Contractor red flags: 12 warning signs before you hire, and what to do instead

Hiring someone to work on your home is a trust decision, and in a small town there may only be a handful of pros to choose from. That makes it even more important to spot trouble early. The list below draws on the Federal Trade Commission's home improvement guidance and the questions homeowners ask us most.

The 12 red flags

1. They knocked on your door. Especially right after a storm, with a line like "we're working in the area." Good contractors are usually booked through referrals, not door to door.
2. "Leftover materials" from another job. A classic pitch the FTC specifically warns about. Real leftover materials are rare, and the discount is the hook.
3. Pressure to decide today. "This price is only good if you sign now" is a sales tactic, not a business reality. A fair bid holds for at least a few days.
4. Cash only, or full payment up front. The FTC's advice: never pay the whole job up front. Pay by check or card so you have a record, in stages tied to finished work.
5. They ask you to pull the permit. The pro doing the work should pull it. If they won't, it often means they're unlicensed or don't want an inspector looking.
6. No license number on the estimate. Most states require contractors for many trades to be licensed. Look it up on your state board's free site in two minutes.
7. No proof of insurance. If an uninsured worker gets hurt on your property, you could be on the hook. Ask for a certificate of insurance, not just a yes.
8. A verbal-only estimate. Get it in writing, itemized, from two or three pros. If one bid is far lower than the rest, ask why.
9. Blank spaces in the contract. Fill in or cross out every blank before you sign, so nothing gets added later.
10. They push a specific lender. The FTC flags contractors who steer you to a lender they know. Shop financing separately.
11. No local address or only a cell number. Not always a problem in small towns, but you should be able to find a real business name, reviews and a way to reach them after the job.
12. Reviews that don't add up. A brand-new profile with a burst of five-star reviews, or reviews that all sound alike, deserves a closer look.

The 2-minute check before you hire

1. License: search your state's contractor licensing board by business name or license number. Confirm it's active and covers this kind of work.
2. Insurance: ask for a certificate of liability insurance, and workers' comp if they have employees.
3. Reviews: read the newest and the lowest reviews, and how the owner responded.
4. A real phone number: call it. A local pro you can reach directly is worth a lot after the job is done.

What a fair contract includes

The FTC recommends a written contract even when your state doesn't require one. It should list:

• The contractor's name, address, phone number and license number
• Estimated start and completion dates
• Every verbal promise about the work, labor and materials
• Your right to cancel within three business days if you signed at home or away from their place of business
• The payment schedule, tied to milestones

How to pay safely

Don't pay the full cost up front, and check whether your state limits the size of a down payment. Pay by check or card, not cash. Hold the final payment until the work is finished, inspected if a permit was needed, and you're satisfied.

Common questions