7 was to spot a potentially bad contractor

There are many honest contractors out there, but there are also quite a few that might be looking to rip you off. If you’re about to undertake a big renovation project, here are a few red flags to look out for before you hire a contractor.

Asking For Too Much Money Up Front

Most contractors won’t start a job without getting part of the payment upfront. After all, there are materials to buy and workers to hire. But a contractor that wants the entire sum up front should set off alarm bells. Once you fork over the cash for a project, a contractor might lose the motivation to finish the job quickly and efficiently. For most jobs, a downpayment of around 15 percent is common, and an initial payment should never exceed a third of the total cost of the project.

Asks for Cash Payments

Some contractors will ask to be paid in cash, which is a sure sign that there is something shady going on. Without a check or credit card statement to back you up, it becomes your word versus the contractor’s in any payment dispute. So even if a contractor offers you a cheaper rate if you pay in cash, don’t take the deal.

Too Many Subcontractors

A good contractor will know how to use subcontractors wisely. For instance, if there’s a particularly tricky wiring job, it’s a good idea to call in an expert electrician. But a contractor who is overly reliant on subcontractors should raise some red flags. If a contractor is farming most of the work out to subcontractors, then he’s acting more like an unnecessary middleman rather than a essential part of the renovation process.

Won’t Give You References

If a contractor refuses to give you references, it’s a sure sign that something is amiss. Every contractor should have a few pleased customers that can vouch for past jobs. If a contractor says he’s just starting out and doesn’t have references yet, take a pass and find someone with more experience.

A Truck For An Office

If a contractor doesn’t have an office with an actual address, don’t hire him to work on your home. Some contractors will tell you that they are so busy, they mostly just work from their trucks and leave you with nothing more than a cellphone number. But if you hire a contractor like this, you’ll have no way to track the contractor down if he takes your money and runs.

No Insurance or License

Regulations vary from state to state, but in general contractors need to be insured and licensed to work on a home. Unlicensed contractors might offer you a cut-rate deal on a renovation, but they can leave you exposed if something goes wrong. If an injury occurs during the job, or the works cause damage to a neighbor’s home, you could be on the hook for damages. So make sure to see a contractor’s paperwork before you sign a contract.

No Contract or an Open-Ended Contract

Beware of any contractor that does business with a handshake agreement or that gives you a contract that’s overly open-ended and fails to set deadlines. Home renovations are complex things, and every stage of the renovation should be documented in the contract. Sure, there will inevitably be delays in any major renovation project. Materials might not come in on time, or bad weather might prolong the project. But a good contractor should know how long certain stages of the job will take and set deadlines that he can meet. The agreement you sign should also specify what kind of materials the contractor will use. You want to protect yourself against a contractor that promises you the moon and then cuts cost with bargain-basement materials.