Online referral services serve a number of purposes. For the contractor, it is essentially a new form of advertising — contractors typically pay to be included on the list. For the homeowner, online services help expedite the contractor-finding process by doing a lot of the legwork. That includes such laborious tasks as:

• License verification
• Background checks
• Referral verification (the service calls references themselves)
• Insurance verification

Many also provide feedback from previous customers and make getting free estimates from these contractors a simple form-filling process.

Add to that the fact that many services are free, and the appeal is not hard to realize. Still, as Remodeling Guy points out, that doesn’t necessarily make online referral services a foolproof option. While the verification services provided are useful, and probably effective in general, it would not be too difficult for a dishonest contractor to get around these obstacles.

That is why the online referral service should not free the homeowner from all research obligations. It is important to remember that many of these services make money off the contractors — a good reason to let some mediocrity slip through the cracks. Now, there are plenty of online services out there; the rise of the online referral service will inevitably spawn even more hungry entrepreneurs to the cause. Therefore, it becomes necessary to effectively research the researcher, for homeowners to spend a few hours looking into the referral services themselves.

So while online referral services are an ever more effective way to reach homeowners and potentially gain some serious business, they are unlikely to be as easy for contractors as paying a fee and reaping the benefits. Well-researched homeowners will still judge by personality, although being on their list (narrowed down by the online service) will certainly help the cause.

In addition, when it comes to researching the same advice applies to contractors looking to advertise within this rising trend. It would be unwise to place your bets with a service that has had a negative reaction around the web.