Past work history, quality, price, word of mouth.
I have an extensive list of Agents that call on a regular basis.
Also helps that I have remodeled some of their homes.
Honesty is another one.

Once they find that needle in the haystack, they move you to the top of their contractor referral list.

We normally try to keep things as simple a possible by asking for recommendation from colleagues or basing our recommendations on direct personal contact with customers that have been completely satisfied with services provided.

From a personal stand point, we cannot affort to recommend services for any provider that cannot produce at the highest level. Regardless of what the service is, we clearly communicate this to the people we recommend. They know up front that if they produce they will continue to get our support.....if not, we cut them loose quickly.

To my knowledge (as a contractor and former real estate expert), there is no STANDARD. Generally contractors are advised for several reasons:
1) To correct issues before a home goes on the market
2) To correct issues so that a home inspection goes fast and smooth
3) A recommendation about issues with floor plans or something an owner did that isn't going to sit well witht he market of buyers
4) a REQUIRED repair must be made due to a condition found on a home inspection report that needs to be corrected before closing

Keep in mind that MOST agents do not get anything from any contractor they might suggest. Generally I would suggest 3 and let the client choose.

I hope this answered your question or shed some light on the subject.