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When does a new home need a general contractor?

Contractor looking at plans with homeowners
Jetta Productions Inc/Getty Images
Contractor looking at plans with homeowners
Jetta Productions Inc/Getty Images

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When you’re constructing a home — be it a new build or a gut-renovation — you’ll find yourself dealing with a lot of different tradespeople and professionals. That’s why, most of the time, hiring a general contractor is a must. Like the producer of a play, the GC hires and oversees all the other contractors involved in the project, coordinating and corralling them towards the common end goal: a smash hit of a house.

General contractors can also be a huge help if you’re planning an extensive remodel of or a large addition to an existing home. Even if you have some DIY building experience, working with a general contractor is still an excellent way to keep your project on track and take some stress off yourself.

In this guide, we’ll cover everything you need to know about working with a general contractor, including when to consider hiring one, how to find a reputable one, and what to expect when they’re on the job.

What is a general contractor?

In construction, a general contractor (GC) oversees and manages the successful completion of a renovation or new build. They’re the point person between the homeowner and all the other various contractors and tradespeople working on the property, providing the day-to-day management of the construction site and ensuring that the project is progressing as it should.

Unlike specialized contractors, such as plumbers and electricians, general contractors don’t necessarily have expertise in a particular trade (though they may have begun their careers within a certain area, like carpentry). Instead, their job is to oversee all of the components of the construction — including foundation-laying, roofing, wiring and so on — and ensure that they’re running smoothly.

General contractors can be involved in nearly every stage of a home-building project, all the way from bidding to planning to construction. They can even be involved in some post-construction phases of the project if there are outstanding payments due the subcontractors (as those working under a GC are known), permits that still need to be filed, or inspections to schedule.

Types of general contractors

Traditionally, general contractors have been responsible for executing a home plan that’s been developed by someone else – whether that be an architect, engineer or interior designer. Some specialize in renovating certain parts of a home (such as bathrooms or kitchens), but they don’t participate in the design process of these areas.

But there’s also a second option that allows contractors to get involved in the creative aspect of home renovations. It’s called design-build construction, and it encourages contractors and design professionals to work together from the earliest stages of the project as a way to ensure transparency, collaboration and the best results.

What does a general contractor do?

A general contractor oversees the work on a construction site, making sure that it’s being done correctly and safely. This is a broad role that entails many components, such as:

  • Drafting the construction timeline and budget
  • Hiring and assigning work to subcontractors and laborers
  • Liaising with the homeowner, architect and/or engineer
  • Securing relevant building permits
  • Managing the ordering and delivery of materials
  • Ensuring on-site safety
  • Keeping the project aligned with the client’s budget, schedule and quality expectations
  • Managing payments to subcontractors
  • Scheduling post-work inspections

When do you need a general contractor?

Even if you’re an experienced DIY-er, there are still certain times when you should hire a general contractor for a remodeling job.

Many experts agree that, as a general rule of thumb, you should hire a general contractor if your renovation will take more than a week to complete or will involve multiple specialist contractors. Bathrooms and kitchens are typical sorts of complex jobs that require a GC.

For example, you wouldn’t need a general contractor if you wanted to just install a standalone shower from a kit; a qualified plumber could do that. But if you wanted to remodel your entire bathroom, it would be wise to hire a general contractor who can manage the many aspects of this type of project, including plumbing, electricity and tiling (to name a few).

Another time that you should hire a general contractor is when building permits are involved. Experienced contractors will be intimately familiar with their locality’s code regulations and permitting process/bureaucracy. Having them manage it on your behalf can spare you a serious headache and inadvertent problems with the authorities.

“Incorrect permitting and coding can lead to serious legal ramifications,” said Dino DiNenna, a broker and realtor at Southern Lifestyle Properties in Hilton Head, S.C. “A general contractor takes all of the necessary steps to obtain the permits and stay within the coding requirements, so you don’t need to worry about your project’s legality.”

Paying the general contractor

Since general contractors are hired for longer-term projects, they’ll usually receive a percentage of the project’s overall cost, rather than charge an hourly rate.

According to HomeAdvisor, GCs generally receive between 10 percent and 20 percent of the project total, with some charging 25 percent for larger projects. This means that a general contractor would earn between $28,000 and $56,000 for their role in building a house, which costs $282,000 on average.

However, this fee isn’t paid all at once. It’s provided to the contractor at different points of the project, based on a payment structure that you jointly agree on (and put in writing). Many times, contractors will already have a standard payment schedule that they use with their clients, which can be a great starting place to determine what works best in your particular situation.

Typical payment plans often include a down payment (which can go toward materials, permits, or other upfront expenses), followed by payment installations when certain predetermined milestones are reached.

For instance, you might pay 10 percent of the total project cost as a down payment. Then, you can pay another 20 percent upon each successful milestone completion, with a final 30 percent payment when the entire job is complete.

How to hire a general contractor

Since you’ll be working with your contractor daily on the most personal of projects (your home), it pays to do research before hiring someone. The best contractors will be in-demand, so you should start exploring your options as soon as you get title to the land and blueprints for your project (or even before, if you’re going with a design-build GC firm).

Not sure where to start? Ask your friends, family members, co-workers and acquaintances if they have any recommendations. If you know any, ask if they’ve worked with any stellar general contractors who might be open to new jobs. Finally, do some online research and look for well-rated contractors who have prior experience in your type of project.

Once you’ve made a shortlist of candidates, reach out and ask each one for a brief introductory meeting, where you can ask important questions such as:

  • Are you licensed?
  • Are you insured?
  • What is your experience with my type of residence? (some GCs specialize in historic homes, others in new builds, others in renovations and additions)
  • How long has your firm been in business?
  • Can you provide references? (be sure to talk to a few)
  • How often will we meet/communicate? Will you give me regular reports and updates?

While all of these questions are crucial, it’s most important to confirm that your potential contractor has the appropriate license and insurance as required by your city or state. If they seem annoyed or brush off the question, it may be a red flag.

“Any credible professional should have this information ready to offer when asked. It helps to protect you and the contractor,” says Kerri Osterlund, senior manager, Contractor Relations for American Home Shield. “You can also contact the Better Business Bureau (BBB) or state licensing board to verify credentials.”

Final word on general contractors

Trying to build or remodel a home on your own can be daunting, dangerous and downright illegal in some cases. If you’re planning a large-scale renovation that involves multiple subcontractors or permits, you can simplify the process by hiring a general contractor who will manage the day-to-day operations and the completion of the project.

Yes, it’s inserting another person into the process — and as you might expect, their services don’t come cheap, with some general contractors charging up to 25 percent of a project’s total cost. But who’s going to figure out what should be done when? Will you be able to recognize if the roof isn’t pitched properly, or know why the cement is taking so long to dry?

In the end, a GC’s experience, expertise and ability to trouble-shoot can make all the difference in a home construction project, steering it to remain as close as possible to your budget, timeline and dreams.

Written by
Taylor Freitas
Contributing writer
Taylor Freitas is a freelance writer and has contributed to publications including Bankrate, LA Weekly, CNET and ZDNet.
Edited by
Senior homeownership editor