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ADU bid red flags to spot before you sign

By the HyreADU research desk. Last checked .

The short answer

ADU bid red flags are signs that a price is incomplete or a builder is risky: one lump sum with no lines, no site work or utility connections, very low allowances, a deposit above the legal cap, payment ahead of work, no license number, cash-only terms, or pressure to sign today.

Ask for an itemized bid on the same drawings and walk away from the rest.

Red flags in the price

  • One number with no lines. You cannot see what is included.
  • No site work or utilities. Trenching, sewer, water and power are where budgets most often move.
  • Low allowances. Cabinets, tile or fixtures carried at amounts that will not buy them.
  • “Permits by owner” without saying which fees you pay.
  • A long exclusions list that removes major work.

Red flags in the terms

  • A deposit above the cap. In California, no more than $1,000 or 10 percent, whichever is less (Bus. & Prof. Code § 7159.5).
  • Payments ahead of work. California bars payments that exceed the value of work done or materials delivered.
  • No license number on the bid, or a name that differs from the license.
  • Cash only, or payment to a personal account.
  • Pressure to sign today for a special price. The FTC lists this as a warning sign.

What to ask instead

Ask for an itemized bid on the same drawings as the others, with site work and utilities as lines and every allowance named. Then compare them in the ADU bid comparison. Read questions to ask an ADU builder before your next meeting.

What to do next: read the questions to ask an ADU builder, check what decides ADU cost, then tell us about your project. Matching is not live yet, so we reply with information, not a quote.

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Questions

Is the lowest bid a red flag?

Not by itself, but check what it leaves out before comparing totals.

Can a builder ask for a large deposit for a prefab unit?

California’s down payment cap applies to home improvement contracts. We give no legal advice on specific contracts.

What if the builder will not itemize?

You cannot compare the bid. Move on.

Where do I report a problem contractor?

In California, to the CSLB.

Sources

HyreADU is a publisher. It does not design, permit or build ADUs, has no partner builders, and gives no legal, tax or engineering advice. Rules vary by state and city; California rules are labeled as such.