How to Hire a General Contractor: A Step-by-Step Guide

To hire a general contractor, define your project in writing first, then build a shortlist from referrals, verify each contractor's license and insurance, get at least three itemized bids, check references, and sign a detailed written contract that ties payments to completed milestones -- never the calendar. The full process typically takes two to four weeks but protects you from the most common and costly homeowner mistakes.

Why a Systematic Process Saves You Money and Headaches

A general contractor (GC) manages the full scope of a home project -- scheduling subcontractors, sourcing materials, pulling permits, and delivering a finished result. Because GCs sit at the center of every decision, choosing one poorly can cascade into months of delays, unexpected change orders, and disputes that are difficult and expensive to resolve.

The Better Business Bureau logs thousands of contractor-related complaints annually, and the Federal Trade Commission identifies home-improvement fraud as one of the most common consumer scams in the country. The steps below are designed to prevent you from becoming part of those statistics.

Step 1: Define Your Project Scope in Writing

Before you contact a single contractor, write down exactly what you want done. A vague description produces vague bids that are impossible to compare. A precise scope produces apples-to-apples quotes and protects you if a contractor later claims the work you expected was never included.

Your written scope should cover:

• The specific work to be done (demo, structural changes, mechanical upgrades, finishes)
• Materials you have selected or have strong preferences for
• Any rooms or areas that must stay operational during construction
• A target completion date and any hard deadlines (a lease ending, a holiday gathering)
• Any adjacent work that is explicitly out of scope

If you are unsure of the technical details -- for example, whether a wall is load-bearing -- note that in your scope and ask each contractor to assess it during the bid walkthrough. Do not leave it unresolved; it will become a change order later.

Step 2: Build a Shortlist from Referrals

Aim for a shortlist of three to five contractors. More than five makes the process unwieldy; fewer than three leaves you without competitive pressure on price.

Referral sources to use:

• Neighbors or friends who completed a similar project in the past two years
• Your local hardware store or building supply counter (they know who buys quality materials)
• Your real estate agent or a local home inspector
• The Better Business Bureau directory at bbb.org, filtered by trade and accreditation status

Avoid contractors who contact you unsolicited after a storm or neighborhood event. The Federal Trade Commission warns that door-to-door contractor solicitations following natural disasters are a documented fraud pattern. Legitimate general contractors do not need to knock on doors to find work.

For more on recognizing fraud patterns before you engage, see How to Avoid Home Improvement Scams.

Step 3: Verify License and Insurance

Every state requires general contractors to carry a license, and most states require both general liability insurance and workers' compensation insurance. These are not formalities.

• License means the contractor has met state-defined competency requirements. Look up every contractor on your state licensing board's public database before you invite them to bid. The license should be current and in good standing, with no disciplinary actions.
• General liability insurance covers property damage your contractor causes during the job. Without it, you could be responsible for repairing damage to a neighbor's fence, a cracked foundation, or a flooded basement.
• Workers' compensation insurance covers medical costs if a worker is injured on your property. In many states, if a contractor does not carry workers' comp and a worker is hurt, the homeowner can be held liable for medical expenses and lost wages.

Ask each contractor to provide certificates of insurance directly from their insurer, not a copy of a certificate they hand you. Call the insurer to confirm the policy is active. For a detailed walkthrough of this process, see How to Vet a Contractor's License and Insurance.

Step 4: Get at Least Three Detailed Written Bids

A verbal estimate is not a bid. A written, itemized bid breaks down labor, materials, subcontractor costs, and any allowances (placeholders for materials not yet selected). Itemized bids let you compare line by line rather than totals only, which is the only way to understand why one number is higher or lower than another.

Provide every contractor on your shortlist with your written project scope from Step 1 and schedule a walkthrough of the space. Each contractor should assess the same project conditions before submitting their bid.

When reviewing bids:

• Look for items that appear in two bids but are missing from a third -- a low total often means something was omitted, not that the contractor is more efficient
• Ask about any allowances and clarify what happens to the contract price if the actual material selection costs more or less
• Ask each contractor for a projected start date and completion timeline

For guidance on reading and comparing itemized quotes, see How to Get Accurate Contractor Quotes.

Step 5: Check References and Recent Work

Ask each contractor for two or three references from projects completed in the past 18 months that are similar in scope and value to yours. Then call them.

Questions worth asking:

• Did the project finish on time and on budget?
• How did the contractor handle unexpected problems?
• Was communication consistent -- did they show up when scheduled and keep you informed?
• Would you hire this contractor again?

If the contractor has recently completed a project you can visit, ask to see it. Looking at finished work in person -- joint quality, trim alignment, tile grout lines -- tells you more than any number of online photos.

Step 6: Review the Written Contract and Payment Schedule

A written contract is not optional. It is the document that makes every other agreement enforceable. At minimum, your contract should include:

• Full scope of work with specific materials, brands, and finishes listed by name
• Start date and substantial completion date
• A milestone-based payment schedule (see below)
• A process for approving change orders in writing before work begins
• Who is responsible for pulling permits
• Warranty terms for labor and materials
• A process for resolving disputes

Review the contract carefully before signing. If any term is unclear, ask for a written explanation. For a section-by-section guide to contract language, see How to Read a Contractor Contract Before You Sign.

Payment Schedules: Milestones, Not Calendars

Step 7: Confirm Who Pulls Permits

Required permits vary by project type and jurisdiction, but structural work, additions, electrical, plumbing, and HVAC changes almost always require a permit. Your licensed general contractor should pull every required permit, not ask you to do it yourself.

Confirm this in the written contract. The permit is filed in the contractor's name because they are the party responsible for meeting code. If a contractor asks you to pull permits in your own name, that is a red flag -- it shifts legal responsibility for code compliance onto you.

Work completed without required permits can:

• Block a future home sale when a title search reveals unpermitted improvements
• Void a homeowner's insurance claim related to the unpermitted work
• Result in a legal order to open walls, remove work, and redo it to code -- at your expense

Step 8: Set Communication Expectations Before Work Starts

Establish a single point of contact on the contractor's team, a preferred communication method (text, email, or a project management app), and a regular check-in schedule -- weekly is typical for projects lasting more than a month.

Agree in writing on how change orders will be handled. Any change to the scope, materials, or timeline should require a written change order signed by both parties before the new work begins. Verbal approvals are unenforceable and are a leading source of contractor disputes.

Step 9: Close Out the Job Properly

Substantial completion is not the same as final acceptance. Before releasing your final payment, complete these steps:

• Final walkthrough: Walk every room and every item on the scope of work with your contractor. Note anything incomplete or unsatisfactory in writing as a punchlist. Do not release the final payment until the punchlist is resolved.
• Lien waivers: Request signed lien waivers from the general contractor and, for larger jobs, from any subcontractors or material suppliers. A lien waiver states the party has been paid and waives their right to place a mechanics lien on your property. Without waivers, a subcontractor who was not paid by the GC can file a lien against your home even though you paid the GC in full.
• Warranty documentation: Collect all manufacturer warranties for installed equipment (HVAC units, windows, appliances) and confirm the contractor's own labor warranty in writing. Most reputable GCs offer a one-year labor warranty on their work.
• Copies of permits and inspection records: Ask for copies of all closed permits and passed inspection reports. Keep these with your home records.

Red Flags to Watch for Throughout the Process

The Federal Trade Commission and state attorney general offices consistently document the same warning signs in home-improvement fraud cases. Stop the process if you encounter any of the following:

• No license or expired license: non-negotiable disqualifier in any state that requires one
• No workers' compensation insurance: exposes you to personal injury liability
• Cash-only payment demand: prevents any paper trail and is a common precursor to abandoned jobs
• Door-to-door solicitation after a storm: a documented fraud pattern, per the FTC
• Pressure to sign immediately: legitimate contractors do not manufacture urgency
• A bid dramatically lower than all others: usually indicates missing scope, substandard materials, or a contractor who plans to demand change orders once work begins
• A large upfront deposit demand (over 30 to 50 percent): the FTC advises against paying more than one-third upfront; some state contractor boards cap deposits by law

For a broader look at scam patterns and how to protect yourself before you sign anything, see How to Avoid Home Improvement Scams.

What to Do If Something Goes Wrong

If a dispute arises during or after the project, document everything in writing immediately. Send a follow-up email after any conversation so there is a written record of what was discussed and agreed.

If informal resolution fails, your options in order of escalation are:

1. Written demand letter citing the contract terms at issue
2. Filing a complaint with your state contractor licensing board (which has authority to suspend or revoke a license)
3. Filing a complaint with the Better Business Bureau at bbb.org
4. Small claims court for amounts within your state's limit (typically $5,000 to $10,000)
5. Hiring a construction attorney for larger disputes

Check whether your state licensing board offers a recovery fund -- some states maintain funds specifically to compensate homeowners harmed by licensed contractors who fail to complete work or cause damage.