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Nothing in life is certain except Death and Taxes….. And Roofing 

 

Yes, its true, at some point in your life the roof over your head is going to wear down and fail. Your roof protects everything below it which is usually all of your life’s work and more importantly your family. Whether due to storm damage, wear and tear, age, or a variety of other reasons you will have to go through the process of having your roof replaced at some point. This can be a smooth and easy process or a living nightmare. Let me explain further….

 

The residential roofing industry in Georgia and most other states is perhaps one of the most competitive, cutthroat industries in existence. The residential roofing industry standards (especially in Georgia and low regulated states) creates an environment where Homeowners and customers have a high chance of being taken advantage of or supplied with a poor product and/or service. Below I will list the top 5 reasons that this happens and as a Homeowner why you should work with a roofer that you have vetted thoroughly. I will then give you some ways to help you through this process and make this as good of an experience as it can be.  

 

           1. Lack of Experience- These people are “Roof Salespeople not Roofers”

 

When a “Roofer, Roof Insurance Specialist, Roof Inspector, Roofing Expert” knocks on your door and tells you that you have storm damage on your roof or they will give you a free inspection there is a very high chance that person has only been in the Roofing Industry for a couple of months. There is a much higher chance that the Salesperson has never installed one shingle in their life and there is almost 100% probability that the salesperson’s “Property Insurance knowledge” is limited to meeting an insurance adjuster at a property a few times. 

 

Roofing sales can be highly lucrative in certain situations and because of this it has a “Get Rich Quick” atmosphere. The “Get Rich Quick” atmosphere is a myth over the long run with the amount of work it takes to maintain a strong sales pipeline being significant making the turnover rate of roofing salesman extremely high. It would be safe to say that 99 out of every 100 people that sell roofs will not be in the industry for more than 1 year on average.

 

Roof Salesman learn how to sell roofs and along the way they may learn about actual roofing. While every roofing company advertises that they have hands on or top industry training, the training programs for the vast majority of the residential roofing companies are letting a new salesperson follow another salesperson around who has been in roofing sales for a couple of months longer while stumbling into roofing jobs. The roofing sales companies are in a continual “numbers game”. How many people can you hire, how many people can you push through your company to prospect new leads, how many of those leads can you closel. The more successful roof salespeople will open their own companies in a very short amount of time and begin the hiring cycle all over again (more on this later). 

 The real “Roofers” are the crews of people that come out to remove and replace the shingles on your roof. These are mainly Hispanic crews, often with illegal immigrants, who are the real Roofing Experts. Because roofing is one of the most dangerous and physically demanding jobs on the market, the vast majority of Americans will no longer do it. Residential shingle roofing is the most common and least specialized roofing so there are less Americans doing this work than the more specialized roofing types such as metal, commercial single-ply, slate, or wood. 

 

Not all Roof Salespeople are completely inexperienced but it does take some effort to figure out if you are talking with a good salesperson or a qualified Roofing Expert. So how has the Georgia roofing industry evolved into this mess?.....


 

          2. Low Barriers to Entry- No oversight. Anyone can open a company. 

 

While most entrepreneurs are all for less regulation by the government the Georgia roofing industry is in some need of assistance. Right now in the state of Georgia there is no licensing requirement to be a roofer. You can walk out of your door and announce to the world that you are a roofer and BAM! Your a roofer. A Felon who just came out of prison for insurance roofing fraud can start a roofing company. The residential roofing industry is one of the few industries in the country that a person with no experience can make six figures a year with relatively less effort than other jobs. 

Georgia has requirements in place (testing, licensing, insurance) to become a general contractor but not a roofing contractor. The State of Georgia calls this Specialty Trade Contracting. It means that if a company advertises and represents that they are only do 1 or a couple trades they do not have to meet the same requirements as a General Contractor, who generally represents that they can do any type or scope of work. The only other licensed trades are the mechanical trades (Electrical, Plumbing, HVAC, and Utility). So when most roofing companies say they are “Licensed” the only license they may have is their local city business license and maybe a drivers license. The Georgia General Contracting License has different tiers (residential basic, residential/light commercial, general contractor limited tier, and general contractor) which all have different project dollar amount maximums (except General Contractor which is unlimited) or limitations for the height and size of the project. As a Specialty Trade Contractor there is no dollar limit to the size project that you can do. A $1,000,000.00 roofing job is the same as a $3000.00 roofing job. They are both just a roofing job. 

Think licensing sounds bad? Try “Bonded”. Bonding requires that a bank or bonding company guarantees your work so the requirements are similar to getting approved for a loan. No bonds are required for any sized residential job (unless specifically asked for by the customer and there is no good reason to have one on a job as small as a residential roof replacement). So most companies who have bonded on the side of their truck in residential roofing are straight forward lying. That is unless the company is doing commercial or government work of so size. At that point they may really need to get bonded.   

Insurance… So workers compensation and general liability insurance is something that most roofing companies say they carry. In most cases roofers will have the state minimum on general liability insurance. There are plenty of roofing companies who have no workers compensation insurance and who solely rely on their roofing crews to carry their own. Georgia requires that all companies who employ people carry workers compensation which is why virtually every roofing company files a 1099 Independent Contractor status for every salesperson working for them.  Most of the Roof Salespeople are not insured by their company since they are classified as independent contractors which means that your homeowner’s insurance is picking up the tab if they fall off your roof while doing that “Free Inspection”. Workers compensation protects the workers And The Homeowner in the case that a roofer, roof salesperson, or anyone working on your home gets hurt on the job. Due to roofing being one of the most dangerous jobs that there is the workers compensation rates for actual roofers is very high sometimes up to 40% of what that person is paid. 

SO REMEMBER AS YOU’RE VETTING YOUR ROOFER…….. The “Roofing Salesperson” you are speaking to could have walked out their door that morning saying “Today I’m a Roofing Contractor”. They do not have to carry their own workers compensation insurance on the workers on your jobsite, and they can hop on a skyscraper and complete a five million dollar roofing project that protects the belongings and family of 100’s of families and have no professional license.   Pretty scary huh?

 

           3. Insurance Adjuster / Roofer Disconnect

 

While most Roofing Insurance Specialists are just inexperienced roof salespeople, the experts from your property insurance company often have equal or less experience. Property insurance companies hire most of their adjusters straight out of college. These are also people who have never been on a roof prior to becoming an adjuster. They have never seen storm damage to construction materials until this job. This is the first professional job of their working lives. 

While there are plenty of experienced people in both construction and insurance everyone starts out new. When a person who seems young is telling you their an expert at their trade just remember there is a limited amount of time they could have learned that trade. It is common for new insurance adjusters to try to “prove” themselves by being tougher at adjustments than is called for. As adjusters get more experienced they usually begin to look at how they can cover damages rather than how they can not cover damages. That is highly based upon who your insurance company is though.  Insurance companies are not created equally. A lot of these companies are for profit and only beholden to the state rules and their shareholders. While I can’t say which companies are the worst (and there are several of the most prominent ones out there that statistically cover less damages for their claims than others) I can say that most member owned companies tend to have the benefit of their customers in mind the most. USAA and State Farm are two of the best companies to insure with. They may cost more on your premium but when something happens and you need them they will do what you pay them for in most cases.

I will say that insurance companies do have extensive training programs for their adjusters. But on that note, they train their adjusters in how they want them to interpret storm damage, which is not always applicable to the real world. If an insurance company can legally justify paying or not paying for something, that is their main concern most of the time. The best insurance companies will consider damages in the grey area as covered and the bad insurance companies will not even cover some things that blatantly obviously should be covered based upon their policy. The bad companies would rather spend money on marketing and lawyers fighting claims and lawsuits than paying for their customer’s claims. These bad companies often target low income and low education homeowners in their marketing.  By my guess this is because they know the homeowners won’t know how bad they have it until it is too late or won’t have the resources to fight a claim decision made against them.  

 

         4. Failure Rate

So when you get very low experience in an industry and very low barriers to entry in an industry, the result is a high FAILURE OF ROOFING COMPANIES

Because of the fact that roofing sales people are taught by previous roofing sales people that were generally inexperienced, there is a lot of inexperience in the industry. A lot of times a roof sales person may learn how to sign up customers, have a vague knowledge about how to order material, have a vague knowledge about how the actual roof project should be completed, and then get to the collection of money and they get stuck. The residential roofing market is driven by property insurance claims. It is rare for a roofing customer to pay for the total cost of their roof replacement out of their own pocket. This is because most people don’t have the money, the roofing sales companies know this and have learned how to get the insurance companies to cover the cost of the roofs. I spoke to an industry expert who said that residential insurance roof replacements account for over 30% of all property insurance claim money paid out each year! No wonder the roofing industry is growing in popularity regardless of all these problems in it. 

The failure of roofing companies comes steadily and quickly. The average amount of time that roofing company stays in business is 1 year to 2 years. The life cycle of most roofers is: Person begins in the roofing industry as a roofing salesperson, works for an older roofing company for less than 1 year, decides they can do the entire job that the roofing company does and keep all the money, makes the contacts to get roofing supplies and 1 or 2 roofing crews, quits the roofing company they started with, might work with another company for a couple months, quits there, then starts their own roofing company. 

These new companies always start out financially strong and feel like success is theirs! This is because the credit lines from roofing suppliers are generous and are not due for a couple of months. The insurance roof replacements pay out in a multi check process. After a roof is approved by your insurance company the insurance company issues a front end check called the ACV or Actual Cash Value for your loss. This is their estimate of what your construction items damaged were worth at the time of your loss. Just like a car that is 10 years old when it gets damaged the insurance company takes depreciation away and pays you for a 10 year old car not the same car at a brand new value. Homeowner’s insurance differs from car insurance in that once you complete the repairs to the home the insurance company pays the difference. Since your repairs brought the value of the asset that they are insuring up to the same value as new they pay for the total value of the repair (Except for your deductible which is your part of your insurance similar to a Co-payment). 

So while the new roofing company is putting their material on credit and pushing back the payments, collecting the front end checks from new insurance claims, and the roofing season (spring thru fall) is on them success seems inevitable. There is a large amount of money coming in and out of most roofing companies bank accounts but, at first, there always seems to be enough to go get a $60,000 truck or send their sales people on super expensive trips (whatever it takes to keep your salespeople happy right?). Also since the money just seems to pile up the sales begin to naturally slow down (why work so hard when you’ve done so well….). 

Everything seems to be OK until the end of the roofing season. As soon as the bills pile up the businesses begin to close. All of those promises of a lifetime warranty are only good as the paper they were written on and a new evolution of roofers closes and opens. In my Georgia county alone just talking to my accountant he saw six roofing companies fold just last year. I have seen about ten new ones open up this year. That’s only the ones visible online which is probably less than half. Every one of these new companies splintered off of an existing one. 

 

While I fully support entrepreneurship I do feel like there could be a way that impacts less people so severely. 


 

           5. The Entire Industry Has Issues- Homeowners Beware You Are Part of This Also

 

So now you know that the roofing industry has some bad apples and to be aware of them. Part of the problem that promotes the ease with which the bad apples operate is customer driven. Every time a roof salesperson knocks on a door and sells a customer a roof inspection. About 95% of the time the homeowners are OK calling in a claim to their insurance company as long as they don’t have to pay anything out of pocket. 

ATTENTION: If you do not pay your deductible in an insurance claim you have just committed insurance fraud. The deductibles were figured into the cost of completing repairs. It is included in the insurance company’s estimate for the cost of operating a business in the roofing industry. So every time a roofer gives away a deductible they are giving away a significant part of their profit. That helps to cause them to default on their bills (while mismanaging money is the main reason, losing a large portion on job after job is also a big reason). After defaulting on their bills to their suppliers, the suppliers raise their prices to make up for the loss, which raises the cost of roofing, which raises the cost of insurance, which the homeowners then pay for anyways. 

The whole insurance industry is statistic driven. Insurance companies will not lose money over a long enough period of time. They will just keep driving up rates to make up for losses. So any homeowner asking or agreeing to their deductible being waived is hurting themselves in addition to knowingly committing a felony. Please don’t be these people. It is not worth it. 

Finally, the worst fraud in the industry is roof damage fraud. It is a known fact in the residential roofing industry that a significant portion of roofers cause damage to the shingles on their customer’s roofs. They flip 3-tab shingles to make them look like they were damaged by wind. I can’t tell you how many roofs around the country that I have been on that were damaged by people. The insurance companies call this mechanical damage because without having the culprit on video it wouldn’t be legally prudent to say that a crime has taken place. The insurance companies get constant reports of mechanical damage and if they have any proof they will pursue action against the company responsible but it is very difficult to prove without video evidence. The damage may have been caused by wind or by another roofer at a different time. If someone is on your roof “looking for damage” for more than 30 minutes on a normal sized roof I would be cautious of them. Unless a roof is very difficult to climb it should not take more than 30 minutes to identify all the damages on the roof. So word to the wise. Watch your roofer doing their inspection because if you don’t the damage they are announcing to you may have happened right under your nose. 


 

How to Best Navigate The Roofing Process

 

       1. Use someone local. I know you always hear it. There is a good reason for it. When I worked           as a catastrophe adjuster for a few thousand adjustments I can’t tell you how many calls I                 received from distressed homeowners telling me that they gave their insurance money to an             out of town roofer never to hear from them again. Be aware. It does happen!

 

       2. Thoroughly vet the roofer. Ask for references from other customers. Look through online                 reviews. Were the reviews written by the company themselves or customers? How long have             they been in business? Do they have a physical location that you can go if something goes               wrong? Ask for a copy of their business license, GC license if they have one, and general                 liability insurance and Workers Compensation insurance. 

 

       3. Ask them about their roofing crew. How long have they worked together? How do they                   complete the job? How many people will they bring? How long will it take? What do they do to           clean up afterward? Any roofer who can not effectively answer these simple questions is not             the expert you are looking for. 

       4. Call a roofing material distributor and get a recommendation. ABC Supply is a national                 roofing distributor that you can get a good recommendation from usually. 

 

       5. Ask to come by one of their jobs to watch before your job takes place. 

       

       6. Ask if your roof salesperson ever worked as a property adjuster. Anyone who spent time               adjusting claims for a few years should know the insurance process pretty thoroughly. Ask the         roofer if they are certified in any way. (A Hagg Engineering Certification is the most common             roofing certification that is valued in the industry even though it is just a class that very few               people don’t pass and a large price tag with it.)

       7. Ask how many roofs they’ve replaced and their call back ratio for warranty items. Warranty           should be about 1-2% at most. If they tell you just a few then it’s a good chance your roofer is           at least honest with you. I do think that new people to the industry who show themselves to be         honest and hard working on your behalf should be given a chance.

       8. Finally, Ask them if they will waive your deductible. Anyone who says yes is willing to risk               you being charged with a felony and should not be trusted. 

       9. Check with your local Contractor’s Co-op for a good referral. Contractor’s Co-op was                     created to assist local homeowners with their contractor relations. It is free to join and you can         connect directly with local roofers and all other residential contractors and tradesmen. We are           trying to teach better business to contractors in your area. If you ever have an issue with                   someone we refer to you please come sit down in our office and tell us about it so we can get           better. 

      10. Join your local Contractor's Co-op. Contractor's Co-op is gathering good local homeowners        and contractors who believe there is a better way to do business, keep more business local,            and improve the contracting industry. We hope to join our local industry leading contractor in a        political push to help straighten out some of these problems listed above. The more local                  residents and contractors who join the louder our voice will be. 


 

Call us today for a safe referral for your roofing project or any other project you need help with. Also join our Co-op and get the inside track on our local directory of contractors you can not find online, get Co-op pricing at local retailers and construction material providers, and come to our Spring and Fall events where you can meet contractors in person face to face prior to hiring them. 

 

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