Hiring a general contractor is one of the biggest decisions in any major construction project. A great GC delivers quality work on time and on budget. A bad one costs you months of delays, thousands in unexpected expenses, and a project that might need to be redone. The gap between those outcomes is largely determined by how well you do your due diligence before you sign anything.
Most homeowners and property owners who get burned by contractors skip the same steps: they don't verify the license, they accept the lowest bid without asking why it's low, and they sign a contract with vague language. This guide walks you through what actually works when hiring a general contractor for a significant project.
Before anything else, verify that the general contractor holds a valid license in your state. Most states have an online contractor license lookup tool through the state licensing board or contractor licensing authority. Use it. A legitimate contractor will have a license number they can provide immediately — if they can't or won't, that's your first red flag.
Licensing matters because it means the contractor has met minimum competency requirements, passed relevant exams, and carries required insurance. Unlicensed contractors are riskier in every way: no verified competency, often no insurance, and limited legal recourse if things go wrong.
While you're verifying the license, check for any disciplinary actions, complaints, or suspensions on file. The licensing board typically publishes this information. A complaint here and there over a 20-year career isn't automatically disqualifying — but patterns of complaints, or complaints for the same type of issue, are serious warning signs.
The standard advice is to get three bids. That's a reasonable starting point, but how you compare those bids matters more than how many you collect. Bids need to be apples-to-apples comparisons. If one bid is $50,000 and another is $75,000 for the same project scope, you need to understand why before you assume the lower bid is the better value.
Common reasons bids vary widely:
Ask each bidder to break down the bid into materials, labor, and overhead/profit. A contractor who refuses to provide a detailed breakdown should raise questions.
Every contractor has a reference list. The ones on that list are handpicked by the contractor — of course they're going to say positive things. That doesn't mean references are useless. They're still worth calling, with the right questions.
Ask references specifically: Did the project finish on schedule? If not, by how much did it run over and why? Did costs stay close to the original bid? How did the contractor handle problems when they came up? Would you hire them again? That last question gets you the most honest answer — a lukewarm "sure" reveals more than you might expect.
Beyond the contractor's provided list, search for reviews on Google, Houzz, or contractor review platforms. Look at patterns: are there recurring complaints about communication, about cleanup, about warranty follow-through? No contractor has a spotless record, but patterns are meaningful.
A verbal agreement with a contractor is not enforceable in any meaningful way. You need a written contract, and that contract needs to cover specific things:
Never make the final payment until all work is complete, inspections have passed, and you've done a thorough walkthrough. The punch list — the list of remaining items and corrections — should be resolved before you release the final payment.
A few warning signs that should slow you down significantly:
Pressure to decide immediately. Legitimate contractors are busy, but a good one gives you time to review a bid. High-pressure tactics to sign now before a "price expires" are sales manipulation, not professional practice.
Asking for large upfront payments. Wanting 30–50% upfront is a significant red flag, especially from a contractor you haven't worked with before. Reasonable upfront deposits are 10–15% for materials; the rest should be milestone-based.
No physical business address or office. Work trucks and cell phones are fine — but a contractor with no verifiable business presence is harder to hold accountable if something goes wrong.
Won't pull permits. Any contractor who suggests skipping permits to "save time" is putting you at risk. Unpermitted work can complicate insurance claims, title transfers, and refinancing. You're the property owner — unpermitted work is your problem, not the contractor's, once they're gone.
The general contractor license requirements exist because construction projects carry real risk. A licensed contractor has skin in the game — their license is on the line. Unlicensed contractors don't have that accountability.
Hiring the right contractor is step one; working with them effectively is step two. Establish communication expectations upfront: how will you communicate (text, email, phone), how often, and what requires written approval. Stay involved without micromanaging — knowing what's happening on your project is your right and your responsibility as the owner.
Keep a project journal. Note what was done each day, what was discussed, what decisions were made. If a dispute arises later, your dated notes are valuable. Don't make verbal decisions on site that contradict the contract — put changes in writing through a formal change order process.
The general contractor relationship works best when there's clear communication, documented decisions, and mutual respect for each party's role. You hired the contractor for their expertise — let them do their job while staying informed about the project's progress.
Whether you're a homeowner hiring a GC or studying for your own general contractor license exam, understanding what separates competent, professional contractors from the rest matters. Licensed contractors have demonstrated knowledge in building codes, project management, safety, and construction practice. That knowledge is what the licensing exam tests.
Our general contractor practice tests cover the technical foundations — building codes, MEP systems, structural principles, and contractor law. They're valuable whether you're on the hiring side of a project or preparing to earn your own license. Start working through them today and build the knowledge base that makes you a better informed decision-maker in any construction context.