Caveats aside, Petit and other remodelers say these measures will reduce your exposure to difficult clients:
“Remodelers’ feelings are pretty sensitive,” says Dennis DuRoff, who consults to the industry through Universal Business Design (www.dennisduroff.com). “Often they know [a prospect is bad news],” he says, “but either they’re afraid to say no, or they think they can’t afford to. It’s a heck of a challenge when you need a job.” The damage is often far greater than the amount of the contract, DuRoff adds. “The biggest thing my clients die from is the personal strain of dealing with a client like this.” Second is the “opportunity cost” of having to divert time and resources from other priorities.
In Daughenbaugh’s experience, bad clients slip in via one of two ways. Usually, the writing is on the wall. “We went in with our eyes wide open” to a big but difficult job recently, he says. “We knew [the client] would be high-maintenance and kind of nasty. We discussed it, and we turned out to be absolutely dead on. People say, ‘I can manage that,’ but of course you never can.”
Less common are the stealth attacks. “Some people hide their true psyche from you, and they’re really good at it,” he says.
In either case, Heritage Builders uses separate design and construction contracts to filter out most bad eggs. “I would rather have someone who’s nasty and can make up their mind than someone who can’t make up their mind,” Daughenbaugh says. Clients’ true colors emerge during the design process, giving his company a chance — which it indulges two or three times a year — to say, in effect, We don’t think we’re a good fit for you. Better to walk away than to get stuck in a morass.
One of Mark Scott’s favorite sayings came from a colleague of his: “I made the most money on the job I didn’t get.” Mark IV Builders came close to taking one of those jobs a few years ago after “the desperation signing of a contract by one of my salespeople,” Scott says. “The first thing [the prospect] did was return my boilerplate four-page contract with 35 pages of changes.” The prospect then refused to meet with Scott to discuss his objections. Mark IV Builders declined the job.
Several remodelers interviewed for this article expressed frustration that there’s no “bad client” registry on the Internet. Mark IV Builders has a more subjective way to vet prospects: Its design agreement specifies that a credit check will be performed using their Social Security number. No client has objected yet, Scott says, and if they did, there would probably be a reason. For a modest fee, a local company does the checks, which also reveal involvement in lawsuits. It’s all in the public record, he says.
Kathleen Squires says that most clients withhold funds not because of workmanship issues, but because they simply run out of money. “Often they’ve refinanced to pay for the project,” she says, “and they get all that money in their bank accounts, and they end up spending it,” especially before longer jobs are completed.
To pre-empt this scenario, Squires Company Design, in Anchorage, Alaska, requires the entire contract amount — sometimes a little more, to cover extras — to go into an escrow-type account before any work begins. A mortgage company arranges the account, and the client pays a small fee for it. Both the client and the contractor must sign to withdraw payments.
As with Mark IV Builders’ credit checks, clients are fine with this requirement. “The way we sell it to them, it protects them, too,” Squires says. She notes that her contracts are precisely worded about how the draws work.