Hire a Contractor Without Getting Burned

The homeowner's guide to getting solid bids, verifying licenses and insurance, reading contracts, setting a payment schedule, and handling change orders.

Get Bids

• Get at least 3 written bids for any project over $1,000 — bids should specify materials, labor, timeline, and payment schedule
• Ask each bidder to use the same specifications — identical scope makes apples-to-apples comparison possible
• Be suspicious of bids that are dramatically lower than the others — this often signals the contractor will cut corners on materials or labor
• Ask for a line-item breakdown, not just a total — 'labor and materials: $8,500' tells you nothing

Verify License & Insurance

• Verify the contractor's license number on your state's contractor licensing board website — most states have a free online lookup
• Request a certificate of general liability insurance and a workers' compensation certificate — call the insurance company to verify it's active
• Ask for 3 references from projects completed in the last 2 years and call all of them — ask specifically about timeline adherence and how disputes were handled
• Search the contractor's name and business name on the Better Business Bureau and your state's attorney general consumer complaints database

Contract Red Flags

• Do not sign a contract that lacks a start date, substantial completion date, and payment milestones
• Do not pay more than 10–15% upfront for materials — legitimate contractors have trade credit; large upfront demands are a warning sign
• Ensure the contract specifies the exact materials to be used — brand, model, and grade — or the contractor can substitute cheaper alternatives
• Include a lien waiver clause — this protects you from subcontractors placing liens on your home if your general contractor doesn't pay them

Payment Schedule

• Structure payments around milestone completion: e.g., 10% to start, 30% at framing, 30% at rough-in, 20% at completion, 10% after punch list
• Withhold the final 10% until you have done a full walkthrough and all punch-list items are corrected
• Pay by check or credit card — never cash, which leaves no paper trail

Change Orders

• Require all changes to scope or price to be documented in a written change order before work proceeds — verbal agreements are unenforceable
• Budget 10–15% contingency on top of the contract price for change orders — they are almost universal on remodels
• Keep a job log: photograph progress each day the crew works and note what was completed