5 common contractor scams and how to avoid them
Jeffrey Anderson | Improvement Center Columnist | August 10, 2015
The vast majority of building and remodeling contractors are honest, hardworking, contentious people who take a great deal of pride in their work. Unfortunately, like any profession, it can only take a few bad apples to give everyone a bad name. Seemingly at least a few times a month, especially during the summer when many homeowners decide to go ahead with remodeling projects, there is something on the local news about the latest contractor scams and how families get taken for a lot of money. Many of the con-artists in this field stick with one of these tried and true methods for separating homeowners from their hard-earned cash.The following tips should help keep your project from being the feature story on Live at 5.
It's not at all unusual for a building or remodeling contractor to request some up-front payment before beginning a job - it gives them peace of mind that the homeowner is serious about moving forward with the project. However, it should only be a very small percentage of the total cost, 10 percent at the very most. All other payments should be done according to an agreed upon draw schedule based on reaching certain work-completed milestones. If a contractor asks for a larger percentage before the job starts, at best it might be a sign that they are on shaky financial ground, and at worst, it could mean after getting that payment you might never see them again.
That wasn't part of my price
Any time a contractor does work on your home or property there should be a written contract, and all but the smallest projects should also have an attached scope of work. A scope of work delineates exactly what the contractor is including in their quoted price in enough detail that there can be no question as to responsibilities. If you are expecting three light fixtures in a certain price range to be supplied and installed by your contractor, that is what should be written in the scope of work. That way you won't get one (or three) of a lesser quality or be told that you as the homeowner are to supply the fixtures. By insisting on a written scope of work, you may discover that low price you were given was below the other project estimates for a very good reason - very good for the contractor that is!
The extras game
It's very rare that a project goes from start to finish without at least a few changes being made by the customer. The alteration may be as simple as a change in style for a light fixture or a new wall color. However, some changes cause more work or material cost for the contractor and are known as extras. How these are to be handled should always be spelled out in the written contract so there aren't any unpleasant surprises at the end of the job. Even more important is that the customer be made aware that something will be an extra and told its cost before the actual work is done. That should eliminate you from thinking your final payment for the finished project will be $2,000, but instead getting handed an invoice for $5,000 that includes $3,000 worth of extras done that you might have thought were even trade-offs during the job.
The no license price-break
Anytime you are told by a remodeling contractor that they can give a lower price due to not having a license or insurance, the conversation should end right there. Allowing a contractor, their employees, and sub-contractors to work on your home while unlicensed and without insurance can make you liable should anyone get hurt during the course of the project. And it's almost a sure bet that those potential medical costs would dwarf any price break you might have received. In addition, your homeowner's insurance may not cover any damages to your home or incomplete work done by contractors without proper credentials. The no license price-break is just not worth it.
We were working just up the street...
This common contractor scam is in the news all the time. A homeowner gets a knock on their door and a person who claims to be a contractor tells them that they were paving a neighbor's driveway just down the street and have some extra asphalt, would the homeowner be interested in getting their driveway done at a steep discount so the material doesn't get thrown away? Substitute paint, siding, shingles, or any other common building material used during remodeling projects for the asphalt for the many variations of this contractor scam. While this sort of situation could happen with a reputable contractor, it is very unlikely as most are meticulous at estimating how much material is needed for each project. Instead, these "contractors" are probably going to install inferior materials using shoddy workmanship and then quickly disappear. If you get a knock on your door from someone like this, it's best to just send them on their way.
By following a few simple tips, homeowners can greatly reduce the chances of getting taken:
- Written contract. Always have a written contract before any work is done on your home or property. And for all but the smallest jobs, have a detailed scope of work as well.
- Proper credentials. Insist that your contractor have proper licensing and insurance and ask for proof. Check with your local building inspection department to see what is required in your area.
- References. Ask for and actually check references for past jobs and also suppliers they often use. A problem with paying suppliers may alert you to a contractor on shaky financial ground. Your local building inspection department may also be able to inform you of any problems with a particular contractor.
In this Internet age, there are numerous online resources that can help protect homeowners from scams. Your local Better Business Bureau and contractor referral sites such as ReliableRemodeler.com might be good places to start.
Photo credit to Myryah Shea