Picking a residential contractor can be a source of stress. After months of carefully planning your project, the wrong choice of contractor can be the difference between finishing it on time or facing unnecessary delays and headaches.

Contractors are likely to interact with you daily, especially for residential projects. Setting clear boundaries from the beginning will go a long way in ensuring the project goes smoothly.

Here are some early signs you can look out for to identify potentially problematic contractors.

The Contractor Asks For A Large Down Payment

A reasonable down payment for most projects is between 10 and 20% of the total cost. This down payment is used to purchase materials, supplies, and equipment necessary to begin working.

If a contractor asks for more, say 50 or 60%—before he even starts working—it should cause alarm. In fact, in certain states, it’s illegal for contractors to ask for more than a certain amount as a downpayment.

In California, a contractor can only ask for a down payment of 10% or $1,000, whichever is less. In Maryland, the limit is one-third of the contract price.

The Contract Isn’t Clear

A contract should specify all the steps they will take to ensure the project’s completion, from the scope to payment schedules, subcontractors—if applicable—and every minute expense.

Assume nothing – contractors are not obligated to do it if it’s not in the paperwork. Make sure your contract is airtight and matches your expectations. It will save you a lot of headaches down the line.

The Contractor Can’t Produce References

A contractor’s references are their bread and butter. It’s how they get new clients, strengthen relationships, and secure repeat clients. If a contractor can’t pull out a single reference for a happy client or complains that he always deals with bad clients, beware. In those scenarios, he’s the only common denominator; chances are he’s the source of the problem.

The Contractor Doesn’t Have Reviews

We’re living in the digital era, and it’s made it easier for customers to not rely on word of mouth only. But this cuts both ways. If the contractor can’t produce positive references and has only negative – or no reviews – online, you should consider whether you want to continue.

As with references, a contractor’s previous work should be a source of pride in a well-done job. If they’re serious, you should be able to find pictures of them showcasing their craftsmanship and abilities.

The Bid Is Extremely Low

If you want to offer a project to a group of contractors, don’t just focus on the lower bid. If a bid sounds too good to be true, for example, if it barely covers the cost of materials and a little more, you may want to look closer at the fine print.

Unethical contractors may hide behind vague terms and unclear conditions to justify not doing part of the work – or they might try to ask for more after the project began because it ‘wasn’t included in the contract.’ Again, ensuring you sign an airtight contract will save you a lot of headaches.

The Contractor Doesn’t Have A License

Different states have different license requirements. In Georgia, for example, any contractor working on a project valued at more than $2,500 needs to have a license. In Colorado, only plumbing and electrical contractors must have state-issued licenses. Therefore, if you’re starting to google ‘general and residential contractors near me’ in Colorado, know that they are not required to carry a license.

This may change at the municipality level, so it’s always worth checking what’s actually required. When in doubt, lean towards licensed contractors.

While not required, it’s a strong positive indicator that the contractor carries additional insurance, such as General Liability and Builders’ risk.

The Contractor Is Hard To Reach

Communication is key in any long-term business relationship. If you feel a contractor is slow in responding, avoids your calls, doesn’t fully address your concerns, or dismisses them, beware.

Maintaining a healthy and open communication channel with clients is in a contractor’s best interest. If they’re not doing this, they are likely not fully invested in the project. Consider your other options.

The Contractor Asks You To Pull Permits

As with insurance and licenses, each state has different requirements regarding permits. However, a good rule of thumb is that you, as the homeowner, should never be the one to obtain permits.

Permits protect homeowners and require contractors to do a good job. Whoever pulls the permit is ultimately responsible for paying the fines if things go wrong.