How to Hire a Contractor: What Every Homeowner Needs to Know
Step-by-step guide to vetting, hiring, and managing a contractor — including red flags to watch for and contract terms you must have.
Choosing the wrong contractor is one of the most expensive mistakes a homeowner can make. Unfinished work, blown budgets, and legal disputes are all preventable with proper vetting. Here's the process that protects you.
Where to Find Qualified Contractors
- Ask neighbors or friends who recently completed similar work
- Use platforms like Remodelr, Houzz, or Angi that verify credentials
- Check your local building supply store — contractors with accounts are often established
- Ask your real estate agent for referrals
How to Vet a Contractor
Before inviting anyone to bid on your project, verify these fundamentals:
- License — verify through your state contractor board website
- Insurance — request certificates for general liability AND workers' compensation
- References — call at least two recent clients with similar project scope
- BBB or review history — look for patterns, not one-off complaints
- Physical address — be wary of contractors with only a P.O. box
Getting and Comparing Bids
Always get three bids for any project over $5,000. When comparing them, don't automatically choose the lowest — look at what's included. A low bid may exclude permit fees, cleanup, or key materials.
- Provide the same written scope to every bidder
- Ask each contractor to itemize labor vs. materials
- Confirm whether permits are included
- Clarify payment schedule before signing
- Ask about subcontractors — who are they and are they insured?
Contract Terms You Must Have
A verbal agreement is not a contract. Every project needs a written contract that includes at minimum:
- Detailed scope of work — specific materials, brands, and finishes
- Start date and substantial completion date
- Payment schedule tied to milestones, not calendar dates
- Change order process — how additional work gets approved and priced
- Warranty terms for both labor and materials
- Dispute resolution clause
- Lien waiver upon final payment
Red Flags to Watch For
- Requests for more than 15% upfront
- No written contract or reluctance to sign one
- Pressure to decide immediately or 'price only good today'
- Can't provide license or insurance documentation
- No physical business address
- Unusually low bid with vague scope
- Wants to pull permits in your name instead of theirs
Frequently Asked Questions
How much should a contractor require upfront?
A standard deposit is 10–15% of the total project cost. For small projects under $5,000, 25–30% is sometimes acceptable. Never pay more than 50% before work begins, and never pay cash — always use check or credit card for documentation.
What should I do if a contractor does poor work?
Document everything with photos, communicate concerns in writing (email, not text), and give the contractor a reasonable opportunity to correct the work. If they refuse, contact your state contractor licensing board and file a complaint. For disputes over $5,000, small claims or civil court may be warranted.
Do I need a contract for small jobs?
Yes — even for small jobs. A simple one-page contract with scope, price, timeline, and payment terms protects both parties. Many disputes happen on 'small' jobs precisely because nothing was written down.