How to Avoid Hiring a Bad Builder or Contractor

13 Red Flags to Spot Bad Contractors

1. Someone who seems too available. 

Let’s assume you call a contractor, and they offer to come over and look at the job in the next hour or so.  That’s a big red flag that tells you something is not right.  Most good contractors are booked out several days if not weeks, so if they are available right away that should be concerning. 

There may be an exception to this, like if they just to happen to have another job in the same neighborhood, though this is normally rare.

2. Someone who is not available enough. 

Of course the opposite of being able to start right away is someone that does not get back to you within a reasonable time, and as in any long-term relationship, communication is the key, to a successful project. 

If you have trouble getting a contractor to phone you back “before” you even give them your business, imagine how hard it will be for them to return calls after they already have your security deposit.

3. A contractor who is asking for too much money up front. 

Many contractors won’t start a job without getting part of the payment upfront.  After all, there are materials to buy and workers to hire. 

However a contractor that asks for a very large deposit or wants the entire sum up front should set off very loud alarm bells. 

We’ve all heard those horror stories of people who saved up for years to remodel their home, and a bad apple contractor demands payment up front, and if paid upfront are never to be seen again.  Don’t let this happen to you!

Hundreds of people get ripped off every year; don’t let this happen to you

There are many good contractors out there that don’t require any up-front deposit, and only bill you for materials and services after they have been provided to you, or that work with a milestone payment program, that are based on pre-agreed to project milestone payment draws. 

Such as how the group at Landen Design Build work, at https://landendevelopment.com/ where they do not need any upfront deposit.

Alternatively, ask the contractor, if the requested up-front deposit can be deposited directly into a lawyers trust account, even if it is the contractors lawyers truss account, set up with releasable release conditions, that when certain milestones have been achieved the deposit can be released to the contractor.

4. If a contractor or builder is being really pushy.

This tends to be guys that are not busy and are desperate for work. 

If they are really pushy, and tell you they need to start right away or else!  That’s a big red flag. 

Qualified contractors don’t need to use high-pressure sales tactics that sound like they’re trying to sell you products or services that are on a “limited time only” pricing option! 

Building a home or a major renovation is a serious investment, and a good contractor will understand that its worth you’re taking a few days to think it over. 

Also ask the contractor if they offer a 10 day “cooling off period”, in Alberta contractors are required by law to have this cause in their contract if they are taking up front deposits

5. They want to be paid in cash only.

Some contractors will ask to be paid in cash, which is a sure sign that something shady is going on. 

They are most likely trying to avoid taxes, but there could be an ulterior motive as well.  Without a check or credit card statement to back you up, it becomes your word versus a 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.  Besides, why should you pay taxes and not the contractor?

6. They avoid answering your questions or giving you references. 

If a contractor refuses to give you any “Real references” it’s a sure sign that something is amiss. 

Every contractor should have a long list of pleased customers that can vouch for their past jobs. 

If a contractor says he’s just starting out and doesn’t have references yet, you should probably pass on hiring them, no matter how good a deal it appears to be, you should find someone else with more experience.

The old saying the price looks to “good to be true” is probably a good sign of a red flag that this is going to cost you way more in the end than if you hired the right guys in the first place!

7. Too many subcontractors

 A good contractor will know how to use subcontractors wisely. 

For instance, you are better off having a “Real electrician” doing the electrical work rather than some “jack of all trades” where a good general contractor knows that they need to call in an expert for things like electrical, plumbing, gas work, and so on, plus you’re your home insure will want this done by registered/ticketed professionals, any work done by a non-qualified guy can make your homeowners insurance policy null & void! 

However a contractor, who is overly reliant on subcontractors and has no real hands on the job, should also raise a few red flags. 

For example, if a contractor is farming out most of the work to subcontractors, then he’s acting more like an unnecessary middleman rather than an essential part of the project process.

7. They only have a truck for an office

If a contractor doesn’t have a “Real office” with an actual address, don’t hire them to work on your home.  Some contractors will tell you that they are so busy that they mostly just work from their trucks. 

But if you hire a contractor like this, you’ll have no way to track the bad contractor down if they take your money and run.

8. No “Real Website”

Although just about anyone can set up a website for a few hundred bucks, most real builders/contractor’s that have been around for a while tend to have spent some real money on building a substantial website, a red flag is a contractor that has a very simple “template type website” such as a Go-Daddy template Web Site, with no real substance to it, or worse no website at all. 

In today’s virtual world, no real contractor would go without a decent, well done website.

9. No proof of liability insurance

Regulations in Alberta do NOT legally require a contractor to have liability insurance, however in general most real contractors need to be insured and licensed to work on any home.

Unlicensed contractors might offer you a cut-rate-deal on a build or renovation, but this will leave you very exposed if something goes wrong, such as major water damage form a leak, or fire caused by a carless plumbers soldering job. 

Or if an injury occurs during the job, or the work being done on your home caused damage to a neighbor’s home, you could be on the hook for all of these damages, not “your insurer.”  

Check your own home owner’s insurance policy, many policies have a clause that states, that if you are using an unlicensed or unqualified contractor, or using a contractor that does not have their own liability policy, means your policy becomes null & void!

 So make sure to see all of the contractor’s proper paperwork before you sign a contract, and follow-up with your own insure and let them know up-front who you plan to hire. 

You may find that they put up a Red Flag for you, and tell you to think twice about the guy you want to hire.

10. They have No “real” contract, or use an open-ended contract.

Beware of any contractor that does business with a handshake or gives you a contract that’s overly open-ended. 

A good contractor should know how long certain stages of the job will take and set deadlines that they can meet despite inevitable delays (i.e. materials delayed, bad weather). 

The agreement you sign should also clearly specify what kind of materials the contractor will use. 

Home building and renovations are complex and every stage of the build or renovation should be documented in the contract. 

You want to protect yourself against a bad contractor that promises you the moon and then cuts cost with bargain-basement materials, or try’s to extra charge you with overpriced change orders. 

Also look to see if the contractor has a 45 day 10% lien hold back clause within their contract (See also our free e-book “How to protect yourself from Liens) and read this before you engage a contractor or builder!  

Also, unless it is going to be a very small project, you should have a lawyer look at the contract, unless you are very sure you know what you are reading! 

Plus, any contractor not willing to negotiate wording in their contract is a big Red Flag! 

Many will say “This is a standard contract” you should note there is no such thing as an industry “Standard Contract”!  Most protect the contractor, NOT you!  Look for a “win/win” agreement!  Also known as a, “cuts both ways” contract!

12. They tell you, that building permits are not necessary.

Any contractor that tells you “you don’t need a permit for the work you want done” is a BIG red flag. 

They may try and sell you on the fact that your property taxes will go up with the added value of the project, and that part is most likely true, but!  

The real reason they don’t want to apply for proper permits is most likely because they don’t have all the right licences, WCB coverage, warranty etc. in place to actually make a permit application!

13. They can’t give you any trade and supplier references

Any good contractor/builder worth their salt should be able to give you a list of trades and suppliers that they work with, for you to verify that they are in good standing with their trades and suppliers.

There is an old saying “Happy trades & Suppliers” makes for a quality well done job, vs. un-happy trades & suppliers that are not as enthusiastic about doing great workmanship. 

Any contractor not willing to give you any trade and supplier references is a big red flag that they may not be up-to-date with payment to their trades and suppliers, making very unhappy trades that will most likely translate into a big mess for you later on!

Other Need-to-Knows When You Hire a Contractor

• Ask how long the builder/contractor has been in business? You can verify this with the Alberta registry.  Note:  Brand new contractors are more likely to be un-experienced contractor’s, that may not have developed good access to quality trades and subcontractors, as most good trades and subs are already busy working for their regular builders.
• Ask what building credentials they have, such as trade certificates, design certificates, awards, training, education background etc.
• Ask if they are a design builder, meaning they have their own in-house architectural design team, meaning they don’t just sub this architectural design work out.
• Ask what in-house trades they have, such as framing crews, cabinet or mill work shop,
• Ask if you will be getting a dedicated site supervisor for your project, or if multiple projects will be supervised by the same person.
• Get a few bids before you hire a contractor, 3-4, do not look for more than this, as the industry is very small, and word gets around fast that you are “just shopping for the best price” and then no one wants to give you fair pricing.
• See if they provide timely response to questions or issues.
• Remember, you get what you pay for. Sometimes the lowest bid was the lowest for a good reason, where in the end the highest bid might have been the best choice to go with.
• Review bids and included specifications very closely, never bottom line a bid, the bottom line number can be very deceiving, especially if some shady guys are playing games with the specifications, and including lower grade products
• Review all aspects of a contract before you sign.
• Make sure that the plans and “very detailed” specifications are attached to and form part of the main agreement as an addendum to the agreement, and if possible a detailed room to room specification as to what details will be going into each room.
• Even if you hire the best contractor, someone will still need to check up on them.
• Inspect work as the project progresses; if you are not happy with the work say something, before the work progresses too far to do anything about it!
• Schedule a weekly site meeting to check in on-site conditions, or have someone visit the property for you.  Note: a contractor that will not allow clients on site while they are there is also a red flag to them possibly covering something up.
• NEVER let any non-licensed person, non-insured person, or non-compliant WCB person do work on your project!
• Never give the keys to your home to a contractor, or their workmen no matter how much you trust them, ask the contractor to change the door lock out to a “construction lock” that has a construction key put into a realtor type lock box, for trades to use, then when the project is done change out the construction lock for your original lock.
• Let them know that you plan on sending them more business after the first project.
• Always set up and have a proper 45 day lien hold back fund set up “Before” you have any work done, and preferably have this set up with your lawyer!

Where Can You Find a Good Contractor?

Now that you’ve learned how to spot bad contractors, you now need a way to find the good guys.  Here are a few ways to find the best contractors:

1. Referrals from customers & subcontractors
2. Referrals from real-estate agents & Property Manager’s
3. Referrals from major suppliers or tradesmen
4. Online reviews – Yelp , Google, Trusted Pros
5. Home Improvement Sites – Houzz
6. TV home improvement shows like Marc & Mandy

So Now You Know, what to look for in a Good Contractor, What’s next?

Give us a call at LANDEN Design Build, and lets us show you what we can do for you, then go ahead and check out a few other guys, to make sure we are what we say we are, at Landen we are very sure you will see the difference that a quality design build contractor like our team can provide you, including our no charge preliminary planning services with no strings attached, (up to 30 hours of real architectural CAD design, free).  

Plus, our No requirement for an up-front deposit, this, for both our architectural planning or building services, and our virtually spotless 5 star reference, referral, and testimonials on Google, Trusted Pros and other internet sources. 

Plus one of the best no charge photo realistic 3-D rendering services in the industry, to help you visualize your project in a full 3-D colour virtual-tour of your project before a single nail driven!

E-mail us: info@landendevlopment.com

Website: landendevelopment.com

Phone us: 403-619-4734