Are Online Referral Services the Best Way to Find a Contractor?

In today’s housing market, more and more homeowners are deciding they would rather brave a remodeling project than fight an uphill battle trying to sell the home they’re in already. Whereas in the past people chose major remodeling over moving predominately because they loved their location, now those numbers are added to by those who can’t imagine selling at a reduced price, those who don’t see any good prospects for a mortgage, and those whose financial outlook is a little dimmer than it might have been a couple of years ago.

When faced with a need, such as more space or better accessibility, among hundreds of other wants and needs, increasing numbers of homeowners think “remodel”. For many, the next thought is an even scarier one:

“we need a contractor.“

The idea of finding and hiring a contractor, in whose hands customers intend to place their money, their home, and indeed the very happiness of the family, is a daunting one for many.

Many Turn to The Internet

Immediate questions come to mind concerning the process. Where should we look? The yellow pages, the internet, a local circular or mailer, the side of the truck at the traffic light, maybe even the Home Depot parking lot. All of these are places people go to find a contractor, and good contractors can be found in each of these. Increasingly, as with almost everything, people are turning to the internet.

One increasingly popular source of potential contractors are web-based referral services. A quick search for contractor referral services, or find a remodeling contractor, will provide enough results to make your head spin! Services such as this have been around for many years. More than a decade ago, we began to receive solicitations from these services looking for our business.

It’s important to recognize the significance of this point. The referral service was looking to the contractor to get business. In other words, the customer of these referral services was the contractor. Or maybe I should say that the “paying” customer of the referral service was the contractor. I’m sure that the more reputable of these services considers the consumer as equally, if not more, important to them than the contractors. But the fact remains that the source of revenue is the contractors.

Advertising Venues for Contractors

Being listed on such a service will come out of the “marketing and advertising” segment of the contractors budget, right alongside his purchases for vehicle signage, yellow pages, his own website, etc. To the contractor, this is an advertising venue, a way to get business. There is nothing sinister about this and I’ve not seen a website that attempts to hide this fact, though I’ve not seen it advertised either. It’s just very important that the consumer realizes that the contractor is paying for the service.

I’m skeptical of these services, though I find the reasoning provided on many of the websites quite compelling. These businesses offer:

• License verification
• Background checks
• Referral verification (they call the provided referral and inquire)
• Insurance verification
• Feedback from previous customers through the service

Many also present themselves (and they may actually be) experts on the business of remodeling, providing informative articles and regular publications. All of these offerings are very helpful and valuable to the consumer; but are they enough? Is there a danger that these services could lull the consumer into a false sense of security? I believe there is such a danger and I would advise against relying completely on an outside source in checking out the contractor you intend to hire.

While there are certainly many very reputable contractors referred everyday through websites, I can only imagine that there are a good many bad eggs in the bunch. The methods of verification are simply too easy for an unscrupulous business to work around. I’ve been a contractor for many years, and I don’t even have to think hard to figure out how I would get around all of the verification efforts.

Do Some Research

I’ve spent the last two hours reading everything I could find on a few of the more prominent services in lead generation (that’s the contractor’s view of what the client calls a “referral”). I was easily able to find discussion threads, both from the contractor’s perspective, and the consumer’s perspective on any of the services I searched for. I strongly suggest that consumers take the same approach.

One point that I read that really struck a chord with me was on the contractors discussion board on these services. Many contractors pointed out that they had paid for leads through multiple web companies and found the leads to be “low quality” and in general began to see them as a waste of time. This is incredibly important from the homeowners perspective.

Since this rang true with my own experiences from many years ago, I’ll explain the point that was made. The contractor pointed out that when the lead generation provider (the referral website) regularly provided leads that don’t “convert” (to sales) that the contractors who were able to find work in other ways would do so. This would have the gradual effect of weeding out the “good contractors” from the pool of contractors referred. That, combined with the relative ease of meeting the “stringent” requirements for inclusion in the pool, seems to verify my gut reaction that these services aren’t the best solution for finding and hiring a contractor.

I’ve written another post which details exactly how I would suggest a homeowner should go about the process of finding a good contractor.

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Have you had any experiences with online services that refer contractors?

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Tagged as: contractors, hiring, referral services