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CNN Live Saturday
"Dollar Signs": Choosing A Contractor
Aired March 06, 2004 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BOB FRANKEN, CNN ANCHOR: "Dollar Signs" is straight ahead, but first here's what's happening at this hour. Despite the delay, a coalition official says the signing of Iraq's interim constitution remains on track. Friday's postponement is being downplayed as just one chapter in Iraq's march to democracy. Country's governing council is still discussing last-minute differences.
In Afghanistan, nine suspected Taliban rebels have been killed by U.S. soldiers. U.S. military spokesman says the clash started when about 40 militants tried to flank American forces manning their position not far from the border with Pakistan. There were no U.S. casualties and the remaining rebels ran off.
In Crawford, Texas, President Bush met with his Mexican counterport, vice president -- Mexican President Fox. Talks focused on easing security restrictions on his fellow countrymen. Mr. Fox says they've agreed that Mexicans visiting the United States for less than three days won't have to undergo fingerprinting and photographing.
And an American ship left Libya today carrying all known remaining equipment from that country's nuclear weapons program. A spokesman for the National Security Council says the 500 ton cargo includes five scud long-range missiles, centrifuge parts and other equipment. Nowhere yet on where the ship is headed.
Welcome to "Dollar Signs." Every year Americans spend more than $130 billion fixing up their homes. Unfortunately, many watch their homes turn into money pits because of problems with contractors.
Recent study by the Consumer Federation of America shows that contractor remodeling is second among the categories which have generated the most complaints over the past five years, just below automobile sales. And most of the complaints arise from failure to use a written contract, disputes over workmanship and contractors abandoning the job or refusing to complete the work.
To help you avoid contractor nightmares, we are joined from New York by Mari McQueen who is an associate editor at "Consumer Reports" and a specialist on home improvement. And from Ft. Lauderdale Florida, certified contractor Steve Gonzalez who is the author of "Before You Hire a Contractor."
Let's start with you, mara. Why is this profession, why is this situation, so fraught with peril?
MARI MCQUEEN, CONSUMER REPORTS: One reason I think is that people look for a bargain. They're spending a lot of money to improve and upgrade their homes, and they look to save money. And sometimes the way they do that is not appropriate. They choose contractors who are fly by night operators, and they have a very unsatisfactory experience.
FRANKEN: Well, Steve, how can the scam happen? What is it that causes people to get into trouble?
STEVE GONZALEZ, CERTIFIED CONTRACTOR: Well, Bob, I think Mari is very much right. What's happening is people are putting all their confidence in a contractor to think that he's just going to come into their home and he's going to do what you expect him to do on his terms. Well, the problem here is, you can't just buy price. You know, you're not buying a vehicle. You're buying a home improvement. You're buying a home. You're buying a major home remodeling project. And this is something you use.
Your home appreciates in value, where a vehicle or some other commodity depreciates in value. The consumer is just as much to blame as the contractor. The consumer really needs to do their homework and study the contract before they hire a contractor.
FRANKEN: But is that fair? We're talking about real field of expertise. None of us who's out of the business is experts on formica, what kind of roof is supposed to be installed, that's the contractor's job. Why should the consumer be the one who bears the owness for this? Why shouldn't there be some heavy regulation -- Mari.
MCQUEEN: I think one of the things is that, you know, you still have your own common sense, and you have your own intellect, and you have your own judgment. And that goes across the board. You can never just hand over responsibility for anything to a professional.
You do your due diligence. You know, with the internet, with the library, you can have a general idea of what materials are used. What kinds of general plan that you are looking for, and discuss that with the contractor first.
We always advise getting at least three bids. When you get three bids from three different contractors, who look at the job that you want done, you'll pick a lot just from them.
FRANKEN: Well, and Steve, one of the suggestions you make, and just about everybody who is a watchdog makes, is to be as specific as possible when you're making the arrangements, right?
GONZALEZ: That's true, Bob. Mari, the key word here is specifications. Specifications is the key to getting what you want. You need to go out and do your own homework. You need to go shopping at show rooms. You need to go to home improvement stores. You need to look at products and learn what's out there.
Because if you decide to sign a contract with a contractor, for a home improvement, a kitchen or a new home, whatever the project may be, he's going to specify what he wants to give you at the most price he can give you. Now, remember one thing, whatever isn't specified, you're not going to get, or you're using his discretion in the end. And that's not really a good thing.
FRANKEN: But there are some other things that need to be specified too, Mari as you pointed out in your article, such things as a time frame. Such things as the condition of the house after the contract is through, right?
MCQUEEN: That's right. And if those things are not included in the contract, you can ask to have them included in the contract. You can stipulate that the job be finished by thus and such a date, or approximately, you know at that time. And state the condition that you want your home left in afterwards, that it should be left in good condition, similar to how it was found.
FRANKEN: But right now it seems to be a seller's market. There is, with refinancing in particular, there is so much home refinancing going on, that people are sometimes desperate to find a contractor. What do you do in that situation -- Steve?
MCQUEEN: Well, I think what you need to do is, if you're desperate to find a contractor, you really need to stop and slow down and do your homework again, like I keep saying, because this is one of the most -- the largest investments you're going to make in your lifetime is a major home building, or a remodeling project, and it's nothing to take lightly. If you just want to throw money out the window it's up to you.
But doing your homework is really important, and you know, the contract is the key. I mean, if you put the right specifications in there for materials, as far as, you know, what you want exactly, all the way down to the end, and also like you were mentioning before, Bob, it's not just that, it's what you expect of the contractor, and his qualifications and how you want your job left and some of the conditions of the contract. And that's some of the things that you really need to pay a lot of detail to.
It's important to look into. There's so many aspects of the contract that need to be diversified into someone's, you know, a contractor is not going to put that in a portfolio. He's just going to show you his projects that were completed. He's not going to tell you the conditions of those contracts or whether he made money on them or if he lost money or if the homeowners are happy or not.
FRANKEN: Not only are we not construction experts, most of us most of us aren't lawyers. So the question is and I'll address this to Mari, how do you find the information you need to make sure that you're effectively covered by a contract?
MCQUEEN: Well, I would agree that with Steve about the, you know, the more specific your contract, the better. One thing that you can always do especially when you're talking about a very large remodeling job, it's worth it to have an attorney look at your contract before you sign it. And sign off on it.
The other thing you should know, though, is that a lot of remodeling contractors, and home improvement contractors lately have been moving toward the arbitration clause. They have -- require arbitration or request binding arbitration for contractual disputes. In some instances this is not to the advantage of the consumer. So that's something you want to carefully consider before agreeing to.
FRANKEN: Not because the arbitration sometimes is slanted toward the industry, and also because it's secret. Want to stay with us now. We'll be taking your calls and emails next on "Dollar Signs." And of course, you can still send your question to dollarsigns@cnn.com, or you can call that number, 1-800-807-2620. Back in a moment.
(COMMERCIAL BREAK)
FRANKEN: Welcome back to "Dollar Signs." Choosing the wrong home improvement contractor or not knowing how to work with a contractor can turn your dream home into a nightmare. To help you avoid that, "Consumer Reports" associate editor Mari McQueen is with us from New York. And certified contractor Steve Gonzalez, author of "Before You Hire a Contractor" is with us from Ft. Lauderdale, Florida. We're going to start with a telephone call from dean in Florida. Dean, go ahead.
CALLER: Good afternoon, folks. I have a two-part question. First part is one of the more obvious questions. When you have senior citizens or elderly who don't have a family structure near them to protect them from scam artists, what tips might you have?
And also, another thing I've noticed too is oftentimes you'll have friends or people who may be related through co-workers that work under the table. Are you opening yourself up to perhaps no recourse or do you simply need to treat your friends better when it comes to working on your home?
FRANKEN: Mari?
MCQUEEN: One thing you ask the question about senior citizens. And the first thing is, that if you can help them to go through that process, that would be helpful. Because it is a fact that senior citizens are often targeted by fly by night operators.
One thing that they should be warned about is to beware of a ruse whereby a contractor comes and knocks on your door, unsolicited, to say gee whiz, it looks like your roof is falling down. I'm doing this guy next door, I'll do yours for a good price. They should just summarily reject those kinds of offers.
Also, reject the offers of people who come to your home and say I'll give you a free electrical inspection and then lo and behold, oh, my god you have this life threatening problem and I'll fix it for you, pronto. They should just reject anything like that out of hand.
Also, the same advice applies to them as to anyone, to get at least three bids. And to reject any especially low bids, because labor and materials pretty much cost what they cost within a range. An exceptionally low bidder is probably going to cut corners somewhere. Check the licensing, that you are in a community that requires licensing of contractors, and check with your Better Business Bureau, or local and state consumer affairs department for a history of complaints.
Also, in general, it's a bad thing for a business to have only a Post Office Box and not a legitimate street address. And to have only a cellular or mobile number, instead of a permanent telephone.
FRANKEN: One of the things that strikes me, Mari, is the prevalence or the large, large number of unlicensed contractors. In virtually any profession, licensing is very important. And the states normally enforce those licenses fairly stringently, but it doesn't seem to be that way in this industry. How come?
MCQUEEN: Well, that's a matter for once again state and local governments, and their funding priorities. Unfortunately, in the United States, there are many, many communities that don't license contractors or don't license every type of contractor, so it is a buyer beware situation.
The other thing is that consumers also have to bear part of the blame. As I say, you know, people are bargain hunters, if someone comes by and says that they will do the job for half the cost of a guy down the street, many people will jump at that chance without asking themselves, you know, gee, why? Labor costs what it costs per hour. Materials cost what they cost. How can somebody undercut someone else's price by 50 percent?
FRANKEN: All right let's move on to our first email. And this comes from Craig in Los Angeles. Steve, it's going to be addressed to you. Question, "how do I ensure that my contractor is not padding the materials, Bill. And how do I ensure that I'm actually getting those materials for which I'm being asked to pay?"
GONZALEZ: Well, the key there is to a lot of people hire a contractor based on time and material basis. And that's not a good idea. You should never sign a contract or an agreement or even a verbal agreement with somebody for a time and material basis. Because, in many instances, they will be doing other work and billing it to you.
The key here is to try and make sure that you have a contract with a specified amount, and with a specified product. And you know, like we touched on before, everything should be specified. But by no means should you sign a time and material, or a cost plus basis contract with anybody to where they could just go out and shopping on your account and just bill you whatever it is that they want to bill you.
And if you are locked in that situation right now, you could, you know, ask them for original invoices from the company or the supplier that they had purchased the materials from. And don't forget about releases of liens, as well. You make sure that anybody who supplies materials or labor to your project, other than the contractor, gives you a release of lien for those materials or labor, very important.
MCQUEEN: May I jump in here for a second? FRANKEN: Sure.
MCQUEEN: One thing is that last spring "Consumer Reports" did an issue in which we tested roofing and siding materials, for example. And that story concluded that it really does matter, you know, which materials you choose, that there are roofing and siding products that are superior to other products.
And one of the things that we suggested in that story is that you shop for the best, you know, shingles or the vinyl siding that you choose, and then, you know, shop for a contractor that installs that product.
This is becoming more and more easy because of the Internet, because of certification programs that the manufacturers are developing to install their products.
So, I would agree with what Steve was saying, that you can't just accept any material that the contract wants to give you. That the contractor wants to give you.
FRANKEN: Well, you also pointed out in your article that often times the retailers who sell these products are also coordinating with contractors who use them. You make that sound like that's a good idea.
MCQUEEN: Well, the thing about that -- I would say it's a good idea with certain reservations. Which is that, you know, no matter who is the installer, no matter who is the contractor, you still have to do your due diligence.
In some instances, these are owned and you know, these are installers hired directly by the company. In some cases, they are -- have a contract with local installers to install the products they sell. So we can't give a blanket recommendation to any retailer. But, it's worth looking into.
FRANKEN: OK. Waiting patiently in New York is Alma.
GONZALEZ: Hi, Alma.
CALLER: Hi.
FRANKEN: Maybe she's not waiting patiently.
CALLER: Yes, I am, I'm here.
Now that you've scared us to death, because all this stuff that I'm supposed to do, I mean, how do you know who to trust anymore? I mean, I have a roofing deal that I got really run over the coals with. And I mean, how do you really know? These are people that everybody else says they do a wonderful job, and all of a sudden I'm stuck with something that isn't wonderful. I mean how do you know who to trust anymore?
GONZALEZ: Well, Alma, it's just like with any other instance in your life, you have to try and, you know, make good judgments on who you do business with.
I think, you know, not many contractors who are reputable and they pay all their dues, and they have their licenses and their insurance and stuff, and they're in the business, and they're in the business for a long time, and they're working based on their reputation and word of mouth, they're generally the guys who are going to stay with you to the end and get the job done the way you want it.
Unfortunately, a lot of people tend to go towards the lower price. And it's so attractive that, they end up getting the guys who are not so reputable and they don't really care whether you get what you want or not. They're just in it for the money. And if they get into trouble in their personal lives or on another job it's going to reflect on your job, and obviously out of your pocketbook as well.
FRANKEN: So little time, so much to talk about. Let's get back to that in just a moment.
(COMMERCIAL BREAK)
FRANKEN: Today on "Dollar Signs," our guests are here to help you avoid costly mistakes in selecting and working with home improvement contractors. Mari McQueen is with "Consumer Reports." And Steve Gonzalez is an author of "Before You Hire a Contractor." And Miriam is sitting in Seattle waiting to ask a question -- Miriam.
CALLER: Yes, I am. I work with both contractors, and customers on a daily basis. And I have heard all the horror stories about contractors. But what I want to know is why on programs like yours, and on other investigative-type reports do they never bring up about the bum customer who is out there trying to take the contractor? It's always the bad contractor.
And I finally had to call in and stick up for the guys. Because there really are a lot of really good contractors out there. They're trying to do a good job. But there's the customers out there that are trying to get something for nothing.
Also one thing, a lot of companies have switched to cell phones to try to keep their costs down. So when you sit there and state don't go for somebody that just has a cell phones, a lot of people in general are doing that. And so are contractors. They always have their cell phone with them. And it's a cost-cutting thing to try to pass on. But if you could please let me know what you think about those customers out there that are just trying to get something for nothing.
FRANKEN: We're running a little bit short of time.
MCQUEEN: Could I take that for a second?
FRANKEN: OK, go ahead.
MCQUEEN: I think that I have pointed out in my remarks up to now that the consumer does bear some of the blame when they look for the cheapest contractor, without consideration to other things. So I think I'm trying to be fair to the contractor.
And also with respect to the issue of cell phones, there's nothing evil about having a cell phone. However, if you go to the Better Business Bureau Internet sites and you're trying to track down and check out your contractor, if they don't have a permanent phone it will not track to a permanent address. And not having a permanent address is not a good sign.
FRANKEN: OK.
GONZALEZ: I agree.
FRANKEN: Steve -- I have one more that I want to get in, if you don't mind, and this is a question I want to address to you from Sharon in California -- Sharon.
CALLER: Hi. I'm in the process of getting bids for a large remodeling job. Every contractor that seems to come in is asking me for 50 percent down, 25 percent percent midway...
GONZALEZ: No way.
CALLER: ...and the balance after. And I'm not comfortable handing anyone a dollar of my money.
GONZALEZ: That's right.
CALLER: Is that norm?
GONZALEZ: That's very normal. You be very smart, and you let that be a message to everybody else. A contractor, a reputable contractor does not need any money up front. Now I know I'm going to be getting a lot of contractors upset about this. But, yes I'm a contractor, too. And you do not need money up front. If you are reputable and you're a local contractor, you are established and you have accounts throughout your town where you don't have to buy or pay for your materials for up to 45 to 60 days.
FRANKEN: Steve, we've run out of time. Very quickly the word is no money up front.
GONZALEZ: There's no need for it. Let them get a couple of week's worth of work done first to show that he's got something done, then pay him and take it like that throughout the project.
FRANKEN: And that's all the time we have for now. Stay with CNN, because up next, "PEOPLE IN THE NEWS" takes a closer look at Martha Stewart.
Then on CNN LIVE SATURDAY a former "Playboy" playmate is now dedicating her life to helping the impoverished in Haiti. She's just returned from Haiti and she'll join us live at 6:00 p.m. Eastern.
At 7:00 Eastern, President Bush's use of 9/11 pictures in his campaign ads strikes controversy. Hear what the "CAPITAL GANG" has to say. And I'll be back after a quick break with today's top stories.
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Aired March 6, 2004 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BOB FRANKEN, CNN ANCHOR: "Dollar Signs" is straight ahead, but first here's what's happening at this hour. Despite the delay, a coalition official says the signing of Iraq's interim constitution remains on track. Friday's postponement is being downplayed as just one chapter in Iraq's march to democracy. Country's governing council is still discussing last-minute differences.
In Afghanistan, nine suspected Taliban rebels have been killed by U.S. soldiers. U.S. military spokesman says the clash started when about 40 militants tried to flank American forces manning their position not far from the border with Pakistan. There were no U.S. casualties and the remaining rebels ran off.
In Crawford, Texas, President Bush met with his Mexican counterport, vice president -- Mexican President Fox. Talks focused on easing security restrictions on his fellow countrymen. Mr. Fox says they've agreed that Mexicans visiting the United States for less than three days won't have to undergo fingerprinting and photographing.
And an American ship left Libya today carrying all known remaining equipment from that country's nuclear weapons program. A spokesman for the National Security Council says the 500 ton cargo includes five scud long-range missiles, centrifuge parts and other equipment. Nowhere yet on where the ship is headed.
Welcome to "Dollar Signs." Every year Americans spend more than $130 billion fixing up their homes. Unfortunately, many watch their homes turn into money pits because of problems with contractors.
Recent study by the Consumer Federation of America shows that contractor remodeling is second among the categories which have generated the most complaints over the past five years, just below automobile sales. And most of the complaints arise from failure to use a written contract, disputes over workmanship and contractors abandoning the job or refusing to complete the work.
To help you avoid contractor nightmares, we are joined from New York by Mari McQueen who is an associate editor at "Consumer Reports" and a specialist on home improvement. And from Ft. Lauderdale Florida, certified contractor Steve Gonzalez who is the author of "Before You Hire a Contractor."
Let's start with you, mara. Why is this profession, why is this situation, so fraught with peril?
MARI MCQUEEN, CONSUMER REPORTS: One reason I think is that people look for a bargain. They're spending a lot of money to improve and upgrade their homes, and they look to save money. And sometimes the way they do that is not appropriate. They choose contractors who are fly by night operators, and they have a very unsatisfactory experience.
FRANKEN: Well, Steve, how can the scam happen? What is it that causes people to get into trouble?
STEVE GONZALEZ, CERTIFIED CONTRACTOR: Well, Bob, I think Mari is very much right. What's happening is people are putting all their confidence in a contractor to think that he's just going to come into their home and he's going to do what you expect him to do on his terms. Well, the problem here is, you can't just buy price. You know, you're not buying a vehicle. You're buying a home improvement. You're buying a home. You're buying a major home remodeling project. And this is something you use.
Your home appreciates in value, where a vehicle or some other commodity depreciates in value. The consumer is just as much to blame as the contractor. The consumer really needs to do their homework and study the contract before they hire a contractor.
FRANKEN: But is that fair? We're talking about real field of expertise. None of us who's out of the business is experts on formica, what kind of roof is supposed to be installed, that's the contractor's job. Why should the consumer be the one who bears the owness for this? Why shouldn't there be some heavy regulation -- Mari.
MCQUEEN: I think one of the things is that, you know, you still have your own common sense, and you have your own intellect, and you have your own judgment. And that goes across the board. You can never just hand over responsibility for anything to a professional.
You do your due diligence. You know, with the internet, with the library, you can have a general idea of what materials are used. What kinds of general plan that you are looking for, and discuss that with the contractor first.
We always advise getting at least three bids. When you get three bids from three different contractors, who look at the job that you want done, you'll pick a lot just from them.
FRANKEN: Well, and Steve, one of the suggestions you make, and just about everybody who is a watchdog makes, is to be as specific as possible when you're making the arrangements, right?
GONZALEZ: That's true, Bob. Mari, the key word here is specifications. Specifications is the key to getting what you want. You need to go out and do your own homework. You need to go shopping at show rooms. You need to go to home improvement stores. You need to look at products and learn what's out there.
Because if you decide to sign a contract with a contractor, for a home improvement, a kitchen or a new home, whatever the project may be, he's going to specify what he wants to give you at the most price he can give you. Now, remember one thing, whatever isn't specified, you're not going to get, or you're using his discretion in the end. And that's not really a good thing.
FRANKEN: But there are some other things that need to be specified too, Mari as you pointed out in your article, such things as a time frame. Such things as the condition of the house after the contract is through, right?
MCQUEEN: That's right. And if those things are not included in the contract, you can ask to have them included in the contract. You can stipulate that the job be finished by thus and such a date, or approximately, you know at that time. And state the condition that you want your home left in afterwards, that it should be left in good condition, similar to how it was found.
FRANKEN: But right now it seems to be a seller's market. There is, with refinancing in particular, there is so much home refinancing going on, that people are sometimes desperate to find a contractor. What do you do in that situation -- Steve?
MCQUEEN: Well, I think what you need to do is, if you're desperate to find a contractor, you really need to stop and slow down and do your homework again, like I keep saying, because this is one of the most -- the largest investments you're going to make in your lifetime is a major home building, or a remodeling project, and it's nothing to take lightly. If you just want to throw money out the window it's up to you.
But doing your homework is really important, and you know, the contract is the key. I mean, if you put the right specifications in there for materials, as far as, you know, what you want exactly, all the way down to the end, and also like you were mentioning before, Bob, it's not just that, it's what you expect of the contractor, and his qualifications and how you want your job left and some of the conditions of the contract. And that's some of the things that you really need to pay a lot of detail to.
It's important to look into. There's so many aspects of the contract that need to be diversified into someone's, you know, a contractor is not going to put that in a portfolio. He's just going to show you his projects that were completed. He's not going to tell you the conditions of those contracts or whether he made money on them or if he lost money or if the homeowners are happy or not.
FRANKEN: Not only are we not construction experts, most of us most of us aren't lawyers. So the question is and I'll address this to Mari, how do you find the information you need to make sure that you're effectively covered by a contract?
MCQUEEN: Well, I would agree that with Steve about the, you know, the more specific your contract, the better. One thing that you can always do especially when you're talking about a very large remodeling job, it's worth it to have an attorney look at your contract before you sign it. And sign off on it.
The other thing you should know, though, is that a lot of remodeling contractors, and home improvement contractors lately have been moving toward the arbitration clause. They have -- require arbitration or request binding arbitration for contractual disputes. In some instances this is not to the advantage of the consumer. So that's something you want to carefully consider before agreeing to.
FRANKEN: Not because the arbitration sometimes is slanted toward the industry, and also because it's secret. Want to stay with us now. We'll be taking your calls and emails next on "Dollar Signs." And of course, you can still send your question to dollarsigns@cnn.com, or you can call that number, 1-800-807-2620. Back in a moment.
(COMMERCIAL BREAK)
FRANKEN: Welcome back to "Dollar Signs." Choosing the wrong home improvement contractor or not knowing how to work with a contractor can turn your dream home into a nightmare. To help you avoid that, "Consumer Reports" associate editor Mari McQueen is with us from New York. And certified contractor Steve Gonzalez, author of "Before You Hire a Contractor" is with us from Ft. Lauderdale, Florida. We're going to start with a telephone call from dean in Florida. Dean, go ahead.
CALLER: Good afternoon, folks. I have a two-part question. First part is one of the more obvious questions. When you have senior citizens or elderly who don't have a family structure near them to protect them from scam artists, what tips might you have?
And also, another thing I've noticed too is oftentimes you'll have friends or people who may be related through co-workers that work under the table. Are you opening yourself up to perhaps no recourse or do you simply need to treat your friends better when it comes to working on your home?
FRANKEN: Mari?
MCQUEEN: One thing you ask the question about senior citizens. And the first thing is, that if you can help them to go through that process, that would be helpful. Because it is a fact that senior citizens are often targeted by fly by night operators.
One thing that they should be warned about is to beware of a ruse whereby a contractor comes and knocks on your door, unsolicited, to say gee whiz, it looks like your roof is falling down. I'm doing this guy next door, I'll do yours for a good price. They should just summarily reject those kinds of offers.
Also, reject the offers of people who come to your home and say I'll give you a free electrical inspection and then lo and behold, oh, my god you have this life threatening problem and I'll fix it for you, pronto. They should just reject anything like that out of hand.
Also, the same advice applies to them as to anyone, to get at least three bids. And to reject any especially low bids, because labor and materials pretty much cost what they cost within a range. An exceptionally low bidder is probably going to cut corners somewhere. Check the licensing, that you are in a community that requires licensing of contractors, and check with your Better Business Bureau, or local and state consumer affairs department for a history of complaints.
Also, in general, it's a bad thing for a business to have only a Post Office Box and not a legitimate street address. And to have only a cellular or mobile number, instead of a permanent telephone.
FRANKEN: One of the things that strikes me, Mari, is the prevalence or the large, large number of unlicensed contractors. In virtually any profession, licensing is very important. And the states normally enforce those licenses fairly stringently, but it doesn't seem to be that way in this industry. How come?
MCQUEEN: Well, that's a matter for once again state and local governments, and their funding priorities. Unfortunately, in the United States, there are many, many communities that don't license contractors or don't license every type of contractor, so it is a buyer beware situation.
The other thing is that consumers also have to bear part of the blame. As I say, you know, people are bargain hunters, if someone comes by and says that they will do the job for half the cost of a guy down the street, many people will jump at that chance without asking themselves, you know, gee, why? Labor costs what it costs per hour. Materials cost what they cost. How can somebody undercut someone else's price by 50 percent?
FRANKEN: All right let's move on to our first email. And this comes from Craig in Los Angeles. Steve, it's going to be addressed to you. Question, "how do I ensure that my contractor is not padding the materials, Bill. And how do I ensure that I'm actually getting those materials for which I'm being asked to pay?"
GONZALEZ: Well, the key there is to a lot of people hire a contractor based on time and material basis. And that's not a good idea. You should never sign a contract or an agreement or even a verbal agreement with somebody for a time and material basis. Because, in many instances, they will be doing other work and billing it to you.
The key here is to try and make sure that you have a contract with a specified amount, and with a specified product. And you know, like we touched on before, everything should be specified. But by no means should you sign a time and material, or a cost plus basis contract with anybody to where they could just go out and shopping on your account and just bill you whatever it is that they want to bill you.
And if you are locked in that situation right now, you could, you know, ask them for original invoices from the company or the supplier that they had purchased the materials from. And don't forget about releases of liens, as well. You make sure that anybody who supplies materials or labor to your project, other than the contractor, gives you a release of lien for those materials or labor, very important.
MCQUEEN: May I jump in here for a second? FRANKEN: Sure.
MCQUEEN: One thing is that last spring "Consumer Reports" did an issue in which we tested roofing and siding materials, for example. And that story concluded that it really does matter, you know, which materials you choose, that there are roofing and siding products that are superior to other products.
And one of the things that we suggested in that story is that you shop for the best, you know, shingles or the vinyl siding that you choose, and then, you know, shop for a contractor that installs that product.
This is becoming more and more easy because of the Internet, because of certification programs that the manufacturers are developing to install their products.
So, I would agree with what Steve was saying, that you can't just accept any material that the contract wants to give you. That the contractor wants to give you.
FRANKEN: Well, you also pointed out in your article that often times the retailers who sell these products are also coordinating with contractors who use them. You make that sound like that's a good idea.
MCQUEEN: Well, the thing about that -- I would say it's a good idea with certain reservations. Which is that, you know, no matter who is the installer, no matter who is the contractor, you still have to do your due diligence.
In some instances, these are owned and you know, these are installers hired directly by the company. In some cases, they are -- have a contract with local installers to install the products they sell. So we can't give a blanket recommendation to any retailer. But, it's worth looking into.
FRANKEN: OK. Waiting patiently in New York is Alma.
GONZALEZ: Hi, Alma.
CALLER: Hi.
FRANKEN: Maybe she's not waiting patiently.
CALLER: Yes, I am, I'm here.
Now that you've scared us to death, because all this stuff that I'm supposed to do, I mean, how do you know who to trust anymore? I mean, I have a roofing deal that I got really run over the coals with. And I mean, how do you really know? These are people that everybody else says they do a wonderful job, and all of a sudden I'm stuck with something that isn't wonderful. I mean how do you know who to trust anymore?
GONZALEZ: Well, Alma, it's just like with any other instance in your life, you have to try and, you know, make good judgments on who you do business with.
I think, you know, not many contractors who are reputable and they pay all their dues, and they have their licenses and their insurance and stuff, and they're in the business, and they're in the business for a long time, and they're working based on their reputation and word of mouth, they're generally the guys who are going to stay with you to the end and get the job done the way you want it.
Unfortunately, a lot of people tend to go towards the lower price. And it's so attractive that, they end up getting the guys who are not so reputable and they don't really care whether you get what you want or not. They're just in it for the money. And if they get into trouble in their personal lives or on another job it's going to reflect on your job, and obviously out of your pocketbook as well.
FRANKEN: So little time, so much to talk about. Let's get back to that in just a moment.
(COMMERCIAL BREAK)
FRANKEN: Today on "Dollar Signs," our guests are here to help you avoid costly mistakes in selecting and working with home improvement contractors. Mari McQueen is with "Consumer Reports." And Steve Gonzalez is an author of "Before You Hire a Contractor." And Miriam is sitting in Seattle waiting to ask a question -- Miriam.
CALLER: Yes, I am. I work with both contractors, and customers on a daily basis. And I have heard all the horror stories about contractors. But what I want to know is why on programs like yours, and on other investigative-type reports do they never bring up about the bum customer who is out there trying to take the contractor? It's always the bad contractor.
And I finally had to call in and stick up for the guys. Because there really are a lot of really good contractors out there. They're trying to do a good job. But there's the customers out there that are trying to get something for nothing.
Also one thing, a lot of companies have switched to cell phones to try to keep their costs down. So when you sit there and state don't go for somebody that just has a cell phones, a lot of people in general are doing that. And so are contractors. They always have their cell phone with them. And it's a cost-cutting thing to try to pass on. But if you could please let me know what you think about those customers out there that are just trying to get something for nothing.
FRANKEN: We're running a little bit short of time.
MCQUEEN: Could I take that for a second?
FRANKEN: OK, go ahead.
MCQUEEN: I think that I have pointed out in my remarks up to now that the consumer does bear some of the blame when they look for the cheapest contractor, without consideration to other things. So I think I'm trying to be fair to the contractor.
And also with respect to the issue of cell phones, there's nothing evil about having a cell phone. However, if you go to the Better Business Bureau Internet sites and you're trying to track down and check out your contractor, if they don't have a permanent phone it will not track to a permanent address. And not having a permanent address is not a good sign.
FRANKEN: OK.
GONZALEZ: I agree.
FRANKEN: Steve -- I have one more that I want to get in, if you don't mind, and this is a question I want to address to you from Sharon in California -- Sharon.
CALLER: Hi. I'm in the process of getting bids for a large remodeling job. Every contractor that seems to come in is asking me for 50 percent down, 25 percent percent midway...
GONZALEZ: No way.
CALLER: ...and the balance after. And I'm not comfortable handing anyone a dollar of my money.
GONZALEZ: That's right.
CALLER: Is that norm?
GONZALEZ: That's very normal. You be very smart, and you let that be a message to everybody else. A contractor, a reputable contractor does not need any money up front. Now I know I'm going to be getting a lot of contractors upset about this. But, yes I'm a contractor, too. And you do not need money up front. If you are reputable and you're a local contractor, you are established and you have accounts throughout your town where you don't have to buy or pay for your materials for up to 45 to 60 days.
FRANKEN: Steve, we've run out of time. Very quickly the word is no money up front.
GONZALEZ: There's no need for it. Let them get a couple of week's worth of work done first to show that he's got something done, then pay him and take it like that throughout the project.
FRANKEN: And that's all the time we have for now. Stay with CNN, because up next, "PEOPLE IN THE NEWS" takes a closer look at Martha Stewart.
Then on CNN LIVE SATURDAY a former "Playboy" playmate is now dedicating her life to helping the impoverished in Haiti. She's just returned from Haiti and she'll join us live at 6:00 p.m. Eastern.
At 7:00 Eastern, President Bush's use of 9/11 pictures in his campaign ads strikes controversy. Hear what the "CAPITAL GANG" has to say. And I'll be back after a quick break with today's top stories.
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