Adding a room, renovating a basement, or doing some much-needed repairs around your home can be a big undertaking. Finding a trustworthy contractor is an important first step. Scammers will promise to do the work, but leave you and your home worse off than when you started. They may do shoddy work, damage your home, overcharge you, or just take your money without performing any services. So how do you tell the difference between a trustworthy contractor and a scammer? Before you hire a contractor, learn how to recognize the signs of a home improvement scam.
- Signs of a Home Improvement Scam
- How To Avoid a Home Improvement Scam
- The Home Improvement Loan Scam
- Report a Problem
It can be devastating to hire a contractor only to discover that they are scamming you. While most contractors are honest and reliable, there are some tell-tale signs that homeowners can look out for to identify potential scams:
Demands upfront payment: If a contractor demands a large upfront payment before beginning the work, it could be a red flag. Legitimate contractors typically ask for a deposit or partial payment upfront, but they should not demand the full payment before starting the work.
Refusal to sign a contract: A reputable contractor will always provide a written contract that outlines the scope of work, timeline, and cost. If a contractor refuses to sign a contract, it could be a sign that they are not legitimate.
Lack of license or insurance: Legitimate contractors should have the necessary licenses and insurance to perform the work. If a contractor cannot provide proof of these documents, it could be a sign that they are not legitimate.
High-pressure sales tactics: If a contractor uses high-pressure sales tactics, such as offering a “limited time” discount or pushing you to make a quick decision, it could be a sign that they are not trustworthy.
Poor communication: A legitimate contractor will communicate clearly and promptly throughout the project. If a contractor is difficult to get a hold of or does not return phone calls or emails in a timely manner, it could be a sign that they are not reliable.
Lowball estimates: If a contractor provides a significantly lower estimate than other contractors, it could be a sign that they are cutting corners or using subpar materials.
Unwilling to provide references: A reputable contractor should be willing to provide references from past clients. If a contractor is unwilling to provide references or has negative reviews online, it could be a sign that they are not trustworthy.
If a contractor demands a large upfront payment, refuses to sign a contract, lacks necessary licenses or insurance, uses high-pressure sales tactics, has poor communication, provides a lowball estimate, or is unwilling to provide references, it could be a sign that they are scamming you. Homeowners should always do their due diligence and thoroughly research potential contractors before hiring them.
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Signs of a Home Improvement Scam
How can you tell if a contractor might not be reputable? Here are some tactics scammers use:
- Scammers knock on your door looking for business because they are “in the area.”
- Scammers say they have materials left over from a previous job.
- Scammers pressure you for an immediate decision.
- Scammers ask you to pay for everything upfront or only accept cash.
- Scammers ask you to get any required building permits.
- Scammers suggest you borrow money from a lender they know.
How To Avoid a Home Improvement Scam
Here’s some advice to help protect yourself and your money:
- Consider only contractors who are licensed and insured. Check with your state or county government to confirm a contractor’s license, and ask the contractor for proof of insurance.
- Get contractor recommendations from people you know and trust.
- Check with the local Home Builders Association and consumer protection officials to see if they have complaints against a contractor. Also search online for the company’s name with words like “scam,” “review,” or “complaint.”
- Read reviews with a critical eye. Read customer reviews to find out more about the contractor and use online rating websites you trust to see what others are saying about the contractor.
- Get multiple estimates. A written estimate should include a description of the work to be done, materials, completion date, and price. Don’t automatically choose the lowest bidder. And ask for an explanation if there’s a big difference among the estimates.
- Read the contract carefully. Contract requirements vary by state. Even if your state doesn’t require a written agreement, ask for one. Before you sign a contract, make sure it includes
- the contractor’s name, address, phone number, and license number
- an estimated start and completion date
- any promises made during conversations or calls related to issues such as the scope of work and the cost of labor and materials
- a written statement of your right to cancel the contract within three business days, if you signed it in your home or at a location other than the seller’s permanent place of business.
And, make sure all blank spaces are filled in.
- Don’t pay the full amount for the project upfront. Some states actually limit the amount of money a contractor can ask for as a down payment. Contact your state or local consumer agency to find out the law in your area. And never make the final payment until the work is done and you’re satisfied with it.
The Home Improvement Loan Scam
Sometimes, contractors will not just scam you through the work they do — or don’t do. Sometimes, they’ll actually set up a scam that ends with a loan against your home.
Here’s how it works: a contractor calls or comes to your door. He offers a deal to install a new roof or remodel your kitchen. He says he can arrange financing through a lender he knows. After he starts work, he asks you to sign papers. They may be blank — or he might hustle you along and not give you time to read through them. Later, you find out you’ve agreed to a home equity loan with a high-interest rate, points, and fees. What’s worse, the work on your home isn’t done right or isn’t completed, and the contractor — who may already have been paid by the lender — has stopped returning your calls.
Report a Problem
- If you have a problem with a home improvement project
- First, try to resolve it with the contractor. Many disputes can be resolved at this level.
- Follow any phone conversations with a letter you send by certified mail. Request a return receipt, so you can prove that the company got your letter.
- Keep notes and copies of letters and documents for your files.
If you can’t resolve it with the contractor, consider getting outside help from
- your state attorney general or local consumer protection office
- your local home builders association
- your local media’s Call For Action lines
- dispute resolution programs
We hope you found this informative and if you have any question on how to vet a contractor, head on over the BluePagesPro Toolbox. This is here to give you tons of tools to protect the consumer and the contractor!