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The claims process is usually longer for large losses and claims than it is for smaller ones. Learn more about what to expect in a disaster claim here , and don't forget to check into additional living expenses and how they work too. You can contact local state departments to find out if a person representing themselves as a contractor is legitimate. Licensed contractors should not have a problem providing you with information showing their qualifications.

If you are ever approached by one of these salespeople that go door-to-door canvassing neighborhoods offering cleanup and repair services, let them know you are working with an insurance company and you require a formal bid. If they are legitimate, they will be willing to put in a professional bid on doing the work.

While many of these people are honest and reputable, some are not. When you have an insurance claim, the insurance company is responsible for paying the damages if the damage happened due to insured perils. Insurance companies have many well-known contractors they work with and can often recommend a good reliable contractor to you, or even offer you options. Consider taking advantage of their expertise and help in the situation, after all that's what you pay insurance for: to help you in a claim.

This is the easiest and best way to find a reputable and accountable contractor. You are always free to get second opinions and negotiate with your adjuster. Insurance companies provide contractors with many jobs and are big clients to them.

How to Deal With Contractors: 14 Steps (with Pictures) - wikiHow

Letting the insurance company take care of it can save you a lot of stress, time, and trouble. Below is a recommended list of steps to take in order to protect yourself and find an honest and legitimate contractor. Have the adjuster get the insurance company contractor to assess the damage and make an estimate of the damage and repair costs for your property. The insurance adjuster will know what kind of coverage you have on your policy and will be able to help guide you accordingly.

Sometimes there will be a difference in the estimate from the insurance company contractor and your contractor. If this happens you need to get your insurance adjuster to review the estimate from your contractor and let you know if the work will be approved. Otherwise, you may not get paid. The first thing you should request from a contractor before any work is done is their references.

When looking for a contractor, check online reviews, call friends and neighbors and ask them if they have any contractors they could refer to you. Most importantly, make sure the contractor is licensed and carries liability and workers compensation insurance If the contractor is not insured, you may be liable for accidents and damage that occur on your property.

Be very diligent about reading any papers the contractor wants you to sign. When you are hiring a contractor for the insurance claim, you need to be speaking to your insurance adjuster because in an insurance claim you don't have the authority to approve repairs on your own. It is only when the insurance company approves repairs that it gets paid. You can ask your adjuster if they can speak to your contractor to discuss the estimates before anything is agreed upon.

Make sure the contract is well written and includes provisions such as what work the contractor will guarantee and how long that guarantee lasts. Look for the date of completion or what the estimated timeline for the repairs will be. If you are confused about what the contract offers, ask your insurance adjuster to help you. The insurance company will also be able to tell you if your additional living expenses would be covered for this time period or not.

If you want help understanding wordings of the legal contract, consider contacting legal assistance services which many home insurance companies may offer as part of your policy for free or low costs. Of course, in order to be eligible to buy a surety bond policy, the contractor must first be licensed, which opens another avenue to property owners as well. One reason to use licensed contractors is that you can report problems and disputes to the state licensing board. To keep their license in good standing, contractors will often correct the problem rather than risk their license.

This is one way to force the contractor into mediation to resolve the dispute. The process to file a claim also varies by state, so call the department up and ask them about their procedure.

They are similar, but not identical. This way, the contractor is forced to accept arbitration or mediation. The advantage of small claims court is that parties do not need an attorney to represent them. The limitation? Whether your contractor is taking too long to finish a job, or your contractor went over budget, or any other infraction, small claims court is an alternative to mediation.

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Double check what the limit is in your jurisdiction as it varies by state. If mediation is not an option, and the damages you want to sue for are higher than the limit in your state, you can hire an attorney for a full-fledged lawsuit. Granted, suing a contractor should remain a last resort. When all else fails, real estate investors can at the very least leave negative reviews and complaints on public review websites.

A classic example is the Better Business Bureau , with which many businesses keep a profile and rating. It may not help you get your money back, but at least you can prevent other property investors and owners suffering from dealing with a bad contractor. Learning how to prevent and address problems with contractors is crucial to learning how to get started in real estate investing.

How to Deal with a Bad Contractor: Ultimate Guide for Real Estate Investors

Not all bad contractors operate the same way. In the event that your renovation project takes a turn for the worse, here are several common scenarios and how to handle them. It depends on how you go about resolving the conflict with them, and whether they sue you for non-payment. If a contractor does shoddy work, the burden is on you to prove it.

5 Rules for Hiring a Contractor

Start with detail-oriented documentation, showcasing exactly why and how the work is shoddy. Take photos, get expert opinions in writing from other licensed contractors or homebuilding experts. Put together a persuasive case, both to deter the contractor from pursuing the matter further and to present to an insurance bond agent, mediator, arbitrator, or judge, depending on how the dispute proceeds. The first course of action is to approach the contractor directly and politely ask them to correct the problem, if you believe them capable of doing so.

Most important of all, inspect all work carefully before paying contractors for it. The larger a project is, the higher the risk that it goes over budget. Even contractors who do high-quality work and who show up every day on time can still hit you with surprise costs. Before collecting quotes, tell each contractor that you have a zero-tolerance policy for projects going over-budget. Ask them to be extremely precise when bidding the project, because you will not use them for future projects, nor recommend them to fellow property investors if they hit you with surprise costs midway through the renovation.

It may be true, in which case other contractors should confirm that stance. Or the other contractors may have better insights about what lies beneath the surface. If you suspect that happened, you can take it to the state licensing board, or mediator, or small claims court. Just be prepared to prove it. As seasoned house flippers know, forecasting how long it takes to renovate a house is both tricky and prone to going past-schedule.

Start by negotiating hard before signing the contract to pay less up front and more upon completion of the project. The more financial incentive a contractor has to finish the job quickly, the more likely it is to happen on-schedule. You should also be persistent in following up with the contractor.

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Call them several times a day if you must; as the adage goes, the squeaky wheel gets the oil, so squeak loud and often to add another incentive for them to finish your project. It happens more often than new investors think. If that fails, go through the steps above in order and see where you find traction. In that case, skip straight to number 5 and 6 and try small claims court or hire an attorney. Contractors can be your greatest resource or your worst nightmare. The trick is to only work with excellent contractors at each price point, and to weed out the bad seeds before they can cost you tens of thousands of dollars.

Here are 6 prevention tips to make every house flipping deal a success. Regardless of the price point or specialization of your contractor, screen them meticulously to maximize the odds of hiring a good contractor.