The BBB suggests that you solicit two or three bids for any construction/remodeling/repair work you are planning. Don't automatically accept the lowest offer. Make sure all bids are based on the same set of specifications and materials to be used. Ask for references and inspect finished products. Have all guarantees or warranties in writing. Make sure the contractor is in compliance with all local licensing, bonding and insurance requirements, and that any necessary building permits are obtained.
Read the contract carefully before signing, there may be cancellation fees. Never sign a blank or partially blank contract. If you do not understand the contract, do not sign it until you do. Do not be pressured into signing a contract. Obtain a copy of the signed contract at the time it is signed. Contracts signed away from the seller's normal place of business are subject to the FTC 3 day cooling off rule. If you wish to cancel a sale that is covered by the three-day rule, you need to sign and date the cancellation form. If the seller did not give you cancellation forms, you may write your own cancellation letter. This cancellation letter must be postmarked within the three day time period. You do NOT have to give a reason for cancelling the transaction; you have the right to change your mind. Make sure the letter is post-marked before midnight of the third business day. Saturday is considered a business day, Sunday and federal holidays are not. Proof of the mailing date and confirmation that the seller received the cancellation form are very important. You may wish to send the cancellation form certified mail, return receipt requested. Alternately, you may hand-deliver the cancellation notice, be sure to have the person accepting the delivery sign for it. For further details on the Cooling Off Rule, please go to: http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro03.shtm
Before paying, get a sworn statement that all bills for material and labor have been paid for by the contractor. Typically, a down payment of one third of the total contract price is made with additional payments made after completion of each phase of work . Final payment should not be made until work is completed and it has been inspected and passed by you and/or the licensing authority.
If the work is to be financed, be sure to have completed details of the financing agreement, especially if a second mortgage of your home is used as security for the remodeling work.