How to Vet a Contractor: Red Flags in 20 Minutes
The worst contractor jobs telegraph themselves before a single tool comes out of the truck. Here's how to read the signals and verify a license, insurance, and scope in under half an hour.
The short answer
Vet a contractor by verifying three things before signing: an active license (check your state board directly), current liability and workers' comp insurance (call the insurer, not the contractor), and a written scope with a deposit under 30%. The biggest red flags are large upfront deposits, no written scope, and a bid 40% below competitors.
What are the biggest contractor red flags?
The short answer
The four warning signs that predict most contractor disasters are: a deposit demand above 30% of the job, no written scope of work, a license the contractor can't or won't let you verify, and a bid roughly 40% below the other quotes. Any one of these should stop you. Two together mean walk away.
Contractor horror stories feel random when they happen to you. They aren't. After enough insurance claims and vendor disputes, the same pattern shows up over and over, and almost all of it is visible on day one before you've paid a dollar.
The uncomfortable truth: the contractor who takes your deposit and disappears did not fool a careful homeowner. They found one who skipped a 20-minute verification most people never do because they feel awkward asking. The good contractors expect the questions. The bad ones get squirmy.
Key takeaways
- A deposit above 30% is the single most reliable predictor of a bad job.
- "Licensed and insured" means nothing until you verify it at the source, not on their flyer.
- The lowest bid is often lowest because it omits the parts that cost money.
- No written scope means every dispute later is your word against theirs.
What each red flag actually predicts
Every warning sign is a warning about something specific. Reading them as vague "bad vibes" is why people ignore them. Here is what each one is really telling you.
| Red flag | What it usually means | What it predicts |
|---|---|---|
| Wants 50%+ deposit upfront | Undercapitalized or funding another job with your money | Cash-flow gap, stalled work, disappearance |
| No written scope of work | Improvising, or leaving room to bill extras | Change-order surprises, scope creep, disputes |
| Bid ~40% below others | Missing line items, unlicensed labor, or a lowball to win | Mid-job "unexpected" costs that erase the savings |
| Cash-only, no invoice | Avoiding tax, warranty, or a paper trail | No recourse, no receipt for insurance or resale |
| License number won't verify | Borrowed, expired, or belongs to someone else | No board oversight, no bonding protection |
| Pressure to sign today | Manufactured urgency to skip your due diligence | You won't have time to check anything |
| Door-to-door after a storm | Storm-chaser working outside their home market | Gone before the warranty period ends |
The storm-chaser line matters more in Florida than almost anywhere. According to the Insurance Information Institute, hurricane and windstorm losses drive huge repair volume, and that volume pulls in out-of-state crews who solicit door-to-door, take a roof deposit, and are three states away by the time your shingles start lifting. Legitimate local roofers rarely need to knock on doors.
How much deposit is normal?
Deposit rule of thumb
A reasonable deposit is enough to cover materials the contractor must buy before starting, usually 10% to 30% of the total. Larger jobs skew lower as a percentage because the dollar amount is already meaningful. Anything at or above 50% upfront is a red flag regardless of the excuse.
| Project size | Example jobs | Normal deposit range |
|---|---|---|
| Small (under $2,500) | Handyman, small plumbing, minor electrical | 0–25%, often paid on completion |
| Medium ($2,500–$15,000) | Water heater, HVAC swap, bathroom refresh | 10–25% |
| Large ($15,000–$50,000) | Roof, kitchen remodel, window package | 10–20% plus a materials draw |
| Major ($50,000+) | Additions, full remodels | 10% or less, structured payment schedule |
Notice the percentage drops as the job grows. That is deliberate. On a $60,000 remodel, 10% is $6,000, plenty to order cabinets and materials. A contractor demanding 40% ($24,000) on that job is asking you to bankroll their operation, and you become an unsecured lender the moment you pay.
The right structure ties money to milestones: deposit, then draws at demo complete, rough-in inspection passed, and final. Note some states cap residential deposits by law, so check your local rules. If a contractor resists a milestone schedule on a large job, that resistance is the answer.
The 20-minute vetting checklist
This is the whole defense. It takes about twenty minutes, most of it while you're on hold. Run it before you sign anything, not after the first problem.
Checklist
0/12Run this before you sign
One caveat: this checklist won't save you from a licensed, insured, well-reviewed contractor who simply does mediocre work. Nothing fully will. But it eliminates the outright scams and the uninsured operators, which is where the catastrophic losses live.
For homeowners who don't want to run this every time, this is exactly the coordination work platforms like One Home Agent hand to an AI agent — verifying licensing, insurance, and scope before a vendor ever touches the house.
How to verify a license and insurance
- 01
Get the license number in writing
Ask for the exact license number and the name it's registered under. A contractor who hesitates or gives you a number "to look up later" is telling you something. Legitimate ones rattle it off.
- 02
Check it at the state source
In Florida, use the DBPR license lookup — not the contractor's website, not a review site. Confirm the license is active, unexpired, and classified for your type of work. A general handyman is not licensed to reroof a house.
- 03
Confirm the name matches
A common scam is quoting a friend's or former employer's license number. The name on the active license must match the person and business on your contract. A mismatch is a hard stop.
- 04
Get the certificate of insurance
Request a current COI showing general liability and, if they have employees, workers' compensation. Note the insurer, policy numbers, and expiration dates.
- 05
Call the insurer, not the contractor
This is the step everyone skips. Call the insurance carrier or agent listed on the COI and confirm the policy is active today. Fake or lapsed COIs are trivial to produce; a phone call defeats them in three minutes.
The one question that separates pros from problems
“The single best predictor I've seen isn't the price or the reviews — it's how they react when you say you're going to verify the license and call the insurer. A real contractor says 'great, here's everything you need.' The problem ones suddenly need the deposit before that can happen. The urgency is the tell.”
Todd Paton, Partner, One Home Agent
Bottom line
Nearly every contractor disaster is preventable with a written scope, a deposit under 30%, and one phone call to the insurer. It feels awkward to ask. It's far less awkward than a half-finished roof and a vanished deposit. Run the 20-minute vet every time, on every job over a few thousand dollars.
Stop vetting vendors one at a time
Let an AI agent handle contractor vetting
One Home Agent's Vinny coordinates contractors and confirms licensing, insurance, and scope before work starts — so homeowners get the 20-minute vet on autopilot. See how property managers, brokerages, and title companies offer it as a lifetime amenity.
Book a walkthroughFrequently asked questions
A normal deposit runs 10% to 30% of the total, enough to cover materials the contractor buys before starting. Larger jobs use lower percentages and milestone-based draws. A demand for 50% or more upfront is a red flag, and some states legally cap residential deposits, so check local rules.
Sources & further reading