How to Vet a Contractor

In states that require contractor licensing, verify the license number directly on the state licensing board website — do not rely on the contractor's word or business card. Check that the license is active, matches the type of work being done, and is in the contractor's legal business name.

Ask for a certificate of insurance (COI) showing: (1) General liability insurance ($1M minimum) and (2) Workers' compensation coverage. Call the insurance company directly to confirm the policy is active. If a worker is injured on your property and the contractor lacks workers' comp, you may be liable.

Always get at least 3 bids for any significant project. The lowest bid isn't always the best — look for itemized estimates that break down labor, materials, and timeline. Dramatically low bids often indicate corner-cutting, low-quality materials, or that the contractor plans to add change orders later.

Ask for at least 3 references from recent, similar projects in your area. Actually call them. Also check: Google Reviews, Yelp, the BBB, and your state contractor licensing board for complaint history. One or two negative reviews are normal — a pattern of similar complaints is a red flag.

Never start work without a signed written contract that includes: detailed scope of work, materials specified (brand, grade, quantity), total cost and payment schedule (no more than 30% down), start and completion dates, how change orders will be handled, lien waiver provisions, and warranty terms.

Never pay more than 30% upfront. For large projects, a typical structure is: 10% at signing, 25% at project start, 25% at midpoint, 30% at substantial completion, 10% at final walkthrough and punch list completion. Never pay in full until you are satisfied with the completed work.

Any significant structural, electrical, plumbing, or HVAC work requires permits. If a contractor suggests skipping permits to save money or time, walk away. Unpermitted work creates massive problems when you sell the home, can void your insurance, and may require expensive remediation.

After final payment, get a signed lien waiver from the contractor and any subcontractors or material suppliers. Without this, a subcontractor who wasn't paid by the GC could file a mechanic's lien against your property — even if you paid the GC in full.