Last reviewed: August 2026
Most granny flat builders are legitimate businesses doing competent work. The warning signs below are worth knowing anyway, because the cost of missing one is measured in tens of thousands of dollars and the cost of checking is an afternoon.
The three that matter most are an unverifiable licence, a large deposit requested before insurance is in place, and a refusal to put exclusions in writing.
Red flags about the builder
The licence cannot be verified
A NSW builder’s licence can be checked publicly through NSW Fair Trading. Check that:
- The licence exists and is current
- It is held by the exact entity that will sign your contract, not a related company with a similar name
- It covers the class of work
A mismatch between the licensed entity and the contracting entity is a serious problem, and it is not always obvious.
No HBCF cover, or cover promised later
Home Building Compensation cover is required for most residential building work in NSW over $20,000 including GST. The builder must have it in place before starting work or taking any payment, including a deposit.
If you are asked for a deposit and told the insurance will follow, that is the wrong order. You can check whether a policy has been issued for your property through the HBCF Certificates Register at Verify NSW.
A large deposit requested up front
Deposits on residential building work in NSW are regulated. If you are asked for a deposit that feels large relative to the contract, check the current limit with NSW Fair Trading before paying it.
Pressure to sign today
Discounts that expire at the end of the meeting, or a price that is only available if you commit now, are sales pressure rather than commercial reality. A genuine price for a six figure build will still be there in a week.
Red flags in the quote
| Red flag | Why it matters |
| No site inspection before pricing | Site costs cannot be real |
| No soil test | Rock and soil classification are unknown |
| No itemised inclusions | You cannot compare it to anything |
| Refusal to put exclusions in writing | The exclusions are the problem |
| Several large provisional sums | It is not a fixed price |
| “Subject to site conditions” with no detail | Open-ended cost exposure |
| A price well below every other quote | Usually scope, not efficiency |
| Approval status vague or unaddressed | You may be paying for a build you cannot legally do |
| No mention of who arranges survey, soil test, engineering | Those costs land somewhere |
The suspiciously low quote
A quote significantly below every other one is worth understanding rather than celebrating.
Usually the explanation is scope: floor coverings, driveway, fencing, connections and site works are excluded, and they will all be needed. Occasionally it is specification, with lower grade fittings than you are picturing. Sometimes it is a business pricing work below cost to win it, which creates its own risks partway through a build.
Ask what makes it lower. A good builder can explain their price.
Red flags in the contract
- Payment stages tied to dates instead of completed work. You should pay for work that is finished, not for a calendar reaching a certain day.
- A broad clause allowing price adjustment for “site conditions” with no definition of what counts.
- No defects liability period, or no process for reporting and rectifying defects.
- Variations not required to be in writing before work proceeds. This is how disputes start.
- No stated timeframe, or no consequence attached to it.
- The contracting entity differing from the licensed entity.
Have any building contract reviewed before you sign. It is a small cost against a six figure commitment.
What good looks like
To be fair about the other side of this, here is what a straightforward builder does.
- Gives you the licence number without being asked twice
- Inspects the block before producing a price
- Arranges a soil test and prices site works from it
- Provides an itemised inclusion list and a written exclusion list
- Has HBCF cover in place before taking a deposit
- Ties payments to completed stages
- Puts variations in writing with a price before the work happens
- Answers the awkward questions directly
Before you pay any deposit
A short checklist.
| Check | Done |
| Licence verified on NSW Fair Trading, matching the contracting entity | |
| HBCF certificate sighted for this job | |
| Site inspection completed | |
| Soil test completed and site costs priced from it | |
| Written inclusion list received | |
| Written exclusion list received | |
| Provisional sums identified and understood | |
| Contract reviewed | |
| Deposit amount checked against the regulated limit |
Frequently asked questions
How do I check a NSW builder’s licence?
NSW Fair Trading provides a public licence check. Search the licence number or business name and confirm it is current and held by the entity signing your contract.
How do I know if HBCF cover has been taken out for my job?
The HBCF Certificates Register at Verify NSW shows whether a policy was issued, who the insured builder is, the property address, and whether claims have been paid.
What deposit is a builder allowed to ask for?
Deposits on residential building work in NSW are regulated and capped. Check the current limit with NSW Fair Trading before paying, and be cautious about anything above it.
Is a low quote always a bad sign?
Not always, but it always deserves a question. Most of the time the difference is scope rather than efficiency, and the gap closes once the excluded items go back in.
Should I get a contract reviewed by a lawyer?
For a six figure build, it is a sensible cost. A building contract is where the price, the timeline and your remedies actually live.
Ask us the hard questions
We would rather you checked. Licence 247388C, verifiable through NSW Fair Trading, and we provide inclusions and exclusions in writing.
Call BlueGum on 1300 060 651, or book a site assessment.
BlueGum Granny Flats is a licensed NSW builder, licence number 247388C. HBCF details are drawn from icare NSW as at August 2026. This article is general guidance and is not legal advice. Deposit limits and insurance requirements change from time to time, so confirm the current position with NSW Fair Trading.
