When a remodeling job turns sour, it's sometimes best to work out a new arrangement with the contractor rather than making a beeline for court.
Q: We are in a dispute with our remodeling contractor. We signed a contract and gave him a 25 percent down payment to start the job and another 25 percent when he reached the midway point. Then, out of the blue, he raised his estimate and said he would not finish the work unless we paid him several thousand more than we originally agreed. We refused, and he quit, leaving us with a half-finished new bedroom and bath. What options do we have?
A: Most contractors are honest and work hard to make their customers happy. When a contractor changes his bid after work has begun, it's usually because he ran into unexpected problems - like a cracked foundation or severe termite damage - or the homeowners themselves made major changes to their construction plans. If neither of these applies to you, you have a couple of options to remedy the situation and get the job completed.
First, of course, you could file a lawsuit. But there's no guarantee that you would win, especially if the contractor can show the judge that the job went far beyond the scope of the contract that was originally signed. And even if you were victorious, you would probably then have to file a lien against his home or other property to collect - and all the while suffer with a half-finished bedroom and bath.
A better alternative might be to call the contractor directly and see whether you can reach some type of compromise, such as agreeing to pay a little bit more if he agrees to accept less than what he's asking for now. It might not seem like a great option but could save you from the time and expense of a court battle and get the job finished as quickly as possible.
If an agreement can be reached, write a new contract that details all of the work that still needs to be done as well as a new payment schedule for the balance of the renegotiated price.
The agency that regulates contractors in your state might have some additional ideas. In most states, it's the contractor's state licensing board, department of real estate or department of consumer affairs. Also, consider filing a complaint with the local Better Business Bureau, which you can locate at bbb.com.
Are real estate commissions negotiable, or are they fixed by state or federal laws?
Federal anti-monopoly laws state that real estate commissions are negotiable, but most sales agents charge a commission of between 5 percent and 7 percent of a home's eventual selling price to market a property and shepherd the transaction through to its conclusion.
You recently discussed FICO scores in one of your columns. But how are these scores actually calculated? Are some factors more important than others?
On its face, the credit-scoring system developed a few decades ago by California-based Fair Isaac Corp. - which most banks and other lenders use today when deciding whether to approve a mortgage or other type of loan application - seems complex, if not downright mysterious. But really, it's fairly easy to understand: Your score is based on five different factors, some of them more important than others.
About 35 percent of your overall FICO score reflects the payment history on past and current accounts. Another 30 percent is based on the amount you owe, whether it's to a mortgage lender, credit-card company or the firm that approved your automobile loan.
Roughly 15 percent of your score is based on the actual length of your credit history, which tends to favor longtime borrowers but can hurt younger people who are seeking their first mortgage or credit card. An additional 10 percent is based on new accounts that have been opened, the number of recent inquiries to credit bureaus and the like.
The final 10 percent of your score reflects the types of credit that you use. That means that borrowers who have made consistent payments on a variety of different loan accounts often have an advantage over consumers with only one or two accounts.