1. Settle on the scope of your project before you go looking for a contractor.
It's okay to seek guidance from a professional on some details, because your contractor is the expert. But you'll save yourself a lot of time and benefit more from that expertise if you prepare before you start making calls. What are you hoping to accomplish? What materials or approach are you considering? What's your approximate budget? Do you have a firm deadline for completion?

2. Get recommendations from friends and family.
Once you have an initial picture in your mind of the scope of your project, spread the word! Let your contacts know that you're looking for a contractor and the general nature of your project. Start talking about "remodeling the kitchen" or "having a deck built" and you'll find ample feedback from others about their experiences. Ask them to tell you about their own projects and whether they'd hire their contractor again. Request that they be honest. Do they recommend the contractor? Were they satisfied? If not, what were their concerns?

3. Check with industry groups and your local consumer reports resources. 
Whether your fact-finding efforts with your contacts yields several potential contractors or very few, consider contacting professional groups, like the National Association of the Remodeling Industry, for a list of members in your area. Other consumer-recommendation groups like Consumer's Checkbook and Angie's List are good places to do some homework on contractors you are referred to by your friends or that you find on the industry lists. You can try talking with a local building inspector, who will know which contractors routinely meet code requirements.

4. Conduct phone interviews.
Once you have a list of potential contractors, make a quick call to each of your prospects and interview them. The answers to the following questions will demonstrate the contractor's availability for your project, dependability, and how much attention they'll be able to give your project.

• Do they take on projects of your size?
• How long have they been in business?
• How many projects like yours have they completed in the last year?
• Will they provide business references, from vendors or banks?
• May you have a list of previous clients to contact for references?
• If you were to hire them, how many projects, besides yours, would they be working on at the same time?
• How long have they been working with their current subcontractors (the ones relevant to your project)?

5. Schedule meetings with your top picks.
After speaking with each contractor on the phone, select no more than five to meet for estimates and further discussion. Request that each bring the references you requested and copies of any relevant licenses. During this meeting, a contractor should be able to answer questions to your satisfaction and put you at ease. It is imperative that you communicate well and feel comfortable with the contractor, as this person will be spending a lot of time in your home. But, be careful not to allow charm to fool you. If your further research indicates that a contractor you liked personally has a shabby track record, don't do business with them.

6. Do further research.
You've narrowed your list, now put your homework to good use. Check in with your state's consumer protection agency and your local Better Business Bureau to make sure the contractors on your short list don't have a history of disputes with clients or subcontractors. Call the former client references to find out how their project went and ask if you can see the end product. Be sure to also visit a current job to see how the contractor actually works. Is the site neat? Is work being conducted safely? Are the on-site workers polite? Are they careful with the homeowner's property?

7. Get bids.
The remaining contractors should be ones whose reputations are good and who appear to be responsible. It's time to look ahead to your project and be ready to commit to your initial plans. A professional contractor is going to want a complete set of blueprints and a good feel for what you are hoping for with your project, as well as your budget. Don't request bids before your plans are generally set. Ask each contractor to break down the cost of materials, labor, profit margins and other expenses in their bids so that you can compare them fairly. Materials typically account for about 40 percent of the cost, the rest covers overhead and a fair profit margin. Some details you should cover when requesting the bids are:
• Estimated length of time to complete the project
• Time for permitting and inspections, if not covered in the project timeline estimate
• When you can expect to receive the contractor's itemized bid and the delivery method of the bid

8. Set a payment schedule.
Before they head off to calculate their bids, come to agreement on your payment schedule. The payment schedule a contractor requires can speak volumes about their financial status and work ethic. Contractors who want half the bid up front may be struggling financially or suspect that you won't pay the balance after you've seen the work. It's typical to pay 30 percent at contract signing, with progress payments based upon work completed, and the final 10 percent should be paid upon completion and acceptance of all work.

9. Verify the contractors' credentials.
While waiting for the bids to come back, confirm that the companies are licensed and insured if they claimed to be. Follow up with any of the remaining references.

10. Assessing the bids.
Consider all you've learned about the contractor. Don't let price be your guide! In fact, consider throwing out the lowball bid; that contractor is likely cutting corners. If the bid itself didn't arrive in the timeframe the contractor promised, consider that an indicator that their work may run late, too. The most important aspect in choosing a contractor is how well you communicate with them. All other things being equal, it's worth it to spend more and hire someone with whom you're comfortable.

11. Get it in writing.
A comprehensive written contract protects you both. Draw up one that details every step of the project, including the payment schedule, scope of the project, proof of liability insurance and worker's compensation coverage, a start date and projected completion date, specific materials and products to be used, who is responsible for obtaining permits, and a requirement that the contractor secure lien releases from all subcontractors and suppliers. Never sign an incomplete contract. Don't forget: the price will increase and the timeline will be extended each time you make a change to the scope of the work or a problem is uncovered.

12. Create a project file.
Keep a central file with all paperwork related to your project. Include a copy of the plans and specs, any bills or invoices, cancelled checks, a copy of the signed contract, any change orders, all correspondence, and photos documenting the progress of the job.

The most important decision you'll make as part of your remodeling project is which contractor to hire. It's not as easy as flipping open the phone book and selecting the company with the most eye-catching advertisement.

You need to look for a company with an established business history in your community. Successful contractors are proud of their reputation, and track records and their longevity alone is a good sign that they are worth consideration.

Below are 12 essential steps to help you select the right contractor for you and ensure that your project runs as smoothly as possible. A little research and planning will pay dividends in reduced frustration, faster timelines, and fewer unnecessary costs.

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How to hire a contractor