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Never Hire a Contractor without Following These 5 Steps First

Last updated by on February 14, 2015

How to Find a Good Contractor & Save Money

If you’re like me, your home is your baby. You wouldn’t hire the first babysitter that you found in an ad without first asking some questions and doing a little research, would you? So why do the same with your home?

When you hire out a contractor to do work on your home, you want things done right and at a reasonable price. Over the years, I’ve seen a number of people get screwed by hiring a ‘jack of all trades handyman’ who said they could just about everything. In reality, they could do a lot…. of destruction, that is (oh snap)!

No, really folks – to protect yourself from getting ripped off by a contractor, make sure you take these steps:

1. Verify the Contractor’s Insurance

A contractor’s workers compensation insurance protects you if a worker is injured on your property. Liability Insurance protects you if any of your property is damaged. Call the insurance company to ensure that the contractor’s insurance it is up to date. You can also request to have your name on the insurance certificate. By having your name on the certificate, you will be notified if the contractor cancels the policy during your project.

2. Verify the Contractor’s License

how to find a contractorEvery state should have a licensing database. If a license is applicable for your project, the state may help protect you in case of faulty workmanship. If a permit is needed, ensure that the contractor gets it. To verify licenses in your state, try Googling “(your licensing and registration”. If you hire a contractor without insurance or a license, you’re playing with fire.

3. Get at Least 3 Quotes from Contractor’s

Whatever you do, don’t just rely on first Google result or the first ad in the Yellow Pages. I always get estimates from at least three contractors for every job that I’ve done. You’ll be amazed at the price differences between them. Don’t always go with the cheapest quote, just because it’s the cheapest. Reputation should carry a lot of weight, especially if it is a difficult project.

In order to help you compare, I usually ask the contractor to break the total price down by line item. It helps you make sure that the contractor knows exactly what you’re looking for and it helps you compare them against each other. If one contractor is vastly overpriced on a particular part versus the others, it can help you keep them honest and weed out the ones trying to rip you off.

4. Get Estimates & Warranties in Writing

Get all warranties and estimates in writing. Again, it’s very important for both you and the contractor to avoid any confusion over exactly what you want done. Also, you want to make sure that there are no hidden charges or fees. EVERYTHING that the contractor is charging you for should be in writing. You also want to know what is included in the warranty, how long the warranty is good for, and what form of payment the contractor will accept.

5. Check their References

Before you even start your search, it’s good to ask for referrals. However, the key here is to not feel obligated to use someone that your peer recommends just because they recommended them (this particularly holds true with their friends and family).

Ask the contractor for referrals from past clients and peruse ratings in Google Maps or elsewhere. One site in particular that has a lot of credibility checking worked in is Angie’s List.

You should also talk with previous customers and ask them if they would use this contractor again, did they honor their warranty, did they get the job done on time, and would they highly recommend them. Also ask if there was anything they didn’t like about the contractor.

If you just follow these five simple steps, you’ll be a lot better off than most people hiring a contractor. And you’ll save money on the cost of the job now and in the future.

Contractor Discussion:

  • What rules do you follow when hiring a contractor?
  • Do you have any contractor horror stories that you have learned from?
  • Where have you been able to find the best contractors?

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Jeff says:

    I really like your point about getting three quotes and having the contractor break it down by line item. It keeps them honest, especially b/c it tells them they aren’t the only ones vying for your money. Great list!

  • Financial Solutions says:

    I always take prime action at point 5. Before I search a contractor, I ask for referrals, usually by my friend or family.

  • Paul says:

    You should always check out more than one contractor and compare their prices, just like when buying something: You want the best deal. I’ve been through hell with my contractor and am probably getting a new one pretty soon.

  • Nicole says:

    My personal experience suggests that one should not rely on Google for this. My friends have suggested some contractors and they did nice work at friends’ places. So my rule is rely on a personal review than online review or contact.

  • Buddy says:

    Great list. All of these steps are critical to success. In order to get the best “short list” for my bids, I go to the Angie’s List website. This has been invaluable for me for everything from an handyman to roofer. Well worth the cost of a subscription.

  • JoeC says:

    Here is another vote for Angie’s list. I’ve used them for for plumbers, painters, landscaping, auto repair and more and have never had a bad experience (contrary to word of mouth referrals before we sound Angie’s list).

    BTW – I have absolutely no interest in Angie’s list – only a vary satisfied customer

    • Brenda L says:

      I totally agree with you about Angie’s list. It has been my saving grace. I found my home inspector, auto detailer, and my real estate agent on there. And all where great. I think that’s a great place to start your list of professionals to inquire about and then implement the tips that are stated in the article.

  • Cal Phillips says:

    Great points, however “Contractor’s License”, being a painting contractor for over 30 years, I have just recently seen one municipality requiring a “License to Paint” within that particular city. Not being confused with a Business License, having one for the last 2 decades.

    I see this particular city reaching deep for every tax dollar they possibly can. Knowing that the city building inspector will not inspect between each painting intervals, and as to the adhesion properties, and mill thickness of paint.

  • G.E. Miller says:

    That’s a really good tip. Sorry that you got burned like that. Were you able to pursue some sort of legal action?

  • Jesse says:

    You should always check out more than one contractor and compare their prices, just like when buying something: You want the best deal. I’ve been through hell with my contractor and am probably getting a new one pretty soon.

  • Gil says:

    I think those 5 steps for hiring a contractor are fine but in real life they are not working. Not all of them will show you their license or insurance.

  • Tiffany says:

    It’s really unfair to not pay half down when you hire a contractor; I’m sorry you were scammed, but that’s why you really need to do your research. Google the owner of the business, for example; I’ve learned a lot about contractors that way, because they’ll change their business names and move all around the country to avoid being caught, in some cases.

    My point is that it’s standard practice to pay half down for a reason; from their point of view, they’re trusting you to pay for the work they’re going to do, and paying for subcontractors and materials is extremely expensive. You could just as easily scam them as they could scam you, and covering some of their labor and materials costs is only fair.

    Granted, if you’re talking about a little $200 job or something, they’ll probably be more willing to forgo the deposit since they have less to lose, but if you’re doing a full kitchen remodel estimated at $30,000, you probably won’t find a contractor willing to do all the work up front with just the promise of your payment.


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