Start With Credentials, Not Quotes

The instinct to collect bids first is understandable, but vetting credentials before discussing price protects you from a costly mistake. In most US states, contractors performing work above a certain dollar threshold must hold a valid state or local license. The license number should appear on every estimate, business card, and contract — and you can verify it through your state's contractor licensing board website.

Beyond licensing, confirm two types of insurance: general liability (covers property damage the contractor causes) and workers' compensation (covers injuries to workers on your property). Ask for certificates of insurance directly from the contractor's insurer — not just a photocopy — and make sure coverage is current. If a worker is injured on an uninsured job site, you could be held liable.

Verify Insurance Before the First Shovel

Don't accept a photocopy of an insurance certificate. Call the insurer listed on the document and confirm the policy is active and covers the type of work being done. This single step can save you from significant liability if an accident occurs on your property.

For a broader look at the permits and inspections that often accompany contractor work, see our guide to permits and inspections.

How to Compare Bids Fairly

Collecting three bids is a widely recommended starting point — it gives you a realistic price range without being overwhelming. When bids arrive, resist the urge to focus only on the total. Instead, compare scope of work: what materials are specified, what tasks are included, and what is explicitly excluded. A bid that looks low may exclude demolition, cleanup, or finishing work that competitors have priced in.

3 bids

Recommended minimum quotes before hiring

Consumer protection agencies and home improvement educators consistently recommend collecting at least three competitive bids for any significant project.

10–15%

Maximum advisable upfront deposit

Many state contractor licensing boards advise homeowners to limit initial deposits to no more than 10–15% of the total project cost to reduce financial risk.

Ask each contractor to itemize labor and materials separately. This makes it far easier to understand what you are actually buying — and to spot if one estimate is using lower-grade materials to undercut the field.

Be cautious of any bid that arrives without a site visit. A contractor who quotes without seeing the project firsthand is either guessing or will use change orders later to recoup costs.

Checking References the Right Way

Most contractors will offer a reference list, but how you use it matters. Ask specifically for references from projects completed in the past 12–18 months that are similar in scope to yours. A kitchen remodel reference is not very useful if you are hiring someone for a roof replacement.

When you call, go beyond "were you happy?" Ask: Did work start and finish on schedule? Were there unexpected costs, and how were they handled? Did the crew clean up daily? Would you hire this contractor again?

If possible, ask to see the finished work in person. Photos can be misleading; seeing a completed bathroom or addition firsthand tells you far more about craftsmanship and attention to detail.

About Online Reviews and Ratings

Online review platforms can be a useful starting point, but they shouldn't replace direct reference checks. Reviews can be selectively curated, and rating systems vary widely in how they screen for authenticity. Use online reviews to flag obvious red flags, then follow up with personal references for a fuller picture.

What Every Contract Must Include

A verbal agreement is not a contract. Before any work begins — and before you pay a deposit — you need a written contract signed by both parties. At minimum, it should include:

  • Full scope of work: specific tasks, materials (including brand, grade, or model where relevant), and anything explicitly excluded
  • Payment schedule: tied to project milestones, not arbitrary dates — never pay more than 10–15% upfront
  • Start and estimated completion dates
  • Change order process: any additions or changes to scope must be approved in writing before work proceeds
  • Permit responsibility: state clearly who will pull and pay for required permits
  • Lien waiver clause: protects you if the contractor fails to pay subcontractors or suppliers
  • Warranty terms: covering both labor and materials

Our first-year homeowner maintenance guide outlines related tasks that can help you stay ahead of repair needs before they become major projects.

1

Verify license and insurance directly with the issuing authority or insurer.

Forged or expired documents are more common than homeowners expect. Independent verification takes minutes and eliminates one of the biggest sources of contractor fraud.

Example: Search your state's contractor licensing board by the contractor's name or license number — many states provide this lookup online at no cost.
2

Require a detailed written scope of work before signing any contract.

Vague language like 'remodel bathroom' gives a contractor wide latitude to cut corners or charge extra for tasks you assumed were included. Specificity protects both parties.

Example: A good scope entry reads: 'Install 12x24 ceramic floor tile, including backer board, thin-set, and grout; exclude tile purchase by homeowner.' This leaves no room for ambiguity.
3

Tie payment milestones to completed work, not to the calendar.

Paying large sums upfront gives a contractor little financial incentive to return after initial work. Milestone payments keep both parties accountable throughout the project.

Example: A typical structure: 10% at signing, 25% once demolition is complete, 50% at rough-in inspection, and 15% at final walkthrough and punch-list completion.
4

Never skip the permit step, even if the contractor suggests it.

Unpermitted work can create problems when you sell, may void your homeowner's insurance, and can require expensive tear-out if discovered during a future inspection.

Example: If a contractor says 'we don't need a permit for that' for a structural wall removal or electrical panel upgrade, treat it as a red flag and verify with your local building department directly.
5

Document the project with dated photographs throughout.

Photos create a timestamped record of work completed, materials used, and any issues that arise — invaluable if a dispute or warranty claim occurs later.

Example: Take photos before work begins, after demolition, after rough-in work (before walls are closed), and at each payment milestone.

Quick Actions Before Work Starts

Once you have selected a contractor and signed a contract, a few final steps reduce your risk significantly before the first nail is driven.

high Look up your contractor's license number on your state licensing board's website before your first payment.
high Call at least two references from similar, recently completed projects and ask specifically about schedule and budget adherence.
high Request certificates of insurance directly from the contractor's insurer — confirm the policy is active before signing.
medium Review your contract for a change order clause; if it's missing, ask the contractor to add one before you sign.
medium Check with your local building department to confirm which permits are required for your project — do this independently, not just based on the contractor's word.

“The most expensive words in the English language are 'it'll be fine' — especially in construction. A contract that spells out exactly what 'done' looks like is what separates a smooth project from a dispute.”

— National Association of Home Builders, Industry association representing US home builders and remodelers