It’s a smart idea to compare prices for labour and materials when you are planning home improvements. But, if you want to save money, it is possible to get ripped off by unscrupulous contractors who will take your money and run. How can you avoid falling for home-improvement scams?
Many homeowners think they are too smart to be taken advantage of by con artists. Jody Costello is a contractor fraud and home renovation, expert. She says she hears horror stories every day.
#1: Door-to-door solicitors
Door-to-door solicitations are where a contractor, who may or not be licensed, tells homeowners that he is doing work in their neighbourhood. “This person claims that he can see the homeowner’s deck, roof, siding, or any other work they are claiming to be able to do. Costello states that he has materials from an earlier job and can do the work for a substantially lower price. These people are likely to take your money, she says. They’ll do substandard work, or worse, you may never see them again.
These scams are often perpetrated on the elderly. Because they are more trusting and need assistance with home repairs, these scams are most common against the elderly. These scams become more popular after major storms because people are trying to decide if they should. Rebuild after a hurricane or tornado. You can also report a tornado if you have decided to buy a fixer-upper. It may seem obvious that your home needs to be renovated.
Tip: Costello warns that you should not do business with anyone looking to make a quick buck by telling stories about their time in the hood.
#2: Front loading contracts
Front-loading requires that the contractor has a substantial amount of money in advance before they can start working on your project. Costello states that although every state has laws about down payments, the average is between 10% and 30%. She advises against transferring more than 30% of your project funds. You are at risk of losing a lot of money if you don’t have any work to show for it. You may find that the contractor is slow to get started or doesn’t show up at all.
Here’s another thing to consider. Costello states that if they ask for large deposits upfront, they are likely behind on another project in which part of your money will go. Although it is illegal, Costello warns that this happens more often than you think.
Tip: Costello recommends that you “research your state’s contractor laws” and determine the down payment requirements.
#3: Sign up now to receive a discount
Limited-time deals should be avoided. Costello states that the contractor will pressure you to sign a contract now and offer a discount if you do so.
Tip: She warns that you should not be forced to sign any contract. It is not a good idea.
#4: Written agreements that are vague and lack detail and low bids
Also, be cautious of low bids or quick assessments. Sometimes, the contractor who bids on your project may not consider certain details. Many homeowners are more concerned with the final cost. Attention to materials, supplies and subcontractors. You will soon realize that certain things are not being done once the project is underway. The contractor confronts you and points out your signed written agreement, which does not include these items. Costello says that it is possible to add these items for an additional fee.
Costello says, “In another scenario the contractor visits your potential renovating project, assesses it quickly, and then writes down the bid on the backside of a business card, or a sheet paper.” Your project is too important for someone to set a price based on a few notes. You can bet that your project’s costs will rise quickly.
Tip: Costello advises, “Make sure that the bids are detailed. Include everything in your plans and scope.” The same principle applies to the bids. Final Written agreements must be specific and include all information in your plans and specifications.
#5: The homeowner must obtain the permits
Consider it a red flag if you are asked to pull permits. Costello claims that contractors may claim that homeowners can save money by pulling permits. She explains that contractors are often unlicensed or have lost their licenses.
There are many reasons you shouldn’t pull permits. Costello states, “You want the contractor pulling permits because whoever does that is fully responsible and accountable for the project as well as any inspections or failures.” This includes many other responsibilities. They include getting insurance, workers’ compensation, employee wages, and possibly having to register as an employer with state or federal agencies.
Tip: Do not pull permits yourself. This responsibility should always be assigned to the contractor. Ethical contractors won’t ask clients to do this.