What are the biggest red flags in a contractor quote?

The most serious red flags are: requiring more than 25% deposit upfront, refusing to provide a written contract, being unable to provide a verifiable license number or proof of insurance, and asking you to sign over your insurance claim check directly to them. Any single one of these warrants serious caution. Two or more means you should walk away and find a different contractor.

How much of a deposit is normal for a contractor?

Industry standard is 10–25% upfront for most residential projects. Some smaller contractors request up to 30% for material-heavy jobs where they need to pre-purchase supplies before starting. Anything above 33% upfront is a red flag — and demanding 50% or more before work begins is a pattern commonly seen in contractor fraud cases.

Should I be worried if a contractor quote is much lower than others?

Yes, when the gap is significant — typically 30% or more below competing bids. Legitimate contractors have similar material costs (lumber, shingles, fixtures are priced by the market). A dramatically low quote often means the contractor is cutting corners on materials, skipping licensed subcontractors, planning to add large change orders mid-project, or lacks the experience to accurately price the work.

Do contractors need to pull permits, and who pays for them?

Yes, most structural, electrical, plumbing, roofing, and HVAC work requires a permit in nearly every U.S. jurisdiction. The cost of permits is typically included in the contractor's quote or listed as a line item — it is not normally an additional charge to the homeowner beyond what's quoted. If a contractor suggests skipping permits 'to save you money,' that's a major red flag: permitted work is inspected by the city and gives you legal recourse if something goes wrong.

What should I do if I think I hired a fraudulent contractor?

Document everything: the contract (or lack of one), payments made, work performed or not performed, and all communications. File a complaint with your state contractor licensing board, your state attorney general's consumer protection office, and the FTC at ReportFraud.ftc.gov. If you paid by credit card, file a chargeback dispute. If the amount is significant, consult with a consumer protection attorney.

10 Contractor Quote Red Flags: Use Our Checker Before You Sign

Why Contractor Fraud Is a Home Services Epidemic

The Federal Trade Commission receives hundreds of thousands of contractor fraud complaints per year. After natural disasters — hail storms, floods, tornadoes — that number spikes dramatically as unlicensed "storm chasers" move through affected areas offering fast, cheap quotes to homeowners desperate to repair damage.

But fraud isn't only a post-storm phenomenon. Homeowners get taken advantage of on routine kitchen remodels, roofing jobs, and siding replacements every day. The patterns are remarkably consistent — and remarkably predictable. Run your quote through the checker above, then understand what each flag actually means.

What Each Red Flag Signals

Large Upfront Deposit (>25%)

Legitimate contractors have material accounts with suppliers and use project revenue to fund material purchases. They don't need 50% of a $30,000 job upfront before they've touched a single nail.

A large deposit demand is the most common signature of the "take the money and disappear" pattern — the contractor collects, does little or no work, then becomes unreachable. Even if the contractor is legitimate and not malicious, a large deposit gives you no leverage if the work is substandard.

No Written Contract

"We'll handle it" is not a contract. Any legitimate contractor for any project over $500 should provide a written agreement that specifies: scope of work, materials to be used (brand and specification), timeline, payment schedule, and what happens if the scope changes.

In most states, contractors are legally required to provide written contracts for work above certain dollar thresholds. A contractor who balks at a written contract is either hiding something or operating illegally.

Can't Verify License or Insurance

Every state with contractor licensing (the majority of U.S. states) maintains an online lookup tool. You can verify a contractor's license status in about 90 seconds. If a contractor can't provide a license number, or if the number doesn't come up in the state database, they're unlicensed — which means no bonding, no regulatory oversight, and limited legal recourse if something goes wrong.

General liability insurance protects your property if the contractor damages something. Workers' compensation protects you if a worker is injured on your property. Ask for the certificate of insurance directly from the contractor's insurer, not just a document the contractor hands you.

The Insurance Check Signing Scheme

This fraud pattern exploded after Hurricane Ian and other major storm events. A contractor — often a storm chaser — asks you to sign an Assignment of Benefits (AOB) or simply to endorse your insurance check over to them. Once they control the insurance payout, your leverage disappears entirely.

Never sign over an insurance check. Pay your contractor from your own account after work is completed to your satisfaction.

"Today Only" Pricing

Legitimate contractors have predictable material costs. Lumber, shingles, windows, and fixtures are priced by the market — a contractor doesn't get a special discount that expires at midnight. "Today only" pressure is a sales tactic designed to prevent you from getting competing quotes.

The best contractors are often booked weeks out. They don't need pressure tactics because their work speaks for itself.

What a Legitimate Quote Looks Like

For comparison, here's what to expect from a contractor you can trust:

Written contract with clear scope, timeline, and payment schedule
License number they offer without being asked
Certificate of insurance they can get from their insurer within 24 hours
Line-item cost breakdown — not just a total number
Permit discussion — they'll mention what permits are required and include the cost
References — at least 2–3 recent local jobs you can call
Reasonable deposit — 10–25% to start, remainder on completion milestones

If a contractor hits all of these marks, you're in a good position. If they miss several, keep looking.