How to Find a Contractor in 2026: Licenses, Bids, Deposits and Red Flags

This guide follows the order you will actually work in: finding names, checking licenses, insurance and bonds, collecting and comparing bids, spotting red flags, setting the deposit and payment schedule, reading the contract, and protecting your home from liens. It finishes with what to do if a job goes wrong. Licensing and contract rules are set state by state, so the examples below come from California, Florida and Texas; check your own state’s rules before you sign anything.

Where to find contractors worth calling

The Federal Trade Commission’s first suggestion is to get recommendations from people you know and trust, then check each name with consumer protection officials and the local home builders association for complaints, and search the company’s name online along with words like “scam,” “review” or “complaint” (FTC). Read online reviews with a critical eye and look for patterns: do several people describe the same experience, good or bad (FTC)?

California’s licensing board adds a few sources people tend to overlook. Local customers, material suppliers, subcontractors and lenders can tell you whether a contractor pays its bills, and your local building department, trade associations and consumer protection agency can tell you about past problems (CSLB). Make sure every candidate has a real business address and phone number: a contractor who works out of a truck with only a cellphone may be hard to find when something needs fixing after the last check clears.

Be careful with the contractor who finds you. The FTC lists knocking on doors because they are “in the area” and offering materials “left over from a previous job” as classic scam openers (FTC). Texas’s attorney general notes that not every door-to-door contractor is a scammer, but many scammers work door to door, especially after storms (Texas Attorney General).

Check the license: the rules depend on your state

There is no national contractor license. The FTC’s advice is to consider only licensed and insured contractors and to confirm the license with your state or county government (FTC). What “licensed” means changes a lot from one state to the next, as these three show.

State	Who needs a license	Where to check	Rule on money up front
California	Anyone contracting for work that needs a building permit, uses employees, or is worth $1,000 or more in labor and materials combined	Contractors State License Board (CSLB), online or at (800) 321-2752	Down payment of no more than 10% or $1,000, whichever is less
Florida	Anyone in the business of contracting must be certified (statewide) or registered (local)	The state licensing department under Chapter 489	Taking more than 10% up front triggers deadlines to pull permits and start work
Texas	No general or remodeling contractor license on the state licensing agency’s list; electricians and air conditioning contractors are licensed by TDLR, plumbers by a separate state board	TDLR for electrical and HVAC; the State Board of Plumbing Examiners for plumbers	On homestead jobs over $5,000, the contractor must deposit your payments in a construction account

Texas is the useful warning here: in a state without a general contractor license, “licensed” only means something for the trades the state does license. The Texas attorney general’s advice is to check credentials and complaints with the licensing agency when you hire a trade that must be licensed, such as an electrician (Texas Attorney General). Cities and counties can add their own rules on top, so ask your local building department too.

Seeing a license number is not the same as checking it. In California, contractors must print their license number on business cards, bids and contracts, but the board stresses that a number does not mean the license is valid. Ask to see the pocket license and a photo ID, and make sure the person in front of you is the person on the license. Salespeople who sell home improvement jobs for a contractor must be registered with the board too (CSLB).

Match the license to the job. A kitchen remodel that combines plumbing, electrical and carpentry under one contract calls for a general building contractor in California, while a roof-only or plumbing-only job can go straight to a contractor licensed in that specialty (CSLB).

If your home was built before 1978, add one more check. Federal rules require anyone paid to do work that disturbs painted surfaces in those homes to be lead-safe certified, with workers trained in lead-safe work practices, and the EPA estimates that about three-quarters of US homes built before 1978 still contain some lead-based paint (EPA). The EPA runs a locator for certified firms.

Insurance and bonds: what to ask for

Ask for proof of insurance, either a copy of the certificate of insurance or the name of the insurer and agency, so you can confirm it yourself (CSLB). Two kinds of coverage matter most:

• Workers’ compensation. In California a contractor with employees must carry it, and roofing, concrete, HVAC, asbestos abatement and tree service contractors must carry it even without employees. If a worker is hurt on your property and the contractor is uninsured, you could be liable for the injuries, and your homeowner’s policy may or may not cover it (CSLB).
• General liability. It covers damage to your property. California does not require it, so a contractor without it should be able to explain how damage would be paid for; otherwise you or your insurer could end up paying (CSLB).

Bonds are a separate layer, and they protect less than most people think. Every California licensee must carry a $25,000 license bond, which often is not enough to cover several complaints or a project worth more than the bond. A contract bond, which guarantees that the job is finished and that labor and materials are paid for, usually costs 1% to 2% of the contract price (CSLB).

Get at least three written bids and compare them

California’s board recommends at least three written bids built on identical plans, specifications and scope of work, so you are comparing the same job (CSLB). The FTC says each written estimate should describe the work, the materials, the completion date and the price, and that you should ask for an explanation when estimates are far apart (FTC).

Don’t take the lowest number on reflex. A bid well below the others probably means a mistake or missing work, and it may point to cut corners (CSLB). Texas’s attorney general puts it simply: most legitimate bids fall into a fairly close range, so question a “low-ball” bidder about materials and labor (Texas Attorney General).

Knowing the usual price range before the first visit helps you spot a bid that is far off. These are the published ranges for four common projects, with more detail in our guides to bathroom remodel cost, kitchen remodel cost, roof replacement cost and basement finishing cost.

Project	HomeGuide	Fixr	Third guide
Bathroom remodel, average size	$3,500 – $25,000	$6,000 – $18,000	$6,456 – $24,715 (This Old House)
Kitchen remodel, full, same layout	$15,000 – $50,000	$15,000 – $45,000	$14,600 – $41,600 (Angi, as reported by NerdWallet)
Asphalt shingle roof replacement	$5,700 – $16,000	$7,500 – $14,000 (all materials)	$5.09 – $6.66 per sq ft (Homewyse)
Basement finishing, about 1,000 sq ft	$30,000 – $50,000	$15,000 – $30,000	$7,000 – $23,000 (This Old House)

The guides agree closely on bathrooms, kitchens and roofs. They do not agree on basements: This Old House’s range for a 1,000-square-foot basement tops out below HomeGuide’s starting point, so a basement bid anywhere from $7,000 to $50,000 can be normal depending on how much you are building.

Estimate your project budget before you call a contractor

Our estimate: each project range in the calculator runs from the lowest low to the highest high of the guides in the table above (for the roof, the two guides that price the whole job). The contingency lines apply the percentage each guide suggests to the bottom and top of that range: for a bathroom, 10% of $3,500 to 20% of $25,000; for a kitchen, 5% of $14,600 to 10% of $50,000; for a basement, 10% of $7,000 to 20% of $50,000. These are our calculations, not measured prices, and the state selector adjusts the labor share by average construction wages, not by local quotes.

Permits and a contingency: the lines that bids often leave out

Project	Permit cost	Contingency the guides suggest
Bathroom remodel	About $500, or 4% of the project, on average (Fixr)	10% – 20% (HomeGuide)
Kitchen remodel	$500 – $1,500 (HomeGuide); $450 – $2,500 (Fixr)	At least 5% (HomeGuide); 5% – 10% (Fixr)
Roof replacement	$100 – $500 (HomeGuide and Fixr)	—
Basement finishing	$200 – $1,000, or 1% – 2% of the total in some cities (HomeGuide)	10% – 20% (This Old House)

Ask every bidder whether the permit fee is in the price. HomeGuide says most contractor bids for kitchen remodels include it (HomeGuide), and California’s homeowner checklist asks the same question (CSLB). The contingency is money you keep, not money you hand over: it covers what turns up once walls and floors are open.

Our estimate: on a $20,000 bid, the 10% to 20% contingency suggested for bathrooms and basements comes to $2,000 to $4,000, and the 5% to 10% suggested for kitchens to $1,000 to $2,000. This is simple arithmetic on the guides’ percentages, not a measured figure.

Red flags that should end the conversation

• Pressure to decide now, or a discount only if you sign today (FTC).
• A request to pay everything up front, or to pay only in cash, by wire transfer, gift card, payment app or cryptocurrency. Once that money is gone it is almost impossible to get back (FTC).
• A claim that no license is needed for the work, or a refusal to give you copies of the license, insurance or a written contract (FTC).
• Asking you to pull the building permit yourself (FTC).
• Steering you to a lender they know. The FTC describes contractors who rush homeowners into signing papers that turn out to be a high-cost home equity loan, then leave the work unfinished (FTC).
• A contract with blank spaces, or one they won’t leave with you to read (Texas Attorney General).
• After a disaster: asking you to sign over your insurance check, or charging a fee to help you qualify for FEMA aid. FEMA does not charge application fees (FTC), and federal agencies never charge for disaster assistance or for help filling out applications (FEMA).

How much to pay up front, and when to pay the rest

Where or when	Rule or official advice
California	Down payment of no more than 10% of the contract price or $1,000, whichever is less, with no exception for special-order materials. The one exception is a contractor with a blanket performance and payment bond on file with the board, which only about two dozen licensees have.
Florida	A contractor who takes more than 10% of the price as the first payment must apply for permits within 30 days and start work within 90 days after the permits are issued, unless there is just cause or you agreed in writing to longer.
Texas	For homestead improvements over $5,000, the contractor must deposit your payments in a construction account; ask for written proof the account exists.
After a disaster	Don’t pay more than half the cost of repairs in advance.
Any state	Don’t pay the full amount up front; some states limit down payments, so ask your state or local consumer agency.

After the deposit, tie every payment to finished work. California requires a detailed written payment schedule in the contract, and payments may not run ahead of the value of the work done (CSLB). Inspect each stage before you pay for it, and don’t sign a certificate of completion until the work is finished and the site is clean (Texas Attorney General). Pay by credit card or check, never make the final payment until you are satisfied, and keep every invoice and receipt (FTC).

If the work is paid for by insurance, the FTC suggests asking your bank or credit union for a certificate of completion arrangement, so the bank pays the contractor stage by stage after you approve each one (FTC). If you need a loan, shop for the financing separately from the bids, and compare the interest rate, finance charges and total cost over the term (Texas Attorney General).

What the written contract should include

Contract rules vary by state, but the FTC’s advice is to ask for a written contract even where your state does not require one (FTC). California does require one for any home improvement project over $500 (CSLB). Between the FTC and California’s board, a good contract has:

• The contractor’s name, business address, phone number and license number.
• Estimated start and completion dates.
• A detailed description of the work and the materials: sizes, colors, quantities, model numbers, and who does what.
• The payment schedule.
• Who gets the permits.
• Cleanup and debris removal.
• Every promise made in conversation, including scope of work and the cost of labor and materials.
• Written warranties for labor and materials.
• A written notice of your right to cancel within three business days if you signed at home or anywhere other than the seller’s permanent place of business.
• No blank spaces.

Sources for the list: FTC and CSLB. California gives people 65 and older five days, instead of three, to cancel home improvement and home solicitation contracts (CSLB). In Texas, a contract for work on your homestead must carry a warning that you could lose your home if you don’t meet its terms, and a notary other than the salesperson must witness your signature on any document creating a lien (Texas Attorney General).

Changes need paper too. In California, any change to the price or the scope must be made with a written change order signed by both of you before the change, and it becomes part of the contract (CSLB). Texas’s attorney general warns that contractors often charge a service fee for changing the work order, and that the contract should say so (Texas Attorney General).

Liens: how you can pay twice, and how lien waivers prevent it

A mechanics’ lien (Florida calls it a construction lien) is a claim against your property by someone who worked on it or supplied materials and was not paid. The catch is that subcontractors and suppliers can claim against your home even if you paid your contractor in full, if the contractor didn’t pay them. Florida requires contracts over $2,500 on homes of up to four units to print that warning in bold capitals (Florida Statutes, s. 713.015), and Texas’s attorney general gives the same warning for Texas homes (Texas Attorney General).

The protection is a paper trail. California’s board recommends this routine (CSLB):

• Get a list of every subcontractor, laborer and supplier, and keep the preliminary notices they send you.
• Before each payment, get a signed conditional lien release from each possible claimant; after paying, get an unconditional release signed by each one who was paid. You may hold the next payment until you have the unconditional releases for the last one.
• Consider joint checks, made out to both the contractor and the supplier or subcontractor.
• File a notice of completion with the county recorder within 15 days of completion. It cuts the time a contractor has to record a lien from 90 to 60 days, and for subcontractors and suppliers from 90 to 30 days.

Florida’s required notice gives the same core advice: write into the contract that, before any payment, the contractor must give you a written release of lien from anyone who has sent you a “notice to owner”. Florida’s statute also says its lien law is complex and recommends consulting an attorney (Florida Statutes, s. 713.015).

What to do if the job goes wrong

1. Raise it with the contractor first. Many disputes end there. Follow every phone call with a letter sent by certified mail, return receipt requested, and keep copies of everything (FTC).
2. Use your state’s rules on deposits. In Florida, if a contractor took more than 10% and has not pulled permits or started, send a written demand by certified mail to apply for permits, start work or refund the payment. If nothing happens within 30 days of that demand, the law lets it be inferred that the contractor had no just cause (Florida Statutes, s. 489.126).
3. Complain to the licensing board. California’s board takes complaints against licensed and unlicensed contractors for up to four years from the act, but an investigation does not guarantee you get money back; for that, the board points to small claims court or an attorney (CSLB).
4. Get outside help. Your state attorney general or local consumer protection office, the local home builders association and dispute resolution programs can help (FTC). USAGov lists every state consumer protection office.
5. Report fraud. Report a scam to the FTC at ReportFraud.ftc.gov (FTC). Disaster-related contractor fraud can also go to FEMA’s investigations division or the National Center for Disaster Fraud (FEMA).

How to keep the bill down

• Give every bidder the same plans and the same scope, so the prices are comparable (CSLB).
• On a bathroom, keep plumbing and electrical in the same place to save on labor (HomeGuide).
• Plan the contingency before you sign: 10% to 20% for a bathroom (HomeGuide) or a basement (This Old House), 5% to 10% for a kitchen (Fixr).
• Shop for financing on its own; the loan arranged with the work is not necessarily the best one (Texas Attorney General).
• A bid far below the rest is not a saving if work is missing from it; ask what it leaves out (FTC).

For bigger projects, such as a home addition, the same steps apply; that guide covers the design, survey and permit costs that come with one.

Questions to ask before you sign

• What is your license number, and which classification covers this work? Can I see your pocket license and a photo ID?
• Can you give me a certificate of insurance for workers’ compensation and general liability, and the name of the insurer?
• Who pulls the permits, and is the permit fee included in this price?
• How much is the deposit, and what is the payment schedule tied to?
• Which subcontractors and suppliers will work on the job, and will you give me lien releases before each payment?
• How do you handle change orders, and do you charge a fee for them?
• Can I talk to three recent customers and see the work? (California’s homeowner checklist asks whether you did.)
• If the house was built before 1978: is your firm lead-safe certified?

Sources

• Federal Trade Commission, Consumer Advice, How To Avoid Scams After Weather Emergencies and Natural Disasters, September 2025.
• Federal Trade Commission, Consumer Advice, How To Avoid a Home Improvement Scam, July 2022.
• Federal Emergency Management Agency, Disaster Fraud, updated June 26, 2026.
• U.S. Environmental Protection Agency, Lead Renovation, Repair and Painting Program, updated June 17, 2026, and Lead-based Paint Professional Locator.
• USAGov, State consumer protection offices.
• California Contractors State License Board: What Kind of Contractor Do You Need?, How Do I Find the Right Licensed Contractor?, What Is a Contract?, Warnings and Exceptions, Homeowner Checklists, How to Prevent a Mechanics Lien and Filing a Construction Complaint, all checked October 2026.
• The Florida Legislature, 2026 Florida Statutes, s. 489.113, Qualifications for practice, s. 489.126, Moneys received by contractors and s. 713.015, Mandatory provisions for direct contracts.
• Office of the Texas Attorney General, How to Avoid Home Improvement Scams, checked October 2026.
• Texas Department of Licensing and Regulation, Programs Licensed and Regulated by TDLR, and Texas State Board of Plumbing Examiners, checked October 2026.
• HomeGuide: Bathroom Remodel Cost, June 20, 2025; Kitchen Remodel Cost, December 31, 2025; Roof Replacement Cost, November 7, 2025; Cost to Finish a Basement, February 6, 2026.
• Fixr: Bathroom Remodel Cost and Kitchen Remodel Cost, updated January 27, 2026; Roof Replacement Cost, updated February 4, 2026; Cost to Remodel a Basement, updated January 30, 2025.
• This Old House: Bathroom Remodel Cost, updated July 2, 2026; How Much Does It Cost To Finish a Basement?, updated April 6, 2026.
• NerdWallet, Kitchen Remodeling Costs in 2026 and Ways to Save, updated January 19, 2026 (reports Angi’s figures).
• Homewyse, Cost to Install Asphalt Shingle Roof, May 2026.