10 Common Mistakes Homeowners Make When Hiring a Contractor (and How to Avoid Them)

 Learn the 10 most common mistakes homeowners make when hiring a contractor for residential construction or remodeling—and how to avoid them to save time, money, and stress.

Introduction: Why Choosing the Right Contractor Matters

Hiring a contractor is one of the most important steps in any residential construction project—whether it’s a new build, a remodel, or a simple renovation. The right contractor can turn your vision into reality, while the wrong one can leave you with cost overruns, delays, and endless frustration. Unfortunately, many homeowners make the same mistakes when selecting a contractor.

To help you avoid costly errors, here are the 10 most common mistakes homeowners make when hiring a contractor—and tips to choose wisely.

1. Not Checking Licenses and Credentials

One of the biggest mistakes homeowners make is failing to confirm whether a contractor is licensed, insured, and properly certified. A licensed contractor ensures compliance with state regulations and provides protection if issues arise.

✅ Tip: Always verify licenses with your local licensing board and ask for proof of liability and workers’ compensation insurance.

2. Choosing the Lowest Bid Without Questioning It

It’s tempting to save money, but the cheapest bid often comes with hidden costs. A low price might mean shortcuts in materials, unskilled labor, or surprise “add-ons” later.

✅ Tip: Compare bids carefully and ask for detailed breakdowns of materials, labor, and timelines.

3. Not Getting Everything in Writing

Relying on verbal agreements is a recipe for disputes. Without a written contract, homeowners risk misunderstandings about payment schedules, scope of work, and project timelines.

✅ Tip: Always sign a detailed contract that covers deadlines, responsibilities, and payment terms.

4. Skipping the Reference Check

Too many homeowners hire contractors without speaking to past clients. References provide firsthand insight into reliability, work quality, and professionalism.

✅ Tip: Ask for at least three recent references and follow up with phone calls—or better yet, request to visit a completed project.

5. Overlooking Communication Style

Even skilled contractors can cause frustration if they don’t communicate well. Poor communication leads to delays, misunderstandings, and stress for homeowners.

✅ Tip: Pay attention to how promptly and clearly a contractor responds during the hiring process—it often reflects how they’ll behave during the project.

6. Not Setting a Realistic Budget

Homeowners sometimes underestimate the true cost of construction or fail to account for unexpected expenses. This often leads to mid-project financial stress.

✅ Tip: Create a realistic budget that includes a 10–15% contingency fund for surprises.

7. Ignoring Permits and Local Regulations

Skipping permits to “save time” can result in hefty fines, stop-work orders, or issues when selling the home later.

✅ Tip: Confirm who is responsible for securing permits—you or the contractor—and ensure everything is in place before work begins.

8. Failing to Define the Scope of Work Clearly

Vague project descriptions create room for confusion. Without clear details, contractors may interpret tasks differently, leading to disagreements.

✅ Tip: Provide specific instructions with drawings, materials lists, and written descriptions to ensure everyone is on the same page.

9. Paying Too Much Upfront

Some homeowners make the mistake of paying most—or all—of the project cost upfront, leaving them vulnerable if the contractor disappears or fails to deliver.

✅ Tip: Follow the industry standard: a small deposit upfront, progress payments tied to milestones, and the final payment upon completion.

10. Not Trusting Instincts

Sometimes, homeowners ignore their gut feelings because a contractor looks good on paper. If something feels “off,” it often is.

✅ Tip: Trust your instincts. Professionalism, respect, and trustworthiness matter just as much as skill.

FAQs About Hiring Contractors

Q1. How do I know if I’m hiring the right contractor?

Check licenses, references, reviews, and ensure they communicate clearly and professionally. Did they show up to the estimate on time? Did he or she ask the right questions? Do you feel heard and confident in he or she's ability to complete the project to your standards?

Q2. Should I get multiple quotes before hiring a contractor?

Yes—at least three quotes give you a realistic idea of pricing and help spot unusually high or low bids. Take the lowest bid and throw it away, because he is either going to "Change Order" the project into oblivion or he doesn't fully understand the Scope of the Project. Compare the other two bids.

Q3. How much should I pay upfront?

Generally, 33%-50% upfront is standard, with milestone payments during the project and the balance upon completion. My general rule of thumb for a deposit, is to add up the material costs and 10% of subcontractor labor. On smaller projects, we usually do a 50% deposit and 50% final payment for simplicity.

Q4. Can I save money by skipping permits?

No—this can lead to legal and financial issues. Always obtain the necessary permits. You will end up paying more, or twice if you try to skip this step.

Q5. What’s the biggest red flag when hiring a contractor?

If they demand full payment upfront, refuse to provide references, or avoid putting details in writing, walk away. Ask to speak with a previous client. Check their online reviews. Ask for proof of licensing and work history.

Conclusion: Hiring Smart Leads to a Stress-Free Build

Avoiding these 10 common mistakes when hiring a contractor can save homeowners thousands of dollars and countless headaches. By verifying credentials, insisting on a written contract, setting realistic expectations, and maintaining open communication, you’ll build not only a successful project but also a positive relationship with your contractor.