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1. GET MULTIPLE ESTIMATES: We know how it goes. You meet the first contractor in person, describe your project at length and get comfortable with the idea of working with him or her. The contractor is available to begin work right away. You get the estimate, but unless its out of the ballpark, you go with it because you are anxious to complete the project. Only later do you learn you paid way too much. Protect your wallet. Contact at least three contractors and get written estimates from each. Meet each in person and use the opportunity to pick their brains. Their ideas can help you mature your expectations and save you money. Remember, get written estimates that break down costs so you can compare line items between contractors.

2. GET PROOF OF WORKMANSHIP: A legitimate, successful contractor will be eager to show you samples of his work. He may refer you to neighbors, show you photos of his work, or ask you to visit a "prescreened contractor" web site such as BestContractors.com where he is a member and has posted a virtual showroom that includes photos. The latter option is the best because of the prescreening. In other words, you can be assured the photos online are his. For the other options do your follow-up. The neighbor he referred you to might turn out to be a less-than-objective relative.

3. CHECK FOR LICENSING AND INSURANCE: Most homeowner complaints filed with Departments of Consumer Affairs are caused by unlicensed contractors. Ask for proof of licensing Before you sign a contract. Verify that what is provided is for the area of work he will be performing. Also, ask for proof of insurance. Later, if you've been unable to resolve outstanding issues with the contractor, you might be able to seek recourse by getting his insurer involved. They, in turn, may put pressure on the contractor to make amends or risk losing his coverage. Let the contractor know you expect him to obtain all required permits. If he balks, that's a sure sign he is unlicensed.

4. BEWARE OF LOW, LOW ESTIMATES: You may think its your lucky day when an estimate comes in much lower than the others but it could end up costing you far more in the long run. A very low-bidding contractor is either clueless, never intends on finishing the work, or plans on sticking it to you for additional money once the work begins. If you don't pay up you may never see him again. If two of the estimates are within a few percent of each other and the lowest is more than 20 percent less you should go over the estimate line-by-line and get explanations why.

5. ARRANGE YOUR OWN FINANCING: Be cautious of any contractor who offers to arrange financing for you through a lender he knows. You could find yourself rushed through signing a pile of paperwork only to later learn that it was a home equity loan with unfavorable terms to you. When the contractor is paid by the lender instead of you he has less incentive to complete the work to your satisfaction. Always be the one making the payments and use the scheduling of those payments to your advantage.

6. GET A LIEN WAVIER: Let each bidding contractor know you expect him to provide a lien wavier before you make the first payment. Ask if he plans on using subcontractors. Also ask for the names of his suppliers. The wavier is a defense if a mechanic's lien is later filed against your home because the contractor didn't pay his suppliers or subs. Without it, you could find yourself paying twice for the same work.

7. CHARGE IT PLEASE: Ask your contractor if you can pay by credit card. If so, make all your payments with plastic. Credit card issuers tend to favor their customers in disputes. At a minimum, you should pay by check. Never pay in cash. Its an open invitation to take the money and run. When interviewing contractors let them know your payment method. If any contractor tries to get you to pay on a cash-only basis or offer a discount for cash payments cross them off your list as they likely have an ulterior motive. Good contractors operating well-managed businesses provide billing and receipts.

8. PAY AS THEY GO: Since we're on the subject of payment: never work with a contractor who demands full payment up front. Let your contractor know you expect the contract to include a schedule of stage payments and that you will stick to it...not a dime extra in advance. Depending on the scope of your project, you may want to also include a penalty clause if agreed-to work is not completed on time. Contractors, especially those in strong demand, juggle multiple jobs at once and may put your project aside temporarily while completing another that promises quicker money. Make it costly for the contractor to do this to you beyond the scheduled completion date. Remember that it is customary to pay a deposit to a contractor before work begins. You should expect to pay no more than 20 percent. A demand for more than that should raise a red flag.

9. DON'T GET RUSHED: Any contractor that tries to rush you into signing a contract, especially one containing blanks, is likely trying to slide something in under the radar. Ask him to leave the paperwork with you so you can review it. Cross out any blanks so they cannot be filled in after signing. If you do sign a contract without reading it don't panic. The Federal Trade Commission's "Cooling Off" rule allows homeowners three business days to cancel a contract provided that contract was initiated and signed at your home or at a location other than the seller's permanent place of business. Click here for full details.

10. GET IT ALL IN WRITING: You shouldn't expect your friendly rapport with a contractor to be enough to get the project finished on time and as discussed. Good contractors are service professionals. They aren't offended by your insistence on putting everything "in writing." After all, they'll have plenty of their own language in the contract protecting themselves. The contract should include a schedule of payments, deposits and amounts; work schedules, completion dates and penalty clauses. It should also include detailed descriptions of building materials to be used. For example, if a wall is to be tiled, have the type and size of tile to be used--even the kind of grout you want. You don't want to leave any room for substandard materials to be substituted. Make sure the contract includes the contractor's business street address (no P.O. boxes!), phone number, license number, insurance provider and his obligation to obtain permits.

BONUS TIP - IT AIN'T DONE UNTIL YOU SAY SO!: Unscrupulous contractors might try to take advantage of your busy schedule or vacation plans and ask you for final payment and to sign a completion certificate before the work is done. Don't give in to pressure to write the last check until you are satisfied the work is completed per the contract. But be fair. If after signing the contract you decide you want to substitute--for example--a scarce building material or fixture, the contractor has no obligation to use that material and it would be unfair to withhold payment.