Selecting a quality contractor to help you with your home construction project can make the difference between a job done right and an utter nightmare.

And for a first-time home builder or renovator, the process of finding the right contractor can be downright daunting. Choosing the wrong contractor is a very real fear in many people’s minds. It’s scary, there’s a lot of risk and money involved, and it’s your home we’re talking about.

In this article, I want to share a 6-step process for finding and selecting a well-qualified contractor for your project. The contractor selection process that follows will help you pick a reputable contractor with demonstrated ability in building projects similar to yours. It will also help you compare potential contractors based on what you find most important, whether that’s quality, cost, schedule, personality, or any other characteristics that are important to you, because ultimately you have to be comfortable and confident with your choice in contractors.

Here are the 6 steps in selecting a well-qualified contractor for your custom home project:

1. Know what you want in a project
2. Find contractors
3. Research each contractor
4. Interview each remaining contractor
5. Investigate & check references
6. Make your selection & sign a contract

1. Know what you want in your project

It’s always good to start a project off on the right foot with setting project goals.  Setting project goals about the design intent, your programmatic needs, budget, and the construction of your project help set the stage for all future progress on your project. These goals keep everyone focused on what they have to do to help meet those goals.

1. for your project
2. in a contractor
3. in the construction experience.

Depending on when you choose to start the contractor selection process, you may have a completed design or you may be just starting out and thinking about what you want. Either way, it’s always best to have an idea of what you want before you start talking to contractors, even if you’ve just loosely defined your project.

You’ll get a lot more out of your conversations with contractors if you can talk about the spaces you want, the aesthetic, the size, and the budget. All contractors are not the same. Even your child knows there’s a difference between Bob-the-Builder, Handy Manny, and Rosie-the-Riveter. A contractor who specializes in remodels may not be the best choice if you are doing a new custom build. A design-build contractor who builds spec houses may not be the best choice if you want something highly custom. And a handyman (or woman) may not be the best person for a major remodel. Being able to communicate some of your ideas for the project with your contractor will go a long way in helping you determine if they are best for the job or not.

Similarly, you should also have a clear idea of what you’re looking for in a contractor. Of course, you want someone you can trust, who’s qualified, and who can create the best house for a fair price. Are there also other qualities you’re looking for in a contractor? How important is quality versus cost versus schedule? You can have 2 of those, but you can hardly ever have all 3, so which is most important to you? Do you want a contractor who is an innovator and can help think of creative ways to solve complex construction problems or do you want someone who can find the most economical way of doing it?

And how do you want the construction process to go? Do you want a contractor who offers a “white-glove” service and takes care of everything from beginning to end, holding your hand through the entire process? Do you want someone who wants you to make all the decisions or can they make them for you? Do you want to be involved as much as possible in the construction process? Do you want them to send you progress photos throughout the week? How involved you want to be and how much control you leave to the contractor may be a deciding factor in who you select to work with. Just make sure you keep all this in mind.

Your answers to these questions will help paint the picture of what you’re looking for in a contractor and the construction process. Spend some time upfront to think (and/or discuss with your spouse) what you really want out of your project. Be clear on your expectations so that your potential contractors can understand what you want AND so you can determine if they would be the best contractor for the job.

2. Find contractors

After you’ve defined what you want, you can start searching for contractors.

There’s no exact science to finding good contractors. Just as you can’t judge a book by its cover, good contractors are hard to spot at the beginning of the process. Don’t get caught up in trying to determine if they are good or not in the beginning. For now, as you start discovering contractors just make a list. You’ll vet them later in the subsequent steps.

Here are a few places to look for contractors.

• Ask family, friends, coworkers, and neighbors for recommendations.
• Scan the neighborhood for other construction projects getting built. Chances are, the contractor has a sign in the front yard advertising their services.
• Ask other professionals, tradespeople in the industry, or employees at home improvement or hardware stores for referrals.
• Do a search online for reputable builders in your area.
• Look in magazines, newspapers, local advertisements.
• If you’re working with an architect or designer, ask for recommendations.

3. Research each contractor

After you have a list of contractors or builders in your area, spend time researching each one. Look at their websites, check with the Better Business Bureau, and ask around about them. Find out as much as you can about the company, their capabilities, their financial standing/solvency, their experience level, their past projects, and their reputation. In your research, you may find that some don’t have experience in the type or size of custom work you want or that they don’t have the best reputation. Cross them off your list.

Read online reviews on Google, Yelp, Angie’s List for reviews. You’re looking to find out if the contractor is the right person for your job and will work well with you. Keep in mind that reading reviews is not a substitute for checking references, which is covered in a later step.

To give yourself an even better understanding of how well a given company is likely to perform, sites like Angie’s List, Yelp, and HomeAdvisor.com offer not just a list of contractors, but ratings and reviews from the contractor’s previous clients.

Of the remaining contractors on your list, you probably have some lingering questions or gaps in your information of them that you would like filled. Make a quick call to each of your remaining prospects and ask them some introductory questions or others that may reveal the company’s availability, reliability, how much attention they’ll be able to give your project, and how smoothly the work will go.

Ask a few preliminary questions about their work history, licensure, and what differentiates them from others.

• Have you completed a job similar to this before?
• How long have you been in business?
• What kind of work do you find most rewarding?
• How are you different than other contractors in the area?

In most cases, the responses you get to these three questions will give you first glance at how each company operates. If you’re satisfied with how the phone conversation is going, ask to set up a meeting in person to discuss your project and working together in more detail.

4. Interview each remaining contractor

A face to face meeting can be a very telling experience. You can learn a lot about a company and it’s representatives by how the in-person meeting is conducted and how they answer your questions.

In your meeting, ask any questions that you have and talk about your concerns. Talk about your budget and whether they can build to that budget. Talk about how they run their projects and their construction sites. Discuss what’s in the budget, how the cost of construction is determined, and how you intend to award the contract – whether you want to bid out the project or negotiate directly. (Some contractors don’t participate in bidding processes so it helps to understand each one’s stance ahead of time.)

Ask more probing questions about the financial stability, how they handle disputes, and how they anticipate the process of working on your project.

• How does your company handle disagreements and conflicts between homeowners, subcontractors, or other key personnel? Can you tell me a time of how you handled a dispute in the past 6 months?
• How do you warranty your work? How long is the warranty good for? What if you go out of business?
• Is your company insured against workers’ compensation claims, property damage or personal liability?
• How much money upfront do you ask for at the beginning of a project?
• Do you foresee any challenges or potential issues with our project?
• Why do you want the job?

Feel out the contractor and try to read them as a person. Are they on time? Are they happy to answer all your questions? Do they appreciate that you’re taking the time to do your due diligence in finding the contractor that’s the best fit? Do they show an active interest in your project?

Here are a few interview techniques:

1. Let the contractor do the talking. Try not to talk more than 25-30% of the time. Any more than that and YOU’RE the one being interviewed. Let the contractor explain to you why he or she wants the job.
2. Have a set of good quality questions ready to ask the prospective contractors. Try to ask open-ended questions more than “yes or no” questions. Open-ended questions force the person to give more explanation than a simple one-word response.
3. Ask for examples. Questions like asking them to explain a time when “something” happened and how it was resolved. Or give them problem scenarios or nightmare situations and ask how they would handle them.

A contractor should be able to answer your questions satisfactorily and in a manner that puts you at ease. It’s really important that you and your selected contractor communicate well because you will interact with them a lot in the coming months.

Any contractor that gives you a hard time answering a few questions is probably not someone you want to trust in your home or with your hard-earned money. Remember: always consider your instincts. If your gut tells you something doesn’t mesh with the contractor, you’re probably right. Beyond technical competence, comfort and compatibility should play an equal or greater role in your decision. The single most important factor in choosing a contractor is how well you and he/she communicate. All things being equal, it’s better to spend more and get someone you’re comfortable with.

And lastly, and probably most importantly, ask for referrals from past clients (especially from past clients of projects similar to yours).

5. Investigate & check references

Investigate the Facts

After meeting with potential contractors you should have a better idea of how well you think you can work with them. On the other hand, don’t let personality fool you. Check in with your state’s consumer protection agency and your local Better Business Bureau to make sure contractors don’t have a history of disputes with clients or subcontractors.

If anything was discussed that didn’t sit well with you or you were unsure about, investigate it further. Either call the contractor to discuss it further, look online, or call someone who might be able to get to the bottom of it.

Check licenses, complaints, and litigation history. General contractors and most subcontractors should be licensed, although the procedure varies by state and municipality. Check the disciplinary boards, the BBB and local court records for problems. Ask the contractor for a copy of his license and copies of the licenses of the major subcontractors who will work on the job.

Now that you’ve narrowed your list, put your research to use. Call up former clients to find how their project went and ask to see the finished product. But Tom says you shouldn’t rely on results alone. Even more important, visit a current job site and see for yourself how the contractor works. Is the job site neat and safe? Are workers courteous and careful with the homeowner’s property?

Check references

Always check references. Always.

In your in-person meeting with the contractor, hopefully, you asked for a list of past clients that you can speak to about their projects.

At a minimum, have a phone conversation with a few of your contractor’s past clients to get a homeowner’s perspective on how the construction process was. See if you can talk to current customers because those clients have the most recent experience working with the contractor and things are fresh on their mind.

Getting a first-hand account of the process is invaluable. You’re going to be in this position soon so being able to hear from the horse’s mouth how the process went and how the contractor conducted business will go a LONG way in reassuring you that the contractor is well-qualified, professional, and cares about you and your project. Speaking to past clients and visiting their homes is a good way to learn if the contractors still have good relationships with them. It also gives you a chance to confirm the quality of their construction capabilities.

• What is your impression of the contractor after working with him?
• Would you work with him again? Why or why not?
• How smoothly did the project go?
• Were there any issues or disputes that arose and how were they resolved?
• Did the contractor keep the site clean and organized? Were the crew members respectful?

If it’s possible, visit past projects. If your phone conversation goes well with past clients, ask if you may see the house. If you don’t feel comfortable with asking that, ask the contractor if you can visit any of their past projects.

Don’t forget to also speak with subcontractors who can tell you if the contractor pays them on time. Ask them if they would recommend this contractor, or is there someone else who would do a better job.

6. Make your selection & sign a contract

At this point, you should have a good or bad feeling about each contractor on your list and whether they would be a good fit for you or not. You’ve reviewed their track records, met with them in person to understand their personality, and learned about their work ethic. Now, it’s time to stop looking back at past work and start looking forward to your project.

You need to make a decision. If you’re bidding out the project, you should now have a well-qualified list of 3-4 contractors willing to bid on your project. If you want to negotiate with only one contractor, you’ll need to choose the one you think will deliver the best outcome.

Be careful with competitive bids. Make sure they provide detailed estimates so you can compare each estimate with the others. To compare bids, ask each contractor to break down the cost of materials, labor, profit margins and other expenses. Generally, materials account for 40 percent of the total cost; labor counts for 40 percent and the rest covers overhead and the typical profit margin, which is 15 to 20 percent.

Once you’ve selected a bid or negotiated a price with your chosen contractor, it’s time to draw up a contract to get everything in writing. The contract should have details for every step of the project: payment schedule; proof of liability insurance and worker’s compensation payments; a start date and projected completion date; specific materials and products to be used; and a requirement that the contractor obtain lien releases (which protect you if he doesn’t pay his bills) from all subcontractors and suppliers. Insisting on a clear contract isn’t about mistrust. It’s about insuring a successful project completion.

[Feature image photo credit: JD Hancock via flickr]