How to Compare Contractor Estimates

You asked three contractors for a price and got three very different numbers. It's tempting to just circle the cheapest one and move on. But a lower number often means a smaller scope, cheaper materials or costs that show up later, so the comparison has to start somewhere else.

Here's how to line up bids so you are comparing the same job.

Before you compare: make the bids comparable

The easiest way to get bids you can compare is to give every contractor the same description of the work. Write a short scope: what needs fixing, what materials or quality level you want, and what you expect to be included (cleanup, haul-away, permits).

Ask for written estimates. The FTC's consumer guidance on avoiding home improvement scams recommends getting multiple written estimates and asking for an explanation when prices differ a lot. A written estimate should describe the work, the materials, the timeline and the price.

Step 1: Compare the scope line by line

Put the estimates side by side and go through them item by item. For each one, ask: is this in every bid?

• Demolition and removal of old materials
• Repairs to what's found underneath (often written as “if needed” or as a separate unit price)
• Materials and fixtures, or are you buying those?
• Permits and inspections
• Cleanup and disposal
• Paint, trim or patching after the main work

When one bid leaves something out, write it down. That missing item is frequently the whole price difference.

Step 2: Check materials and allowances

Two bids can say “new vanity” and mean a $150 model or a $900 one. Look for brand names, model numbers or quality descriptions. If a bid uses an allowance, a set amount for something you'll pick later, check whether that amount is realistic for what you actually want. A low allowance makes a bid look cheaper but just moves the cost to later.

Step 3: Verify license and insurance

Licensing rules for contractors vary by state, and sometimes by city or county. The FTC advises checking with your state or county government to confirm a contractor's license and asking for proof of insurance.

• License: look up the number on your state's contractor licensing board website if your state has one.
• Insurance: ask for a certificate of insurance. Liability coverage protects your property if something goes wrong; workers' compensation matters if someone is injured on your property.

If a contractor won't give you a license number or proof of insurance, treat that as a red flag.

Step 4: Compare timeline and payment schedule

When can they start, and how long will it take? A lower price with a start date three months out may not work for a leak that's happening now.

Then look at how they want to be paid:

• How much is the deposit?
• Are later payments tied to finished stages of work, or to dates?
• What payment methods do they accept?

The FTC advises against paying the full amount up front, notes that some states limit how much a contractor can ask for as a down payment, and warns that demands for cash, wire transfers or gift cards are common in scams. Payments tied to completed work protect you best.

Step 5: Compare warranty and change orders

What happens if something fails after the job? Look for a written warranty that says what's covered (workmanship, materials, or both) and for how long. Manufacturer warranties on products are separate from the contractor's warranty on the work.

Also check how changes are handled. Good estimates say that any change in scope or price will be agreed in writing before the work is done. That one sentence prevents a lot of end-of-project arguments.

Step 6: Now look at the price

Only after the bids cover the same scope does price comparison mean much. At this point:

• If prices are close, decide on timeline, communication, warranty and how comfortable you feel.
• If one bid is much higher, ask why. It may include something the others don't, or a better material.
• If one bid is much lower than the rest, ask what's not included and how they arrived at the number. Very low bids sometimes come back as change orders later.

Red flags worth slowing down for

• Pressure to sign today to “lock in” a discount
• Cash-only, or a large payment before any work begins
• No written estimate or contract
• Asking you to get the permits yourself
• Offering financing through a lender they know, especially if you're rushed through the paperwork

The FTC lists several of these, and adds that after storms and other disasters, unlicensed contractors often show up in affected areas. See its guidance on avoiding scams after weather emergencies.

Putting it together

A simple scoring system helps when bids are close. Rate each contractor 1 to 5 on scope completeness, materials, license and insurance, timeline, payment terms, warranty and communication. Give more weight to what matters most to you. The comparison worksheet's Excel version calculates a weighted score for you.

And once you've chosen, update your repair budget with the real numbers and keep a contingency for what nobody could see yet.

Sources: Federal Trade Commission, How To Avoid a Home Improvement Scam; How To Avoid Scams After Weather Emergencies and Natural Disasters. Contractor licensing requirements vary by state.