Contractor and client at construction site
Contractor and client at construction site

7 Red Flags You Should Be Aware Upon Hiring a Contractor


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Hiring contractors for either residential or commercial construction purposes as well as renovations isn’t an easy task especially on these days that there are scam artists posing as contractors. Horrible stories about scammers have become widespread. It is important to know this firsthand, be familiar with the issue, and be fully aware of the scamming modus. While some few others are so easy to trust with these scammers just because they have been believed how practical and advanced they are in executing projects bragging about using technology trends such as construction management software and other advanced implementations.

There are risks involving in getting a contractor. It wasn’t an ideal approach not to cover all the bases or take other important things into consideration. Red flags, for example are those important factors that should be considered and determined during the hiring process. By identifying these red flags, you wouldn’t be involved in any troubles or be a victim of a scam.   

Below are some of the common red flags you should watch out for when selecting a contractor:

  1. A vague or non-existent contract

Definitely, one of the biggest disadvantageous mistakes when hiring a contractor is the failure of getting everything from the start – literally everything. It can utterly be easy turning into a blind eye and momentarily forget entirely all the necessary questions and other follow-up questions when speaking with the contractor via phone or personally. These instances have been happening most of the time. That is why, it is important to make sure to have a complete running list of all details you’ll have to ask for before being capable of deciding whether or not the contractor is right for your project or not.

A contract should be prepared and present to you. Once the contract is signed, both parties involved are legally responsible for it. Clients like you have to take an in-depth look and analysis of everything included in the contract.

Below are the following information present and included in the contract.

Details of the Project and Guidelines

  • A comprehensive description of the project presenting the entire scope of the work, the participating crew and team members (working and supervising), and of course the equipment/ materials to be used. It is an advantage if the contractors are deploying construction scheduling software.
  • A protocol for the appropriate handling of rising changes. If by any chance, there are occurring changes while the project in ongoing due to unforeseen issues or new work orders, a protocol will help.
  • Start date of the project including the estimated date of the project completion (If the project is larger and more complex, various completion dates for all project’s phases should be outlined. Outlining will give assurance that the project will stay right on the track and delays not happen.)

Budget and Payment Schedule

  • A clear and descriptive payment schedule (preferably, clients have to pay a small portion as a down payment, you’ll going to pay full price once the project is completed)
  • The estimate and the included materials/works

Unless you are confident enough to agree and say “Yes” to the following questions, you shouldn’t sign the contract:

  • Have I done thorough research in this company and determined them enough to be qualified to handle the project?
  • Does this contractor can able to meet or exceed my expectations?
  • Does this particular contractor understand the timeline and my budget of the project clearly?
  • Do these professionals deploy any software tools for better project management like construction schedule software?
  • Are the necessary details and information of the project explicitly defined in the contract?
  1. Incapable of Verifying References

With all due respect, people often like to think and believe that all contractors are professional and decent. Overall, the majority of people particularly potential clients have defined them as good working professionals, with so much integrity and capability. However, the truth is always ugly because sometimes, this isn’t always the case. There are several contractors who are scammers and usually have some filthy modus operations.

That is why, as someone who wants to avail of their services, never be frightened on asking the contractor regarding about the list of references. One can absolutely tell if the contractor is decently honest during the process. If by any chance, they have too many excuses over simple things you asked such as references from past projects, that is definitely a red flag. Avoid hiring that contractor. Stop the initial negotiations.

Finally, if you have already the list of referrals, reaching out to them asking about their overall experience is a good strategy.

Be direct and get specific. Never ask general questions to the contractors:

  • What type of project that this particular contractor has done for you?
  • Did they abide by all the terms and conditions from the contract?
  • Did the construction costing too high? Did the contractor finish the project with the agreed budget?
  • How it’s like working with them? Are there any conflicts and issues that arise while the project is ongoing?
  • Is the communication clear and consistent? And Are they easy to reach out and communicate with?
  • Lastly, will you recommend this contractor to me?

For sure, there are other related questions as well. And as someone who wants to hire the contractors sooner or later, it is important to feel free in asking questions. Never feel intimidated for this is just a general guideline with every single thing you’ll definitely want to know about the contractor’s capacity to successfully complete the work.

  1. No Insurance

Regardless of the contractors implementing construction crew management and safety protocols, accidents might possibly happen all the time. Someone from the crew got hit and badly injured and surprisingly, you are asked to pay for the medical bills. That shouldn’t be the case. One way to eventually avoid this conflict from happening is to make sure that the contractor you hire has valid business insurance. Ask for the documents from the insurance company as proof that the contractor’s business is insured. You can directly ask the contractor about this.

  1. Asking for too much money upfront

Be wary if the contractor you hired has asked you to pay full price for the work you’ve asked from them. If paying them at full price, they might run away. You won’t see them again possibly. It is also important to remember that any contractor who won’t accept a money order or check is someone who cannot be trusted. Another red flag could be asking for a large down payment.

Asking huge down payments might be a strategy for them to cover up their debts from the current projects they’ve handled. This only proves that they aren’t capable of completing the entire project in the right way. Managing construction projects is a serious matter. Thus, these scammers are no way close to being responsible enough.

  1. Pressure to Sign a Contract

Given that there is already a contract presented to you. Is there a time when the contractor has forced you to sign the contract without even reading the whole thing fully? Or have they told you to sign immediately today so that you can able to avail their special low rate? If you’ve been under that situation, then that’s definitely suspicious. Obviously, they don’t want you to get informed on what is stated in the contract or to search about them before you considerately agree to hire them and work with them.

Never sign the contract from someone who pressures you.

  1. The Estimate is Questionably Low or High

The saying like “if it feels like too good to be true”, then undoubtedly it can be. It is advisable to get consider three contractors to choose from. The next step will be getting estimates on each contractor from the type of job you’ve asked from them. It doesn’t mean that this will be about choosing the contractor with the lowest estimate. This is just a matter of comparing the three contractors and compare if the estimate of the first is lower than the others. If their estimates aren’t close to each other, that can eventually cause for a suspicion.

  • The contractor lacks or might not have practical experience in proper project estimation
  • A contractor having crazy high estimates for the project could possibly mean they’re ordering more unnecessary materials.
  1. Running into Unforeseen Problems

If the project is ongoing and underway, or close enough for completion, then an issue pops out abruptly. All of a sudden, the contractor has informed you that the agreed costs have changed and skyrocketed. He then blamed the discovered structural issues or perhaps design changes.

The add-on fees may be legit but several unprincipled contractors bid jobs lower in order to obtain the offered work and then find excuses to increase the price on the latter part. If you’re suspicious already about of whether the contractor is telling you the truth or not about the structural damages, you can able to obtain impartial opinions from a home inspector.

Taking Legal Actions

There are a lot of cases now that it has been too late to report the scamming contractors. Many people have been negotiating already and have been scammed one way to the other. Others used to have projects not being finished or far away from completion because contractors run away, forgetting all negotiations and project plans.

So got ripped off by a contractor you just hired? Whether they finish the project and did it so poorly or they never really completed it just like in every case, you have the power and right to take action against these scammers, legally.

Contract fraud cases might simple at first but in the truest sense, this type of case can get very much complicated in the long run largely because it can involve in any multiple areas of the law. Contact an attorney specifically experienced contract lawyers or real estate lawyers. Basically, these legal professionals can give you legal advice while proceeding and can able to represent you in the court.     

Key Takeaways

Determining if you’ve hired a decent contractor or having a good contract is quite tricky. That is why, everything stated above is a preparation. Keeping these signs of red flags in mind is a must. Always be informed every single time and be involved in the process. It is essential for your contractor to meet all the necessary standards for reliability and integrity

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