On Some Sites, Homeowners May Just Click With Contractors

More Americans than ever before are buying older homes and fixing them up.

But the Internet has yet to cash in on the record-breaking $143-billion home improvement industry. In fact, the online home improvement category is so young that most Internet analysts don’t track it.

Several virtual remodeling sites hope to build on the global computer network’s strengths as an information clearinghouse by using it to match homeowners with contractors that are the right fit for their kitchen remodel or exterior painting job.

Surprisingly, about 75% of Americans who remodel today do it themselves, according to the Tampa-based Home Improvement Research Institute. The remaining 25% hire a pro to do it for them. But the process is never easy.

Most homeowners fail to thoroughly investigate a contractor before they hire him or her, said Lynette Blumhardt, information officer at California Contractors’ State License Board. Homeowners know the drill for finding qualified contractors: Check with the Better Business Bureau, check references, check with the state’s licensing board. But who has the time?

Web sites like https://www.improvenet.com screen contractors for homeowners for free. Homeowners provide details about the job, the time frame, the materials they’re interested in using and their budget, and these sites recommend at least three local contractors.

What sets online contractor-matching services apart from one another is how diligently they screen contractors. It’s important to understand these screening processes, which vary widely from site to site, to know what you’re getting when a contractor shows up at your house.

These sites also set wide-ranging pricing policies for contractors who use their service, which could impact how contractors bill clients.

ImproveNet, the Internet’s oldest and largest contractor-matching service, runs credit and legal checks on contractors, asks for references from past jobs and from suppliers, and requires proof that a contractor is licensed and that they have insurance.

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The 3-year-old firm only checks with the Better Business Bureau “if there’s a question mark,” said Dennis Galloway, the company’s senior vice president. It also re-screens contractors in its database every 90 days. These standards narrow the field quickly.

“Almost half to three-quarters of our applicants don’t pass,” Galloway said.

The site has a nationwide database of about 235,000 contractors--culled from about 600,000 applicants--in 400 specialties. So far, consumers have submitted 200,000 jobs worth about $4 billion to the Redwood City, Calif.-based site.

ImproveNet requires contractors to pay a $99 screening fee. If they are added to its database, it requires a fee for each job it refers a contractor to and also a percentage of each job the contractor accepts.

Critics charge that asking contractors to pay a percentage of each job could cause them to raise prices for homeowners. Galloway rejects this argument, saying contractors save money on marketing expenses by using ImproveNet so aren’t tempted to raise their prices.

Portland-based Handyman Online, at https://www.handymanonline.com, also requires proof of licensing and insurance and three references, both from past jobs and from suppliers that the contractor buys products from.

The site offers about 7,000 contractors in 130 specialties in all 50 states. It’s fielded about 100,000 homeowner requests since its launch in January. Like ImproveNet, the service was founded by tradesmen who shared consumers’ frustrations about contractor screening.

“They kept hearing from clients, ‘You did a great job. Do you know a good electrician?’ ” said Bruce Stahl, director of marketing for Handyman Online. “People were desperate to find qualified pre-screened contractors.”

The company checks contractors’ credit records but doesn’t do legal checks or inquire about prospective contractors at the Better Business Bureau. Contractors pay the company on a per-lead basis according to the size of the job and the area they’re based in. The site re-screens candidates according to which service they provide.

Handyman Online and ImproveNet assign staff members to follow each contractor in the field. These employees contact homeowners to make sure contractors follow through on jobs and that consumers are satisfied with a contractor’s work.

Twenty-month-old ServiceMagic, which partners with Maytag and Honeywell to broaden its contractor database, uses a two-step certification process. Before a contractor is added to its database, the Golden, Colo.-based firm requires credit and legal checks, as well as proof of licensing. But it doesn’t require references from suppliers or past jobs, or proof of insurance and doesn’t check with the contractor’s local Better Business Bureau.

The company, which offers 485 services in 35 markets, checks on a contractor’s insurance status and asks for references from suppliers after he or she has been added to its network and has received three positive references from consumers.

“We believe the references we generate through our services are the most meaningful or accurate,” said Michael Beaudoin, the company’s co-CEO. “We wouldn’t know if references they gave us beforehand were from their dog, their brother or their sister.”

But California’s contractors’ board says that half of those who recently reported problems to the board failed to check a contractor’s references before they hired him or her--emphasizing the importance of checking with past jobs before hiring a tradesperson, Blumhardt said.

ServiceMagic requires contractors to pay $199 a year to be in its network and levies a commission ranging from 2% to 7%--depending on the job’s size--on work contractors win from the service. The firm doesn’t release the size of its contractor database.

The Internet’s largest real estate Web site, https://www.homestore.com, offers a services directory on its home improvement pages. The directory offers about 1 million professionals in 35 service areas.

Most of these listings are gleaned from partnerships Homestore has with trade associations and other groups, said Bruce Isaacson, division president, home services. The site typically relies on its partners to screen candidates. It does not conduct independent reference checks.

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If a candidate isn’t screened by another party, Homestore will screen him or her according to the amount of revenue their business pulls in, their credit history and the number of years they’ve been in business, Isaacson said.

Consumer watchdogs say it’s important that homeowners who use online contractor-matching services do some background checking themselves to make sure these sites did their homework properly.

“Don’t take it that someone referred from these companies will be a perfect fit,” the contractor licensing board’s Blumhardt said. “That person needs to ask for other referrals and make sure the contractor is someone they can communicate with.”

Homeowners should also check with their local Better Business Bureau to find out how contractors have dealt with problems on jobs in the past, said Kim Burge, director of trade practices at the Better Business Bureau of the Southland.

The Internet is also a help for homeowners who want to check contractors’ records. The number of hits recently to the state contractor licensing board’s Web site--where consumers can check for complaints about contractors--has “gone up astronomically,” Blumhardt said. The site is located at https://www.cslb.ca.gov.

The board receives around 30,000 complaints about contractors in California each year--some of whom skip out in the middle of a job. Unfinished jobs are one of the biggest draws for online contractor-matching services.

“We get a lot of half-done projects,” Handyman Online’s Stahl said. “Especially from homeowners who say, ‘The contractor took my check and left town.’ ”

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Last month’s Virtual Realty column is available at https://www.latimes.com/business/cutting/lat_realty000806.htm.