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3 reasons you shouldn’t hire friends or family

The old adage says it's never good to mix business with pleasure. And when it comes to home repairs or improvements, that old saying couldn't be truer. While it may sound ideal to hire a friend or family member to work on your home, the risks often outweigh the rewards.

Whether it's the urge to save money or skip a contract and start the job on a handshake, unique and unfortunate problems can arise when you hire people you know. If you're considering hiring a friend or family member for a home improvement project, the experts say you should be prepared to draw a clear line between the friendship and the project.

Here are three reasons not to hire friends or family:

No. 1: You lose leverage

The biggest problem when hiring friends or family is that you often lose the leverage you would otherwise have with a stranger. Haggling on price, demanding a rework or having to get tough about a deadline can make for an awkward situation when it's a close friend or family member.

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Conrad Neuf, a former senior construction manager for Toll Brothers, has seen this scenario happen all too often. No matter how qualified the friend or family member may be, no matter how solid the contract is or how low their price is, a homeowner may be reluctant to get tough with a contractor or repairmen when it's a friend.

"Whenever you're dealing with a friend there is another element that enters into it that would not be there if it were a strictly business relationship with a stranger," says Neuf. "You lose a lot of leverage because you're unlikely to put your foot down for a lot of things. Everything is weighed by the fact that you could cause problems in the relationship or family."

No. 2: You're more likely to work without a contract

One of the biggest problems with hiring friends or family is that you're also more likely to start a job on a handshake or verbal agreement. That can lead to big problems if the job doesn't go as anticipated.

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Cheryl Reed, a spokesperson for Angie's List, says if you don't feel comfortable asking for a contract or written agreement, it's probably a sign that you shouldn't hire the person.

"If you're not comfortable having that conversation and even a hardball conversation, maybe it's a sign that you shouldn't enter into a business agreement with this person," says Reed.

Friend, family or not, a reputable contractor or repairman would likely want to enter into a contract for his own protection as well. Reed says you should sign a contract just as you would with a stranger. That should include the exact work the project entails, the materials that are to be used, a completion date and payment terms.

When Angie's List surveyed more than 500 contractors in August 2011, it found that 24 percent didn't require a contract before they started. Seventy percent of those surveyed said they never included provisions that tie payment to completion. Reed said the contract can not only protect the customer and contractor, but it can actually protect the friendship as well.

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No. 3 Project delays or poor work

Neuf says during his days in homebuilding he's seen a number of occasions where homeowners hired friends or family who subsequently performed poor work. In one example, he recalled a person who hired a friend to install crown molding. While the friend saved him a significant amount of money, he didn't install the molding properly. Unwilling to criticize or fire the friend in fear of damaging the relationship, the homeowner had to see the job to completion.

"He stuck with the guy even though he wasn't happy with the work because it was more important to keep the friendship than insult him," says Neuf. "It's a common problem when you're hiring a friend or family member."

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When a friend is working at a discounted rate, or even free, there's less of a value or reason to perform as they would were they working for a stranger. This can range from cutting corners and using subpar materials to delaying your project. Neuf says a friend or family member is more likely to put your job on the back burner if time is tight and regular customers are calling.

"There's a tendency to put you on the back burner because they know your job will always be there," says Neuf. "They're going to go take care of the customers that could fire them first. They know you won't do that."

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About the author:

CraigCraig Guillot is a business and personal finance writer from New Orleans. He covers insurance, investing, real estate and debt. His work has appeared in such publications and web sites as Entrepreneur, CNNMoney.com, CNBC.com, Bankrate.com and Investor's Business Daily. He is the author of "Stuff About Money: No BS Financial Advice for Regular People."

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