9 Red Flags of a Contractor Scam (Before You Pay a Dime)

Most contractor scams aren't sophisticated. They follow the same handful of patterns, and once you've seen them on a job site you can spot them from the first phone call. Here are the nine I tell every homeowner to watch for.

1. They knocked on your door

The single biggest red flag in residential contracting is the unsolicited door-knock. "We were working in the neighborhood and noticed your roof / driveway / gutters…" Real, busy contractors don't need to drum up work this way. Door-knockers are almost always after a quick deposit on a job they have no intention of finishing properly.

2. Cash-only, or "huge discount if you pay today"

Legitimate contractors take checks, cards, and ACH. They have a business bank account, they pay taxes, and a paper trail does not scare them. "Cash only" or "I can knock $2,000 off if you sign right now" means they're creating pressure so you don't have time to verify them.

3. They ask for more than 10% (or $1,000) up front

Most states cap deposits — California is 10% or $1,000, whichever is less. A contractor who wants 30%, 50%, or "half now, half on completion" is either undercapitalized, planning to disappear, or both. A solid contractor funds materials out of operating capital and bills progress payments tied to milestones.

4. The bid is dramatically lower than everyone else

Get three bids. If two come in around $18,000 and one comes in at $9,500, the $9,500 bid is not your lucky break. It's either missing scope, missing permits, missing insurance, or built around change orders that will balloon the price once they've started tearing things up.

5. No written contract, or a one-page "agreement"

A real contract names the parties, lists the scope, breaks out materials vs labor, lists the payment schedule, names the start and substantial completion dates, includes the license number, and lists who pulls the permit. If what you're handed fits on a napkin, walk.

6. "We don't need a permit for that"

Sometimes true, often not. Structural work, electrical beyond a like-for-like swap, plumbing past a fixture replacement, water heaters, HVAC change-outs, and almost any addition need permits. Unpermitted work shows up later as a problem when you sell the house or when the insurer denies a claim. A contractor who routes around permits is routing around inspection too.

7. The license number doesn't check out

Every US state has a public license lookup. Pull up the state board (CSLB in California, TDLR in Texas, CILB in Florida, and so on), type in the license number, and verify the name on the license matches the name on the contract, that the license is active, that it covers the trade in question, and that there are no recent disciplinary actions. Sixty seconds. Do it every time.

8. No proof of insurance

Ask for a Certificate of Insurance (COI) naming you as additional insured for the duration of the job. You want general liability (so if they damage your house, their insurer pays, not yours) and workers' comp (so if their helper falls off your roof, you're not on the hook). A real contractor's insurer emails a COI in an hour. A fake one stalls.

9. No reviews from people in your actual city

Five-star ratings from accounts with no other history, or reviews that all sound like they were written by the same person, are bot reviews. Better signal: reviews that mention a specific neighborhood, a specific problem, and a specific outcome — the kind of detail you can't fake.

What to do instead

• Verify the license on the state board site.

• Get a written COI.

• Get three bids in writing with itemized scope.

• Cap the deposit at the state-legal minimum.

• Tie remaining payments to milestones you can inspect.

• Pull the permit in your own name if anything feels off — the inspector then works for you.

The right contractor will be glad you're doing this. The wrong one will get annoyed and move on to an easier mark. Either outcome is a win.