The Consumer’s Guide to Hiring a Contractor

Even the most avid of DIY enthusiasts will occasionally need to bring in a contractor.  Some projects, such as building an extension to accommodate your growing family, or getting insulation or storm windows, can be too time consuming to take on as a side project.  Finding a reliable, honest and affordable contractor will give you peace of mind, and make all the difference to the project.


Photo: Elvert Barnes

The family home is the biggest financial asset that most people own. For this reason, it’s important to ensure that home improvements are carried out carefully and safely. A handyman may be able to fix a squeaking door or trim your hedges, but for bigger jobs you should hire someone qualified. Most contractors will advertise their services in local newspapers, on the radio or on TV. Don’t make the mistake of assuming that a tradesman must be good because they have a glossy magazine ad, or their ad was shown during an expensive TV slot. The best way to tell if a tradesman is any good is to look at previous examples of their work and to talk to existing customers. Be sure to shop around and get quotes from several contractors. Get a full break-down of the quote from each person so you understand why they have given you that price. The lowest bidder may not be the best person for the job.

Choosing Specialist Services

A large home improvement project may require the services of many different professionals, for example:

  • Architects are most commonly involved in the design of new homes, but they can help with major additions and remodeling projects that involve structural changes.
  • Designers can work with you to re-design specific areas of your home, such as the bathroom or kitchen.
  • Specialty contractors can be hired to install kitchen and bathroom fixtures and fittings, cabinets, and perform other interior design jobs.
  • A general contractor will manage your project for you, handling permits and inspections, as well as hiring and supervising subcontractors.
  • Design and Build Contractors are your one-stop shop for project management and building work.


Photo: The Consortium

Hiring a Contractor for Your Home Improvement Work

Once you have decided what kind of contractor you need, you can start the hiring process. Questions to ask contractors include:

  • How long have you been doing this sort of work? It is a good idea to look for an established company.  Check the company’s claims with your local consumer protection group, and see how many complaints have been made against them. One or two complaints are not necessarily a red flag, but several complaints can be an indication of a trend of poor work or customer service. If there are no complaints on record, that could mean that the company is trading under several names, or has not been in business long.
  • What licenses and registrations do you have in this state? Plumbers and electrical contractors should have licenses in most states, but currently only 36 states have some form of licensing and registration statutes for remodelers and specialty contractors. In some states, the licensing requirements are just a simple matter of registering the business, but in others, there is a more detailed qualification process in place. Some states allow individual localities to manage registrations. You should contact your local building department to find out what the licensing requirements for contractors are in your area. If a contractor claims to be licensed, be sure to inspect the license and make sure that it is current.
  • How many projects similar to the one I am proposing have you completed recently? Ask the contractor for a list of references, and follow up on them. Ideally, you want a contractor that has a lot of experience with the sort of work you want done.
  • Will the work require a permit? In many states, even relatively small building projects require permits. A good contractor will make sure all permits are in place before they start work. Be wary if the contractor asks you to arrange the permits for him. A licensed and registered contractor will usually handle paperwork for you.
  • May I speak to previous clients? Ask for a list of several references, and follow up on them. Try to see the work that was done, and speak to those previous clients to find out how they felt the project was handled. If possible, try to visit a job that is currently in progress as well.
  • What sort of insurance do you have? At a minimum, contractors should have personal liability, property damage, and worker’s compensation coverage.  If they are not insured, you could be liable for any damage that has occurred during the project.
  • Will any subcontractors be involved in this project? If the contractor will be using subcontractors, consider each of those as if you were contracting directly, and make sure they have insurance and licenses. In addition, speak to those subcontractors to make sure that your contractor pays them on time. If your contractor fails to pay his suppliers or subcontractors, you could face a “mechanic’s lien” being placed on your home. The court could force you to sell your home to satisfy any outstanding bills.

Follow Up on References

Be sure to contact at least three of the contractor’s previous customers.  Questions to ask those customers include:

  • May I visit your home and see the work the contractor carried out?
  • Was the project completed on time and to specifications?
  • Were you happy with the way the contractor communicated with you?
  • Did you face any unexpected bills, and if so, what were they for?
  • Did the contractors show up on time every day, and did they leave your home in a clean and tidy state when they left?
  • Do you recommend this contractor?
  • Would you use this contractor for more work in the future?

Avoiding Scams

Disreputable contractors do exist.  Fortunately, if you are aware of the most common red-flags you can avoid getting ripped off.  Here are a few serious warning signs to watch out for:

  • Door to door solicitation;
  • Pushes you to recruit other customers with promises of big discounts;
  • Claims that they “just happen” to have materials left over from another job;
  • States that your job will be a “demonstration job”;
  • Uses high pressure sales tactics;
  • Asks for the whole payment for the job up front;
  • Demands payment in cash;
  • Asks you to arrange the building permits;
  • Is not listed in the phone book;
  • Offers unusually long guarantee periods;
  • Tells you to get a loan from a lender they know, especially if that lender is a company you have never heard of.  Home improvement loan scams could result in your home being repossessed.
  • Refuses to sign a lien release or a lien waver that would protect you if the contractor failed to pay his suppliers or subcontractors.

Paying Your Contractors

Home improvement work can be expensive, and it is common for large projects to be carried out under a finance arrangement. It is not a good idea to pay cash for any major project.  If the project is inexpensive, consider paying by credit card or check.  For high value projects, take out a loan with a lender that is known to you. Usually, the quote you are given for a large project is only an estimate, and the final bill may be higher.  Some states have laws which limit the difference between the final bill and the estimate (although if you approve an increase, you will be expected to pay it).

Make the down payment as small as possible.  Some states have laws that cap the amount of money a contractor can ask for as your down payment.  If a contractor wants a lot of money up front, be wary.  It is perfectly acceptable for a contractor to ask for installments throughout the project.  Try to agree the payment milestones in advance, so that you can monitor the progress of the project.  If the work falls behind schedule, you can delay payments.

Get a lien waiver before you hire the contractor, and read all paperwork that the contractor gives you carefully before you sign it.  Do not make the final payment for the work unless you are completely satisfied, and you know that the contractor has paid all his subcontractors and suppliers.  If you are not sure how lien laws work in your area, seek legal advice.

If you are not happy with the work that the contractor has done, you should follow proper complaint channels and try to work out the issue with the contractor.  If negotiations fail, or communication breaks down, you may be able to withhold payment, or seek a refund if you have paid by credit card.

When The Job is Completed

As your job nears completion, it’s easy to get complacent. All you can think about is getting the builders out of your house, making the final payment, and getting back to a normal lifestyle.  Don’t be in too much of a rush.  Before you make that last payment and sign off on the job:

  • Make sure that all the work listed in the contract has indeed been carried out.
  • Get written warranties for the workmanship and the materials.
  • Get written proof that all subcontractors and suppliers have been paid.
  • Ensure that all materials and tools have been removed from the site, and that the area is clean, tidy and safe.
  • Have an independent person inspect the workmanship.

Avoid Home Improvement Loan Scammers

The Home Improvement Loan Scam is becoming increasingly commonplace.  In this scam, a door-to-door salesman visits you and suggests a major home improvement, such as a fitted kitchen, or a new roof.  The price that the contractor suggests sounds incredibly attractive.  When you say that you can’t afford the payments right now, the salesman persuades you to take out a loan through a lender that he knows.  Tempted by the “amazing deal” you are getting, you agree, and the work starts.

Where people get caught out is that they are given lots of papers to sign, and hidden away in the small print is the notice that the loan you have taken out is a home equity loan with a high interest rate and lots of fees.  Once you’ve taken out this equity loan, and the lender has you trapped, the contractor will lose interest in the work you have hired them for, so you’ll end up with a dodgy kitchen and an expensive debt that, if unpaid, could lead to your home being repossessed.

To protect yourself from this scam, make sure that you always:

  • Read documents carefully before you sign them.
  • Seek legal advice before signing any documents that you don’t understand.
  • Refuse to buy from door-to-door salespeople – if you are interested in what they are selling, ask them to leave literature so that you can consider the product at your leisure and call them back when you have made a decision.

Do Not:

  • Accept an offer of financing from a contractor without first comparing prices independently and researching the lender they recommend.
  • Deed your property to anyone without seeking legal advice first.

Get Everything in Writing

A contract is a legally binding document that lays out all the details of the project.  Not all states require written agreements to be given, but you should always ask for one.  The agreement should be clear and concise, and should cover the following:

  • The contractor’s name, registered address, telephone number, and any license details if relevant.
  • The payment schedule for the work (including payments the contractor will issue to subcontractors and suppliers).
  • The start date and estimated completion date for the work.
  • Details of any necessary permits, and confirmation that the contractor will obtain them for you.
  • Confirmation of how change orders will be dealt with. Change orders are a common part of remodeling jobs, and it is important to agree in advance how they will be handled as they could involve major changes to the project’s cost or schedule.
  • A detailed breakdown of all required materials including their color, cost, size, and the make and model if appropriate (e.g. for fitted kitchens or bathrooms).
  • Full details of any warranties and the parties that will honor them.  Limitations on the warranties should also be described in detail.
  • A “broom clause” that will ensure the contractor will be responsible for cleanup work.
  • Details of anything that the contractor will not be responsible for.
  • A written confirmation of your right to cancel the contract.  If you signed the contract in your own home, or at any other location that is not the seller’s permanent place of business you are entitled to cancel within three business days.
  • If any promises have been made orally, get those promises written into the contract.

Record Keeping and Paperwork

While most home improvement projects go smoothly, things do sometimes go wrong, and one common regret people have is that they did not keep detailed records while work was being carried out.  Be sure to keep copies of the contract and all correspondence in a safe place.  You should also keep records of change orders.  Make a note of the date and time of any phone calls or face-to-face conversations you have with the contractor, and keep a log of what was said.  For major work, take photographs of the site as work progresses.  These records may come in useful if there is a dispute.

Making a Complaint

If you are unhappy with the work being carried out, the first thing you should do is raise the issue with the contractor.  With luck, they will be able to resolve the issue immediately. As mentioned above, keep a record of any conversations you have about the issue, and follow up any phone conversations with a letter.  Send written correspondence by certified mail, and request a return receipt so that you can prove that the company did receive the letter.

If the contractor cannot or will not resolve your complaint to your satisfaction, then you should seek advice from a third party.  Many cities have local dispute resolution groups, and there are also state and local consumer protection offices. If you need to escalate the complaint even further, your local builders’ association may be able to help you. Finally, the threat of a complaint being lodged with the Better Business Bureau, or of you taking your issue to the local media, could be enough to spur the builder into action.

Where to Seek Advice

The following organizations offer advice for consumers dealing with remodelers and contractors:

  • The National Association of Home Builders Remodelors Council (
  • Federal Trade Commission (

The NAHB Remodelors Council has published a free book titled How to Find a Professional Remodeler.  To request a free copy, send a stamped self-addressed envelope to the following address:

NAHB Remodelors Council
Dept. FT
1201 15th Street, NW
Washington, DC 20005

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