How to hire a contractor: a step-by-step guide

Hiring a contractor can feel like a gamble, but it doesn't have to be. Most problems people run into, like unfinished work, surprise charges or a contractor who disappears with the deposit, can be prevented by following a few steps in order and getting everything in writing.

The steps below follow the Federal Trade Commission's consumer advice on hiring a contractor and avoiding home improvement scams, plus guidance from state consumer agencies. They work the same for a one-day repair and a months-long remodel; bigger jobs just deserve more care at each step.

Step 1: Define the job

Before you call anyone, write down what you want done. Be as specific as you can: the room, the problem, the result you want, and any materials or brands you've already picked. Take photos and measurements.

This list does two things. It helps you figure out which kind of pro you need (see our guides to handymen, plumbers, electricians, HVAC technicians, appliance repair and roofers), and it makes sure every contractor bids on the same job. Not sure whether you need a pro at all? Try the fix-or-call quiz.

If you rent, stop here and talk to your landlord. Most repairs to the building are their responsibility, and many leases limit changes.

Step 2: Find candidates

The FTC suggests starting with recommendations from people you know and trust. Neighbors who've had similar work done are a great source, because you can see the results. You can also ask a local supply house or lumber yard who they'd hire, or send a free match request to hear from local pros.

Be wary of contractors who find you, especially someone knocking on your door because they're "in the area." That's the first warning sign on the FTC's list.

Step 3: Check license, insurance and reviews

License. Look up the contractor with your state or local licensing board. Confirm the license is active, matches the business name and covers the work. Our guide to checking a contractor license walks you through it.
Insurance. Ask for a certificate of insurance showing general liability and workers' compensation coverage, and call the insurer to confirm it's current.
Complaints and reviews. Search the company name with words like "complaint," "review" and "scam," as the FTC suggests. Check with your state or local consumer protection office and the Better Business Bureau.
References. Ask for two or three recent customers with similar jobs, and call them.

Step 4: Get written estimates

Get several written estimates. Each should list the work, the materials, the completion date and the price. Don't automatically choose the lowest bid, the FTC warns. If prices are far apart, ask each contractor to explain why. Often one left something out. Our guide to comparing quotes includes a side-by-side checklist.

Step 5: Sign a clear written contract

Ask for a written contract even if your state doesn't require one. Before you sign, the FTC says to make sure it includes:

The contractor's name, address, phone number and license number
Estimated start and completion dates
Any promises made in conversation about the work and the cost of labor and materials
A written notice of your right to cancel, if you signed somewhere other than the contractor's place of business

Make sure every blank space is filled in or crossed out. It's also smart to include the payment schedule, the warranty, who handles cleanup and how changes will be priced. Never sign a document you haven't read or don't understand.

About canceling: under the FTC's Cooling-Off Rule, many contracts signed at your home can be canceled until midnight of the third business day. The rule has exceptions, including emergency repairs and repair work you invited the seller to do.

Step 6: Agree on a payment schedule

Don't pay everything up front. Some states limit how much a contractor can ask for as a down payment, so check with your state or local consumer agency.
Tie payments to progress. For example, a payment after a stage of work is finished and you've seen it.
Pay by check or card, not cash, so you have a record.
Hold the final payment until the work is done and you're satisfied.
Be careful with contractor financing. The FTC warns against agreeing to a loan arranged by your contractor without shopping around.

Step 7: Permits and inspections

Many jobs, like electrical work, water heater replacement, roofing and decks, need a permit from your city or county. Rules vary by place. The contractor should pull the permit. The FTC lists a contractor asking you to get the permits as a sign of a scam, since it can mean they aren't licensed. The Arizona Attorney General also advises confirming that required permits are issued before work begins.

Step 8: Final walkthrough

Walk through the finished job with the contractor and test everything.
Make a written punch list of anything left to fix, and agree on a date.
Confirm any required inspections passed.
Before the final payment, the Arizona Attorney General recommends getting proof that subcontractors and suppliers have been paid, to avoid a lien on your home.
Collect warranties, manuals and receipts, and keep a file with the contract, change orders and payment records.

If something goes wrong

Try to work it out with the contractor first, and keep notes of every conversation. If that doesn't work, send a letter by certified mail with a return receipt. The FTC then suggests contacting your state attorney general or local consumer protection office. See contractor red flags for warning signs and where to complain.

Common questions

How many estimates should I get?

For most bigger jobs, get at least three written estimates. The FTC advises getting multiple estimates and not automatically choosing the lowest bid; if prices differ a lot, ask each contractor why.

How much should I pay up front?

Never the full amount. Some states limit how much a contractor can ask as a down payment, so check with your state or local consumer agency. Tie the remaining payments to finished stages of work and hold the final payment until you're satisfied.

Who should get the building permit?

The contractor, in most cases. The FTC lists a contractor asking you to get the permits as a warning sign of a home improvement scam.

Do I need a written contract for a small job?

Yes, even if your state doesn't require one. A short written agreement that lists the work, the price, the dates and the payment terms prevents most disputes.