Red flags in building quotes: 7 warning signs before you sign
Not every bad quote is a scam — but some are deliberately structured to look competitive upfront and recover the difference through variations. These 7 red flags help you tell the difference.
1. The suspiciously low price
If one quote is 20–30% lower than others for the same scope, the builder isn't giving you a deal. They are almost certainly underscoping the work, using lower-quality materials, underestimating labour, or planning to recover the difference through variations once you're committed. A quote that's 30%+ below competitors for the same scope isn't a budget approach — it's likely missing scope entirely.
What to do: Ask the builder to explain specifically what's included that justifies the lower price. If they can't point to concrete differences, the gap is coming from somewhere you don't want it to come from.
2. The "owner-builder" permit request
If a builder asks you to pull the permits as an owner-builder while they do the work, walk away. This is used by unlicensed operators to dodge registration requirements and insurance obligations. As an owner-builder in Victoria, you become personally liable for defects for at least 10 years, lose DBI protection, and lose access to the DBDRV dispute process. A legitimate builder pulls permits in their own name.
3. Vague or unrealistic Prime Cost allowances
A PC item is a dollar allowance for a fixture not yet selected. They're legitimate, but must be realistic. Engineered stone kitchen benchtops in Melbourne run $600–$1,200 per linear metre installed. A typical kitchen has 4–6 linear metres, so the realistic range is $2,400–$7,200. A $1,500 PC allowance guarantees a variation of $900–$5,700 before you've even chosen your slab.
What to do: Check every PC item against real retail prices (Reece, E&S Trading, Bunnings). If multiple allowances are unrealistically low, the builder is lowballing to win the job.
4. Payment schedule not tied to construction stages
A professional quote ties payments to objective milestones. Be wary of:
- "50% on signing, 50% on completion" — front-loads payment before meaningful work is done
- "As work progresses" billing — no objective way to verify the payment request matches work completed
- A deposit exceeding the legal cap — 5% for contracts over $20,000 in Victoria
What to do: Ask for the payment schedule to be rewritten to match defined construction stages.
5. Missing exclusions
A quote should be just as clear about what isn't included as what is. Common items frequently excluded but rarely flagged:
- Site cleanup and waste removal (skip bins: $300–$600 per load)
- Rock or root excavation during earthworks
- Asbestos testing and removal in pre-1990s homes ($1,500–$4,000)
- Council permit fees and building surveyor inspections
- Landscaping or driveway reinstatement after construction
What to do: Ask directly: "What is not included in this price?"
6. Unverifiable credentials
A builder quoting on residential work in Victoria must hold a current registration with the Victorian Building Authority (VBA). An ABN is not a building licence. Search the VBA register at vba.vic.gov.au/find-a-practitioner and verify the name matches the quote, the registration class covers your project type, and the registration is current. Unregistered builders cannot provide DBI — leaving you with no insurance protection.
7. High-pressure "lock-in" tactics
A 30-day quote validity is standard. A builder demanding a same-day answer or claiming a price "expires Friday" is preventing you from doing due diligence. Common pressure tactics:
- "This price expires Friday" — with no reasonable basis for such a short window
- "I've got another job starting Monday" — designed to create fear of losing your spot
- "Material prices are going up next week" — legitimate builders don't demand same-day decisions based on this
What to do: Take the time you need. In Victoria, you also have a 5-day cooling-off period after signing — but it's better to take your time before than to rely on cooling-off rights after.
What to do next
If you've spotted one or two flags, ask direct questions — a professional builder will address your concerns and adjust the quote if needed. If you've spotted three or more, particularly unverifiable credentials, an owner-builder request, or a deposit exceeding the legal cap, treat the quote with serious caution. These are not careless mistakes.
This article is for general information only and does not constitute legal or financial advice. Sources: Domestic Building Contracts Act 1995 (Vic) · VBA — vba.vic.gov.au · VMIA — dbi.vmia.vic.gov.au · Consumer Affairs Victoria