What you need to know to be the ‘contractor of choice.’

(Photo credit: ©iStockphoto.com/Konstantin Sugyagin.)

I had just returned from having seen the new home my oldest daughter was looking to buy.

She wanted me to look at it because I have enough contracting experience to know about the structure of a home and the mechanical systems. I assure you, it wasn’t because of my decorating skills!

She’s also wise enough to know that I’m now too old and too lazy to be much help with actual work and only really good at giving sound advice.

The place frankly fit the real estate creed of “Location, location, location.” It’s an upcoming area of a major metropolitan city, and she’s smart enough to know that this is closer to the bottom in the housing market than the top.

Unfortunately, the real bargains still require some work. And this place will be needing plenty!

The heating and cooling system is probably 30 years old. The kitchen and bathrooms are current - if you think 1960 is current. Beyond that, there’s still much more work to do. The good news is the structure, which is 8-inch solid brick, is in good condition and the walls, ceiling and real wood floors are in great shape.

So my words of wisdom to her were, “Find yourself a great contractor and develop a good working relationship because you’re going to be working together for quite awhile.”

Here are the top 10 tips I shared with her on how to qualify a good contractor.

1.Do an Internet search on the owner and the company and see what comes up - good and bad. You want to see testimonials from customers who are just like you.

2.Try to get referrals from your friends and family who have had a good experience working with a contractor in the last two to three years. I say two to three years because things change fast.

3.Make sure contractors are licensed to work where you live so you’re covered if and when permits need to be pulled. You don’t want to be scrambling when your job is stopped in the middle of construction.

4.Make sure they’re insured for at least workers’ compensation and that they have a certificate of liability.

5.Set a budget range for the project and know going into it that things come up and choices need to be made. I recommend you figure it’ll cost more money and take longer. If it doesn’t, you’re way ahead of the game.

6.Set up installment payments that give the contractor an incentive to stay on track and to hit objective goals and have a clear completion date. For example: 25 percent upon signing; 25 percent on rip out; 25 percent on install; and 25 percent on completion and inspection (as necessary) - all done by March 31, 2011.

7.Make sure you pick three contractors to bid the job and let them know it’s only going to be three and not 30 bidding. You also want them to know that everyone coming to give a price has been by recommendation. Also, let them know a budget range but keep it about 10 percent less than your walk-away price.

8.Have them price up all the options within your budget goals so you can say yes to what you really need and see if the budget allows for what you’d also really like.

9.Try to let the contractor buy all the materials because that keeps you from being stuck in the middle when something goes wrong. What I mean by that is the place that sold you the materials blames the contractor and the contractor blames the place that sold the materials. If need be, go to the supplier with them so you know what choices you have.

10.Make sure you have a clear understanding of what contractors will and won’t guarantee and for how long.

Why did I share this with you, the contractor?

The contractors I work with have been trained to be the prospect’s “expert advisor.” They’re sincerely interested in helping customers have a successful contracting experience even if they don’t happen to be chosen.

They also have worked with me long enough to be able to successfully address each and every one of the previous items in a positive way. They even have testimonials from their customers who say the things that address these items and give the third-party stamp of approval. That’s why, in general, they are able to ask for more money and get it more than the average contractor they compete with.

My clients love this idea so much they’ve included it on their Web sites and in all of their sales materials.

So if you want to make more profit, get yourself in position to address these top 10 issues (and customize it to fit you better). You should be able to back up your answers with customer testimonials that give validity to why you should be customers’ “contractor of choice.”