Red flags you're dealing with a bad contractor

Your home is your sanctuary from all of life's stresses. So it makes sense that when it comes time to remodel, you want to find a professional home contractor that you can trust.

First things first, you'll want to do your homework and look to resources like your local Better Business Bureau (BBB).

"BBB handles a lot of inquiries and complaints about home contractors, and we constantly remind people - do your research first and make sure you select someone you feel comfortable with," says Katherine Hutt, director of communications and media relations at the Council of Better Business Bureaus.

To help you start the evaluation process, we've compiled a list of potential red flags to help you avoid fraudulent or just plain shady contractors.

Red Flag #1 - No References

Warning: Be wary of a contractor that can't provide you with any references.

"The only reason that someone may not have a lot of references is if the construction company is just getting started and does not have a lot of work under their belt," said Joe Rongisch, owner of Vantage Design & Construction in Gretna, Neb.

Prefer getting a reference from someone you know? Consider asking for personal recommendations from people you trust - family, friends, neighbors, or colleagues.

In fact, according to the National Association of the Remodeling Industry (NARI), nearly half of all projects completed by a remodeling contractor are the result of client referrals.

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Red Flag #2 - No Listed Address

As a contractor, wouldn't you want the public to know your location?

It sounds like a no-brainer, but some contractors still don't advertise their address - and this is a warning sign to look out for.

"If a contractor is not willing to disclose his work address, it may mean he is working from his home," says Rongisch. That may not be a bad thing, unless a contractor is trying to stay under the radar, he adds.

When trying to determine if a contractor you're looking into has a legitimate address, here are a few tips: Look on the contracting company's website or in old phone books. You can also try calling the BBB or your local chamber of commerce to see if the company is listed with them.

Don't be afraid to ask the contractor why the business address isn't disclosed. If he or she avoids the question, it's probably wise to find another person for the job.

Red Flag #3 - No Permit

Steer away from contractors who say they won't need any permits to start building, repairing, or remodeling.

"If there is no permit, most likely, there is not going to be professional tradesmen on the project, and no way for city inspectors to verify that everything is being done to code," says Rongisch.

Besides requiring government inspection to make sure everything is up to code structurally, a permit can better ensure home insurance coverage. For example, if you don't have a building permit and damage occurs to the newly remodeled area, your insurance may not cover the replacement or liability costs, according to Rongisch.

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And depending on your home's location, a permit might be necessary for changing the roofline, putting in new electrical wiring or plumbing, adding a deck, or building a new room, adds Rongisch.

Red Flag #4 - Door-to-Door Solicitation

Although legitimate businesspeople could solicit door-to-door, be cautious and do your research if you decide to hire a contractor who has knocked on your door.

Chip Voelsch, owner of BellaVita Builders, Inc. in Geneva, Ill., doesn't recommend hiring contractors that show up at your doorstep.

"They are looking for a quick turn and quick cash," says Voelsch. "They must be looking for work, and that is a red flag to me. I have never seen that good of craftsmanship when you are doing something quick."

Just keep in mind that not all door-to-door contractors are untrustworthy.

For instance, Rongisch says that some contractors - including his company - use door-to-door solicitation to get their name out in specific parts of a town.

"We have done this on occasion and have seen great results," adds Rongisch.

Red Flag #5 - No Certification or Insurance

A contractor without insurance is like pizza without cheese: It's just not right. To name just one example, if a contractor has no insurance and something happens while on the job, you are responsible for paying the cost in damages.

So how do you know if they are insured? Ask that the contractor's certificate of insurance be mailed or emailed directly to you from the insurance company. Don't accept a copy - it might not be legitimate.

"The true scam of all time is companies paying their insurance on Jan. 1, and then canceling it the next day to get all their money back," says Rich Cowgill, president of the National Association of the Remodeling Industry (NARI) Greater Chicagoland and owner of Vision Design and Build, Inc. in Willow Springs, Ill.

In fact, these sneaky contractors make copies of their certificate and use it all year, even though they really aren't insured, Cowgill adds.

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On the other hand, trustworthy contractors will carry personal liability, property damage, and worker's compensation coverage, according to the Federal Trade Commission, a federal agency that protects American consumers.

Red Flag #6 - Full Payment Requested Prior to Starting Any Work

Another red flag to look out for: a contractor that requests the entire cost of the project up front.

You never want to pay the entire cost at once - especially if the contractor hasn't even started your project yet.

"No one ever asks for the full price of the job unless something is fishy," says Voelsch.

Consider a payment option like the BBB's rule of thirds: pay one third at the beginning of the project, one third when work is underway, and the final third when you are pleased with the final results, says the BBB's 2012 article "BBB Warns Contractors: Promising to Pay Insurance Deductibles is Illegal."

Just keep in mind that up-front costs may vary depending on the project and cost of materials.

"As a contractor, I don't want to be stuck with a bill to the lumberyard for someone's job," says Voelsch. "So, I usually ask for the price of the material by showing them the estimate of what it will cost."

Red Flag #7 - No Written Contract

What's another red flag to help you identify a sketchy home contractor? Answer: a contractor who fails to provide a written contract detailing the entire project's terms and conditions.

"A contract or proposal is very important for any job of any size," says Rongisch. "If there is no contract, there is nothing holding the contractor to what was said. Things are always forgotten or understood differently."

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So what items need to be included? According to Cowgill, the contract should lay out details of the project - products and brand names with serial numbers - with the total price, including labor.

And if there are any changes along the way, they must be written and signed in a change order, adds Cowgill.

Red Flag #8 - No Chemistry

Just like in dating, you might feel that a contractor isn't "the one" after your first meeting.

"If he is a jerk in the beginning, he will be a jerk at the end," says Voelsch. "This has to be a good relationship back and forth."

This may sound like a no-brainer, but go with your instincts. If you feel uneasy after the first meeting, don't hire the contractor. There needs to be trust, and you need to feel comfortable around the person who will be working on - and in - your home.

The Bottom Line

This is your home and your money. So if you want to find the best contractor for your needs, you should take the time to research and ask Qs.

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