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Home / Guides / Hiring a contractor

How to hire a contractor: a homeowner's guide

A new roof, a kitchen remodel, a deck, a furnace replacement. The work is a big spend and the wrong hire is expensive to undo, so the homeowner's job is to slow down and check a few things before any money or signature changes hands. This guide walks through how to do that, step by step.

Every fact here traces to a consumer-protection authority: the Federal Trade Commission, the Better Business Bureau, and state attorney-general and consumer-affairs offices. They are listed in full at the bottom. Where a rule changes from state to state, such as how big a deposit is allowed, this guide says so and points you to your own state instead of quoting one number as if it were the law everywhere. We built this as the first in a small set of homeowner guides, and our own connect offer at the end is kept honest about what it is.

Where to find good contractors

The strongest first move costs nothing. The FTC's first piece of advice for avoiding a home-improvement scam is to get recommendations from people you know and trust. A neighbor who just had a similar job done can tell you who showed up on time and who did not, which is worth more than any ad.

From there, widen the list with a few checks. The Better Business Bureau runs a free business directory that filters to your local area and shows reviews and complaints it verifies for accuracy, with each business given a chance to respond. The FTC suggests one more search that takes a minute: type the company's name together with words like "scam," "review," or "complaint," and read what comes back. It also helps to check with your local Home Builders Association and your state or local consumer-protection office to see whether anyone has filed complaints against a contractor you are considering.

The Texas Attorney General adds a quiet filter worth applying early. Favor a contractor with an established physical address, not just a phone number and a magnet on a truck, so you can actually find the company later if a problem shows up after the work is done. As you narrow the field, look at past projects. The BBB suggests viewing photos of completed work on a company's profile, website, or social media, asking for recent project photos that resemble what you want, and, when you can, looking at finished work in person.

Check license, insurance, and reviews

This is the step that separates a real contractor from a problem, and it takes about ten minutes. The FTC's guidance is direct: consider only contractors who are licensed and insured, confirm the license with your state or county government, and ask the contractor for proof of insurance.

The license

Licensing is set at the state level, and in some places at the county level, so there is no single national license to look up. You check it where the contractor works. In California, for instance, anyone doing home-improvement work valued at $500 or more must be licensed by the Contractors State License Board, and a homeowner can verify that license online or by calling the board. New York handles it locally rather than statewide, requiring home-improvement contractors to be licensed in New York City and in a handful of counties. The practical version: search your state's name plus "contractor license lookup," find the right agency, and confirm the license is current and matches the company name on the bid.

The insurance

A license is not the same as coverage, so confirm both. The New York Attorney General puts the stakes plainly: if a worker is injured or your property is damaged and the contractor is not properly insured, you could be the one held liable. The BBB's advice is to call the insurance carrier directly and confirm the policy actually covers worker's compensation, property damage, and personal liability, rather than taking a certificate at face value.

The reviews

Read reviews with a critical eye, the FTC says, on rating sites you trust. Verified sources carry more weight than an unmoderated star count, which is part of why the BBB directory checks reviews and complaints before publishing them. Reviews are a starting point, though, not the finish line. Both the FTC and the BBB recommend asking the contractor for a list of recent local references and actually calling them. Good questions to ask a reference: How was the overall experience and the communication? How was the quality of the work? Did the contractor stay on budget and on schedule? Is there anything they would have done differently?

Get at least three written estimates

One bid tells you almost nothing, because you have no idea whether it is high, low, or fair. The Better Business Bureau recommends gathering at least three quotes from separate businesses, and the FTC recommends getting multiple estimates. Put each one in writing.

A written estimate, per the FTC, should describe the work to be done, the materials, the completion date, and the price. That detail is what lets you compare bids on the same footing instead of guessing why one number is bigger. When you request the bids, hold every contractor to the same scope so the comparison is fair.

Now the part that trips up most people: do not automatically choose the lowest bidder. The FTC says to ask for an explanation when one estimate comes in far below the others. The Texas Attorney General is blunter about why, warning homeowners to beware the "low-ball" bidder whose price sits well under everyone else's. A very low number can mean cheaper or second-rate materials, inexperienced labor, or tasks the bid simply left out, and the Texas office notes that most legitimate bids land in a fairly close range. The BBB makes a related point from the other direction: a higher bid sometimes buys a faster timeline, locally sourced materials, or a crew with a skill the job actually needs. Read the reasons behind the numbers before you decide.

Questions to ask before you sign

By the time you are close to choosing, a short list of plain questions will surface most problems while you can still walk away at no cost.

  • Are you licensed for this work, and can I verify it? A straightforward contractor will give you the license number and expect you to check it with the state or county.
  • Can I see proof of insurance, and may I call your carrier? The FTC says to ask for proof of insurance; the BBB says to confirm it with the carrier.
  • Who pulls the permits? The New York Attorney General advises checking with your local building and codes office before work starts, and notes that a qualified contractor should know which permits and inspections a job needs. A contractor who tells you to go pull your own permits is showing a warning sign the FTC names directly.
  • What does the written contract include, and what is the payment schedule? You want this on paper before any deposit, not described over the phone.
  • Can you give me recent local references I can call? Then call them.

One more rule from the Texas Attorney General covers all of these at once: a legitimate salesperson will leave the contract and the bid with you so you can read everything on your own time. Anyone who will not is telling you something.

Red flags to walk away from

Consumer-protection offices see the same patterns over and over, and they have written them down. None of these guarantee a scam by itself, but more than one together is a strong reason to stop.

Payment red flags

The FTC says do not pay the full amount up front, and lists "pay for everything up front or only accept cash" among the tactics scammers use. The reason is plain in the Texas Attorney General's account: door-to-door operators notoriously ask for payment in full in advance, then disappear without finishing, sometimes without ever starting. A reasonable contractor takes a deposit, ties the rest to a schedule of work completed, and waits for the final payment until you have inspected the finished job and are satisfied.

How big a deposit is reasonable depends on your state, and several states cap it by law. The FTC notes that some states limit the down payment a contractor can ask for. California caps it at 10 percent of the project price or $1,000, whichever is less. Massachusetts caps it at one-third of the total contract price, or the cost of special-order materials. Check your own state's rule with your state or local consumer agency, and treat a demand for far more than the legal cap as a reason to pause.

No contract, or a contract you are rushed to sign

A contractor who resists putting the job in writing is a problem. So is one who hands you a contract with blank spaces and a pen. The Texas Attorney General tells homeowners never to sign a contract with blanks in it, because the blanks get filled in later on terms unlikely to favor you, and never to let anyone rush the signing. Massachusetts goes so far as to require, in bold type directly above the signature line, the warning "DO NOT SIGN THIS CONTRACT IF THERE ARE ANY BLANK SPACES."

High pressure and the "decide now" push

Pressure to commit on the spot is itself a warning sign. The California Attorney General describes the push for an immediate decision as a tactic that conveniently prevents you from getting competing bids, checking the license, or reviewing references. The same office flags the "free inspection" that suddenly discovers alarming wiring, plumbing, or roof defects, which is built to panic a homeowner into agreeing to unnecessary, overpriced work. Real problems still allow time for a second opinion.

Door-to-door and storm chasing

Be cautious when a salesperson shows up at your door uninvited. The Texas Attorney General is careful to say that not every door-to-door contractor is a scammer, but notes that many scammers do work door to door, and that home-improvement scams spike after disasters like hurricanes, tornadoes, and severe storms, when legitimate repair crews and con artists both go neighborhood to neighborhood. The FTC adds two specific lines to listen for: "we have materials left over from a previous job," and "we are already in the area." Both are common scripts.

If you do sign something at your door, you may have a way out. Under the FTC's Cooling-Off Rule, a sale of $25 or more made at your home can be canceled for a full refund until midnight of the third business day after you sign. Saturdays count toward those three days; Sundays and federal holidays do not. Several states, including New York and Massachusetts, also require a three-business-day cancellation notice in contracts signed in your home. To cancel, follow the written instructions in the notice.

What a good contract includes

Get the agreement in writing. The FTC advises asking for a written contract even if your state does not require one, and some states do require one above a dollar threshold that varies by state. New York requires a written contract for home-improvement work and regulates most jobs costing more than $500. Massachusetts requires every contract over $1,000 to be in writing. The threshold differs, but the direction is the same everywhere: get it on paper.

The FTC says a contract should include the contractor's name, address, phone number, and license number, an estimated start and completion date, any promises made in conversation about scope and the cost of labor and materials, and a written statement of any right to cancel. The Better Business Bureau's contract checklist fills in the rest of what a complete agreement covers:

  • Business contact information and the contractor's license or registration number.
  • A target project timeline with start and completion dates.
  • A detailed scope of work and the materials to be used, including brand and grade where it matters.
  • Costs, warranties, and a payment schedule with each payment tied to a stage of the work.
  • Licensing, insurance, and which permits are needed, and who is responsible for pulling them.
  • A termination clause and a dispute-resolution clause, so both sides know what happens if things go wrong.

Two more protections are worth knowing because they can reach your home itself. First, a lien. If your contractor fails to pay a subcontractor or supplier, your property can be subject to a lien for the unpaid amount even though you never hired that subcontractor directly. The Texas Attorney General explains that under Texas law an unpaid supplier or subcontractor may place a lien on the property, and the New York Attorney General notes the same risk under New York's Lien Law. Second, where your money sits. Some states require your payments to be protected until the job is substantially complete: New York requires a contractor to hold pre-completion payments in a state trust or escrow account, or to post a bond, and to tell you where the money is; Texas requires a construction account at a financial institution for a homestead improvement over $5,000. Ask which protection applies before you hand over a deposit.

One last note from the FTC on financing. If a contractor offers to arrange a loan through "a lender he knows," shop around before agreeing, and never sign loan papers that are blank or that you have not read. The FTC describes a home-improvement loan scam that ends with a homeowner unknowingly signed into a high-rate loan against the house, and it advises never transferring your deed to anyone without first talking to an attorney.

The short version

Find candidates through people you trust and verified directories. Confirm the license with your state or county and confirm the insurance with the carrier. Get at least three written estimates on the same scope, and do not default to the cheapest. Read the whole contract, refuse to sign anything with blank spaces, and never feel rushed. Keep your deposit small and within your state's legal cap, tie the rest to work completed, and hold the final payment until you have inspected the finished job. If a project goes wrong, the FTC says to try to resolve it with the contractor first, in writing, then take it to your state attorney general or local consumer-protection office.

Questions homeowners ask

How do I know if a contractor is licensed?

Contractor licensing is set by your state, and sometimes by your county, so there is no single national license to look up. Confirm the license with your state or county licensing agency. California, for example, requires a license from the Contractors State License Board for any home-improvement work valued at $500 or more, and you can verify it online or by phone. New York licenses home-improvement contractors locally, such as in New York City and a few counties, rather than statewide. Search your state's name plus "contractor license lookup," confirm the license is current, and ask for proof of insurance on top of the license.

How many quotes should I get?

The Better Business Bureau recommends at least three written quotes from separate businesses, and the FTC recommends multiple written estimates. Each estimate should describe the work, the materials, the completion date, and the price, so you can compare bids on the same scope. Do not automatically pick the lowest. The FTC and the Texas Attorney General both warn that a price far below the rest can mean cut corners, cheaper materials, or work the bid left out, and they suggest asking for an explanation when one estimate is much lower.

How much should I pay upfront?

The FTC says not to pay the full amount up front, and notes that some states cap the down payment a contractor can ask for. The cap depends on your state. California limits it to 10 percent of the project price or $1,000, whichever is less. Massachusetts limits it to one-third of the total contract price, or the cost of special-order materials. Check your own state's rule, tie the remaining payments to work completed, and never make the final payment until the job is finished and you have inspected it.

What are red flags when hiring a contractor?

The FTC lists several: knocking on your door because they are "in the area," claiming to have materials left over from another job, pressuring you to decide now, asking you to pay everything up front or only in cash, telling you to pull the required permits, and steering you to a lender they know. The California Attorney General adds the "free inspection" that invents problems to scare you. The Texas Attorney General warns that door-to-door scams spike after storms. Refusing to put the job in writing, or rushing you to sign a contract with blank spaces, are warning signs too.

How do I check a contractor's reviews?

Start with sources that verify what they publish. The Better Business Bureau directory is free, filters to your local area, and shows reviews and complaints it checks for accuracy, with the business given a chance to respond. The FTC also suggests reading reviews critically on rating sites you trust, and searching the company's name with words like "scam," "review," or "complaint." Beyond reviews, both the FTC and the BBB recommend asking for a list of recent local references and calling them to ask about the work, the communication, and whether the job stayed on budget and on schedule.

Want help finding a vetted local pro?

We are building a service that connects homeowners with a local contractor we have checked out, using the same standards above. It is early, so we cannot promise a match in every area yet. If you tell us your project and your zip code, we will reach out when we have a pro near you who fits, and we will say so plainly if we do not have one yet.

Tell us about your project

Curious what good looks like from the contractor's side? Our guide on how the best pros qualify and respond to homeowners shows the habits worth looking for.

Sources

Every fact above traces to one of these consumer-protection authorities.

This guide is general information, not legal advice. Rules differ by state and change over time, so confirm the specifics with your own state or local consumer-protection office before you sign.