Before you sign, verify the contractor’s license with the appropriate state or county office, ask for proof of insurance, compare three written estimates, check references and complaint information, and read a complete written contract. Don’t accept pressure to decide immediately, sign a blank form, or pay the full project price up front. Licensing, permits, deposits, and contract rules vary by location, so check the requirements where the work will take place.
1. Start with referrals, but verify the contractor independently
Ask people you trust for recommendations, then check the contractor’s identity and reputation for yourself. Reviews and referrals can help you decide whom to contact; neither establishes that a contractor is licensed or insured. The Federal Trade Commission (FTC) recommends reading reviews critically and checking with local consumer-protection officials or a home builders association.
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Look for relevant references and complaint information, and consider asking previous customers about the kind of work you are planning. A contractor’s past work may help you assess fit, but it does not replace checks with government licensing offices or a request for insurance documentation.
Keep the checks distinct. A recommendation is a reason to consider a contractor, not evidence that the person has the credentials required for your location or that the proposed agreement is complete. Likewise, a favorable review does not answer who will do the work, what it will include, who will handle permits, or when payments will be due. Verify those details directly and make sure the final written agreement reflects them.
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Use sources that can help you evaluate both reputation and qualifications. The FTC points consumers to local consumer-protection officials and home builders associations as places to check. You can also ask for references relevant to the type of repair you are considering. Treat the information as one part of a broader review: a reference cannot confirm current license status or replace proof of insurance.
FTC guidance on avoiding home improvement scams
2. Check license status and request proof of insurance
Use the state or county government office responsible for licensing the contractor’s trade and location. Requirements and lookup offices differ by place and type of work. Confirm the status directly with the relevant office rather than relying on a contractor’s statement or a number printed on an estimate.
Because the correct office depends on where the project is located and what kind of work is involved, do not assume that one online search or one general state resource answers every licensing question. If you are unsure which office handles the trade, contact a local or state agency and ask where to verify it. The important step is to check with the appropriate government source before committing, rather than treating a claim of being licensed as verification.
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License and insurance checks answer different questions. Confirming a license does not replace the insurance check, and receiving insurance documentation does not establish license status. Include both in your evaluation along with references, complaint information, the estimate, and the proposed contract. If an answer is unclear, pause and ask for clarification before signing.
FTC: How To Avoid a Home Improvement Scam
3. Get and compare three written estimates
The FTC’s home-repair scam guidance says, “Get three written estimates.” Each estimate should describe the work, materials, price, and timing. Ask for an explanation when bids differ substantially. The lowest price is not automatically the best choice: an estimate may cover a different scope, materials, or schedule than the others.
Ask each contractor to put the proposal in writing so you can compare like with like. A price by itself does not tell you whether two bids cover the same work. Read the descriptions and identify differences in scope, materials, timing, and payment terms. If a proposal leaves an important point unclear, ask the contractor to explain it and reflect the answer in writing.
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| Compare | What to check |
|---|---|
| Scope | Does each estimate describe the same work and identify what is excluded? |
| Materials | Are the materials specified clearly enough to compare the bids? |
| Price | Is the amount clear, and has the contractor explained major differences from other estimates? |
| Timing | Does the estimate state the expected schedule or timing? |
| Credentials and history | Have you independently checked licensing, requested insurance proof, and looked into references and complaint information? |
| Permits and payments | Who is responsible for required permits, and when are payments due? |
Use the comparison to understand the proposal, not simply to rank the totals from low to high. If one estimate costs substantially more or less, ask what accounts for the difference. The contractor may be describing a different scope, materials, or schedule; the available guidance does not establish that any particular explanation is acceptable, so compare the written details and decide whether the bids address the same job.
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Also compare practical terms that can affect your decision: whether the proposal makes clear who obtains required permits, what the payment schedule is, and whether the timing fits your needs. The estimates are useful only if you can understand what each contractor is offering. Avoid assuming that an omitted detail is included; ask for it to be clarified in the estimate or contract.
Keep the estimates so you can compare them against the final contract. If a contractor’s proposal changes the scope or terms, resolve the difference in writing before signing. The agreement should not silently replace a material promise or detail in the estimate with something different. Make sure you understand the final version, not just an earlier proposal or a verbal explanation.
FTC Home Repair Scams guidance
4. Read a complete contract before signing
Ask for a written agreement even if you do not know whether local law requires one. Read every line and confirm that it records the deal you actually discussed. Include verbal promises in the written agreement; do not assume they will be honored if they are absent from the contract.
Think of the estimate and contract as documents to compare, not substitutes for one another. The estimate helps you evaluate competing proposals; the contract records the terms you are agreeing to. Before you sign, check that the contract and estimate are consistent about the work, materials, price, timing, permit responsibility, and payments. If something changed during discussion, make sure the final version states what both sides have agreed to.
Check that the contract identifies the parties and work
- Contractor’s name and contact details
- License number, where applicable
- A clear description of the work and materials
- Labor and materials costs
- Estimated start and completion dates
- Responsibility for required permits
- Payment schedule
These items make it easier to see who is agreeing to do the work, what the project covers, and how the basic schedule and payments are supposed to work. Confirm that the description is specific enough for you to understand what is being offered. If the estimate described materials or work more clearly than the contract, ask for the contract to include the necessary detail rather than relying on an earlier document or conversation.
Check the dates and payment schedule together. The contract should give estimated start and completion dates and make clear when payments are due. The cited guidance does not prescribe a universal project schedule or payment formula, so the terms should be understandable and agreed in writing. If you are considering progress payments, tie them to defined work completed and make sure the schedule says so.
Resolve blanks and discrepancies
Make sure every blank is filled before signing. Compare the contract with the estimate and any written promises. If the scope, materials, price, dates, or payment terms have changed, ask for a corrected document rather than relying on an explanation that is not written down. Do not sign a blank or unread document.
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Do not leave space for an important term to be filled in later. A blank may make it unclear what you agreed to, while an incomplete or unread form can leave you unaware of its terms. If a contractor asks you to sign before the information is complete, take the document away for review or decline to sign until it is ready. Keep the final written terms available for comparison with the estimate and the promises made during the selection process.
FTC home improvement scam advice
5. Set payment terms that follow the work
Do not pay the entire project price up front. Some states limit the amount a contractor may collect as a down payment; check with your local consumer agency for the rule that applies where the project is located. Consider tying progress payments to defined work that has been completed, with the schedule written into the contract.
There is no single down-payment limit supplied here that applies throughout the United States. The permitted amount, if a limit applies, depends on local rules. Before agreeing to a deposit, ask the relevant local consumer agency what applies to the project. Do not infer that a proposed amount is lawful just because a contractor asks for it, or assume that the same rule applies in every state.
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Payment terms should be clear before work begins. Check what amount is due, when it is due, and what work a progress payment corresponds to. If you and the contractor agree that a payment follows a particular stage of completed work, describe that point in the contract so there is a written reference for both parties. Avoid vague terms that leave you uncertain about when payment is expected.
For disaster-recovery work, the FTC advises paying by credit card or check and warns against demands for cash, wire transfer, gift card, payment app, or cryptocurrency. Treat an unusual payment demand as a reason to pause and verify the contractor and agreement before sending money. This payment-method advice is specifically included in FTC guidance for disaster-related scams; it should not be mistaken for a statement that every payment method has the same legal status in every situation.
FTC guidance on avoiding scams after weather emergencies and natural disasters
6. Pause if the contractor uses pressure tactics
Take time to verify credentials, compare estimates, and read the contract. Be cautious if a contractor:
- Knocks unsolicited and claims to have leftover materials from another job
- Demands an immediate decision
- Requests full payment in advance or insists on cash
- Asks you to obtain permits that the contractor should be responsible for obtaining under your agreement or local rules
- Pressures you to accept a lender the contractor recommends
- Asks you to sign a blank or unread document
These signs matter because they can push you to skip the checks that help you understand the offer. An immediate-decision demand can cut short time to verify the license, review references, compare estimates, and read the contract. A request for full payment in advance conflicts with the FTC’s advice not to pay the entire project price up front. A blank document prevents you from reviewing complete terms before you agree.
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Permit responsibility deserves particular attention. The contract should say who is responsible for required permits. A request that you obtain permits is a warning sign identified in FTC guidance, but the correct responsibility and process can depend on your agreement and local rules. Verify both rather than assuming the contractor’s request settles the issue.
A single warning sign does not establish what has happened, but pressure is a reason to stop, check the facts, and avoid signing or paying until you are comfortable with the terms. If you are being hurried, take time to compare the written proposal with the contract and verify licensing, insurance, and local requirements. You can decline to proceed if the contractor will not give you time to review or will not put the terms in writing.
FTC: How To Avoid a Home Improvement Scam
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.7. Check cancellation rights and local requirements
The FTC says certain contracts signed at a consumer’s home or somewhere away from the seller’s permanent place of business include a written statement of a right to cancel within three business days. That right is not universal for every contractor agreement; applicability depends on the transaction and circumstances. Verify whether it applies before relying on it.
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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsDo not treat the three-business-day rule as a general cooling-off period for every home repair contract. The FTC guidance describes a right for certain kinds of sales and circumstances. If you are signing at home or away from the seller’s permanent place of business, check whether your transaction qualifies and read the written notice provided. Do not assume that the right applies, or that it does not, without verifying the circumstances.
State and local rules govern important details such as licensing, permits, deposit limits, and contract requirements. Without the project’s location, it is not possible to identify the controlling licensing office, applicable down-payment cap, permit procedure, or state-specific contract rules. Check with the relevant local or state agencies before you sign.
Build the location-specific check into your decision rather than leaving it until after a dispute. Ask which government office handles the contractor’s trade, what rules apply to a down payment, and what permit process applies to your work. No nationwide answer is provided here for those questions. Confirming them locally is part of vetting the contractor and the agreement, not an unnecessary final formality.
FTC guidance on home improvement scams
Before you sign: a final review
Pause before signing and check the whole decision, not just the final price. Have you independently verified the contractor’s license through the appropriate state or county office? Have you asked for and reviewed proof of insurance? Have you considered references and complaint information? Do you have three written estimates that describe the work, materials, price, and timing, and have you asked about substantial differences?
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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Then compare the selected estimate with the contract. Confirm the parties’ names and contact information, applicable license number, scope and materials, labor and materials costs, estimated dates, permit responsibility, and payment schedule. Make sure verbal promises are written down, every blank is filled, and the agreement contains no unresolved changes. Check local requirements for licensing, permits, deposits, and contracts; do not assume a rule from another location applies.
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Finally, do not pay the full project price up front or let an urgent sales pitch rush you into an incomplete agreement. If something is unclear, ask for an explanation and a written correction. The goal is not to guarantee an outcome, but to make an informed choice with the contractor’s qualifications, proposal, payment terms, and obligations in view before you commit.
Frequently Asked Questions
How do I check whether a home repair contractor is licensed and insured?
Use the state or county government office responsible for licensing the contractor’s trade and location to confirm license status. Ask the contractor for proof of insurance and review it; do not rely on a verbal assurance. Requirements and lookup offices vary, so check with a local or state agency if you are unsure where to verify.
How many written estimates should I get?
The FTC’s Home Repair Scams guidance recommends getting three written estimates. Compare the work, materials, price, timing, permits, and payment terms, and ask contractors to explain substantial differences.
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What should be in a home repair contract?
The written agreement should identify the contractor and include contact details, a license number where applicable, a clear description of the work and materials, labor and materials costs, estimated start and completion dates, responsibility for required permits, and the payment schedule. Include verbal promises, resolve discrepancies with the estimate, and fill every blank before signing.
How much should I pay a contractor up front?
Do not pay the full project price up front. Some states limit down payments, so ask your local consumer agency which limit applies to your project. Consider tying progress payments to defined completed work and put the schedule in the contract.
Should I choose the lowest contractor estimate?
Not automatically. The lowest bid may describe a different scope, materials, or schedule. Compare the written details, ask about substantial price differences, and make sure each proposal covers the work you are evaluating.
What are warning signs when hiring a contractor?
Be cautious about unsolicited door knocking with claims of leftover materials, pressure to decide immediately, demands for full payment in advance or cash, requests that you obtain permits, pressure to use a recommended lender, and blank or unread documents. Pause and verify the facts before signing or paying.
Does every home repair contract have a three-day cancellation period?
No. The FTC describes a three-business-day cancellation right for certain contracts signed at home or away from the seller’s permanent place of business. Whether it applies depends on the transaction and circumstances, so verify before relying on it.
Who should get the permits for home repair work?
The contract should state who is responsible for required permits. The applicable process and requirements depend on local rules and the agreement, so check with the relevant local agency. A contractor asking you to obtain permits is a warning sign to pause and clarify responsibility.
The Bottom Line
Before signing, verify the contractor’s license with the appropriate state or county office, review proof of insurance, and compare three written estimates. Make sure the contract captures the scope, materials, dates, permit responsibility, and payment schedule; fill every blank, check local rules, and do not pay the full price up front or accept pressure to sign.
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