Contractor Red Flags 2025: Warning Signs to Avoid Scams

Hiring the wrong contractor can cost you thousands in poor workmanship, project delays, or outright scams. Recognizing red flags early protects your home and budget from disaster.

Critical Red Flags (Walk Away Immediately)

Licensing and Insurance Red Flags

No Valid License

• Claims license "is pending" or "being renewed"
• Provides license number but won't let you verify it
• License doesn't match business name
• Licensed in different state than your project
• Uses someone else's license number

Insurance Issues

• Can't provide current insurance certificate
• Insurance expired or coverage amounts too low
• Only has liability but not worker's compensation
• Refuses to add you as additional insured
• Insurance company isn't verified/legitimate

Estimate and Pricing Red Flags

Suspicious Pricing

Payment Red Flags

• Requests 50%+ deposit before starting
• Doesn't offer payment schedule tied to milestones
• Insists on cash or money orders only
• Wants payment made out to individual, not business
• No formal invoice or receipt provided
• Pushes for early payment "to secure materials"

Contract and Documentation Red Flags

• No written contract offered
• Contract missing scope of work details
• No start/completion dates specified
• No payment schedule outlined
• Missing warranty information
• No clause about change orders
• Doesn't specify material brands/quality
• No cancellation or dispute resolution terms
• Pressures you to sign without reading

Communication Red Flags

• Unprofessional communication: No email address, only personal phone
• Slow to respond during estimate phase (gets worse during project)
• Vague answers to specific technical questions
• Defensive or aggressive when asked for references
• No return calls or inconsistent contact
• Can't explain process or timeline clearly

Business Practice Red Flags

Questionable Business Setup

• No website or online presence
• Recently created business (less than 1 year)
• Multiple negative reviews or BBB complaints
• Business name doesn't match truck/materials
• PO Box instead of physical address
• No branded vehicles or signage
• Uses personal vehicle for commercial work

Reference and Review Issues

• Refuses to provide references
• Only offers references from years ago
• References are all family/friends
• Can't show photos of recent similar projects
• All reviews are 5-star with generic comments (likely fake)
• Recent pattern of 1-star reviews

Project Management Red Flags

• No project timeline: Can't commit to start/finish dates
• Constantly working multiple jobs: Your project keeps getting delayed
• Different crew every day: No consistency in workers
• Unlicensed subcontractors: Using day laborers for skilled work
• No job site cleanup: Leaves debris and hazards
• Missing permits: "Don't worry about those"

Material and Workmanship Red Flags

• Suggests materials significantly below code requirements
• Wants to use salvaged/used materials without disclosure
• Can't specify product brands or specifications
• "You don't need a permit for this" (when you actually do)
• Discourages inspections or final walkthrough
• Rushes through work to finish quickly
• Leaves mid-project for extended periods

High-Pressure Sales Tactics

Storm Chaser Red Flags

Common after natural disasters:

• Arrives unsolicited after storm/disaster
• Offers free inspections and finds extensive damage
• Promises to handle insurance claim for you
• From out of state with no local references
• Wants insurance check signed over to them
• Pressures you to commit before insurance adjuster visits
• Disappears after collecting deposit

Common Scam Patterns

The Disappearing Act

• Takes large deposit and never starts work
• Starts project then abandons it
• Promises to return "next week" indefinitely
• Phone numbers suddenly disconnected

The Bait and Switch

• Low estimate to win bid, then inflates costs
• Substitutes cheap materials for quoted quality
• Sends unqualified workers instead of promised crew
• Adds "unexpected" costs constantly

The Upsell Artist

• Finds "critical issues" requiring immediate additional work
• Claims code violations that don't exist
• Pressures for upgrades at inflated prices
• "While we're here" constant add-ons

How to Verify a Contractor

1. Check license: Verify with state licensing board online
2. Verify insurance: Call insurance company directly
3. Search business name: Look for complaints, lawsuits
4. Check BBB rating: Review complaint history
5. Google reviews: Read 1-3 star reviews carefully
6. Call references: Actually speak to past customers
7. Visit completed projects: See work quality in person
8. Search court records: Check for liens, judgments

Questions That Reveal Red Flags

Ask these to spot problems early:

• "Can I see your license and insurance certificate?"
• "Can you provide 5 references from the past year?"
• "Will you pull all necessary permits?"
• "What's your payment schedule and policy?"
• "How long have you been in business at this location?"
• "Who will be doing the actual work?"
• "What warranties do you offer?"
• "Can I speak to your insurance agent?"

Green Flags to Look For

What to Do If You Spot Red Flags

• During estimates: Thank them and get other bids
• After signing contract: Review cancellation terms immediately
• Mid-project issues: Document everything with photos/writing
• If scammed: File complaints with state licensing board, BBB, attorney general
• Legal action: Consult attorney for significant losses

Protection Strategies

• Never pay more than 30% deposit
• Use credit cards for deposit (chargeback protection)
• Get everything in writing before paying
• Hold final payment until work passes inspection
• Take photos/videos throughout project
• Keep all receipts, contracts, correspondence
• File lien waivers from contractor and subs
• Don't let timeline pressure override due diligence