Is this contractor estimate fair? A homeowner’s 7-check playbook
Getting an estimate you can’t evaluate is one of the most anxious moments in home ownership. The FTC’s own consumer guidance says to “ask for an explanation” when estimates differ. This guide gives you seven concrete checks you can run on any estimate in about 15 minutes, before you sign anything.
1. Is the contractor’s license number on the document?
Most states require a licensed contractor to display their license number on written proposals and contracts. If it isn’t there, ask for it in writing and verify it on your state’s licensing board site.
2. Is the deposit legal?
California caps residential construction deposits at 10% of the contract or $1,000 — whichever is less. New York generally requires deposits over $1,000 to be held in escrow or bonded. Florida triggers a 30-day permit obligation on deposits over 10%. If the estimate asks for 25%+ upfront, ask why.
3. Are line items priced or hidden behind “allowances”?
Allowances are placeholder budgets for items you’ll pick later. If more than 15% of the total is allowances, you have no ceiling on the final price. Ask which allowances are most likely to overrun.
4. Who pulls permits?
If the contractor doesn’t pull required permits and the work needs them, you can be liable for un-permitted work, fail inspection, and even void your homeowner’s insurance. It should say so on the document.
5. Are payments tied to milestones?
A schedule like “25% at start, 50% at rough-in, 20% at drywall, 5% at final walkthrough” is normal. “Paid in full at signing” is a bright red flag.
6. Are start and completion dates written down?
Approximate dates + a reasonable delay-notice clause protect both parties. “TBD” as a start date means you’re last in line.
7. Is there a change-order procedure?
Every remodel has changes. Without a written procedure (signed, priced, dated), verbal changes become disputes about who owes what.
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