How do we know if a contractor's bid is too good to be true?
If it's 30% below the others, it's too good to be true.
A bid that low almost always means corners cut, materials swapped, or a crew that won't show. The one thing that could change it: is the contractor licensed, insured, and willing
Checked Sep 9
How much lower is the bid than the next one?
Why?
Low bids hide costs They often skip permits, use cheap materials, or add change orders later.
Licensing is the filter A real contractor has a license and insurance; a too-low bidder often has neither.
Written scope protects you If they won't itemize the work in writing, that's the answer.
If the low bid comes with a solid reputation and a detailed contract, it might be legit, but that's rare.
If your situation is different
How much lower is the bid than the next one: Under 10%. Probably fine, but verify. Small gaps are normal. Still check their license and references.
How much lower is the bid than the next one: 10 to 30%. Worth a hard look. Could be a deal, but ask why and get the scope in writing.
How much lower is the bid than the next one: Over 30%. Too good to be true. That gap is a red flag. Walk away unless they can prove otherwise.
Who is a too-good-to-be-true bid right for?
Right for
- Homeowners with a simple, small job
- People who can pay cash upfront
- Those who already know the contractor personally
- Emergency repairs where speed beats cost
Wrong for
- Anyone with a complex renovation
- Jobs requiring permits or inspections
- Homeowners who need financing or a warranty
- People who can't verify license and insurance
What does a too-good-to-be-true bid cost in 2026?
| Figure | Value | Why it matters |
|---|---|---|
| Average contractor bid spread | 10 to 20% between comparable bids, 2026 | A bid 30% below the pack is a red flag, not a bargain. |
| Typical permit cost | $500 to $2,000, varies by city, 2026 | Skipping permits saves money but can void insurance and cause fines. |
| Liability insurance minimum | $1 million coverage, common standard, 2026 | Ask for proof; a low bidder often has none. |
| Change order average | 10 to 20% of original contract, 2026 | Low bids often lead to change orders that erase savings. |
What's the biggest mistake with a too-good-to-be-true bid?
The biggest mistake is assuming a low bid means a good deal. People skip verifying the contractor's license, insurance, and written scope, then get hit with change orders or shoddy work. Instead, treat any bid 30% below the next as a warning: ask for itemized costs, check the license, and get everything in writing before signing.
How do you decide if a contractor's bid is too good to be true?
- Get at least three itemized bids for the same scope of work.
- Compare the lowest bid to the next one; if it's 30% lower, ask why.
- Verify the contractor's license and insurance with your state board.
- Demand a written contract with materials, timeline, and payment schedule before any money changes hands.
People also ask
What should be in the written contract?
Put everything in writing, down to the last screw. A contract that names the scope, materials, timeline, and payment schedule is your only real protection against a too-good-to-be-true bid.
How do I spot a change order scam?
Low bid is the first red flag. Watch the change orders. A contractor who wins with a low bid makes it back on extras. The scam is when the change order is verbal, vague, or priced after the work starts.
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