← Hiring Guides

Hiring the wrong builder can be one of the most expensive mistakes a homeowner makes. Abandoned projects, substandard work, and financial disputes are all-too-common outcomes when red flags are ignored early in the process. Here are 12 warning signs to watch for before signing a building contract.

Red Flag 1: No Licence or Insurance

This is the biggest and most obvious red flag. In every Australian state, builders must hold a valid licence for residential work above certain thresholds ($3,300 in QLD, $5,000 in NSW, $10,000 in VIC).

What to do: Ask for the licence number and verify it online. Also ask for a Certificate of Currency for public liability insurance (minimum $5 million) and home warranty insurance (required for residential work over $12,000 in most states).

Red Flag 2: Demands a Large Upfront Deposit

A legitimate builder will never ask for more than 5–10% of the total contract value as a deposit. In many states, this is regulated by law:

• NSW: Maximum 10% for jobs under $20,000, 5% for jobs over $20,000
• QLD: Maximum 5% for QBCC-regulated work
• VIC: Maximum 5% for work over $10,000

Red Flag 3: No Written Contract

Any building work over $5,000–$10,000 (depending on state) legally requires a written contract. A handshake deal or a vague email is not sufficient. A proper building contract should include:

• Detailed scope of work with drawings/plans
• Total price or cost-plus arrangement with caps
• Payment schedule tied to milestones
• Start date and estimated completion
• Variations process (how changes are handled)
• Dispute resolution process
• Cooling-off period (5–10 business days in most states)

Red Flag 4: The Quote Is Suspiciously Low

If one quote is 30–40% below the others, something is wrong. The builder may be:

• Cutting corners on materials
• Not including proper waterproofing, insulation, or compliance requirements
• Planning to hit you with variations (extras) once work starts
• Not carrying proper insurance
• Underpaying subcontractors (which can make you liable under some state laws)

Red Flag 5: Pressure to Sign Immediately

"This price is only valid today" or "I've got another customer who wants the same slot" are high-pressure sales tactics. A legitimate builder will give you time to consider the quote, check references, and compare options. Most states mandate a cooling-off period for building contracts specifically to protect consumers from pressure tactics.

Red Flag 6: Cash Only, No Invoice

A builder who insists on cash payments with no invoice is likely:

• Not declaring income (tax evasion)
• Not carrying insurance
• Not accountable for warranty claims
• Making it impossible for you to claim the work on insurance or prove payment

Always insist on written invoices with ABN, and pay by bank transfer or cheque for a clear paper trail.

Red Flag 7: No References or Online Reviews

An experienced builder should be able to provide:

• 3–5 references from recent projects
• Photos of completed work
• Google Reviews or other online reviews

A builder with zero online presence and no references may be new (which isn't necessarily bad, but requires more due diligence) or may be operating under a new name after problems with a previous business.

Red Flag 8: Won't Put Variations in Writing

Variations (changes to the original scope of work) are normal in building projects. But they must be documented in writing with agreed pricing before the work is done. A builder who says "we'll sort that out later" or "don't worry about signing a variation" is creating a dispute waiting to happen.

Red Flag 9: No Site Supervisor or Project Manager

For jobs over $50,000, a builder should have a dedicated site supervisor who oversees the work daily. If the builder says "I'll check in every few days" or relies on subcontractors to manage themselves, quality control will suffer.

Red Flag 10: Subcontractors Constantly Change

Some turnover in subcontractors is normal, but if the builder cycles through different plumbers, electricians, and tilers on the same job, it may indicate:

• Poor payment practices (subcontractors leave when they don't get paid)
• Burnt relationships with reliable tradies
• Difficulty managing a team

Red Flag 11: Resistance to Progress Inspections

A good builder welcomes progress inspections — they demonstrate quality work. If a builder discourages you from inspecting work in progress or doesn't want you on-site, something may not be right.

For major projects, consider hiring a private building inspector ($300–$600 per inspection) to check work at key stages: footings, frame, pre-lining, and completion.

Red Flag 12: Previous Complaints or Disciplinary Actions

Check your state's licensing authority for any complaints, disciplinary actions, or licence conditions against the builder. Also search:

• QBCC (QLD): Shows complaints and directions issued
• VBA (VIC): Shows disciplinary actions
• NSW Fair Trading: Shows compliance actions
• Google: Search the builder's name + "complaint" or "dispute"

What To Do If You've Already Hired a Bad Builder

If work has started and you're seeing problems:

1. Document everything — photos, written correspondence, invoices
2. Communicate in writing — email, not phone calls
3. Issue a formal notice — most contracts have a process for defective work
4. Contact your state's building authority — they can investigate and mediate
5. Contact your state's consumer affairs/tribunal — for disputes about payment, quality, or contract terms
6. Get a building inspector — an independent report strengthens your position
7. Legal advice — for disputes over $25,000+, consider a construction lawyer