Start Here
What to Know Before You Start Looking
The most expensive contractor mistake homeowners make is starting the search too early — before they have approved permit drawings. A contractor cannot give you a meaningful bid without permitted plans. A bid based on rough square footage or a verbal description is not a bid — it is a guess that will change, usually upward, once the real scope is defined.
The correct sequence is: design first, permit second, contractor selection third. Every contractor you interview should be bidding against the same approved permit drawings. If they aren't, you cannot meaningfully compare their bids.
The single most valuable thing your designer does for contractor selection: A designer experienced with your specific jurisdiction produces permit drawings that are so detailed that contractor bids have almost no ambiguity. Vague drawings produce vague bids with lots of "allowances" that become change orders. Detailed drawings produce bindable fixed-price contracts.
The correct ADU project sequence
1
Confirm zoning eligibility
Call your planning department. Confirm ADU is permitted on your lot. Get current size limits, setbacks, and any specific requirements in writing or noted from the call.
2
Hire a designer — get permit-ready drawings
Hire a designer with ADU permit experience specifically in your city. Produce complete permit drawings. Submit for permit. Allow review time. This stage takes 3–5 months total in most markets.
3
Begin contractor search during permit review
Use the permit review period — often 4–12 weeks — to research and interview contractors. Do not wait until permit approval to start looking. In hot markets, experienced ADU contractors book 2–4 months in advance.
4
Collect bids on approved drawings (minimum 3)
Once permit is approved or in final review, send the approved drawings to at least three contractors. Give each the same drawings. Require itemized bids — not single-line totals. Set a bid due date 2–3 weeks out.
5
Compare, interview, verify, then select
Compare itemized bids line by line. Interview your top two candidates. Verify license and insurance. Call references from completed ADU projects specifically. Select and execute a written contract before permit is approved — you want to be ready to break ground the day your permit arrives.
Finding Contractors
Where to Find Qualified ADU Contractors
Not all contractor sources are equal. The best ADU contractors typically do not advertise heavily — they fill their calendars from referrals. The worst ADU contractors often have the most prominent advertising. Here is how to find the right ones.
Neighbor & local referrals
Ask neighbors who have completed ADU projects in the last 2 years. Walk through their unit. Talk to the owner. This is the highest-quality lead source — you see the actual finished product before engaging.
Your ADU designer's referral list
A designer who has worked with many contractors in your city knows who produces clean work, who communicates well, and who shows up. Their referral list is filtered by real project experience.
Building department permit records
Public permit records show which contractors have pulled ADU permits in your city in the last 2 years. Contractors who permit frequently know your building department's reviewers personally — which speeds corrections resolution.
State contractor licensing board
Use your state's contractor licensing lookup to search by specialty and location. All results are verified licensed. Does not guarantee ADU experience — still ask for ADU-specific references.
Local ADU Facebook groups / NextDoor
Neighborhood-specific social groups often have contractor recommendation threads. Quality is variable — always verify independently. Better for finding names to research than for final selection.
Online lead marketplaces (Angi, HomeAdvisor)
Broad contractor marketplaces. Contractors pay to appear — listings are not merit-based. Use only as a last resort or to supplement other sources. Verify everything independently before engaging anyone found here.
Vetting Process
Questions to Ask Every Contractor You Interview
Ask every contractor the same questions so you can compare answers directly. The quality and specificity of their answers tells you more than the bid price.
- How many ADU permits have you pulled in [your city] in the last 24 months? A contractor with 5+ recent ADU permits in your specific city knows the plan checkers, knows common correction triggers, and will navigate your permit process faster. A contractor with none has a learning curve on your project.
- Can you provide three references from completed ADU projects — specifically — with owner contact information? Ask for ADU references specifically, not general remodeling or addition work. Call every reference. Ask: "Would you hire them again?" and "What would you do differently?"
- Who will be the on-site supervisor for my project, and how many other projects will they be managing simultaneously? The owner or estimator who meets with you is often not the person who manages your project day-to-day. Know who that person is and how stretched they are.
- What is your current workload and when is the earliest you can start? Experienced ADU contractors book 2–4 months in advance. A contractor who can start next week in a busy market may have capacity issues for a reason.
- What is your standard payment schedule, and do you require more than 10% upfront? Legitimate contractors structure payments around construction milestones. Requests for 30–50% upfront are a major red flag.
- What scope items are you explicitly excluding from your bid? Every bid has exclusions. Ask each contractor to identify them. Exclusions that one contractor includes in their base bid and another leaves out explain most large bid variances.
- Who handles permit corrections and how do you communicate status to the owner? Correction cycles are the most common cause of project delays. A contractor with a clear correction-handling process and communication cadence is worth more than one who bids slightly lower.
- Can I see your current certificate of general liability insurance and workers' compensation coverage? Ask for it, don't just ask if they have it. The certificate should show minimum $1 million general liability and workers' comp covering all employees and subcontractors. Verify the policy is current — certificates can be outdated.
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Comparing Bids
How to Compare Contractor Bids
Never compare ADU bids on total price alone. The bid with the lowest total frequently has the most exclusions, the thinnest allowances, and the highest change order exposure. Here is what to compare line by line.
| Bid Item | What to Verify | Red Flag |
|---|---|---|
| Foundation scope | Confirm footing depth, slab or crawl, waterproofing included | Vague — "per plans" with no spec |
| Framing | Labor + material; hurricane straps, hold-downs specified | Labor only — materials as "allowance" |
| Windows & doors | Brand, series, energy performance (U-value) specified | Generic "allowance" with no spec |
| Electrical | Panel size, circuit count, EV outlet, lighting fixtures | Missing fixture allowance |
| Plumbing | Fixture brands, water heater type, sewer connection included | Sewer work listed as "by owner" |
| HVAC | Equipment brand, sizing calculation, duct or ductless specified | Equipment not specified |
| Insulation | R-values meeting local code for walls, ceiling, floor | Just "per code" — no values listed |
| Finishes | Flooring, cabinet, countertop specs or realistic allowances | Unrealistically low allowances |
| Site work | Grading, drainage, concrete walkways, landscaping restoration | Excluded entirely |
| Permit fees | Confirm permit fees are included or excluded consistently | One bid includes, another excludes |
| Utility connections | Who pays water/sewer/electrical tap fees and connection labor | Not addressed — major variable |
| Clean-up & debris | Dumpster, haul-away, final clean included | Not mentioned |
The bid variance rule: If bids vary by more than 25%, do not immediately choose the lowest. Call each contractor and ask them to walk through their scope line by line. The variance almost always reveals scope differences — items one contractor priced carefully that another contractor skipped entirely. Understanding the differences tells you far more than the final numbers.
Warning Signs
Red Flags — When to Walk Away
These are not minor concerns. Each of these signals a pattern associated with either contractor fraud, incompetence, or both. Any single one of these is sufficient reason to remove a contractor from consideration.
- Requesting more than 10–15% upfront. Legitimate contractors fund their materials and labor costs from progress payments tied to completed milestones. Large upfront deposits fund the contractor's operating expenses — or worse. Never pay more than 10% down before work begins.
- No current contractor's license in your state. Verify the license number on your state licensing board's website before engaging. An expired, suspended, or non-existent license is disqualifying — no exceptions. In most states, hiring an unlicensed contractor voids any legal remedy if something goes wrong.
- Unable to provide a certificate of current insurance. General liability ($1M minimum) and workers' compensation are not optional. A contractor without active workers' comp exposes you to liability for any worker injured on your property. Request the certificate, verify it is current, and confirm it covers the duration of your project.
- No ADU-specific references — or references who cannot be reached. A contractor who cannot produce contact information for owners of recently completed ADU projects has not completed recently completed ADU projects. References who "don't answer" or produce evasive answers are negative signals.
- Vague scope of work — not tied to permit drawings. A legitimate bid references the approved permit drawings specifically. A bid that says "build ADU per your plans, approximately 800 sq ft, all materials included" is not a contract — it is an invitation to change orders.
- Asking you to pull the permit yourself. This is how unlicensed contractors avoid the licensing requirement. If you pull the permit as "owner-builder," you assume full legal responsibility for all code compliance, and the contractor's work is not covered by their bond. Do not do this.
- Pressure to sign quickly — "price only valid for 24 hours." Artificial urgency is a sales tactic. Legitimate contractors give you time to review, compare, and verify. Any pressure to sign before you've completed due diligence is a signal to slow down, not speed up.
- No written contract before work begins. Verbal agreements are unenforceable in most states for construction work above a certain dollar threshold. If a contractor wants to start without a signed written contract, they are either disorganized or planning to rely on ambiguity to their advantage.
Contract Essentials
What Your ADU Contract Must Include
A construction contract is your primary legal protection if something goes wrong. Do not sign any contract that does not contain every item on this list. If a contractor resists including any of these terms, that resistance is itself informative.
- Fixed price or guaranteed maximum price — not a "cost plus" arrangement with an open-ended total
- Detailed scope of work specifically referencing the approved permit drawing set by sheet number and revision date
- Itemized exclusions list — everything NOT included in the price, written explicitly
- Payment schedule tied to construction milestones — not calendar dates. Example: 10% at signing, 20% at foundation complete, 20% at framing complete, etc.
- Start date and substantial completion date with provisions for delay (weather, material lead times, permit delays)
- Change order procedure — written change orders required before any out-of-scope work begins, with agreed markup percentage stated
- Lien waiver requirements — contractor and all subcontractors provide lien waivers with each progress payment
- Proof of insurance requirements — contractor maintains specified coverage throughout the project
- Warranty terms — minimum 1-year labor warranty; manufacturer warranties passed through for materials and equipment
- Dispute resolution process — mediation before litigation; governing law and venue specified
- Right to terminate for cause — defined triggers and cure period before termination is effective
- Final payment tied to Certificate of Occupancy — do not make final payment until the COO is in hand
Never make final payment before Certificate of Occupancy. The COO is issued after the building department's final inspection confirms the completed work matches the approved plans. Releasing final payment before this inspection removes your financial leverage if the inspector finds deficiencies that require corrective work.
FAQ
Frequently Asked Questions
How do I find a qualified ADU contractor?
The most reliable sources: referrals from neighbors who have completed ADU projects (you can see the finished work), your ADU designer's referral list (filtered by real project experience), and your city's building permit records (showing which contractors have pulled ADU permits recently). Always verify license and insurance independently before engaging anyone.
How many bids should I get?
Minimum three bids — always. Three bids establishes a market range for your specific project. If bids vary by more than 25%, call each contractor and ask them to walk through their scope line by line — the variance reflects scope differences, not just price competition. Never choose the lowest bid without understanding why it's lower than the others.
How much deposit should I pay an ADU contractor?
No more than 10% upfront — ever. Legitimate contractors structure payments around completed construction milestones: a percentage at signing, a percentage at foundation complete, at framing complete, at rough mechanicals, and so on. Final payment (typically 10%) is released only after the Certificate of Occupancy is in hand. Any contractor requesting 30–50% upfront should be removed from consideration.
What should I do if a contractor asks me to pull the permit?
Walk away. A contractor who asks you to pull the permit as "owner-builder" is likely unlicensed — this is how unlicensed contractors avoid the licensing requirement. As owner-builder, you assume full legal responsibility for code compliance, the contractor's work is not covered by their bond, and you take on personal liability for worker safety on your property. The California Contractors State License Board and equivalent agencies in other states specifically warn against this arrangement.
When should I start looking for a contractor?
Begin contractor research during the permit review period — not before, and not after permit approval. Before you have approved permit drawings, contractors cannot give you a meaningful bid. But waiting until after permit approval to start looking adds 2–4 months to your schedule in busy markets, because experienced ADU contractors book that far in advance. The permit review period is the right time to research, interview, and shortlist — then execute the contract when the permit is approved or in final review.
Disclaimer: The contractor guidance in this guide is for educational purposes only. NationwideADU does not vet, endorse, or guarantee any contractor. Always independently verify license, insurance, references, and contract terms before engaging any contractor. For contractor disputes or licensing issues, contact your state's contractors licensing board.