Contractor laying tile for home improvement project.

Hiring A General Contractor: What Homeowners Should Know

Sarah Li Cain5 minute read
PUBLISHED: March 25, 2022


When it comes to making larger renovations to your home, hiring a general contractor may make the most sense. As you’re making plans and budgets, understanding the process of hiring a professional is key. You want to be able to trust that this person will do what they promise and on budget so that your home improvement project is a success.

What Is A General Contractor And When Would I Need One?

A general contractor is a person who supervises and coordinates a remodeling or building project. Some tasks include scheduling and hiring workers, securing permits when necessary, and doing the renovation work themselves. Licensed general contractors will have liability insurance and worker’s compensation, taking responsibility for the worksite.

Here’s a list of tasks general contractors typically take on:

  • Remodels
  • Plumbing
  • Painting
  • Renovation
  • Electrical work
  • Woodworking
  • Roofing
  • Siding
  • Flooring

General contractors typically guarantee their work, meaning they’ll make sure work is done to the utmost of standards and it’s completed in a way that won’t void any warranties. Plus, depending on the project, general contractors may also be responsible for cleaning up and disposing of all construction debris and trash.

Keep in mind that some projects, especially small ones that don’t require special permits, may not require a general contractor, depending on the scale of the project.

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What To Look For In A Contractor

Each state will have licensing requirements to become a general contractor. For instance, some will need to pass a test, provide proof of liability insurance and even set up a business entity.

In general, the type of education a contractor has doesn't matter much, unless you’re looking for a highly specialized skill. In fact, the more important qualification is most likely their practical experience. Many of them work for years for another contractor or company to learn the skills necessary to advance to higher roles before becoming a general contractor themselves. With this practical experience, they are able to properly estimate completion time, costs, and be able to hire others and manage a worksite.

More specifically, here’s a checklist of what to look for in a contractor:

  • Good to excellent reviews
  • Relevant experience
  • Professional liability insurance
  • Worker’s compensation coverage
  • Required permits
  • Property damage coverage

Before hiring a contractor, it’s a smart idea to check what specific permit and warranty requirements are in your state.

Steps To Hire A General Contractor

Understanding how to hire a contractor will help you ensure your project can be completed as efficiently as possible. The contractor you end up hiring should have the expertise, experience, licenses and permits necessary to complete the project. You can even check to see if there are any reviews to see there are any complaints when making your decision.

Here are some best practices when hiring a contractor, though these steps and their length can vary between projects.

Get Recommendations From Trusted Sources

It’s common for people to start their research by asking around for recommendations — positive reviews and word of mouth are great ways to get intel about a contractor. When asking those you trust about their experiences, consider seeing the project that was completed, whether it’s similar to what you want, and asking for anything that stood out to them about the contractor.

You can also come up with a list by doing some online research with websites such as Angi (formerly Angie’s List). Once you have a list of contractors, it’s time to make some calls to screen contractors to narrow down your list.

Some questions you can ask include:

  • Does the contractor take on projects of your size?
  • Do they have references they’re willing to provide?
  • Do they hire subcontractors and how long have they worked with them?
  • Will they provide a list of previous clients?
  • How many projects will they have at the same time as yours?

Meet With Your Short List

Once you have your short list, set up a time to meet with each contractor. That way, you can get estimates and further narrow down your list to the one you’ll ultimately hire. If you didn’t already ask these questions in your initial call, here are more to ask during your interview:

  • How long they’ve been working as a general contractor
  • What types of insurance do they have?
  • Estimated cost of project
  • Estimated timeline of project

Don’t forget to check the Better Business Bureau to see if there are any complaints against the contractor. Sure, you may like their personality, but it won’t matter if they won’t do a good job on your project.

Get Everything In Writing

As you’re discussing everything with contractors, make sure to get it all in writing to ensure there’s a paper trail to reference if things get sticky during or after the project. In most cases, the contractor will have a contract for you to sign — make sure to read it thoroughly before signing.

It’s also important to negotiate payment terms well ahead of time and get those in writing. Some of these terms include payment schedules or plans, estimates and timelines, potential lien releases, and specific materials to be used.

In many cases, you may have to make a down payment before the contractor starts work. In this case, make sure to record the exact amount the contractor received and the remaining amount due so everyone is on the same page.

Other things to note when it comes to payment:

  • Don’t pay in cash: You want to have a record of payment. If the contractor only accepts cash, they could potentially scam you.
  • Finance larger projects: Depending on the contractor, they may have their own financing, or you can arrange your own. For instance, getting a personal loan from Rocket LoansSM is an easy way to pay for a larger renovation.
  • Credit cards and checks may be acceptable: Both these payment methods provide a record of payment and may be appropriate for smaller projects. 

Begin Your Project

Once a contract and pricing has been agreed on, the project can start. Of course, depending on the general contractor’s availability, this may not be immediate.

When the project is underway you should try to keep detailed records to make sure that it’s all unfolding as the contract stated. For instance, take photographs of the work in progress and save physical copies of any change orders that happen so you have proof if you need it.

When the project comes to a close, consider drawing up a checklist your contractor can sign to ensure the work is completed as promised.

Some of these items include in a checklist:

  • You have copies of all warranties
  • All of the work has been done according to what the contract says and to a high standard
  • Proof everyone was paid for the project
  • You’ve inspected and approved the work completed
  • The job area has been completely cleaned

Get Started On Your Next Home Improvement Project

Hiring the right contractor can take some time, but it’s worth the effort. You’ll want to carefully vet people on a shortlist and check references to ensure they’re reputable and experienced to your liking.

Even before hiring someone, it’s crucial you figure out how to pay for your home improvement project. While smaller projects can be paid with a credit card, larger ones may require you to get some form of financial assistance. If you need assistance financing your improvement project, consider a personal loan from Rocket Loans.

Working On A Home Project?

Use a personal loan to finance exactly what's needed for turning your house into a home.

Sarah Li Cain

Sarah Li Cain is a freelance personal finance, credit and real estate writer who works with Fintech startups and Fortune 500 financial services companies to educate consumers through her writing. She’s also a candidate for the Accredited Financial Counselor designation and the host of Beyond The Dollar, where she and her guests have deep and honest conversations on how money affects our well-being.