Home Improvement: 5 Steps for Hiring a Contractor

2. Interview candidates

Armed with a list, make some calls to get a sense for how comfortable you'll be with them working in and around your home.

The NARI suggests a list of questions to ask a potential contractor at http://www.nari.org. They include:

— How long have you been in business?

— Who will be assigned as project supervisor for the job and will workers be employees or subcontractors?

— Does your company carry workers compensation and liability insurance?

— How many projects like mine have you completed in the past year?

— May I have a list of references from those projects and a list of business referrals or suppliers?

— Do you belong to any professional associations?

3. Avoid red flags

During your search it's helpful to know a few sure signs of trouble. For example, a contractor offering an extremely low bid signals he's likely cutting costs with cheap material or on labor. Poor quality materials or a contractor rushing to get a project done cheaply will end in disaster.

"You're shopping for a final finished product. That doesn't necessarily mean the lowest price," said Herriges, who is also a contractor in Mukwonago, Wis. "You're shopping for value."

Here are a few other red flags from a potential contractor:

— There's a request for significant money up front, say more than a third. It's a sign there may be cash flow issues.

— There's a demand to be paid in cash only.

— The contractor doesn't have a physical business address, just a post office box number.

— The contractor sought you out saying he was in the area and wanted to give you a discount.