How to Recognize a Home Improvement Scam and Hire a Reputable Contractor

Hiring a contractor or trades person for home improvement projects can be expensive. A good contractor, though, is worth the money. The job will be done right and done on time.

Unfortunately, the home improvement industry also has its con artists. Home improvement scams cost consumers thousands of dollars. You need to be aware of how these con artists work, and what you should do when you do need to hire a contractor.

Door-to-Door

Avoid contractors who solicit business door-to-door. A reputable contractor doesn’t approach homeowners with special offers because he happens to be in the neighborhood.

This scammer knocks on your door and tells you he and his crew were on a job in the neighborhood. They have left over materials and will gladly repair your roof or driveway at a discount.

Reputable contractors do not “resell” leftover materials. They do not solicit jobs on the spot nor do they discount labor costs. Should you say yes, you will be expected to pay cash upfront. The work will be shoddy and the materials sub par. It is also likely the contractor will never complete the job.

The Lowest Bid

Don’t assume the lowest bid is the best bid. Always get at least three bids for a job, but the contractor that claims to be able to do the job at an exceptionally low cost may not be the best choice.

This contractor offers a low cost, but then pressures you into paying for the entire job up front. This guy will likely abscond with your cash without ever doing a bit of work.

Financing

If you balk at the cost a contractor quotes you, or state you are unable to afford the job, the contractor may offer you financing. This scam artist will have a contract handy, but certain spaces will be blank.

This scam ends with you owing a lender more money than the bid was for at an exorbitant interest rate. You also put your house up as collateral.

The lender has already paid the contractor, so the contractor no longer has incentive to perform the work in a timely manner, if at all. But you are still obligated to the lender.

Finance home improvement projects through your own bank.  This gives you control over the money, and you will have a thorough understanding of the terms.

How to Hire a Contractor

Research any contractor you are considering for a project. General contractors are licensed by the state. A contractor should be able to provide you with a business phone number, an address and a license number.

Contact your state’s contractors’ licensing board or Registrar of Contractors. You can also use an Internet site such as www.contractors-license.org/. This website allows you to click on your state and follow the links to your state’s contractors’ listings.

Ask for references. Even if a contractor is licensed, ask for local references from other customers and speak with them. Check with the Better Business Bureau for any complaints against the contractor.

How to Pay a Contractor

A good contractor will not ask for all the money up front. You will need to pay a small portion up front, but this should be no more than a third of the total bid, if that much.

Include a clause in the contract that states the contractor will receive another payment when the job has reached a certain point. The last portion will be paid when the project is complete and to your satisfaction.