10 Red Flags to Watch Out for When Hiring a Contractor

Hiring the right contractor can make or break your home-building or renovation project. Whether you’re a new home builder or a seasoned real estate investor, the stakes are high when it comes to choosing the contractor who will bring your vision to life. The wrong contractor can lead to costly delays, shoddy workmanship, and endless headaches. To help you avoid these pitfalls, we’ve compiled a list of 10 red flags to watch out for when hiring a contractor.

1. Lack of Proper Licensing and Insurance

Why Licensing and Insurance Matter

First and foremost, a legitimate contractor should have the proper licensing and insurance. Licensing ensures that the contractor has met the necessary qualifications and adheres to local building codes. Insurance, on the other hand, protects you from liability in case of accidents or property damage during the project.

The Red Flag

If a contractor is unable or unwilling to provide proof of licensing and insurance, this is a major red flag. Working with an unlicensed contractor can lead to legal troubles, and if they’re uninsured, you could be on the hook for any accidents that occur on your property.

A Personal Anecdote

We once had a client who was tempted to go with a cheaper, unlicensed contractor for a simple project. Fortunately, they decided to do some research and found out that the contractor had a history of unfinished jobs and legal disputes. They dodged a bullet by walking away.

2. No Written Contract or Vague Terms

The Importance of a Clear Contract

A written contract is your best protection against misunderstandings. It should detail everything from the scope of work and materials to the payment schedule and project timeline.

The Red Flag

If a contractor is hesitant to provide a detailed written contract or offers one with vague terms, it’s a sign that they might not be entirely trustworthy. A verbal agreement or a handshake deal isn’t enough when thousands of dollars are at stake.

A Personal Anecdote

We had a project where the client initially hired a contractor who promised to “take care of everything” without putting anything in writing. When issues arose, there was no way to hold the contractor accountable. Eventually, they had to bring us in to fix the mess, but it ended up costing them more than if they had hired us from the start.

3. Request for All Money Upfront Before Starting

Understanding Payment Structures

It’s standard practice for contractors to ask for a deposit before starting work.

The Red Flag

If a contractor demands a large upfront payment—anything more than 80%—it’s a red flag. This could indicate cash flow problems or, worse, that they might disappear with your money. We here at The Luna Crew do ask for up to 50% deposit depending on the project before starting but never 100% before we start.

4. No References or Negative Reviews

The Role of References and Reviews

A reputable contractor should have a solid list of past clients who can vouch for their work. Online reviews can also provide valuable insight into their reliability and quality of work.

The Red Flag

If a contractor refuses to provide references or has consistently negative reviews, it’s a major warning sign. They might be hiding something or have a history of unsatisfied customers.

A Personal Anecdote

We always encourage potential clients to check our references. One time, a client told us they chose us because of a glowing review from a neighbor. That kind of word-of-mouth recommendation is invaluable, and any good contractor should have them.

5. High-Pressure Sales Tactics

Recognizing Pressure Tactics

A contractor who pressures you to make quick decisions, sign a contract immediately, or take advantage of a “limited-time offer” is likely using high-pressure sales tactics. Good contractors understand that building or renovating a home is a significant investment and that you need time to make informed decisions.

The Red Flag

If you feel rushed or bullied into signing a contract, it’s a clear red flag. A reputable contractor will give you the time you need to make the right decision and will be willing to answer all your questions without pushing you into a commitment.

A Personal Anecdote

We’ve had clients tell us they appreciated our no-pressure approach. One client said they felt overwhelmed by another contractor’s aggressive tactics and chose us because we allowed them to take their time to review everything carefully. It’s about building trust from the start.

6. Unclear or Inflated Estimates

Why Clear Estimates Are Crucial

A detailed, itemized estimate helps you understand where your money is going and allows you to compare bids effectively. It should include costs for materials, labor, permits, and any other expenses.

The Red Flag

If a contractor provides an estimate that is vague or significantly higher than others without a clear explanation, it’s a red flag. They might be padding the numbers or planning to hit you with surprise costs later.

A Personal Anecdote

We’ve been called in to finish projects where clients were hit with unexpected charges halfway through the build. One client shared that they initially went with a cheaper contractor who gave them a vague estimate. As the project progressed, the costs kept rising with no justification. They ended up paying more than expected.

7. Lack of a Clear Timeline

The Importance of a Project Timeline

A clear timeline helps manage expectations and keeps the project on track. It should outline the start date, major milestones, and the expected completion date.

The Red Flag

One of the red flags when hiring a contractor is if they can’t provide a clear timeline or is vague about when the work will be completed, it’s a red flag. This could lead to endless delays and frustration.

A Personal Anecdote

We’ve seen projects drag on for months longer than expected because the contractor didn’t commit to a clear timeline. One client came to us after their previous contractor kept pushing back the completion date with no end in sight. They appreciated our structured approach and timely delivery.

8. Poor Communication (MOST IMPORTANT)

Why Communication Is Key

Good communication is essential for a successful project. You should feel comfortable reaching out to your contractor with questions or concerns and expect timely, clear responses.

The Red Flag

Another one of red flags when hiring a contractor is if they hard to reach, takes days to respond, or provides unclear or evasive answers, it’s a sign of potential trouble. Poor communication can lead to misunderstandings, mistakes, and delays.

A Personal Anecdote

We always make it a point to keep our clients informed at every stage of the project. One client mentioned how refreshing it was to get regular updates after their previous contractor went silent for weeks at a time. Keeping the lines of communication open builds trust and ensures everyone is on the same page.

9. Frequent Changes in the Scope of Work

Understanding Scope Creep

While some changes are inevitable during a project, frequent or unnecessary changes can lead to significant cost overruns and delays. This is known as scope creep, where the project expands beyond its original plan.

The Red Flag

If a contractor frequently suggests changes that increase the project’s complexity and cost without a clear reason, it’s a red flag. This could indicate a lack of planning or an attempt to inflate the budget.

A Personal Anecdote

We had a client whose previous contractor kept suggesting “enhancements” that seemed unnecessary. By the time we took over, the project was way over budget, and the client was frustrated. We helped them get back on track by sticking to the original scope and only making changes that were truly beneficial.

10. No Portfolio or Poor Quality Work

The Value of a Strong Portfolio

A good contractor should be proud to show off their past work. A portfolio allows you to see the quality of their workmanship and whether their style aligns with your vision.

The Red Flag

Big red flags when hiring a contractor is if the don’t have a portfolio or if the work they show is inconsistent or of poor quality, it’s a red flag. You want to be sure that they can deliver the results you’re expecting.

A Personal Anecdote

We often share our portfolio with potential clients, and it’s one of the reasons they choose us. Seeing examples of our work gives them confidence that we can handle their project with the same level of care and expertise.

Conclusion

Hiring a contractor is one of the most important decisions you’ll make in your building or renovation project. By being aware of these red flags, you can avoid costly mistakes and ensure that your project is in good hands. Remember, the key to a successful partnership is trust, clear communication, and a commitment to quality.

If you’re ready to start your project and want to work with a licensed contractor who specializes in metal buildings and construction, don’t hesitate to reach out. We’re here to help you every step of the way, ensuring that your investment is protected and your expectations are exceeded!

Follow us on Social Media!