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Requirements vary by state and trade. At minimum, contractors should have a state contractor's license, general liability insurance ($1M+ recommended), and workers' compensation if they have employees. Verify licenses through your state's licensing board.

Provide identical scope documents to each contractor, request itemized bids (not lump sums), ensure they include all permits and cleanup, and get everything in writing. Compare bids on scope and quality, not just price — the lowest bid often costs more in the long run.

Never pay more than 10-20% upfront, with payments tied to completed milestones. Final payment (typically 10-20%) should only be made after all work is complete, inspected, and permits are closed. Avoid contractors demanding large upfront payments.

Detailed scope of work, material specifications, total price and payment schedule, start and completion dates, change order procedures, warranty terms, cleanup responsibilities, permit and inspection responsibilities, and a clear dispute resolution process.