, thus safeguarding the owner's personal assets from the company's debts and legal matters in most situations.

Question 15

What should I keep track of as an independent contractor?

Accepted Answer

Maintain a comprehensive record-keeping system by capturing photographs and retaining receipts (including digital and physical invoices, credit card statements, office expenditures, and tax deductible acquisitions) and utilize an independent contractor spreadsheet to monitor both income and expenses.

Question 16

Should I tell a contractor my budget?

Accepted Answer

A reputable remodeling contractor will inquire about your budget to provide the most cost-effective solutions, so it's essential to openly communicate your budget when asked by the contractor.

Question 17

What should a contractor quote include?

Accepted Answer

Ensure that every estimate encompasses essential elements, including a job description detailing the work, an overview of materials and labor with associated costs, the total project cost, and comprehensive sales and company contact information.

Question 18

Are contractor prices negotiable?

Accepted Answer

Once you've narrowed your selection to two contractors, initiate a final negotiation by contacting one or both, expressing that their bids are closely aligned, and inquire if there is any flexibility in their pricing without specifying an amount, as they will understand where adjustments may be possible.

Question 19

Who is the #1 general contractor in USA?

Accepted Answer

The Turner Corp. holds the top rank in the ENR 2022 Top 400 Contractors list, followed by Bechtel in second place, Kiewit Corp. in third place, and STO Building Group Inc. in fourth place, with additional rankings available in the provided table.

Question 20

What are the disadvantages of being your own general contractor?

Accepted Answer

Being your own general contractor comes with drawbacks such as a high-stress role with numerous responsibilities, a substantial time commitment, a potentially steep learning curve that could result in overspending if not properly managed, extensive research and planning demands, and the likely need to obtain licenses and permits.

Question 21

What is the easiest contractors license to get?

Accepted Answer

A Class "B" Contractor's License, the simplest type of contractor's license, permits individuals to engage in general contracting tasks.

Question 22

What are typical payment terms for contractors?

Accepted Answer

The terms "Net 10," "Net 30," or "Net 60" as indicated on the invoice signify that the contractor's payment is due within 10, 30, or 60 days from the invoice date, respectively, with few associated risks, as it's a common payment term for independent contractors.

Question 23

Is it normal for a contractor to ask for 50% down?

Accepted Answer

For smaller projects, such as a $16,000 bathroom remodel, contractors may request a 50% deposit, whereas for larger endeavors like a $100,000 full-home renovation, a deposit ranging from 10% to 20% is generally more customary.

Question 24

Is there a legal difference between a quote and an estimate?

Accepted Answer

Remember that estimates provide a rough idea of the price and serve as an initial guide, while quotes are legally binding and should only be relied upon when the costs are certain.

Question 25

What is the markup for a general contractor?

Accepted Answer

As a general contractor, your profit margin typically ranges from 7% to 20% or more, representing the amount remaining after covering all job costs, and this margin is often calculated as a percentage markup.

Question 26

What is a good profit margin for a general contractor?

Accepted Answer

Knowing how to calculate commercial profit margins is crucial for contractors to ensure profitability after accounting for project expenses, with the optimal profit margin target ranging from 8% to 15%, although it's important to note that profits do not necessarily translate to a higher contractor salary.

Question 27

What is the percentage of overhead for a general contractor?

Accepted Answer

In construction, it's typically advisable to aim for an overhead percentage between 10% and 11%, as deviations may indicate potential expense inefficiencies.

Question 28

Which is better w2 or independent contractor?

Accepted Answer

A 1099 worker is often more cost-effective than a W-2 employee, requiring no additional training and ready to perform tasks immediately, but they have the flexibility to select the work they accept, which may result in occasional unavailability for the tasks you require.

Question 29

How much can I write off as an independent contractor?

Accepted Answer

Contractors and other self-employed workers have the opportunity to deduct various expenses such as home office costs, advertising expenses, accounting fees, phone bills, equipment depreciation, travel and car expenses, as well as healthcare and retirement contributions from their taxable income.

Question 30

Why do companies prefer independent contractors?

Accepted Answer

Engaging independent contractors offers companies the flexibility to respond to market demands efficiently, access specialized skills, expedite project delivery, enhance turnover management, and maintain cost model flexibility.

Question 31

Should you pay a contractor for a quote?

Accepted Answer

Contractors typically do not charge for estimates on smaller, straightforward jobs such as painting, window washing, or lawn services that do not necessitate in-depth consultation or design work.

Question 32

Why do contractors charge so much?

Accepted Answer

The value of a skilled general contractor lies in their ability to provide high-level service that enhances the overall experience, with quality home improvement services necessitating substantial investments in hidden details, often resulting in higher costs due to the allocation of significant resources, including time, expertise, and finances.

Question 33

Is it bad to be hired as an independent contractor?

Accepted Answer

Despite the freedom, contractors lack the security typically provided by full-time employment, which includes benefits such as health insurance, paid time off, and retirement plans that are generally reserved for full-time employees.

Question 34

What are the risks of being a contractor?

Accepted Answer

Independent contractors face the absence of benefits, including health insurance, as well as the responsibility of covering all business expenses from their own income and personal funds, with each expense contributing to the financial burden.

Question 35

What is the difference between B and B2 contractors license?

Accepted Answer

Furthermore, B2 contractors are restricted from extending electrical, plumbing, or HVAC systems, tasks permissible for B contractors, and the B2 classification mandates contracts involving three or more unrelated trades, in contrast to the B classification which allows for two or more.

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