Shady Contractors

If you are doing residential construction work, you know there are all kinds of people. You’ll especially see it in sales; we talked about that in our online class last Thursday, and will discuss more sales “opportunities”, also known as challenges, next Thursday.

There are also all kinds of contractors. We received this note from one of the good guys, asking questions about helping a homeowner who was dealing with a shady contractor:

I recently received a phone call from a retired lady who hired a shady contractor to do an addition on her home. While the actual work being done is of acceptable quality the GC has completely overshot her budget, doing additional work and then getting her to sign off on the additional work after he starts it. He now claims that she still owes him $37,000 (the original contract was $168,000 and she has already paid him $171,000). In my humble opinion the contract price was low for what work was outlined. On top of that, after I reviewed it, the contract is obviously grossly under-detailed. There are listed items on the contract that are missing, which the GC will not credit back to the client, and the additional work done seems to be priced extremely high (double what I would charge considering my cost + markup).

Let me interrupt this note to say that the reason you need to have change or additional work orders signed and paid before doing any changes or additional work is to establish, in writing, that your client wants the change and is willing to pay for it. Most contractors who don’t take the time to get a signed change work order signed think they’re too busy to stop and do the paperwork. With this contractor, it sounds like part of the scam; he makes the change, then tell the client they have to pay for it.

I’d like to know how she chose her contractor. It looks like he was the lowest price contractor and is making up for that low price with changes. Let’s go back to his note:

My question is: I’d really like to help this lady get her project finished. Other projects that I’ve taken over, the client had already parted ways with their original GC and my contracts were extremely specific about what work I was to do and what work I would not be liable for. In this situation the client wants to have the original GC finish the work as she has already paid him beyond the original contract amount. I AM NOT A LICENSED ATTORNEY! So, I’m a little wary of what advice I can give and how I could be of service to this lady. I feel bad for her as she is retired, single and has been taken advantage of by this GC.

Your advice would be extremely helpful! Your books saved my company back in ’09 and I value your input on this situation.

I suggested he encourage the homeowner to file a complaint with the state contractor’s board. I also don’t think it’s wise to get involved any further as long as the original contractor is in the picture.

I’m reasonably sure that many of you have either been in this situation, a similar situation, or have heard these stories from a friend. Contractors like this continue to cause problems for home and building owners, and the good guys pay the price. The GC written about in the note should have his license yanked and get the heck out of our industry. He’s one of the reasons construction has a bad name.

What can you do? Be honest. Be fair. Quote a firm, fixed price to your clients and educate them on why that’s the best way to hire a contractor. Write a detailed contract and build the job according to the contract. Don’t take shortcuts, and don’t expect the owner to pay for any of your mistakes. Good guys win in the long run.

Related article: It’s Time to Change Our Image

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Jody Costello
June 8, 2020 3:08 pm

Thanks Michael for this post. Unfortunately, bad contractors continue to cause harm and do indeed ruin it for ethical contractors. Having gone through a horrible remodeling nightmare nearly 20 years ago, I created a site to help and warn consumers about the pitfalls of renovating and hiring/working with contractors. It’s usually the vetting process that homeowners fail to do their due diligence in as well as not becoming familiar with their states’ contractors laws and what’s expected of both parties.

June 4, 2020 8:44 am

Never, ever, take on a job that someone else started and walked away from, no matter the reason.

Joe Dentente
Joe Dentente
June 2, 2020 7:42 pm

Left the commercial industry nearly 40 years ago, engaged a contractor 1 year ago to remodel our home. Fair price contract, references weren’t a problem, however 1 month into project, clearly he was over-extended and then tried to take shortcuts. Project was to take 12 weeks, as we entered week 28 engaged an attorney, fired him, replaced with a competitor who in 4 consecutive work days performed more work than original contractor in 3 months. I will not be done until he loses his license, as I discover I’m not the only client he has failed. Difference, I have the… Read more »

Clay Carson
May 27, 2020 3:49 pm

Michael, enjoyed this explanation. It’s tough to walk away from a situation like this.
A few years back, my Dad used a ‘friend’ to do some renovations on his house. My Dad was in his 80’s, contractor in his 30’s.
The job ballooned from $20k to $70k, with no written record, within weeks. I was furious. Asked the contractor to justify his costs, and his price instantly and ‘miraculously’ dropped down to $25k.
The work done was fine. The pricing was crazy.
I appreciate the work you do!

Mikhail Gannage
May 27, 2020 2:03 pm

Just finished helping a client disentangle them self from almost the exact situation + 100k. So sad, and really gets my blood boiling. We all spend a great deal of energy working to change the customers mind set regarding contractors only to find knuckleheads like this throwing a monkey wrench into the mix. I agree that it is best to not get in the middle of this “fight”. Use the contractors board, and guide from a distance. If necessary, help with the “clean-up” as you would approach any other job. It is unfortunate, but the client will most likely ended… Read more »
May 27, 2020 6:32 am

I’ve been in this situation many times and I’ve found that “no good deed goes unpunished.” As much as the good contractors would like to help out those who have been taken advantage of, my position now is to walk away as you’re just asking for trouble. Now I just tell them that while I’m sorry, my insurance does not allow me to continue any work that was started by another contractor. There’s too much liability and you’re just stepping into a hornet’s nest if you get involved.

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