How to Vet a General Contractor: 2026 Checklist

April 16, 2026

Hiring the wrong general contractor is one of the most expensive mistakes a homeowner can make. Unfinished projects, blown budgets, and shoddy workmanship cost American homeowners an estimated $17 billion per year in rework and legal fees. This checklist gives you a systematic way to vet any contractor before you sign a contract.

Step 1: Verify Their License

Every state except a handful requires general contractors to hold a license for work above a certain dollar threshold. In California, any project over $500 requires a CSLB license. In Texas, there's no statewide license but most cities (Houston, Dallas, Austin) require registration.

Here's how to check:

1. Ask the contractor for their license number — a legitimate contractor will know it off the top of their head.
2. Go to your state's licensing board website and search the number.
3. Confirm the license is active, not expired or suspended.
4. Check for any disciplinary actions, complaints, or bond claims.
5. Verify the name on the license matches the business entity you're contracting with.

If a contractor tells you they "don't need a license" for your project, verify that independently. In many states, working without a required license is a misdemeanor — and it means you have zero recourse through the licensing board if things go wrong.

Step 2: Confirm Insurance Coverage

Two policies are non-negotiable:

• General liability insurance: Covers property damage and bodily injury. Standard minimum is $1 million per occurrence, $2 million aggregate. For projects over $100,000, look for higher limits.
• Workers' compensation insurance: Required in almost every state if the contractor has employees. Without it, you could be held financially responsible if a worker is injured on your property.

Don't just take a contractor's word for it. Request a Certificate of Insurance (COI) naming you as an additional insured. Then call the insurance company directly to confirm the policy is active and hasn't lapsed. This takes 10 minutes and could save you hundreds of thousands of dollars.

Step 3: Check References and Reviews

Ask for at least three references from projects completed within the last 12 months. When you call, ask these specific questions:

1. Did the project finish on time? If not, how late and why?
2. Did the final cost match the original estimate? What caused any overages?
3. How was communication? Did the contractor return calls within 24 hours?
4. Were there any issues after completion? How were they handled?
5. Would you hire this contractor again?

Beyond personal references, check online reviews on Google Business Profile, Yelp, and the Better Business Bureau. Pay attention to patterns — a single bad review means little, but repeated complaints about the same issue (late timelines, hidden costs, poor cleanup) are a red flag.

Step 4: Review Their Portfolio

Any experienced contractor should have photos of completed work. Look for projects similar to yours in scope and style. If you're planning a home addition, you want to see additions they've built — not just bathroom remodels.

Better yet, ask to visit a current job site. How a contractor runs a site tells you everything: Is it clean and organized? Are workers wearing safety equipment? Are materials stored properly? A messy job site usually means messy work.

Step 5: Get Detailed Written Bids

For any project over $5,000, get at least three written bids. A proper bid should include:

• Itemized breakdown of labor and materials
• Specific materials and brands (not just "standard fixtures")
• Projected timeline with start and end dates
• Payment schedule tied to milestones, not calendar dates
• Allowances for selections you haven't made yet
• Exclusions — what's not included

If a bid is significantly lower than the others (say, 30% less), be skeptical. Either the contractor is cutting corners on materials, underestimating the scope, or planning to make it up in change orders. The most detailed bid is usually the most honest one.

Step 6: Understand the Payment Structure

Never pay more than 10-15% upfront or $1,000, whichever is less. Some states cap deposits by law — California limits contractor deposits to $1,000 or 10% of the contract price.

A healthy payment schedule looks like this:

• 10% at signing — covers mobilization and permits
• 25% at rough framing / demolition complete
• 25% at mechanical rough-in (plumbing, electrical, HVAC)
• 25% at substantial completion
• 15% at final walkthrough and punch list completion

Always tie payments to completed milestones you can physically verify — not to dates on a calendar. And never make the final payment until the punch list is 100% done and you have lien waivers from all subcontractors.

Step 7: Read the Contract Line by Line

The contract is your only protection. Every agreement should include:

• Full legal names and addresses of both parties
• Complete scope of work with specifications
• Total contract price and payment schedule
• Start date and substantial completion date
• Change order process and pricing method
• Warranty terms (minimum one year on workmanship)
• Who pulls permits and who pays for them
• Dispute resolution method (mediation before arbitration)
• Right to cancel within 3 business days (required by federal law for home solicitation sales)

If a contractor resists putting something in writing, that's your answer. Walk away.

Step 8: Verify Permits Will Be Pulled

Your contractor should pull all required permits. Period. Unpermitted work can result in fines, forced demolition, insurance claim denials, and major problems when you sell your home. Ask the contractor which permits the project requires and confirm with your local building department.

The contractor — not you — should be the one applying for and managing permits and inspections. If they suggest skipping permits "to save you money," that's a contractor you don't want anywhere near your home.

The Complete 2026 Vetting Checklist

1. License number verified through state licensing board
2. General liability insurance confirmed ($1M+ per occurrence)
3. Workers' compensation insurance confirmed
4. At least 3 recent references checked
5. Online reviews reviewed (Google, BBB, Yelp)
6. Portfolio of similar completed projects reviewed
7. 3 written, itemized bids received and compared
8. Payment schedule tied to milestones (not dates)
9. Written contract reviewed with all required clauses
10. Permit plan discussed and agreed upon
11. Warranty terms documented in writing
12. Lien waiver process agreed to

Print this checklist and go through it for every contractor you're considering. The 2-3 hours you spend vetting upfront will save you weeks of headaches — and potentially tens of thousands of dollars — down the road. Browse contractors in your city to start comparing options.