How to Choose a Contractor: 5 Red Flags

The cheapest proposal can be the best fit. It can also be missing the work that makes the project usable. Before choosing a contractor, establish three things: who you are hiring, what that business agrees to deliver, and how changes or problems will be handled.

How do you compare contractors with different prices and reviews?

Separate evidence of experience from the price of the job. A newer business may have relevant experience under a previous employer; ask which projects the proposed supervisor personally managed. A long-established business may send a crew you have never met. Find out who will actually be on your project.

Read reviews for patterns you can investigate: communication during delays, handling of changes and response after payment. A review is one person's account, not a verified finding. Ask the contractor about the process behind a recurring concern, rather than treating a star rating as proof.

The FTC's hiring guidance recommends checking licensing and insurance, seeking multiple written estimates and contacting references. Verify requirements with the authority where the property is located; a license from another state is not a substitute.

Five red flags to resolve before you sign

1. The contracting business cannot be verified. Match the legal name on the proposal to the license or registration required locally. Ask for insurance evidence covering the work, and verify it with the issuing party.
2. The price has no identifiable scope. A total without quantities, products or exclusions leaves you unable to compare. Ask for the missing schedule before treating it as a complete offer.
3. You are pressured to pay before checking the agreement. Pause when an offer depends on immediate payment or you are discouraged from obtaining another estimate. A genuine scheduling constraint can still be explained in writing.
4. Responsibility for permits is dismissed without checking the work. Cosmetic work and structural or utility changes can follow different rules. Ask the local building department about the proposed scope and record who applies, pays and attends inspections.
5. No one will put changes and defect handling in writing. Establish who authorizes extra work, how price and schedule changes are approved, and whom you contact after completion.

What should both bids include?

Mark each line included, excluded, allowance or unresolved. Do not enter zero for an unresolved cost. A tile allowance, for example, needs an area and an explanation of whether it covers material alone or also freight, tax, trim and installation. The quote review tool can help organize those questions; the contractor must confirm the agreement.

Which reference questions tell you something useful?

Ask for a similar completed project and, where available, a client who needed a callback. With the client's permission, ask what changed after signing, how the change was approved and whether the contractor returned to resolve defects. Ask whether the same supervisor and subcontractors are proposed for your job.

A portfolio image establishes appearance. It does not establish final cost, waterproofing quality or responsibility for the work. Request enough context to understand which parts the contractor performed.

Who pays when a product or installation fails?

Put product supply and installation responsibilities side by side. If you buy the fixture and the contractor installs it, ask who checks it before installation and who handles removal and reinstallation if it is defective. A manufacturer's product warranty and a contractor's workmanship agreement may cover different expenses.

Do not assume that “bonded” guarantees completion or pays every complaint. California CSLB distinguishes a license bond from a contract bond. Ask which protection is being offered, its limits and its claim process.

California contracts: check the local rules

CSLB's home-improvement contract guidance describes written scope, payment terms and signed change orders. Its ordinary down-payment limit is the lesser of $1,000 or 10% of the contract price. Check applicable exceptions with CSLB; do not apply this California rule to projects in other states.

For the state-specific checks, use our California contractor checklist. For a kitchen project, carry the scope into the kitchen cost breakdown before requesting bids.

A request you can send to your shortlist

Please price the attached scope and list exclusions and allowances separately. Confirm the supervising person, permit responsibilities, payment milestones, change-order process and workmanship terms. Identify owner-purchased items and the costs that remain unresolved before I compare the proposals.

What a CSLB license check shows

Start with the license number, not the star rating. CSLB says every contractor advertisement, from a truck door to an online ad, must carry the state license number. If a number is missing, the CSLB license lookup also searches by business name or by the contractor's name.

The record tells you more than whether a license is active. CSLB says it shows insurance information, whether a contractor in certain trades carries workers' compensation, and whether the contractor has the rare blanket bond that allows a larger down payment.

It also shows some complaint and discipline history, within limits set by Business and Professions Code section 7124.6. CSLB must publish certain complaints that have been referred for investigation or accusation, with a disclaimer that a complaint is only an allegation. Complaints resolved in the contractor's favor are not disclosed. Citations stay public for five years after compliance, and a revocation that is not stayed stays public indefinitely. A clean record means nothing disclosable is on file. It does not mean no customer has ever complained.

Match the license to the person and the job

When someone arrives to bid, CSLB suggests asking for the pocket license and a photo ID and checking that the person matches the license. A salesperson working for a contractor must be registered with CSLB as a Home Improvement Salesperson.

Then check the classification. CSLB licenses contractors in 45 classifications. For a kitchen remodel with plumbing, electrical and carpentry under one contract, CSLB says to hire a licensed "B" General Building contractor. For roofing or plumbing alone, a specialty license may fit better. In California, a license is required for any job that needs a building permit or is valued at $1,000 or more in combined labor and materials.

Red flags in a California estimate or proposal

A written contract is required in California for home improvement projects over $500, and Business and Professions Code section 7159 lists what it must contain. A proposal missing these items is not ready to sign, however good the price looks.

The payment rule is printed in capitals in the statute: it is against the law for a contractor to collect payment for work not yet completed or materials not yet delivered. CSLB's contract guidance adds two more checks. Never sign a blank or partially blank contract, and remember that anything you sign to authorize the work could become the contract. Its example of a specific description is "install oak kitchen cabinets, manufactured by Company XYZ, model 01381A, as per the plan," not just "install kitchen cabinets."

Is the lowest bid a red flag?

Not automatically. CSLB recommends at least three written bids based on identical plans, specifications and scope. It warns against any bid substantially lower than the others, which it says probably means a mistake or missing work. CSLB also cautions that accepting an abnormally low bid may lead to a dispute with your contractor. The same check applies to single-trade quotes; see why plumbers charge what they charge and when to push back.

Mechanics liens: the risk that survives paying in full

A mechanics lien is a hold on your property filed by an unpaid contractor, subcontractor, laborer or supplier and recorded with the county recorder. CSLB says the homeowner is ultimately responsible for payment even after paying the direct contractor. The results can include paying twice for the same work, foreclosure, or a recorded lien that affects your ability to refinance or sell.

CSLB's lien prevention steps fit into the hiring process:

1. Get a list of all subcontractors, laborers and material suppliers from the direct contractor.
2. Save every Preliminary Notice you receive. Subcontractors and suppliers can send it up to 20 days after starting work or delivering materials.
3. Pay with joint checks made out to both the contractor and the subcontractor or supplier.
4. Get a conditional release before each payment and an unconditional release after it. By law, you may withhold the next payment until you have the unconditional releases for the previous one.
5. File a Notice of Completion with the county recorder within 15 days of completion. It cuts the contractor's lien window from 90 to 60 days, and the window for subcontractors and suppliers from 90 to 30 days.

Section 7159 also requires the contract to promise an unconditional lien release for each portion of work that has been paid. If that statement is missing, ask for it before signing.

Can a contractor start soon without it being a red flag?

An open calendar is not proof of a problem. What matters is whether the paperwork and the payments follow the rules. Section 7159 requires the contract to state an approximate start date and to describe what counts as substantial commencement of work, so a quick start should still appear in writing. CSLB also says payments cannot exceed the value of the work performed, apart from the down payment.

Speed does not cancel your right to cancel. Unless the contract is negotiated at the contractor's place of business, a California buyer generally gets three days to cancel a home improvement contract, and buyers 65 and older get five. The main exception is a service and repair contract for emergency work requested on short notice, with a total price under $750.

How to read contractor reviews

Reviews still help, but read them knowing what the federal rules cover. The FTC's Rule on the Use of Consumer Reviews and Testimonials, 16 CFR Part 465, makes it an unfair or deceptive practice for a business to:

• write, create or sell reviews that misrepresent whether the reviewer exists or used the service;
• pay or give incentives for reviews that express a particular sentiment, positive or negative;
• have an officer or manager post a review without clearly disclosing the relationship to the business;
• present a site it controls as an independent source of reviews or opinions;
• hide negative reviews while presenting the rest as most or all of the reviews submitted.

The rule makes these practices illegal. It does not screen any review page for you. So look for detail you can check: the type of project, how changes were handled, and whether the contractor came back after the final payment. Then take the patterns to the contractor as questions.

Owner-builder: when someone suggests you pull the permit

If anyone suggests you pull the permit yourself as an owner-builder to save money, CSLB's owner-builder warning is direct: be wary of consultants or unlicensed individuals who try to talk you into becoming an owner-builder to save money, because they are usually the ones who profit illegally from the arrangement.

The owner-builder exemption for improving your own home has conditions. The work must be done before sale, you must live in the home for the 12 months before the work is completed, and you cannot use the exemption on more than two structures in any three-year period. If a contractor fails to pull a required permit, CSLB accepts a Building Permit Violation Referral form.

If the job goes wrong after you sign

CSLB can act on complaints against licensed and unlicensed contractors for up to four years from the date of the act. Its investigations can lead to discipline, but CSLB states that an investigation does not guarantee restitution, and that homeowners mainly seeking money should consider the courts. CSLB also lists a mandatory arbitration program for complaints about damages of $25,000 or less. Keep the contract, change orders, payment records and lien releases in one file from the first day; they are what any complaint or claim will rest on. When you are ready to compare bids side by side, the quote review tool can organize the questions above, and find a pro is where to request matched bids in the areas Renology covers. Run the same license and contract checks on every bid, whatever its source.

Sources and Methodology

Reviewed September 28, 2026 against the FTC and California CSLB pages linked above. The comparison sheet and reference questions are Renology editorial tools, not a contractor certification or investigation. We removed unsupported dispute statistics and generalized licensing, bond and tax-credit claims. See our editorial methodology.