Contractor Red Flags: 10 Warning Signs Before You Hire

Hiring the wrong contractor can derail your renovation dreams. Spot these key contractor red flags early to protect your home, your wallet, and your peace of mind.

1. No License or Insurance

A licensed contractor meets legal and safety standards. Without proof of license and valid insurance, you risk liability for damages or injuries.
What to Do: Always ask for documents and verify through your state registry or BBB.

2. Unusually Low Bids or High Upfront Costs

• Too-low bids often indicate cutting corners or hidden costs later.
• Large upfront payments (over 15–30%) are illegal in many places and a major red flag.
  What to Do: Obtain at least three detailed quotes. Only pay milestone-based installments.

3. No Written Contract or Vague Terms

A proper contract protects you; it should detail scope, timeline, materials, costs, warranty, and permit responsibilities.
What to Do: Demand a signed, clear contract before work begins. No exceptions.

4. Poor Communication & Professionalism

Lack of responsiveness, missed calls, or messy behavior, from substance use to tardiness, signals deeper issues down the line.

“They asked for 50 percent up front… not answering your calls/texts”
What to Do: Choose contractors who respond promptly and respectfully on-site and off.

5. No References or Bad Reviews

Reliable contractors will provide references and portfolios. Consistent negative feedback or no online presence is a strong red flag.
What to Do: Check BBB, Google, and social media. Ask for contact info from previous clients.

6. Rushed Sales or Pressure Tactics

Be wary of contractors who push quick decisions or use fear tactics; you should be able to evaluate at your own pace.
What to Do: Take your time. Walk away if you feel pressured.

7. Scope Creep & Hidden Fees

Watch for verbal changes, surprise change orders without documentation, or phrases like “we’ll figure it out later”.
What to Do: Include a clause stating all changes must be written and signed before work proceeds.

8. Permits & Regulation Avoidance

If a contractor downplays or skips permits, it’s a red flag for potential legal and safety issues. Permits are often required.
What to Do: Confirm who’s responsible for securing permits and inspections, and ensure it’s in writing.

9. Messy Job Sites & Safety Lapses

Contractors should keep your property clean and workers safe. Untidy sites, lack of PPE, or ignoring safety standards can lead to accidents and delays.
What to Do: Look for organization and adherence to safety protocols in pre-visits.

10. Company Name Changes or Insurance Gaps

Frequent rebrands or subcontracted work may hide a troubled history. Insurance gaps or mismatched business names are red flags.
What to Do: Run license checks in your state’s database and ensure insurance matches the legal business entity.

Bonus: Contract Type & Incentives

• Cost-plus contracts may reward inefficiency, opt for fixed-price or well-defined payment schedules.
• Good contractors offer warranties, demonstrate transparent processes, and align their interests with yours.

FAQ

Q: Why is license/insurance important?
A: It confirms credibility and shields you from liability and sloppy work.

Q: What if a bid is too low?
A: It could mask subpar materials or shortcuts. Always compare multiple quotes.

Q: Is a written contract really essential?
A: Absolutely, it defines responsibilities, covers change orders, and protects both parties.

Q: How much deposit is normal?
A: Between 10–30% upfront, then milestone-based payments, no full payment upfront.

Summary Table

Spotting these contractor red flags upfront ensures your remodeling project stays on track, on budget, and on time. To find the best contractors around you, you can use our free contractor database!

Written by Vanessa Gallanti. July 2, 2025

Enthusiast about planning, project management, construction materials and technology, and construction. A civil engineer from Los Andes University and a content writer for Kukun.