How to Hire a General Contractor: A GC's Honest Guide
How to hire a general contractor: verify the license and insurance yourself, collect three real bids on the same written scope, set a milestone payment schedule with a small deposit, pull permits, get lien waivers, and call references on finished local jobs. Skip any of those steps and you're gambling.
I've spent twenty years on the other side of this conversation. I've also been hired plenty of times to clean up after a homeowner picked the wrong guy. The painful part is that the bad hire was almost always avoidable. The warning signs were there before a single dollar changed hands. This is the checklist I'd give my own sister if she were renovating.
Step 1: Verify the License and Insurance Yourself
Do not take anyone's word on this. A contractor can hand you a laminated card that means nothing.
- License. Look up the license number on your state or county licensing board's website. Confirm it's active, matches the business name, and has no disciplinary history. Many states let you search complaints too.
- General liability insurance. This covers damage to your property. Ask for a certificate of insurance, and ask the GC to have the carrier send it to you directly. That confirms the policy is current.
- Workers' compensation. This is the one people skip and regret. If a worker gets hurt on your property and the contractor doesn't carry comp, you can be on the hook. Verify it.
If a contractor gets cagey about any of these, that's your answer. A legitimate GC produces this paperwork without flinching because we deal with it constantly.
Step 2: Get Three Bids on the Same Written Scope
One bid tells you nothing. Two gives you a coin flip. Three gives you a real picture of the market and surfaces the outlier.
The critical part most homeowners miss: all three bids have to be priced against the same written scope. If you tell each contractor a vague story and let them each define the job, you'll get three numbers that can't be compared. Write down exactly what you want, hand the identical document to each GC, and ask them to bid it line by line.
When the bids come back, ignore your instinct to circle the lowest one. Read my breakdown of general contractor cost to understand why the cheapest number is so often the one that runs out of money. The bid you want is the one that's itemized, realistic on allowances, and roughly in line with the other two.
Step 3: Demand a Detailed Written Contract
A handshake is not a contract. Neither is an email that says "kitchen reno, $40k." Your contract needs to spell out:
- A detailed scope of work, room by room, with what's included and explicitly what's not
- The total price and the payment schedule tied to milestones
- A start date and a realistic completion window
- Allowance amounts for finishes you haven't selected
- How change orders are handled (written, signed, priced before work)
- Who pulls permits (it should be the contractor)
- Warranty terms and lien waiver requirements
If a contractor wants to start on a verbal agreement, stop. The contract protects both of us, and any pro knows that.
One detail people overlook: the contract should name who is responsible for cleanup and debris removal, where the dumpster goes, and which bathroom the crew uses. These sound trivial until week three when there's drywall dust in every room and nobody agreed on who hauls the trash. I put it in writing because the small frictions are what sour an otherwise good job. I also like a clause requiring the contractor to protect finished surfaces, floors, and fixtures that aren't part of the renovation. A good crew tapes off and covers without being asked, but the clause gives you recourse if they don't.
Step 4: Set Milestone Payments, Never a Big Deposit Up Front
This is the rule that saves the most people from the most pain, so I'll be blunt: never pay a large deposit up front.
A funded, legitimate contractor does not need half your money before lifting a tool. We carry the cash flow to start a job. A reasonable deposit is enough to lock your slot on the calendar and order any long-lead materials, usually around 10 percent. Some states cap deposits by law at 10 percent or a fixed dollar amount. Check yours.
After that, payments tie to completed milestones. Here's a structure I use and trust:
| Milestone | Typical payment |
|---|---|
| Signing / mobilization | ~10% deposit |
| Demolition and rough framing complete | ~20% |
| Mechanical rough-in (plumbing, electrical, HVAC) passed inspection | ~20% |
| Insulation and drywall complete | ~20% |
| Finishes substantially complete | ~20% |
| Final walkthrough, punch list done | ~10% (retainage) |
The thing I want you to notice is that final 10 percent. Hold it back until the punch list is genuinely finished. That retainage is the only leverage you keep at the end, and the end is exactly when a sloppy contractor wants to vanish.
If a contractor demands 40 or 50 percent before demo even starts, they are funding their last job with your money, or they're about to disappear. Walk away. That single red flag is the most reliable predictor of a job gone wrong, and I cover the rest in my piece on the signs of a bad contractor.
Step 5: Make Sure Permits Get Pulled
Permits exist to get an independent inspector to verify the work is safe and to code. A contractor who suggests skipping permits to "save time and money" is offering to make their job easier at your future expense.
Unpermitted work can sink a home sale, void insurance claims, and force you to tear out finished work when it's discovered. The GC should pull the permits in their name, not push that responsibility onto you. If they want you to pull an "owner-builder" permit so the liability lands on you, that's a flag.
Step 6: Get Lien Waivers With Every Payment
This one is invisible until it bites. If your GC doesn't pay a subcontractor or supplier, that sub can file a mechanic's lien against your house, even if you already paid the GC in full. You can end up paying twice.
The protection is a lien waiver. Every time you make a payment, get a signed lien waiver from the GC and, on larger jobs, from the major subs and suppliers confirming they've been paid for that phase. It's standard paperwork. A real contractor handles it routinely.
There are two kinds worth knowing. A conditional waiver says the sub gives up lien rights once a specific payment clears. An unconditional waiver says they've already been paid and are giving up the rights now. On a big job I collect conditional waivers tied to each progress payment and a final unconditional waiver at the end before that last check goes out. If a contractor can't produce waivers from the subs on a six-figure renovation, I'd treat that as a sign their own cash flow is shaky, because it usually is.
Step 7: Call References and Visit Finished Local Jobs
Ask every contractor for references from jobs similar to yours, finished in the last year or two, in your area. Then actually call them. Ask:
- Did the job finish on budget? If not, why?
- Did it finish on schedule?
- How did the contractor handle problems and change orders?
- Was the site kept clean and safe?
- Would you hire them again?
If you can, drive by or visit a finished job. Local, recent, and verifiable beats a glossy portfolio every time. When you're vetting candidates, a contractor reference and interview checklist keeps you asking the same questions of everyone so you compare apples to apples.
Spotting the Lowball
Let me close on the thing that fools the most people: the bid that's far below the others. It feels like a win. It almost never is.
A lowball usually means one of three things. The contractor missed scope and will discover it (and bill you) mid-job. The contractor padded the allowances thin so the bottom line looks lean. Or the contractor is desperate, underfunded, and chasing cash flow. All three end the same way: change orders, delays, and a phone that stops getting answered.
Trust the cluster, not the outlier. If two bids land around $48,000 and one comes in at $31,000, the cheap one isn't a deal. It's a warning. For the full picture of what these jobs actually run, see my home renovation cost guide, and when you're ready, compare vetted local pros who've already passed the basics.
The Honest Bottom Line
Hiring a general contractor is mostly about discipline before the work starts. Verify credentials yourself. Bid three contractors on one written scope. Get everything in writing. Keep your money tied to finished milestones with a small deposit and a held-back retainage. Pull permits, collect lien waivers, and call references. Do all of that and you've eliminated nearly every way this goes wrong. The contractors who resist these steps are telling you exactly who they are. Believe them.