How to Hire a Good General Contractor
Hire a general contractor by getting three detailed bids, verifying their license and insurance, checking recent project references, and ensuring clear payment terms and timeline expectations in a written contract.
- Difficulty
- Intermediate
- Time
- 3 weeks to hire, then project timeline
- Cost
- Hiring costs nothing—project costs vary
- Tools
- Three-ring binder, Camera phone, Spreadsheet for bid comparison
- Permit required
- No
- Contractor recommended
- No
- You will need
- Three-ring binder with dividers, Bid comparison spreadsheet (or paper template), Contractor vetting checklist, Camera or smartphone for documentation, List of at least five local contractors, Insurance verification process (phone numbers handy), Lien waiver forms (state-specific or generic), Pen and notepad for reference calls
Materials
- 1 binder Project binder with dividers (Use labeled sections for contract, permits, receipts, warranties, and correspondence) — $8 - $15
- 1 document Bid comparison spreadsheet template (Create columns for each contractor with line items matching across all three bids) — Free
- 1 per contractor Contractor vetting checklist (Track license verification, insurance confirmation, reference calls, and contract review status) — Free
- 1 per subcontractor Lien waiver forms (Your state may have standard forms—some contractors provide these, others require you to supply them) — Free - $25
Step by step
Start With Licensed Bidders Only
Contact at least five contractors and request formal bids from three who respond professionally and visit your site. Each bid should break down labor, materials, timeline, and payment schedule—not just a single bottom-line number. Verify their license number through your state's contractor licensing board online before scheduling any meeting.
Tip: Contractors who send bids without visiting the site are guessing—eliminate them immediately.Confirm Real Insurance Coverage
Ask each contractor for proof of general liability insurance and workers' compensation coverage. Call the insurance company directly, using a number you look up yourself rather than one the contractor provides, to confirm the policy is active and covers the dates of your project. Require minimum coverage of one million dollars general liability.
Tip: Request that your home be listed as additionally insured on their general liability policy—good contractors do this routinely.Talk To Their Recent Clients
Ask each contractor for contact information for three clients whose projects finished within the past year and match your scope. Call each reference and ask specific questions: Did they stay on budget? How did they handle problems? Would you hire them again? Drive by one completed project if possible to see finished quality.
Tip: Ask references what surprised them most during the project—the answer reveals how the contractor handles the unexpected.Tie Payments To Milestones
Read the full contract before signing. It should specify start and completion dates, detailed scope of work, payment schedule tied to milestones, change order process, and lien waiver requirements. Avoid contractors who demand more than ten percent down or want large payments before work begins. Payment should follow completion of phases, not precede them.
Tip: Never pay the final ten to fifteen percent until you've walked the completed project and confirmed every item on the punch list is finished.Know Their Subcontractor Team
Ask who will actually do the electrical, plumbing, HVAC, and finish work. Good general contractors use the same trusted subcontractors repeatedly and can provide their names and credentials. Confirm the GC will pull all necessary permits and schedule inspections—you should never be managing permits yourself.
Tip: If a contractor suggests skipping permits to save money or time, walk away—that's a red flag for cutting other corners.Lock In Communication Cadence
Discuss how often you'll receive updates, whether you'll have a daily site contact, and how change orders will be documented. Set clear rules about site access, working hours, cleanup expectations, and where materials will be stored. Get agreement in writing about daily cleanup and final site restoration.
Tip: Agree on a weekly standing meeting time—contractors who commit to regular updates rarely leave you wondering what's happening.Build Your Documentation System
Create a three-ring binder for the contract, all change orders, permits, inspection reports, product warranties, and payment receipts. Take photos before work begins and at each major phase. Save all email correspondence and text messages related to decisions or problems. This documentation protects both parties and resolves disputes before they escalate.
Tip: Use your phone to photograph the day's progress every evening—it creates an automatic timeline if questions arise later.Get Lien Waivers Before Final Pay
Walk the finished project with the contractor and create a punch list of any incomplete or incorrect items. Once everything is finished, collect signed lien waivers from the general contractor and all subcontractors before releasing final payment. This protects you from mechanics liens if the GC didn't pay their subs.
Tip: Collect signed waivers from the general contractor and every subcontractor before releasing final payment.
Questions people ask
How much should I pay as a down payment?
Ten percent is standard, fifteen percent is acceptable for large projects, and anything above twenty percent is excessive. The deposit should cover initial material orders and scheduling but not fund the contractor's other obligations. Avoid contractors who demand thirty to fifty percent upfront—they're either cash-strapped or planning to use your money to finish someone else's project.
Should I get bids from contractors friends recommend?
Personal referrals are valuable starting points but not substitutes for full vetting. Even excellent contractors have bad projects or personality mismatches. Verify their license and insurance, check recent references, and review their contract terms exactly as you would with any contractor. Your friend's bathroom remodel doesn't guarantee your kitchen addition will go smoothly.
What's a reasonable markup on materials and subcontractors?
General contractors typically mark up materials ten to twenty percent and subcontractor labor ten to fifteen percent to cover their management, overhead, and profit. This is standard practice and pays for their expertise in coordinating the work. If you want to supply your own materials to save money, expect most good contractors to decline—they can't warranty materials they didn't source or control.
Troubleshooting
Contractor stops responding after getting deposit
Send written demand for return of deposit or immediate work start with seven-day deadline, then file complaint with state contractor licensing board and consider small claims court.
Work quality doesn't match the bid specifications
Document the discrepancy with photos, reference the specific contract language, and withhold payment for that phase until corrected—never pay for work that doesn't match the contract.
Project timeline slips with no explanation
Request written revised schedule with specific completion date and daily penalties for delays beyond that date—put it in a change order both parties sign.
Contractor adds unexpected charges not in contract
Reject any charges not documented in signed change orders.
Subcontractor threatens to file lien for non-payment
Request proof they weren't paid by the GC, then withhold that amount from your final payment to the GC and pay the subcontractor directly with a signed lien waiver.
Before you sign: general contracting, every trades guide and your house costs more to rebuild than to buy.