Investors Beware! The Risks of Using Unlicensed Contractors

If it sounds too good to be true, it probably is.

You’ve likely heard that phrase before, but it’s worth repeating when it comes to hiring contractors. Unlicensed contractors usually bid lower, appealing to those trying to save a little – but the bargain may not be all it seems.

When a contractor applies for a license, they have to prove their expertise and financial stability. Without that proof, you lose accountability, reliability, and quality. Is it worth the risk?

1. Zero Accountability

Unlicensed contractors aren’t held to a standard quality of work. To maintain a license, contractors have to keep their workmanship to standard. Without a license to protect, they eliminate repercussions for unsatisfactory work. You’ve already paid them, and they owe no one else an explanation.

2. Untraceability

These contractors have also been known to take the money and run. If you hire someone without the right documentation, you likely only have a name and phone number. They can easily change the number and escape you completely.

I once had an out-of-state client pay an unlicensed contractor $2,000 to paint a house and put in new carpet. He told me, “Go over to the property. It should be ready.” When I got there, the contractor hadn’t done a single thing – and the client could never get a hold of the contractor again.

3. Inconsistent Work Quality

You also risk quality of work when you hire an unlicensed contractor. Licensed, bonded, and insured people have those certifications for a reason. They are confident in their work. They pay for their licenses to show how seriously they take their jobs.

Related: Behind the Scenes: A Day in the Life of LEAP DFW Property Management

When you choose a contractor who hasn’t taken these steps, you gamble with the outcome. Sure, they could be just getting started and have excellent craftsmanship. But most likely they’re unlicensed for a reason.

Making the Choice

If you still want to give the job to an unlicensed contractor, follow these two rules:

First, get a reference. Talk with previous clients to gauge quality of work and troubleshoot problems with payment and reliability.

Second, check in while the job is in progress. This means you have to be local so you can stop by regularly to see the actual progress. Using an unlicensed contractor is tempting when the quotes are low, but with these likely hazards, it’s not worth the savings.

When You Hire a Contractor

Even when your contractor meets industry standards, take the time to check past work and monitor communication habits. These extra measures help you avoid other frustrations that may come up with your contractor.

Call References

Get multiple references before signing your contractor. The state has already checked out the licensed contractor’s background, but you’ll gain valuable information by talking to recent clients. Ask, “Was the work done right the first time?” and, “Was it finished on time?” When you follow up with multiple clients, you’ll see a pattern emerge. If the contractor did great work for past clients, you can expect the same great results.

Related: Landlords: How to Handle Damage to Your DFW Rental Properties

If there was a problem with a past client, see how the contractor took care of the issue. Ideally, you want someone who does the job right the first time. Yet, if there’s a problem, a contractor needs to take responsibility and fix it for free.

Monitor Communication

How quickly does the contractor respond to calls, emails, and texts? Someone who promptly replies to your messages is reliable. We have a contractor that responds within minutes, even on the weekends. He gets the work done as soon as possible. Because of that, he’s our first call for a job.

Contractors are there to make sure things get done. When they do so in good time and fashion, they leave happy clients. Look at more than just the price point, so you can put your property in good hands.

Not sure how to get started Property Inspection? Give us a call!