Working with Contractors to Increase Value of Your Home in Foreclosure

Contractor: Professional approach to improving your foreclosure property

How to find a qualified contractor?

While many handymen may not have a professional license, insurance, and insurance, practically all of the building or construction contractors are licensed by the state and county authorities. Most contractors carry insurance coverage in multiples of hundred thousands of dollars and bonds as well. Many state and local authorities require such insurance coverage and placement of bond.

For remodeling works, you can

Discuss and negotiate with your general contractor

Don't let all of the terms and conditions set by your contractor. You can ask him to cross out certain sections of the contract if he prepared one, and insert your own wording, if you wish.

• Prepare a clear-cut description of what you want your contractor do at your foreclosure property. Itemize and detail each of the works to make different offers from the contractors comparable. Otherwise, each contractor will state what he will do. What they offer will be different and difficult to put in monetary terms.

• Negotiate second time with the contractors who offered the best three bids. Find an excuse for such negotiation. This may be an addition or deletion of a small work. You can negotiate the total fee, commencement and completion times, payment terms, and the type and duration of warranties.

• Monitor their work closely. See how each of them works. You have the right to report any problem or worker who does not work properly.

Mechanic's Lien: what do you need to know?

Mechanic's lien is a legal term that carries great importance when a real estate property is bought. Anyone who provides material or labor when constructing, repairing, or improving a property may record a mechanics' lien if he is not paid by the contractor or sub contractor. Although this may not happen in foreclosure property purchases however, you need t make sure that the seller does not owe any amount.

You can ask your contractor for a waiver

Ask your contractor to get a waiver of lien from his subcontractors each time he pays for their services. This way, you reduce the amount of the total work to a minimum. Ask him to insert such a clause into your contract.

Don't forget to expand this to cover not only subcontractors but also suppliers of materials.

How do you settle your dispute with your contractor?

Having a dispute with a contractor is not uncommon. Consider your plan if that happens to you. Here's what you can do to protect yourself:

• It is a federal law that obligates your contractor to give such cancellation form and inform you about your rights to cancel. Add a clause to your contract with your contractor giving you a form to cancel it and enable you to assign it to another contractor. Five-day notice is fine in most cases.

• You can also cancel your contract within three days after signing it.

• Designate a third party for dispute resolution. Do not accept a provision that refers to your contractor's trade association. The American Arbitration Association is a better choice for you for fair resolution of your dispute.