Home owners who need to hire a contractor to do maintenance and construction work sometimes turn to a Contractor Referral firm to help them find reputable, qualified tradesmen.
Referral firms support themselves by charging a fee to the businesses that join them. The firm may charge the business a flat rate or may charge a percentage of the amount of the work that was referred. For example, one firm's average cost per year was 500 dollars for membership and another firm was charged 10 percent for jobs priced up to 5000 dollars, and 5 percent on work over 5000 dollars.
Consumers should be aware of the following:
- Several contracting companies have advised BBB that any costs they incur for registering with a referral firm are generally passed to the consumer in the price quoted. However, the increase in cost may be worthwhile if the referral company has saved you time and worry by providing well researched information.
- The referral company does not guarantee the work of the contractor. Nevertheless, inquire if the referral company has any procedures in place to assist consumers in the event of a dispute with a referred contractor.
- The referral company only refers paying or cooperating companies. This means that there may be a number of ethical, qualified contractors which are not included on their list. However, this may not be a problem as long as you are provided with a sufficient number of choices. Find out what criteria contractors are required to meet in order to be included in their listing.
- The referral company's rating of a firm is based on a varying range of research and investigation. Referral companies often check for the appropriate licensing, insurance and Workers Compensation Board coverage. Some also check past references, as well as doing ongoing reference checks. In addition, some referral companies send out evaluations to customers of the referred contractor to keep up to date information. Question the Referring company to determine how thoroughly they check contractor licencing and references.