Open communication is the golden rule of dealing with contractors. If you find a reasonably honest person, asking straightforward questions and delineating what you want and expect from your home projects will eliminate most potential problems. Put this verbal communication in writing to protect yourself from unreliable contractors.
There are several different home improvements that present themselves as viable DIY projects, but only to morph into money-sucking monsters. For example, fence building, deck building, exterior house painting, and drywall repair can all fit into this category. None of these projects is impossible to DIY, but the average homeowner should always lean toward hiring a pro when there is even the slightest doubt.
Avoid door-to-door solicitation. Depending on what your gut tells you, respectfully ask for a business card and look up the company or call the local chapter of your Better Business Bureau to report suspicious behavior.
You should always be wary of bids substantially higher or lower than the competition's. High bids sometimes result from a busy contractor not looking to take on more work unless the profit margin makes it worth it. Just as you would with a suspiciously low bid, ask both the individual contractor and the rest of the bidding contractors why one single bid is so much higher or lower than the others.
Don’t be afraid to look for contractors outside of your immediate area. Most home improvement contractors service multiple counties. Many are willing to travel and provide bids, especially for larger projects.