Volume 14, Issue 8- October 2013

You Don’t Know Jack
Competing with the Ramblin’ Man

By Casey Neeley

TWe’ve all heard the saying, Jack of all trades, master of none. You’ve seen him out there, underbidding projects. He’s his own boss and his office is his truck. One day he’s buying lumber from Lowe’s to build a deck, the next he’s installing replacement windows. He may have even lived in three or four different states this year alone.

How can the reputable, insured contractor who has mastered his trade compete against low-bidding, unlicensed handymen? Just because he can “do the work,” does that really mean he deserves your client’s business? Industry members say a resounding no.

Who is He?
“We come across it every day; you’re consistently bidding against licensed and unlicensed contractors,” says Jim Lett, president of ABE Doors and Windows in Allentown, Pa.

“From a personal level, there’s a huge difference between the trucks they drive, the way they dress and how they carry themselves,” adds Bill Shaw, National Association of Home Builders (NAHB) Remodeling chairperson and partner at William Shaw & Associates.

The low-ball pricing and lack of accountability are traits remodelers agree can both attract and hurt consumers.

“We can’t compete with them in price alone because we follow and comply with all local, state and federal requirements,” says Kevin Anundson, president-elect of the National Association for the Remodeling Industry (NARI) and vice president at Renovations Group Inc. “We’re all consumers and we want the best price … We can always find it too because there’s someone willing to cut the price …”So how can licensed, certified and insured remodelers set themselves apart from their unaccountable counterparts?

“You always have that guy driving around in his pickup truck underbidding jobs,” Lett says. “There’s not much you can do except sell your credentials and tell consumers they need to check for insurance. You don’t want someone getting hurt on the job then find out they don’t have workers comp insurance.”

Proof of Insurance
“Not only are they underbidding jobs … they may have unsafe practices,” Lett adds.

Having insurance is one benefit bona fide door and window installers and remodeler should tout.

“With a licensed remodeler, you must carry insurance. You’re registered with the state,” says Lett. “You’re assured that they meet, at least, the minimum requirements for insurance. Any lawsuits against the company would show up as well.”

“You have to get insurance so you have to have the minimum state requirement for insurance,” says John Azeri, director at Nationwide Windows and Siding in Clifton, N.J.

“In Wisconsin, if a contractor is unlicensed (we call it ‘dwelling contractor certification’), they’re likely uninsured,” says Anundson. “Licensed is a general term because its meaning varies by state. Insurance is a very important part because if anything happens you need to make sure you’re covered. If they’re licensed they plan to stay in business for some time.”

Short-term employment, a change of services or a move to a different state are all risks consumers face when using a Jack-of-All-Trades.

The Pros and Cons
Consumers may perceive some advantages to hiring an unaccountable remodeler, but members of the industry warn against being blind to the cons.

They can do the job for so much less than someone who is licensed, established and has the training,” says Lett. “The flipside is they’re more likely to get hurt on the jobsite and, if they’re not insured, they can come back and sue the homeowner. That’s a risk of which most homeowners are not aware.”

“You probably will get cheaper pricing, but the cons far outweigh the pros,” says Azeri. “If you have a problem in six months, the phone number may be disconnected, or they may not have done it correctly. You can’t see underneath what they do. It’s a matter of craftsmanship. You won’t know when it’s done; it will be a problem down the road. For all you know, by then they may be out of business or too busy on another project somewhere else.”

A proper background and certification counts just as heavily in the door and window replacement and remodeling industries as it does for health care or legal fields.

“It’s the same reason you hire degreed doctors, lawyers and accountants,” Anundson says. “You are hiring a professional to know and understand the technical and legal aspects of the home improvement industry.

A licensed and certified contractor knows what it takes to do the job, which means they aren’t going to run out of money during the project and they aren’t going to cut corners,” he adds. “I’ve never met a homeowner who was willing to pay less for less quality and less service.”

“With the Jack-of-All-Trades you may get a better price. And there’s a chance that you could get an unlicensed contractor who knows what he’s doing and does the job well,” Anundson says. “It’s like buying a used car. You could find that gem that runs like the day it was first purchased and sold to you for well under what it’s worth. But there’s also the chance it could only run until you get it home.”

A Re-Education
“Educating consumers about the risks they take when they hire a substandard contractor is the best way to level the playing field,” says Mark Milanese, owner of Milanese Remodeling in Coatesville, Pa. “Making them aware of the cost of their own time and the potential for additional expenses they may incur when they try to do a project themselves is another way.”

Without glitzy media campaigns and industry lobbyists, the responsibility to promote awareness among homeowners falls to remodelers.

It’s hard because we don’t have a lobby or industry budget for doing public service announcements but it’s something we can do in the consumer’s home during an estimate,” Lett says.

“You have to educate the homeowner … It’s a difficult task to educate them,” says Shaw. “He’s always going to be cheaper. One of the techniques I love to employ is to tell the homeowner right in the beginning that I may be higher priced than some of the other people they are talking to, then ask if that going to be an issue.”

“It’s an education process letting consumers know. Show your certificate of insurance and license number to build credibility in the process,” says Lett. “It’s not like we’re dairy farmers with a ‘got milk?’ campaign, but you can do a lot on your own when meeting with customer. That’s part of the sales process.”

Shaw finds giving prospective clients a series of interview questions helpful in determining the quality of the lead.

“The difficulty is educating homeowners about what they should be looking for when interviewing remodelers,” he says. “What are some of the key things they need to be asking? I have developed questions that I email my client, homeowner or lead and prepare them for the interview. It has a series of questions I feel they need to be asking any contractor they interview. It’s interesting to see the homeowners who will open it and pay attention and the ones who don’t. If I send that and go on the initial interview and they have no idea what to ask me or they have no idea how to understand the intricacies associated with what a successful remodeling company looks like, that’s a red flag right there.”

“It’s the same way we buy a car,” adds Anundson. “We may be willing to not get the fastest car, not the fanciest car, but we expect a dependable car … you still want the product to be reliable for the life you intend it to serve. You can’t look at a contractor and know if he’s reliable but there are indicators, just as there are with a car. Some of those indicators for remodeling include licensing, certification, insurance and NARI membership.”

First impressions can also be an indicator.

“You get to decide your level of comfort as far as who you’re hiring,” Anundson continues. “Most of the time homeowners are not home. If you don’t feel comfortable for any reason, you need to rethink your decision.” Sharing real-life horror stories can also provide a wake-up call for customers.

“Give examples. Show them from experience,” Azeri says. “Show consumers what other people have gone through. We’ve done thousands of jobs where we’ve replaced new products, windows, siding, that was installed just a few years ago, but installed wrong. Once it’s installed incorrectly, it’s useless. Most licensed contractors will show you letters of recommendations and pictures of jobs.”

Up for Review
“Get recognized through high-quality Google and online reviews,“ says Lett. If you can get customers to write reviews, be proactive to show your credibility without tearing down the unlicensed contractor. You can do it in a positive way, not a negative way.

“As long as you don’t have any fear, you can invite customers to check out your company online through reviews or search customer complaints,” he adds. “Reviews online also tell a lot about a company,” notes Azeri.

Online reviews are another trait, in addition to licensing, certification and insurance, that runaway remodelers will likely lack.

“As professionals attempting to secure leads that are not repeats or referrals we first have to figure out what media to use to have the best chance to hit our target and then we can figure out what message to send them. Direct mail postcards warning against ‘Storm Chasers’ (see pg. 51 for more) after extreme weather conditions can be effective,” Milanese says. “But, perhaps the best way to talk to consumers is through social media and our websites. Relaying warnings from law enforcement about ‘contractors’ who steal deposits on Facebook could be an effective way to get out the message.”

A Competitive Edge
What specifically is in the insured, certified remodeler’s arsenal? “You can get permits with a license,” says Azeri. “Certifications are important as well … Being certified also ensures that the installation is done properly, so there’s no question about that.”

“When it comes to remodeling companies that are not a specialist, they have some options with the business model they want to set up,” Shaw says. “They can limit the exposure they have to those types of people. A design/build company would completely eliminate that because they would be competing based on interviews. The selection would not be made on price.”

Knowing your competition can also help you better develop a strategy.

ategy. “Find out who you’re competing with. If a homeowner or client won’t tell you, that says a lot right there,” adds Shaw.

From there, door and window remodelers can show off their achievements to homeowners.

“Individual contractors can point to their experience, references, the professionalism of their staff, their Better Business Bureau ranking, membership in local chambers of commerce, NARI membership and their additional insurance policies over and above workers compensation that protects the property owner from liability,” says Milanese.

“We can’t compete with an unlicensed uncertified contractor because they don’t charge enough to stay in business as a long-term profession. Everyone who owns a business can choose how much to charge. We’re all independent business owners,” says Anundson. “Some of the smaller businesses may charge less, but that’s not always true either. We can’t compete with the one- or two-man shows that aren’t going to apply for and get permits. There are additional costs for that. If you incur those costs you have to charge for them.”

Shaw adds that at some point, many dealers and remodelers have been on the other side of this situation.

“Remember that all of us started out in some form as a ‘Chuck in a truck.’ As we get more experienced and our organizations grow, we forget about the struggles we had getting in the business,” Shaw says. “When we were Chucks, the way we grabbed business and grew was by price. As we grow and we get larger organizations with more overhead and offices with staff, there’s no way we can compete against Chuck, so we have to find a different way to compete and clients who are interested in the services and professionalism we bring.”

A Ramblin’ Family
Meet Jack and His Cousins

Jack-of-All-Trades,” “Fly-by-Nights,” “Storm Chasers,” “Tailgaters,” “On-the-Siders” and “Do-It-Yourselfers” all compete against more legitimate contractors and win a substantial amount of work. They will continue to do so as long as property owners believe the perceived savings outweigh the potential risk.

Here are some definitions of a variety of “unlicensed” contractor terms as well as a list of the pros as the perceived benefit to the property owner and the cons as the potential risk. Take a look at the Jack-of-All-Trades and some of his cousins.

Jack-of-All-Trades – Contractor who claims to be proficient at every task required for any project both large and small.

Pros: A great resource for projects requiring the performance of a wider variety of tasks than specialty contractors can typically offer. Willingness to work outside of the law—without the proper permits—can expedite the process.

Cons: Often a master of none and the quality of work shows it. Typically, Jacks are not certified or licensed for each of the individual tasks. Property owners who allow a contractor to work outside of the law assume the risk of being caught by codes enforcement and can be in fined.

Fly-by-Night – Here today and gone tomorrow.

Pros: He claims to have just moved back to the area, or to be new to the area. He often will offer a low price to property owners and tell them it is because he wants to show off his work in the neighborhood and needs references. This may allow property owners to believe they will get the contractor’s best work because of their situation.

Cons: The work is often shoddy and intended to look good and work properly just long enough for the check to clear and the contractor to move on. There is a high possibility the work will never be performed or completed satisfactorily. They are often trying to just get the deposit from the homeowner without doing any work, or the deposit and the first draw.

Storm Chasers – These fellows follow the weather channel to find their victims. Storm chasers convince property owners they have received damage to their homes from hail, wind or snow and that their insurance will cover new doors, windows and siding. Sometimes they may even cause damage to the home during their “inspection.”

Pros: Storm chasers convince property owners they have a legitimate insurance claim and they will receive new doors, windows, siding and roofing for “free”—covered by their homeowners’ insurance.

Cons: They con the property owner into allowing them to perform the repairs before the insurance claim is settled. The homeowner is also partially responsible for any insurance fraud.

Tailgaters – Contractors who wander through neighborhoods writing up contracts on their tailgate desk with prices too good to be true...

Pros: Property owners save huge amounts of money because this contractor is “working in the neighborhood.”

Cons: Tailgaters often work outside of the rules and regulations do not follow industry standards or guidelines and work without proper insurance, permits or licenses. Property owners expose themselves to liability associated with those risks.

Do-It–Yourselfers - DIY homeowners try to tackle projects themselves that oftentimes should be left to the professional.

Pros: Property owners convince themselves they can save substantial money because they have seen how “easy” it is on YouTube, the DIY Network or when a professional did the same project in their neighborhood.

Cons: DIYers don’t consider the cost of their time. The project may not be as easy as it looks when done by a pro, on their computer or television screen. A mis-measured door or window can be very costly and improper installation can cause lots of damage if it allows water penetration. Energy savings are also diminished if air infiltration still remains.

On-the-Siders – Full-time employees of professional contractors who agree to work for a property owner.

Pros: Homeowners can save money and get the same professional installation they would have received by hiring the On-the-Sider’s boss.

Cons: Uninsured, outside of the law and, perhaps, stealing materials or “borrowing” tools to perform the work is not only dishonest, it exposes the property owner to liability. —Mark Milanese

 

 

DWM
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