When you\u2019re planning a home improvement project, it\u2019s wise to comparison shop for materials and labor. However, the zeal to save money can also lead you to work with unscrupulous contractors eager to take your money and run. How do you avoid home improvement scams?<\/p>\n
Most homeowners believe that they are too savvy to be ripped off by con artists. However, Jody Costello, home renovation planning and contractor fraud expert and the founder of the Contractors From Hell website, tells Freshome that she hears horror stories on a routine basis.<\/p>\n
Costello shares seven of these home improvement scams \u2014 and tips for avoiding them.<\/p>\n
#1 : Door-to-door solicitors<\/strong><\/p>\n In door-to-door solicitations, a contractor (who may or may not be licensed) tells the homeowner he\u2019s doing work in the neighborhood. \u201cThis individual says that he can see they need work on their deck, roof, siding or whatever they claim to see. He happens to have materials left over from another job and can do it for substantially less,\u201d Costello says. She adds that these individuals are likely to happily take your money. Then, they\u2019ll either perform substandard work or, worse, you might never see them again.<\/p>\n Unfortunately, these scams are most commonly perpetrated against the elderly. That\u2019s because they\u2019re more likely to be trusting and in need of help with home repairs. These scams are also popular after major storms, as people are deciding if they should rebuild after a hurricane or tornado. Also, if you\u2019ve decided to buy a fixer-upper, it may be obvious that your house needs work.<\/p>\n Tip : \u201cDon\u2019t do business with solicitors looking to make a fast buck with their stories of working in the \u2018hood,\u201d Costello warns.<\/p>\n #2 : Front loading contracts<\/strong><\/p>\n In front-loading, the contractor requires a large amount of money upfront before starting on your project. \u201cEvery state has different laws regarding down payments, but it is usually between 10% and 30%,\u201d Costello says. And she advises that you never want to turn over more than 30% to start a project. \u201cYou put yourself at a disadvantage when handing over large amounts as you have no work performed to show for it. The contractor drags his feet getting started on your project or, worse, never shows up.\u201d<\/p>\n And here\u2019s something else to think about. \u201cWhen they ask for a large deposit up front, they\u2019re likely behind on another project where part of your money will be used,\u201d Costello says. Obviously, that\u2019s illegal, but she warns that it happens a lot more than you might imagine.<\/p>\n Tip : \u201cResearch your state\u2019s contractor laws and down payment requirements,\u201d Costello advises.<\/p>\n #3 : Sign now and you\u2019ll get a discount<\/strong><\/p>\n Be wary of limited-time offers. \u201cThe contractor pressures you into signing a contract today, and you\u2019ll get a discount for doing so \u2014 but only if you sign today,\u201d Costello says.<\/p>\n Tip : \u201cNever allow yourself to be pressured into signing any contract, period,\u201d she warns. \u201cNo good ever comes from it.\u201d<\/p>\n #4 : Low bids and written agreements with vague language and little detail<\/strong><\/p>\n You should also be wary of low bids and quick assessments. In some scenarios, the contractor bidding on your project will leave off some of the details, knowing that many homeowners focus on the end cost. Pay attention to materials, supplies, construction equipment and subcontractors. \u201cOnce the project begins, you realize that some things are not being performed. You confront the contractor, who points to the written agreement you signed which doesn\u2019t include those items. But, of course, it can be added for additional monies,\u201d Costello explains.<\/p>\n \u201cIn another scenario, the contractor visits your potential renovation project, quickly assesses it and writes down the bid on the back of a business card or a sheet of paper,\u201d Costello adds. However, your project is too important to let someone set a price based on some scribbled notes. \u201cAnd you can bet that the costs to do your project will escalate quickly.\u201d<\/p>\n Tip : \u201cMake sure the bids are detailed and include everything that is included in your plans and scope of work,\u201d Costello says. \u201cTo this same point, the final written agreement must be detailed and include everything that is in your plans and specs.\u201d<\/p>\n #5 : The homeowner needs to pull the permits<\/strong><\/p>\n If you\u2019re asked to pull the permits, consider this a red flag. Contractors may tell homeowners that they can save money by pulling the permits, but Costello says that\u2019s not true. \u201cIt\u2019s usually because they\u2019re unlicensed or their license is revoked,\u201d she explains.<\/p>\n And there are several reasons why you should not pull the permits. \u201cYou want the contractor to pull permits because whoever does is fully responsible for the project and any failures and inspections,\u201d Costello says. And this includes a laundry list of associated responsibilities. \u201cThey include obtaining insurance, workers\u2019 comp, employee wages and potentially having to register as an employer with state and federal agencies and pay additional taxes.\u201d<\/p>\n Tip : \u201cDon\u2019t pull the permits yourself,\u201d Costello warns. \u201cAlways place that responsibility on the contractor, since ethical contractors will not ask the client to do this.\u201d<\/p>\n #6 : The contractor uses someone else\u2019s license<\/strong><\/p>\n If the contractor doesn\u2019t have a license, that\u2019s another red flag. \u201cIt could be that his license has been revoked and he can\u2019t get another license. So he uses a buddy\u2019s license or gets a family member to apply for one and operates under that license.\u201d<\/p>\n In a second scenario, the contractor uses a license number he got from the state Contractors Board. The trouble is that it\u2019s no longer active. He\u2019s counting on homeowners failing to check the license. \u201cIf they do, the guy comes up with a crazy story as to why his name isn\u2019t on it,\u201d Costello says. \u201cI have heard this many times from consumers when troubles begin. They start doing some research on the guy and the truth is revealed.\u201d<\/p>\n Tip : \u201cCheck the license number to ensure that it is valid and belongs to the contractor you\u2019re working with,\u201d Costello says.<\/p>\n #7 : The contractor asks for more money to continue the project<\/strong><\/p>\n It\u2019s not uncommon for projects to go over budget. But pay close attention to contractors asking for more money than is agreed to in the contract part way through the project. \u201cIt\u2019s possible that the contractor has mismanaged the money given for your project or is behind on paying his subs or purchasing materials,\u201d Costello says. \u201cThe contractor then comes up with some excuse for needing more.\u201d<\/p>\n She warns against falling for this ploy. Costello says the contractor will continue to come back for more if you take the bait.\u201cMany consumers share stories of handing over money repeatedly. Some of them want to get the project done and want to get the guy out of their hair,\u201d Costello says. \u201cOthers are simply intimidated and some have been threatened with liens filed against their property.\u201d<\/p>\n Tip : \u201cStipulate in your written agreements that any \u2018extra money\u2019 for extra work will only be considered in the form of a Change Order. In a Change Order, both parties agree to the work and sign the agreement. Then, it\u2019s added to the overall cost of the project before anything is done.\u201d<\/p>\n If this stipulation is in your agreement, Costello says the contractors cannot legally put a lien on your property. Plus, this clause will scare off unethical contractors.<\/p>\n