How to Hire a Contractor to Do Work in Your Home

An important aspect of hiring a contractor to do work in your home is to understand what permits, special requirements or licensure are required for each job. Once that’s understood, you can know whether it’s best to hire a licensed contractor or a handyman.

REFERRALS
Be sure to ask for referrals and references and know the relationship of those referring parties to the contractor. Ask for pictures of installations on similar jobs that have been performed for others and give those referring parties a call or visit to ask how the work was performed, the attitude during the job, coming in on budget and wrapping up on time. Discover if there are any negative remarks online or with the BBB. Be sure he or she is qualified to handle the scope and type of work needed, especially with regard to special conditions such as lead based paint, asbestos, mold, etc.

IDENTITY
If the home is occupied, if personal items are stored there or is otherwise notid_verified vacant, be sure to qualify your contractor if he’s unknown to you through online services such as mysmartmove.com or others. Get a copy of the contractors driver’s license and have him sign a w-9 to include his social security number. If you’re an investor and renovations are common for you, you may want to investigate the Verify Photo ID app recommended by Inman News.

CONTRACT
Next, execute an Independent Contractor Agreement with your contractor. Be certain it has no verbiage or requirements to suggest the contractor is an employee of yours.

PHASES
Now is the time to outline and understand the three phases of the renovation. The initial Phase One is paid on day 1 of the job. The subsequent draws for Phases Two and Three should be paid by the week, on a Monday or Tuesday. In constructing the phases, the contractor should budget for each item and any overages or misquote is the responsibility of the contractor, not the homeowner. Make sure your agreement covers things such as milestones, and outlines the scope and sequence of the work to be completed. The contract should include the description of all work, and condition of Customer Satisfaction such as all items completed in a workman like manner, job site left clean and tidy daily, and no items incomplete.

MATERIALS
Ideally the home owner should have chosen paint colors, sheens, types for each space, cabinets, granite and whatever materials will be used in the project at the source. Have your Independent Contractor pay for those materials and have that provider deliver the materials to the job site, then reimburse the contractor immediately – this strategy avoids any appearance of establishing an employee/employer relationship. Do not pay for routine tools and supplies the contractor uses in his everyday business such as paint brushes, ladders, tarps, etc.

UPDATES
If you’re not the owner occupant at the job site, require the contractor to provide daily pictures and videos of each phase when complete before scheduling a personal inspection and before payment on that phase is released. An investor can use this in the future or marketing.

COMPLETION
In exchange for the final payment the homeowner should sign off that he is satisfied with the job, and the independent contractor should sign that he is releasing all liens in exchange for final payment.

Real Estate Statistics Explained

Basic Real Estate Statistics Explained

We are going to define some of the basic real estate statistics that get thrown around on a regular basis. To do that, we will use one real estate market, located in Hood County Texas. Even more granular, we will use the single family numbers for homes in Granbury Tx, a small town of approximately 8,000 residents which has seen substantial real estate growth in the past 12 months. It is important when reviewing real estate statistics to use a group of numbers large enough for consistency, but granular enough to tell your story.

The statistics that we will be referencing are true and accurate for the year discussed but are being used to define the real estate statistic itself.

We have chosen Granbury Tx as our example because the growth of the local real estate market there make the statics stand out.

Anytime you are evaluating statistics, especially in real estate, the source of the numbers are extremely important. In most instances, the MLS (Multiple Listing Service) provides the most accurate numbers when referring to real estate. This is because they have all listings by all local real estate brokers in their database. For the sake of explanation of the data, we will be looking at the numbers for home sales in Granbury Tx, directly from the MLS. These numbers are meant to give an example of how to read the statistics themselves. Anytime you evaluate real estate numbers, its important to pay close attention to how the numbers are gathered. In this instance, we will be using ONLY single family properties in the city of Granbury.

Basic Real Estate Statistics

    • Number of Sales – This one is pretty self explanatory. It is simply the number of single family homes sold in a particular month. In January of 2015, they had 51 single family homes sold. One thing to pay attention to when looking at this statistic is are they using the Under Contract date or the day the property actually went to closing. These two dates are usually between 30 and 60 days apart, so its critical that you know which one is being referenced. In addition, many of the homes that get calculated, if you are using the “under contract” number may not actually close! In our example, we are using the number of homes that actually closed. In January of 2016 they had an increase of over 49% which brought the total to 77 from 51. Growth of that level is very seldom ever seen.

 

    • Sales Volume – Sales Volume is simply the total amount of dollars spent on single family housing within that month. Once again, when reviewing this statistic, its important to keep the property types consistent. If you are comparing two areas to see which one has grown more and you include vacant land in the number for one area, you must include it in the other too. As previously mentioned, our examples only include single family properties. With Number of Sales looking at the units, you would expect the Sales Volume to go up appropriately, but in this instance, it went up even more than the units (by percentage). The total Sales Volume of single family homes in Granbury in January of 2016 was $15,191,500 as opposed to the January of 2015 number of $9,281,915. That is an increase of over 63%. Because the Sales Volume went up at a larger rate than the number of units, this reflects the average home sale being much larger in 2016 than 2015.

 

    • Months of Inventory – This is a commonly referred to statistic when examining a real estate market. This statistic refers to at the current rate of sales, how long will it take to sell through the existing level of inventory. This reflects the supply and demand for the market. In our example, in January of 2015 the level of inventory was 9 months and in January of 2016 it had dropped to 6 months. That is a 33% drop in available inventory! This means if you are looking to buy a home in Granbury Tx, it will be a little tougher in 2016 as there is less inventory available to buy.

 

    • Median Days To Sell – This stat simply refers to how long it takes for single family properties to be put under contract. Don’t let the “to sell” confuse you. To accurately show the demand for active homes, you really want to track how long it takes to go “under contract”. The process of acquiring final lender approval, insurance and getting to a closing can vary on a variety of factors. In January of 2015, the Median Days to Sell was 88. That number dropped by over 30% to 61. Once again, this tells you if you are looking for homes in Granbury TX, you better get your offers in quickly as the most desirable homes are going fast!

 

    • Average Price – This statistic can be derived in a variety of ways. We are going to use it in its most raw form and simply be the Average Price of Homes Sold within that month. Be careful when looking at this statistic printed anywhere as how the user defines the date sold can vary. Needless to say, Average Price can be used for active homes for sale or for the homes that sold. The Average Price of ACTIVE homes for sale is generally a pretty useless number as you can list a home for any price, without any possibility of it ever selling. Many homes listed for sale are at unrealistic prices thus the Average Price of Active homes for sale can fluctuate dramatically and give little insight into the market. You will want to look at the Average Price of SOLD homes. In January of 2015, the Average Home Sale was $181,998 and it jumped to $199,888 in the same month in 2016. This is an increase of almost 10%. This is not a number that truly tells the increase in home values across the board, but simply of the homes sold in that month, what the average was.

 

  • Median Price – The Average Home Sales Price can be skewed by a variety of factors. All it takes is one 5 million dollar home sale to throw those numbers off. To get a better view of the overall increase in value, it can be better to look at the Median Sales Price. Median Sales Price takes the number that is perfectly in the middle. For instance, if you have 11 homes that you are using in your statistic, you would take the sales price of the 6th one. This leaves 5 homes sold higher and 5 homes sold lower. In this instance, they are pretty close as the Median Sales Price increase from January 2015 to 2016 was 9.69%. This shows that we didn’t have the Average Price skewed too much because of an extremely large or extremely small sale.