It’s always hard to decide on the contractor you’re going to hire for a project. Even though the majority of them are probably respectable businessmen, there are still plenty of swindlers out there just waiting to get their hands on your money. The best way to protect yourself is to watch for five red flags that mean a contractor is a rip-off. As soon as you spot even one of them, it’s time to part company with that contractor.
1. A Contractor Gives You A Bid Far Below the Rest
Anytime you receive a bid from a contractor that’s way below the others you’ve received, that’s a red flag indicating something’s wrong. Tom* and Ella* wanted a simple two-car garage built. They only had a certain amount of money to invest in the project, so the quotes had to stay within their tight budget.
Tom* and Ella* met with five contractors. They showed them the building plan they had in mind. All the estimates they got were in the $20,000 range- except one. It was only $15,000. Being that Tom and Ellas’ budget was so tight, they sat down with the contractor who gave the lowest bid. Everything seemed to be in order so they hired him to build the garage. The contractor did indeed build it according to their plan. However, he used the cheapest, lowest grade of wood and other materials he could get his hands on. Tom and Ella got a low-cost garage built, but how long it will stand is questionable.
Contractors who severely underbid projects also try to make up the loss by adding on “unexpected” costs throughout the project.
And, true scam artists who are posing as contractors give you a rock-bottom bid so you’ll give them the job. They’ll then take your money and run.
2. A Contractor Has No Provable Physical Business Address
One of the first things you should do when you receive a written quote from a contractor is to check for his/her contact information. There’s undoubtedly a phone number listed, but is there a physical address? (A post office box doesn’t count.) Fly-by-night scammers who are on the run don’t have addresses because they don’t stay in one place for long. Any respectable contractor is going to have a fixed place of business, even if it’s run out of their home.
3. A Contractor Has No References
No references to give you is another one of the red flags that means a contractor is a rip-off. A reputable contractor will provide you with the names, addresses and phone numbers of several of their satisfied customers. And family and friends don’t count either! That way, you can call their past customers, and even go see the work they did. Don’t fall for the scam of showing you pictures of “their work.” Insist on talking to customers to make sure their work is professional, as well as their business practices.
4. A Contractor Demands A Large Deposit Upfront
It’s customary for a contractor to ask for a deposit on a large project s/he is going to do for you. Ten to twenty percent is usual. But, contractors who require a large down payment are yet another red flag that s/he is a rip off.
When Jon* wanted a room added on to his house, the contractor he was going to hire wanted a whopping fifty percent of the quote before he could start. When Jon questioned the high amount, the contractor hemmed and hawed around. Finally, he admitted that his credit was bad, so he had to pay for all the materials when he ordered them. The contractor blamed his wife for writing bad checks and spending too much money. He even laid the blame on the economy and high prices for his financial woes.
In reality, contractors who can’t handle their business finances are rip-offs who should be avoided. Everything else checked out with the contractor Jon had chosen, so he went ahead and paid him half of the quote. The contractor started the project as scheduled, but he quickly ran out of money. So, he had to temporarily quit the job so he could take on another project… and get another hefty deposit. The truth was, Jon found out, that the contractor was juggling money and jobs, and doing a bad job of keeping his business running. For example, when the contractor couldn’t pay all of his helpers, some of them quit. He replaced those experienced carpenters with high school kids who worked for minimum wage. Did Jon get a break on his bill? Heck no! He was still charged a premium rate for work that was being done by inexperienced teenagers. Did the quality of the work suffer? You bet!
5. A Contractor Won’t Supply Written Guarantees
And finally, the last red flag that means a contractor is a rip-off is when he will only guarantee his work verbally. “Talk is cheap”, as the saying goes, and it’s ever so true. No matter what s/he may say about what is covered under a warranty, it all means nothing unless they write it down. Verbal agreements end up being a “s/he said, s/he” sort of deal, and they don’t stand up well in court.
*Name Changed to Protect Identities