Key takeaways
- Get at least three itemized bids for the same written scope so you are comparing like with like.
- Verify the license with your state or local licensing board and ask for certificates of insurance sent directly from the insurer.
- Tie payments to completed milestones, keep the deposit modest, and hold back the final payment until inspections and punch list items are done.
- Collect lien waivers from the contractor and major subs and suppliers as you pay to avoid paying twice.
In this guide
To hire a contractor, write down your project scope, collect at least three itemized bids, verify each contractor's license and insurance, and check references and reviews. Then sign a detailed written contract with a milestone-based payment schedule, a modest deposit, a change-order process, and lien waivers as you pay.
Whether you are remodeling a bathroom, replacing windows or re-roofing, the process is largely the same. The steps below focus on protecting your money and making it easy to hold the contractor to what was promised.
Start with a written scope
Before calling anyone, describe what you want in a page or two: the rooms involved, what will be removed, fixtures and finishes you have picked or want the contractor to supply, and any must-haves. Include measurements and photos if you can.
A clear scope does three things. It lets you compare bids fairly, it reduces surprise change orders, and it becomes the foundation of the contract. For a bathroom, our bathroom remodel cost guide can help you decide between a refresh, a partial and a full remodel.
How to get and compare contractor bids
Find candidates through referrals from neighbors, local building supply stores and reviews. Then:
- Request at least three bids based on the same scope.
- Ask for itemized pricing covering labor, materials, permits, disposal and any allowances.
- Compare allowances carefully. A low bid with a small tile or fixture allowance may end up costing more once you choose actual products.
- Ask about timeline and crew. Who will be on site, who supervises, and which trades are subcontracted?
- Be cautious of outliers. An unusually low bid may reflect missing scope, cheaper materials or a contractor who plans to make it up with change orders.
| What to compare | Why it matters |
|---|---|
| Scope and exclusions | Items left out often become costly change orders |
| Allowances for fixtures and finishes | Low allowances make a bid look cheaper than it is |
| Permits | Confirm who pulls permits and schedules inspections |
| Timeline | Start date, duration and what could delay it |
| Warranty | Length and coverage of the contractor's workmanship warranty |
| Payment schedule | Deposit size and milestones tied to completed work |
How to check a contractor's license and insurance
License
Licensing rules vary by state and sometimes by city or county, and specialty trades like plumbing and electrical often require separate licenses. Look the contractor up on your state or local licensing board's website. Confirm the license is active, the name matches the business on the bid, and the classification covers your type of work. Note any complaints or disciplinary actions.
Insurance
Ask for certificates of insurance showing:
- General liability, which can cover damage to your property caused by the contractor's work.
- Workers' compensation, where required, which covers injuries to the contractor's employees.
Ask to have the certificates sent directly from the insurance agent, check that the dates cover your project, and consider asking to be listed as a certificate holder. An uninsured worker injured on your property could create a claim against you. Review how your own policy handles contractor work in our guide to what homeowners insurance covers.
Contract terms to insist on
Get everything in writing before work begins. A good contract includes:
- Contractor's legal business name, address and license number.
- A detailed scope of work, including brands, models or allowances.
- Start date, estimated completion date, and how delays are handled.
- Total price and payment schedule tied to milestones.
- A change-order process requiring written, signed approval with pricing before extra work starts.
- Who is responsible for permits, inspections, cleanup and debris removal.
- Workmanship warranty terms and pass-through of manufacturer warranties.
- How disputes will be handled and the conditions for termination.
For many contracts signed at your home, federal and state rules may give you a short window to cancel; your contract should explain any cancellation rights that apply. Never sign a contract with blank spaces.
Setting a safe payment schedule
The goal is to keep your payments roughly in step with completed work. A common structure is a modest deposit, several progress payments tied to milestones such as demolition complete, rough-in inspection passed and tile installed, and a final payment after completion.
Some states limit how much a home improvement contractor can collect upfront. California, for example, generally caps the down payment at 10% of the contract price or $1,000, whichever is less. Check your state's rules.
Pay by check or card rather than cash so you have a record. If you are financing a larger project, compare options such as a cash-out refinance vs a HELOC instead of defaulting to contractor financing.
Lien waivers: protecting yourself from paying twice
In most states, subcontractors and suppliers who are not paid can file a mechanics lien against your property, even if you already paid the general contractor. Lien waivers help prevent that.
- Conditional waiver: takes effect once the specific payment clears.
- Unconditional waiver: takes effect upon signing, typically provided after payment is received.
- Partial (progress) waiver: covers payments made so far.
- Final waiver: covers the full contract amount at completion.
Ask for a lien waiver from the contractor with each payment, and from major subcontractors and material suppliers where possible. Lien rules and waiver forms vary by state, so check your state's requirements or ask a real estate attorney for large projects.
Before the final payment
Walk through the job with the contractor and create a written punch list. Confirm final inspections have passed, you have received warranty documents and manuals, all debris is gone, and you have final lien waivers. Only then release the final payment. These steps apply equally to roofing projects; see our roof replacement cost guide and our window replacement cost breakdown for project-specific budgeting.
The bottom line
Hiring a contractor well comes down to preparation: a clear scope, comparable itemized bids, verified license and insurance, and a detailed written contract. Keep the deposit small, tie payments to completed milestones, collect lien waivers as you pay, and hold the final payment until inspections and the punch list are done.
Frequently asked questions
How many quotes should I get from contractors?
Three is a common rule of thumb for significant projects. Fewer makes it hard to know whether a price is reasonable; many more can take a lot of time without adding much insight. Give every contractor the same written scope and material allowances so the bids are comparable, and ask each to itemize labor, materials, permits and disposal.
How much should I pay a contractor upfront?
Keep the deposit modest and tied to real costs like ordering materials. Some states cap home improvement down payments; California, for example, generally limits them to 10% of the contract price or $1,000, whichever is less. Beyond the deposit, pay in stages as defined work is completed, and avoid paying in full before the job is done and inspected.
What is a lien waiver?
A lien waiver is a signed document in which a contractor, subcontractor or supplier gives up the right to file a mechanics lien against your property for a specified amount of payment. Conditional waivers take effect once the payment clears; unconditional waivers take effect when signed. Collecting them as you pay helps ensure you are not later asked to pay unpaid subs or suppliers.
How do I check if a contractor is licensed?
Look up the contractor on your state contractor licensing board website, or with your city or county if licensing is local. Confirm the license is active, matches the business name on the bid, and covers the type of work. Also check for complaints or disciplinary actions. Requirements vary by state and trade, and plumbers and electricians often hold separate licenses.
What should be in a contractor contract?
A solid contract names both parties and the license number, describes the scope in detail, lists materials or allowances, sets start and completion dates, spells out the payment schedule, explains how change orders are priced and approved, addresses permits, cleanup and warranties, and states how disputes will be resolved. Never sign a contract with blank sections.
Official Resources & Further Reading
Use these resources to check current guidance. Requirements and availability may vary by state and provider.
This guide is for general educational purposes and is not individualized financial, legal, tax or insurance advice. Product terms, rates and availability vary by provider and location. How we make money.
