Up Next
Up Next

What Is a Home Contractor?

Sally Painter
Woman talking with home contractor

A home contractor is also known as a general contractor or homebuilder. This professional is governed by licensing and the types of services provided.

Home Contractor Defined

A home contractor (general contractor) is the prime contractor for building or remodeling a home. The contractor hires all sub-contractors and is responsible for overseeing all details of the construction site.

Home Contractor Is in Charge

The contractor controls all stages of the construction, including communicating with sub-contractors to keep everyone on schedule. All workers, including sub-contractors answer to the home contractor. The homeowner only has to deal with the contractor as opposed to all the sub-contractors.

Construction Experience

Most contractors began their careers as carpenters and know how to construct a house from the ground up as well as being familiar with all aspects, such as HVAC systems (heating and air conditioning), electrical, and plumbing.

What the Contractor Provides

The contractor is responsible for all equipment and building supplies. Other things that fall in his realm of responsibilities include building permits, setting up temporary utilities, inspections, fees associated with certain services, and other construction and repair costs.

Meeting With Client

The contractor will schedule a meeting with the client(s) to go over the blueprint for the new home or inspect the remodeling construction project. At this time, the client will inform the contractor of the budget for the job.

Budget Negotiation

The contractor may decide he/she cannot complete the desired project within the budget. The client must decide if the budget is flexible and come to a preliminary agreement with the contractor on the project price.

Ways Contractors Price Out Jobs

There are several ways a contractor can enter a price agreement with a client. It often depends on the type of job and the contractor's obligations.

Estimate

An experienced contractor can usually give a potential client an accurate estimate of how much a project will cost. This can be given as a starting point for the client to determine undertaking the project is feasible. Some contractors make estimates based on a square foot price point. Unless otherwise agreed, the contractor will follow-up an estimate with a formal bid for the project.

Cost Plus Price

This type of contract is often referred to as a cost reimbursement contract. The contractor is reimbursed by the client for all materials and other expenses necessary to complete the job, including labor. The contractor then adds his/her fee on top of the expenses and is a set price that remains the same. However, the expenses can vary based on market price and any issues that arise during the process of remodeling or construction.

How a Contractor Prepares Your Bid

Most people try to get at least three bids for their construction job. The exception would be if they're familiar with the builder's reputation and specifically wish him/her for the job.

Contractor's Bid

If the contractor decides to bid on the job, there as many things that go into calculating the bid and developing a final proposal for the client. This involves estimating the cost of materials and labor, which includes sub-contractors.

Bidding Resources

A contractor must know how to bid on jobs and give estimates. This is typically an experience-driven skill, although there are guidelines a new contractor can follow provided by the National Association of Home Owners (NAHO). There are numerous software programs available that can help reduce the time that manually creating a bid requires.

Sub-Contractor Bids

The contractor will get bids from each sub-contractor, so he/she can calculate the building or remodeling costs from the sub-contractor into the final construction proposal. The contractor takes a percentage of the overall cost of the job for his/her profit margin.

Pricing Materials and Other Labor Costs

The current prices for materials are used in the bid but can change due to market fluctuations and supply. Labor costs aren't likely to change unless the contractor lives in an area where all construction workers are unionized.

Architects and Home Contractors

Most contractors know how to work with architects, but as a general rule the contractor is the manager/overseer of the construction project. Unless it is a highly expensive complex project, the architect is only consulted when the contractor has questions about the structure or special building requirements.

Licensing and Liability Insurance Requirements

Contractors must be licensed, although some states only require being registered. These requirements and the fees for licenses can vary state by state. General contractors aren't typically required to meet any educational qualifications, but some states require specific experience and/or training. Liability insurance is a good idea for most contractors. Check with your state government to determine if it's required.

Understanding the Home Contractor's Role

It's good to know what a home contractor is responsible for in a construction project. Most contractors rely upon a good referral base for much of their business.

Was this page useful?
What Is a Home Contractor?