Avoid Shady Contractors

WASHINGTON, DC (WUSA) -- Whether you want to update your kitchen or spruce up the bathroom, hiring a contractor is a big decision.

So, here are some tips to protect your investment, and avoid being taken by a shady contractor.

Avoid door to door solicitors and those who only accept cash.

Make sure the business is licensed.

Get three estimates.

Never sign a blank contract. Angie Hick's, the creator of Angie's List, says doing your homework is a musT.

She says, "In the downturn in the economy, companies may start to cut corners and you don't want to be one of those. You don't want someone who has dropped their license or is financially not as sound. Don't be afraid to check the companies credit rating even."

Angie says DC area residents have spent nearly $11 million on home improvements in the past three months.

Angie's List 14 Tips for Hiring a Contractor

Clearly define your project. Look through remodeling magazines and search the Internet for information, design ideas and materials. Put your ideas to paper. It will give the contractor a better idea of your expectations and what you hope to accomplish.

Do you need a general contractor? Consider what you can realistically accomplish on your own.

Consider an architect. Eliminating walls, adding rooms or large projects that impact the structure of your house, consider hiring an architect.

Ask around. Ask family, friends and neighbors who've had work done for references. Log on to Angie's List for references.

Do your research. Check the contractor's performance record.

Check references. Get names of previous customers and find out if they were pleased with the work, project timeline. Ask if they would hire the contractor again. Get the names of subcontracts and ask if they work with the contractor often, and does he pay on time.

Get estimates. Take time to get a few estimates. Get them in writing, make sure you have documentation in case anything goes wrong.

Where can I reach you? Be cautious of contractors who give you a post office box with no street address or only uses an answering service.

License for hire. Don't rely on the contractor's word to know whether his or her license is valid: check it out through the appropriate agency.

Insured and bonded. Check the status of the contractor's bonding and liability insurance coverage.

Know your budget and payment options. Experts say the recommended pre-payment is typically between 10 and 15 percent of the total value of the project. Never pay for a project with cash; always use a credit card so you have recourse in case something goes wrong. And before you sign off on the final payment, check that the work is complete.

Review all aspects of the contract before you sign. Know the details of the contract, as well as how any change orders will be handled. Check that your contract includes a lien waiver, covering payments to all subcontractors who worked on the project.

Confirm the "punch list" procedure. This is how the contractor will deal with the list of small items remaining to be completed at the end of the job.

Prepare your family for the stress. How will the project change your routine, especially if it's a kitchen or bath? Where will materials be stored? What are the working hours for the crew?