Thinking about building or renovating your dream home? Watch out for these red flags.
Homeowners lose billions of dollars to fly-by-night contractors every year. In fact, contractor fraud costs Americans billions yearly, according to the National Insurance Crime Bureau. $9.3 billion USD yearly to post-disaster fraud alone.
But it’s not all doom and gloom.
You can avoid becoming just another statistic by spotting the warning signs BEFORE you sign on the dotted line. That can save you thousands in damages, months of stress, and headaches.
Here’s a look at:
- Why It Matters When Building or Renovating an Open Floor Plan Home
- The Top 6 Red Flags When Hiring a Residential Construction Professional
- What You Should Do to Protect Yourself Before Signing
Why It Matters When Building or Renovating an Open Floor Plan Home
Open floor plan homes are one of the most sought-after designs for renovations and new builds.
By knocking down the walls that separate the kitchen, living room, and dining room you’re left with one large open-concept space. It’s perfect for entertaining guests and makes a home feel brighter and more spacious.
But opening up your floor plan isn’t as simple as grabbing a sledgehammer.
There are structural concerns that come into play whenever you remove walls from a home. Like identifying load bearing walls. Adjusting beam placements. And moving electrical, plumbing, and other services.
That’s why hiring the right custom builder contractor matters.
Renovating to an open floor plan home requires years of experience and expertise. If you hire a fly-by-night contractor without the proper qualifications the entire project can be compromised.
Whether it’s a custom home build from the ground up OR your next home renovation. You don’t want to mess around when it comes to hiring a construction professional.
6 Biggest Red Flags When Hiring a Contractor
Of course, not every contractor wearing a hard hat is going to rip you off. But there are certain red flags you should watch out for.
They Have No Licence or Insurance
Can’t produce a valid contractors licence? Do not hire that contractor.
Simple as that.
While many jurisdictions allow handyman services to operate without a licence. Anyone undertaking major renovations or building a home from scratch should have the proper credentials.
If they’re unlicensed they’ll likely cut corners on every detail of the project. From hiring subcontractors that lack the proper licenses, to using cheap materials.
And when that inevitably causes issues with your renovation…
Who’s liable for the damages? You are.
If their work causes damage to your home and they don’t have insurance then you’re responsible for paying for repairs and damages out of pocket.
They Want More than 30% Upfront
Here’s another biggie that catches too many homeowners off guard…
Any contractor that asks for more than 30% of the total project cost upfront should raise suspicion.
Typically, contractors work off of project milestones when it comes to payments. They take a deposit upfront to secure the date on their calendar. Then they’ll bill you for portion of the work as they hit agreed-upon milestones.
This protects both parties.
Demanding half of the project cost up front is robbery waiting to happen. There are too many stories of contractors taking that money and never showing up to start work.
Even if they do show up, they may skimp on critical materials and details to make up for the lost profit when the job is complete.
They Won’t Provide a Written Contract
Don’t let this happen to you.
If a contractor doesn’t want to provide a detailed written contract they’re probably sketchy.
Word contracts are the contractors way of escaping accountability. When everything is detailed in writing both you and the contractor are held to that agreement.
Anything missed in the contract is up for interpretation. And guess who benefits from vague contracts?
The contractor does.
Make sure you have a contract that includes:
- Full scope of work
- All materials to be used
- Project timeline
- Payment schedule
Don’t let them talk you out of it. And definitely do NOT start work without something in writing.
Avoid Vague Estimates and Conversations
Ask questions. Good contractors will answer with clarity and confidence.
If their responses are vague or non-committal when it comes to cost, timelines, and materials. Move on to the next contractor.
Asking questions is always encouraged. You should feel comfortable asking your contractor any and everything you can think of.
They Try to Pressure You into Making a Decision
Speaking of feeling uncomfortable…
Pressure is another big red flag.
If a contractor tries to pressure you into making a decision – walk away.
You should never feel forced to make a decision when it comes to your hard-earned dollar. Take your time, get multiple quotes, and do your research.
No Portfolio or Past Client References
This should be a biggie for you.
Do they have a portfolio of previous work? What about past client references?
If they can’t provide either then keep looking.
Not all drywall installers started as drywall installers. And every reputable contractor has a story of a problem job.
The difference between good contractors and bad ones? How they handle the problem.
Always check references. A quality contractor will not only provide you with a list of references, but they’ll encourage you to call.
You should call. Ask about the quality of work, if they felt communication was good, did they stay on budget, and would they hire the contractor again.
How to Verify a Contractor is Legit Before Signing
While knowing the red flags will prevent you from making rookie mistakes. There are steps you can take to go a little bit deeper when verifying a contractors credentials.
Call their licensing authority. Every contractor should be licensed (depending on the work they’re doing). Call that license office and verify their credentials are still valid.
Check online reviews. Visit third-party review sites and see what past customers are saying about them. You’ll typically find the good contractors don’t have a website. But they will show up online.
Get 3+ Quotes. Always get multiple quotes before starting work. Home improvement scams are the third most complained about consumer issue according to the Tennessee Attorney General’s office. So if everyone else is charging $15,000 to paint your home then $5,000 seems too good to be true, it probably is.
Verify their insurance. Call the insurance company directly. Don’t accept a photocopy of their insurance certificate.
Policies can be cancelled. Or close to expiring.
Visit some of their current job sites. If you’re able to, request to visit some of their current job sites. It’ll give you an inside look into how they run a job site and the quality of their work.
Protecting Your Home the Right Way
There’s enough content for an entire book on the dos and don’ts of hiring a contractor. But if you learned anything from this article it should be this…
Do your homework.
Too many homeowners get scammed because they skipped the research phase. Maybe they got a great price. Maybe they liked the contractor on a personal level.
Excuses excuses.
Your home is your largest investment. Protect it by taking the time to find the right contractor to bring your vision to life.
And don’t forget to bookmark this article for future reference.
Wrapping It Up
Nobody wants to get burnt when hiring a residential construction professional. But with so many contractors out there who ARE willing to burn you, it’s hard to know who to trust.
Before you commit to hiring that contractor make sure to look out for these red flags:
- Do they have a licence and insurance?
- Are they asking for more than 30% upfront?
- Did they provide a written contract?
- Do they avoid answering your questions?
- Are they trying to pressure you into signing?
- Can’t provide past client references or portfolio?
If you answered YES to any of the above. You may want to try looking for a new contractor.