A safer way to hire a home-improvement contractor

Don't let a contractor's urgency set your timetable. For a U.S. home project, check the business independently, compare written estimates, and put the scope and payment terms in a contract before you pay a deposit. Keep records from the first conversation through the final inspection.

State and local requirements differ. A current license, proof of insurance, or good reviews can lower risk, but none guarantees that the work will be completed properly.

Check the contractor before you hire

An unexpected visit or phone call may come from a legitimate contractor. It isn't proof of an exclusive bargain or of urgent damage. The Federal Trade Commission's guidance on home-improvement scams recommends researching contractors, using trusted review sources, and getting multiple estimates.

Before discussing a deposit, write down:

• The contractor's legal business name, address, phone number, and license number
• The name that will appear on the contract and invoices
• The state or local agency that issued the license, if the work requires one
• The people or company responsible for the work and any expected subcontractors

Then work through these checks:

• Confirm the license or registration through the relevant state or local agency. Check that the classification covers your project and that the status is current.
• Look for complaints or disciplinary history if the agency makes those records available.
• Read reviews on more than one trusted platform. Repeated complaints about abandoned work, unexplained charges, or pressure tactics deserve follow-up.
• Ask for recent references and contact them yourself.
• Request proof of liability insurance and workers' compensation coverage when applicable. Ask how subcontractors are covered. For important details, use a publicly listed number to contact the insurer rather than relying only on a document supplied by the contractor.
• Ask who will obtain permits and arrange inspections. Confirm the answer with your local building department when necessary.

Don't rely on a website, vehicle lettering, or a claim that a license is "in process." Make the license check yourself and save a dated screenshot or copy of the result.

Compare estimates that describe the same work

Ask several contractors to quote the same project. If one person includes demolition and disposal while another does not, the prices aren't really comparable.

A useful estimate answers questions such as these:

A low bid may leave out permits, disposal, necessary repairs, or materials that another contractor included. Ask about major differences in writing. The cheapest number isn't necessarily the lowest total cost.

Make the contract specific

The contract should make clear what "finished" means. It should identify the parties, the property, the work, the price, and the process for handling changes.

Include:

• The contractor's legal name and license information, if applicable
• Your name and the property's address
• The exact work, materials, brands, finishes, and cleanup obligations
• The total price, taxes or allowances, and payment schedule
• The expected start and completion dates
• Responsibility for permits and inspections
• Procedures for changes, delays, defective work, and extra charges
• Warranty terms
• Subcontractor responsibilities
• Notice and termination terms

Don't sign with blank spaces. A verbal promise that matters to you should appear in the written agreement. Any change to the work or price should be written, dated, and approved before the additional work begins.

Read every document offered with the project. A home-improvement packet might include a separate loan agreement, lien-related document, or authorization to charge an account. If you negotiate in a language other than English, ask whether the law where you live and the type of purchase give you a right to receive the contract in that language. The FTC says that entitlement can depend on both factors.

Protect the deposit and later payments

The FTC advises consumers not to make the final payment until the work is complete and they're satisfied with it. A written payment schedule can help you avoid paying for work that hasn't been done.

• Tie installments to observable milestones rather than dates alone.
• Avoid paying the entire price before work starts.
• Use a traceable payment method and keep each receipt.
• Have the invoice identify the project and the work covered by that payment.
• Compare invoices with the contract and approved change orders.
• Photograph completed stages before releasing milestone payments.
• Keep records showing what remains unfinished.

Deposit limits and payment requirements vary by state. Check your state's consumer-protection or contractor-licensing rules before agreeing to a large deposit. A demand for immediate full payment, especially in cash, calls for an explanation and independent verification.

Treat contractor-arranged financing as a separate decision

Financing isn't automatically fraudulent, but it creates a financial obligation beyond the work contract. The FTC warns that some home-improvement scams end with a loan against the homeowner's property.

Before signing a financing document:

1. Find out whether it's a loan, home-equity agreement, lien authorization, or another form of credit.
2. Confirm the lender's name, amount financed, interest rate, fees, payment schedule, and consequences of nonpayment.
3. Contact the lender through a phone number or website you found independently, not only through the contractor.
4. Check whether your home or other property secures the debt.
5. Never sign blank forms or give a contractor control of your online banking account.
6. Keep a copy of every financing document, including anything you signed electronically.

Pause if you don't understand what you've been asked to sign. Ask the lender or a qualified professional to explain the document before committing to it.

Check whether the three-day cancellation rule applies

The FTC Cooling-Off Rule isn't a general right to cancel every contractor agreement. It covers certain sales of $25 or more made at a buyer's home, workplace, dormitory, or a temporary seller location. When it applies, it generally gives the buyer three business days to cancel.

There are exceptions, including some buyer-initiated emergency transactions, certain sales made entirely by mail or telephone, and specified transactions involving real property. Read the FTC explanation of the Cooling-Off Rule and the federal regulation in 16 CFR Part 429 before assuming the rule covers your agreement. State law or the contract may provide different or additional rights.

For a covered sale, the seller generally must provide cancellation information and forms. Follow the instructions and meet the deadline. If the forms weren't provided, the FTC says you can write a cancellation letter; it should be postmarked within three business days of the sale. Send the form or letter in a way that gives you proof, such as certified mail, and keep a copy and the mailing record. A phone call alone may not protect you.

The rule addresses cancellation of an eligible sale within the required period. It doesn't automatically fix defective work or create a refund right after the deadline has passed.

Warning signs that merit a pause

One warning sign doesn't prove fraud. Several at once are a good reason to stop and verify the facts before hiring the contractor.

• A salesperson says the price is available only if you sign immediately.
• The contractor claims to have found urgent damage you didn't ask anyone to inspect.
• The business won't provide a legal name, license information, references, or a written estimate.
• The estimate is far below the others without a clear written explanation.
• The contractor wants the full price before work begins.
• You're asked to sign a blank document or approve an unexplained change.
• The contractor insists on cash or discourages receipts.
• The contractor says permits aren't necessary without explaining why.
• The person who gave the estimate and the business named in the contract are different, with no explanation.
• The contractor pushes a loan or asks for access to your bank account.

You don't have to accuse anyone of a scam to walk away. Time to review a written estimate and contract is a reasonable condition for a major home expense.

If the work is unfinished or defective

Start by preserving the evidence. Then use the contract's process for notice and correction.

1. Record the condition. Take dated photos and videos. Save the estimate, contract, change orders, invoices, receipts, texts, emails, permit records, and proof of payment.
2. Read the contract again. Mark the promised work, payment milestones, warranty terms, notice requirements, and any cure period.
3. Write to the contractor. Describe each unfinished or defective item, attach useful photos, and request a specific remedy and response date.
4. Keep the dispute factual. Don't approve extra charges or changes until you understand how they affect the original agreement.
5. Send important notices with proof. The FTC recommends following phone conversations with a letter sent by certified mail. Keep the letter, receipt, and delivery record.
6. Choose the right local office. A state licensing board may handle licensing or conduct issues. A local building department may address permits or unsafe work. A state consumer-protection office may offer a complaint process.
7. Handle financing separately. If you suspect an unauthorized loan, lien, or misleading credit document, contact the lender promptly through its official channel and ask what documents were used to open the account.
8. Get help for a serious dispute. A local attorney, legal-aid program, or consumer organization can explain possible options when the amount, safety risk, or property claim is substantial.

Don't make a new payment just because the contractor threatens or pressures you. Before withholding a payment that may be contractually due, review the agreement and obtain local advice.

Printable contractor hiring checklist

Before signing

• ☐ I verified the contractor's license or registration with the relevant agency.
• ☐ I checked the legal business name and contact details.
• ☐ I reviewed available complaints or disciplinary records.
• ☐ I compared multiple written estimates for the same scope of work.
• ☐ I checked references and more than one trusted review source.
• ☐ I requested and independently checked insurance information.
• ☐ I know who handles permits and inspections.
• ☐ The contract states the scope, price, schedule, materials, and payment milestones.
• ☐ Changes must be written and approved before extra work begins.
• ☐ I understand the warranty, notice, and termination terms.
• ☐ I reviewed every loan or financing document separately.

During the project

• ☐ I keep copies of contracts, invoices, receipts, photos, and messages.
• ☐ I approve changes in writing before extra work begins.
• ☐ I inspect milestone work before paying.
• ☐ I confirm permits and inspections as the project progresses.
• ☐ I haven't made the final payment before the work is complete and satisfactory.

If a dispute starts

• ☐ I recorded the problem with dated photos or video.
• ☐ I sent a clear written notice and kept proof of delivery.
• ☐ I checked the contract's notice and cure provisions.
• ☐ I contacted the relevant licensing, building, or consumer-protection office.
• ☐ I contacted the lender separately if financing is involved.

Before you invite bids, write down the project scope and the questions you want answered. That makes it easier to compare contractors on the same work rather than on sales promises.