How to Hire a General Contractor in the Bay Area: A Complete Checklist

Why Hiring the Right Contractor Matters More in the Bay Area

The Bay Area is one of the most expensive construction markets in the country. Labor costs, material prices, permit fees, and regulatory complexity all run significantly higher here than in most U.S. metros. A kitchen remodel that costs $60,000 in Phoenix can easily cost $120,000 or more in Palo Alto, Saratoga, or Los Altos.

That cost premium makes your choice of general contractor the highest-leverage decision on any project. The right contractor protects your investment through accurate budgeting, quality workmanship, and transparent communication. The wrong one can cost you tens of thousands of dollars in overruns, legal fees, and unfinished work.

The CSLB receives over 20,000 complaints annually, and roughly 60% involve unlicensed operators. Homeowners who hire unqualified contractors lose an average of $45,000 per incident. This guide gives you a systematic checklist to avoid those outcomes.

Your Complete Contractor Hiring Checklist

Use this checklist as a step-by-step process. Each item builds on the previous one, so resist the urge to skip ahead to portfolio reviews or bid comparisons before completing the foundational verification steps.

Step 1: Verify CSLB License and Classification

Every general contractor working on projects valued at $1,000 or more in California must hold an active license from the Contractors State License Board. As of January 1, 2025, Assembly Bill 2622 raised the licensing threshold from $500 to $1,000. Any project at or above that amount requires a licensed professional.

How to check:

1. Visit cslb.ca.gov and use the “Check a License” tool
2. Enter the contractor’s license number (they are required by law to display it on all bids, contracts, and advertising)
3. Confirm the following:

• License status shows “Active”
• Classification includes “B” (General Building Contractor) for whole-house renovations, additions, or new construction
• Workers’ compensation insurance is current (not exempt, unless the contractor has no employees)
• Contractor bond of $25,000 is in place
• No unresolved complaints, suspensions, or revocations appear in the disciplinary history

If a contractor will not provide their license number or says they “don’t need one” for your project, end the conversation immediately. For reference, Custom Home operates under CSLB license #986048, verifiable directly on the CSLB website.

Step 2: Confirm Insurance Coverage

A CSLB license alone does not fully protect you. You also need to verify that the contractor carries adequate insurance.

• General liability insurance: At least $1 million per occurrence and $2 million aggregate. This covers property damage and bodily injury caused by the contractor’s work.
• Workers’ compensation insurance: Required if the contractor has any employees. If a worker is injured on your property and the contractor lacks coverage, you may be held liable.
• Commercial auto insurance: Covers damage caused by contractor vehicles on your property or while transporting materials.

Important: Ask for a Certificate of Insurance and call the insurance carrier directly to verify the policy is active. Paper certificates can be outdated or falsified. For Bay Area projects involving structural work, consider requesting higher liability limits.

Step 3: Check References and Reviews

References from past clients are one of the most reliable indicators of how a contractor actually operates. Online reviews provide additional context, but direct conversations with homeowners who have completed similar projects are far more valuable.

• Request at least three references from recent projects (within the past 12-18 months)
• Ask each reference the following:
  • Was the project completed on time and on budget?
  • How did the contractor handle unexpected issues or changes?
  • Was communication consistent throughout the project?
  • Were there any disputes, and if so, how were they resolved?
  • Would you hire this contractor again?
• Check online reviews on Google, Yelp, and Houzz for patterns (one negative review is normal; a pattern of similar complaints is a warning sign)
• Verify membership in professional organizations such as the National Association of Home Builders (NAHB) or local builder associations
• Look for recognition from third-party platforms like BuildZoom, which evaluates contractors based on license history, complaint records, and project data

Do not skip this step. A contractor who hesitates to provide references, or who only offers references from projects completed several years ago, may be hiding recent performance issues.

Step 4: Evaluate Portfolio and Experience

Licensing and insurance confirm that a contractor is legally qualified. Portfolio review tells you whether they are qualified for your specific project.

• Look for similar project types. A contractor who specializes in commercial buildouts will approach your home differently than one with 20 years of residential experience.
• Look for similar home styles. The Bay Area has a mix of mid-century ranches, Eichler homes, Victorians, contemporary builds, and everything in between. Find a contractor with experience in your home’s style.
• Look for similar price ranges. A contractor who primarily handles $50,000 cosmetic refreshes may not be equipped for a $500,000 structural renovation.
• Look for local projects. Contractors who work regularly in your city understand local permitting processes, inspection expectations, and the standards that homeowners in your market expect.
• Ask for a site visit. A reputable contractor will want to see your property before providing a meaningful estimate. Contractors who quote prices without visiting the site are guessing.

Step 5: Get Multiple Bids and Compare Carefully

Getting at least three bids from licensed contractors gives you a meaningful range for comparison. But the goal is not simply to find the lowest number.

• Collect at least three written bids from licensed, insured contractors
• Ensure each bid includes:
  • Detailed scope of work (not just “kitchen remodel” but specific tasks, materials, and finishes)
  • Itemized breakdown of labor and materials
  • Permit fees and who is responsible for pulling them
  • Estimated timeline with start and completion dates
  • Payment schedule tied to milestones
  • Allowances for items not yet selected (fixtures, finishes, appliances)
• Compare scope, not just price. The lowest bid often excludes items that the higher bids include. Line up each bid side by side and identify what is covered and what is missing.
• Ask about contingencies. Does the bid include a contingency line item for unexpected conditions? If not, who pays when surprises arise?

A bid that seems too good to be true usually is. Contractors who significantly underbid the competition often make up the difference through change orders once work has begun.

Step 6: Review the Contract Before Signing

California law requires a written contract for all home improvement projects over $500. The contract is your single most important legal protection. Read every word before you sign.

Your contract must include:

• Detailed scope of work describing all tasks, materials, and finishes
• Total contract price and a payment schedule tied to completed milestones
• Estimated start and completion dates
• Change order process (all changes must be in writing and signed by both parties)
• Permit responsibilities specifying who obtains and pays for permits
• Contractor’s CSLB license number
• Notice to Owner describing lien rights and how to prevent liens against your property
• Three-day right to cancel for contracts signed anywhere other than the contractor’s place of business
• Warranty terms covering workmanship and materials (a minimum of one year; two years is preferred)
• Dispute resolution process (mediation, arbitration, or litigation)

California-specific contract rules to know:

• The down payment cannot exceed 10% of the total contract price or $1,000, whichever is less
• Progress payments must be tied to work completed, not calendar dates
• The contractor must provide a “Notice to Owner” at the start of the project
• Any changes to the contract must be documented in writing

Step 7: Understand Payment Schedules

How and when you pay your contractor directly affects your leverage and protection throughout the project. A well-structured payment schedule keeps both parties accountable.

• Never pay more than the legal maximum upfront: 10% of the contract price or $1,000, whichever is less
• Tie all payments to completed milestones, such as:
  • Completion of demolition
  • Rough framing inspection passed
  • Mechanical rough-in (plumbing, electrical, HVAC) inspection passed
  • Drywall and finish work complete
  • Final walkthrough and punch list completion
• Hold a final retention payment (typically 5-10% of the total) until all punch list items are resolved and you are satisfied with the completed work
• Never pay cash without a receipt. Insist on checks or electronic payments that create a paper trail.
• Never pay ahead of completed work. If a contractor asks for payment for work not yet started or completed, that is a serious warning sign.

Step 8: Know the Red Flags

Certain behaviors should immediately disqualify a contractor from your consideration. These red flags are consistent warning signs of unqualified or dishonest operators.

Walk away if a contractor:

• Refuses to provide a CSLB license number or says a license is not needed
• Demands cash-only payment or offers a “discount” for paying in cash
• Pressures you to sign a contract immediately or claims the price is only valid today
• Asks for a down payment exceeding the legal limit
• Has no physical business address (only a P.O. box and cell phone)
• Will not provide references or a portfolio of completed work
• Offers to skip the permit process to “save you time and money”
• Has a pattern of unresolved complaints on the CSLB website, BBB, or review platforms
• Cannot or will not provide proof of insurance
• Shows up without a written contract or with a contract that lacks essential terms

Skipping permits is particularly dangerous. Unpermitted work can result in fines, failed inspections when you sell your home, insurance claim denials, and legal liability if someone is injured.

15 Questions to Ask Every Contractor Before Hiring

Beyond the checklist items above, these questions will help you evaluate how a contractor communicates, plans, and solves problems. Pay attention to the specificity and transparency of each answer.

1. How long have you been in business, and how many projects similar to mine have you completed?
2. Can you walk me through your process from first meeting to project completion?
3. Who will be the day-to-day project manager on my job site?
4. How do you handle design changes or unexpected conditions during construction?
5. What is your current project load, and when could you realistically start?
6. Can you provide three references from clients with projects similar to mine?
7. What subcontractors do you use, and how long have you worked with them?
8. How do you communicate project updates? How frequently?
9. What is included in your warranty?
10. How do you handle disputes or disagreements during a project?
11. Will you pull all necessary permits, and are permit fees included in the bid?
12. What contingency percentage do you recommend for my project?
13. Can I visit a current job site to see your work in progress?
14. How do you protect my property (landscaping, flooring, neighboring surfaces) during construction?
15. What happens if the project goes over the estimated timeline?

A contractor who answers these questions directly, without evasion or vague generalities, is demonstrating the transparency you want throughout your project.

Why Design-Build Simplifies the Hiring Decision

One way to reduce the complexity of hiring a contractor is to choose a design-build firm that handles both design and construction under one contract. In the traditional model, you hire an architect first, then bid completed plans to general contractors. This means you are managing two separate relationships, two contracts, and the communication gaps between them.

Design-build firms eliminate that disconnect. The designer and builder collaborate from day one, which means your design is always informed by real construction costs and your budget stays on track from the start. Research from the Design-Build Institute of America shows that design-build projects complete up to 33% faster than traditional delivery and cost an average of 6% less.

At Custom Home Design and Build (CSLB #986048), we use a two-phase design-build process. Phase 1 delivers complete 3D visualization, engineering, and itemized pricing before construction begins. You see exactly what you are getting and what it costs before committing to Phase 2. This process eliminates the most common sources of budget overruns and miscommunication that plague residential construction projects.

With over 20 years of experience serving homeowners across the Bay Area, including San Jose, Los Gatos, Saratoga, Palo Alto, Cupertino, Los Altos, and dozens of other communities, Custom Home is fully licensed, bonded, and insured. Our team handles everything from custom homes and whole-house remodels to ADUs, kitchen renovations, and home additions.

Start Your Project with Confidence

Hiring a general contractor is not something you should rush. Use this checklist systematically, verify every credential, ask the hard questions, and trust your instincts when something feels off. The time you invest in vetting contractors upfront will save you far more in avoided problems, cost overruns, and stress down the line.

If you are planning a construction project in the Bay Area and want to work with a team that values transparency, quality, and accountability, contact Custom Home today for a free consultation. We are happy to walk you through our process, answer your questions, and show you how our two-phase design-build approach protects your investment from start to finish.