Hiring a contractor is one of the largest purchases most households make, and it is usually made quickly, after a leak, a storm, or a long-delayed decision. The difference between a smooth project and a painful one often comes down to what you do before anyone picks up a tool: verifying who you are hiring, comparing real bids, and putting every detail in writing.
This guide is for homeowners planning anything from a bathroom update to a new roof. By the end you will have a repeatable vetting process, a list of questions to ask, a contract checklist, and a payment schedule that protects you if the work stalls.
Start with a written scope of work
Before you call anyone, write down what you want done. List the rooms or areas involved, the materials you prefer (or a budget per item), whether you expect demolition and cleanup, and your ideal start and finish dates. Take photos of the current condition.
A written scope makes bids comparable. If one contractor quotes tile and another quotes vinyl because you never specified, you will be comparing different jobs. It also gives you something to measure against when the work is done.
Decide which parts of the project need a licensed professional. Electrical, plumbing, gas, and structural work usually do, and many states also license general contractors, roofers, and HVAC installers. Rules vary a great deal by state and sometimes by city, so find out what applies in your area before you start looking.
Find candidates and check them yourself
Ask neighbors, friends, and coworkers who have had similar work done recently, and ask to see the finished result if they are willing. Virginia's Department of Professional and Occupational Regulation notes that referrals from people you know tend to be more reliable than paid ads or online reviews, which can be biased or untruthful. Reviews are still worth reading for patterns, such as repeated complaints about missed deadlines.
Then verify each candidate:
- License. Search your state's contractor licensing board, usually an online "license lookup." Confirm the license is active, covers the type of work you need, and has no disciplinary history. Some states do not license general contractors at all, in which case check for local registration and trade licenses.
- Insurance. Ask for a certificate of insurance showing general liability coverage and, if the contractor has employees, workers' compensation. Better still, have the insurer send the certificate directly to you so you know it is current.
- Complaints. Check your state attorney general or consumer protection office and the local Better Business Bureau for filed complaints.
- References. Ask for the names of two or three recent customers with projects like yours, and call them.
- Business address. A contractor with a real local address and a business phone is easier to find if something goes wrong.
Collect and compare at least three bids
Ask each contractor to walk the site and give a written estimate based on your scope. Virginia's regulator recommends at least three written estimates and asking why prices differ rather than simply picking the lowest.
A good bid itemizes labor, materials, permits, disposal, and any allowances (fixed budgets for items you have not chosen yet, such as light fixtures). A single lump sum with no detail makes it hard to see what is missing.
Use this table to compare what you receive:
| What to compare | Bid A | Bid B | Bid C |
|---|---|---|---|
| Total price and what it includes | |||
| Materials named by brand or grade | |||
| Permits and who pulls them | |||
| Start date and finish date | |||
| Cleanup and debris removal | |||
| Warranty on labor (length) | |||
| License and insurance verified |
A bid that is far below the others is not a bargain until you know why. It may leave out work, use cheaper materials, or come from a contractor who plans to ask for more money once the walls are open.
Questions to ask before you sign
- Will you pull the permits, and will inspections be scheduled by you?
- Who will actually be on site each day, and will any work be subcontracted?
- Who is my day-to-day contact, and how quickly do you respond to calls or texts?
- What is your estimated timeline, and what could delay it?
- How do you handle changes to the scope, and how are change orders priced?
- What warranty do you give on labor, and what do material manufacturers cover?
- How do you protect the rest of the house from dust, and what time does work start and end?
Pay attention to how the answers are delivered. A contractor who explains clearly, admits uncertainty, and does not rush you is showing you how the project will go.
What the contract should contain
Most state licensing agencies and attorneys general advise the same thing: get a written contract before work starts, and put every promise in it. Verbal assurances are hard to prove later. The contract should include:
- The contractor's legal name, address, phone, and license number
- A detailed description of the work and the specific materials, brands, and model numbers
- The total price, the payment schedule, and how change orders will be handled
- Start and substantial-completion dates
- Who obtains permits and arranges inspections
- Cleanup and disposal responsibilities
- Warranty terms in writing, including how long they last and what is covered
- Proof of insurance and how lien waivers will be handled
The District of Columbia's attorney general advises being cautious about mandatory arbitration clauses and nondisclosure agreements, which can limit your options if there is a dispute. Read the entire document, and do not sign anything with blanks in it.
If you sign a contract in your own home after a salesperson comes to you, the FTC's Cooling-Off Rule generally gives you three business days to cancel, and the seller must tell you about that right. Some states add their own protections.
Set a payment schedule that protects you
Deposit limits vary by state. Virginia's regulator says to keep the first payment to no more than 10% of the contract or $1,000, whichever is less, with a larger allowance for custom-made items. The District of Columbia's attorney general suggests keeping deposits to about one-third or less. Check what your state allows, and treat anything higher as a warning.
Here is a worked example. Say you sign a $24,000 bathroom remodel contract. A protective schedule might look like this:
| Milestone | Payment |
|---|---|
| Signing the contract | $1,000 |
| Demolition done and rough plumbing and electrical passed inspection | $7,000 |
| Tile and fixtures installed | $8,000 |
| Substantial completion and passed final inspection | $7,000 |
| Punch list finished, final cleanup done | $1,000 |
Because each payment depends on visible progress, a contractor who falls behind also gets paid later. Hold the last payment until your punch list (the short list of small fixes) is done.
Pay by check, credit card, or another method that leaves a record. Keep a folder with the contract, receipts, change orders, photos, and a log of calls and messages.
Red flags that should stop you
- Pressure to sign today, or an offer that expires when the salesperson leaves
- A story about leftover materials from a neighbor's job, a common opening for asphalt and roofing scams
- A request for full payment up front, or for cash only
- No license, or a license number you cannot verify
- A contractor who suggests you pull the permits in your name to avoid inspections
- No written contract, or one that is vague about scope and price
- Door-to-door solicitation after a storm
- Arranging financing through the contractor without letting you shop for your own loan
If a contractor offers to arrange a home equity loan for you, research the lender, contact them directly, and confirm that only you can receive or release the funds.
Common mistakes
Choosing on price alone. The lowest bid sometimes reflects missing scope. Ask what is different before you decide.
Skipping permits. Unpermitted work can create problems when you sell, may complicate insurance claims, and can force you to tear out finished work to allow an inspection.
Paying ahead of the work. Money paid for work not yet done is hard to recover.
Approving changes verbally. Every change to price or scope should be a signed change order.
Not checking at the end. Walk through with the contract in hand, make a punch list, and get your lien waivers and warranty paperwork before the final payment.
If you also plan to save on utility costs during the job, our guide to energy-efficient home upgrades explains which improvements to bundle together, and kitchen remodel planning covers budgeting and timelines for one of the most common big projects.
Frequently asked questions
Should I get a contractor's license number even for small jobs?
Yes, if your state licenses that trade. Many states set a dollar threshold below which a license is not required, so check your state board's rules. For electrical and plumbing, licensing often applies regardless of price.
How much should I pay as a deposit?
It depends on state law and the project. Regulators in Virginia and the District of Columbia suggest very small deposits relative to the total. A reputable contractor should be able to buy most materials without a large advance from you.
What is a lien waiver and why does it matter?
If your contractor does not pay a supplier or subcontractor, that party may be able to file a lien against your home in many states. A lien waiver is a signed statement that a party has been paid and gives up that right. Ask for waivers with each payment and a final one at the end. Lien rules differ by state.
What should I do if the work goes wrong?
Put your complaint in writing, referring to the contract. Contact your state licensing board and your state attorney general or consumer protection office. If you paid by credit card, ask your card issuer about a dispute, since there are deadlines.
Next steps
- Write a one-page scope of work with photos, a budget range, and the dates you would like.
- Look up your state's contractor licensing board and confirm what licenses your project requires.
- Request three written, itemized bids, then verify each contractor's license, insurance, and references.
- Review the contract against the checklist above and negotiate a milestone-based payment schedule before you sign.
