Homeowners Beware: Top Contractor Scams and How to Protect Yourself


Wall Street reports that in the year 2013, Americans spent more than $130 billion on home renovations. With that kind of money, it’s no wonder there are so many con artists out there wreaking havoc on homes. You see, when homeowners are not informed on what constitutes a reputable contractor, they fall victim to shady characters looking to make a quick buck. While the vast majority of contractors are trustworthy, credible professionals, there are those risks out there that homeowners should be prepared for. Knowing the various scams to look out for and how to protect yourself in those instances can help save you money, and protect your home from potential damage.

Below is a list of some of the most common contractor scams and how you can prevent them from happening to you.

“I Need an Upfront Payment”

The first scam fraudulent contractors try to get over on homeowners is the need for an upfront payment. They might give an explanation such as needing to order materials and equipment to begin your home improvement project. They are careful not to ask for the entire payment upfront and will typically ask you for a deposit of about 30 – 50%. Homeowners, not being fully aware of the scam end up paying forward the money. In this instance one of two things can occur: the contractor shows up and does a piss poor job knowing that you can’t complain because you’ve already given them half the money, or the contractor disappears completely.

Protect Yourself: There are some professional contractors that will require a deposit before starting. However, it is recommended that you don’t spend any more than 10% of the total estimated costs. This will ensure the contractor that you’re a serious customer. Also ensure that you receive a receipt for the funds you’ve provided and check to find out what the money back policy is if you’re not satisfied with the services.

“I Understand Your Vision Completely”

Generally when you’re ready to hire a contractor, you have them come out to your home so that they can see the area that needs improvements and get an idea of what you want done. Another common scam that homeowners have experienced is the contractor agreeing to all the specifications that you’re interested in, but not including those features into the contract agreement. As the project gets closer to finished, the homeowner realizes that the special features they asked for are not included in the renovation. When the homeowner inquires about it, the contractor says that will be extra because it wasn’t included in the agreement.

Protect Yourself: There isn’t much that you can do to protect yourself after signing the contract, because it is a legally binding contract. Therefore, in this instance you’ll want to be proactive by making sure that you have read the contract completely, and that all specifications and ideas that you want are clearly outlined. If changes are made after the signing of the contract, make sure that it is added to the contract and both you and your contractor initial it.

“You Won’t Need a Permit”

Most homeowners are not aware that they need to have a building permit for most construction projects. Permits are required so that building officials can ensure that the work that is completed is up to local safety codes. There are several instances in which an unlicensed contractor will try to scam the homeowner. For smaller jobs, they might state that the local government won’t pay attention to the changes unless you’re looking to sell the property. For larger jobs, some homeowners have been told by unlicensed contractors to go down and apply for a homeowner’s permit. However, what homeowner’s don’t understand is that taking out a permit essentially means that you’re the one responsible for the work that has been done. Any inspections or code violations would ideally be your fault and not the contractors.

Protect Yourself: Never work with a contractor that is not willing to get the necessary permits for the work they’re completing on your home. Permits help to weed out the unlicensed professionals and it also ensures that you’re getting renovations completed that are safe and up to code.

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“There Were Unforeseen Issues”

The contractor begins working on the renovation project and suddenly has to inform you that the agreed upon price will have to change. Why? Well because there were some previous issues with your home’s structure that need to be fixed before the construction can continue. While the additional costs might be legit (as problems can arise), there are some shady professionals that will try to get more money. Some contractors create the damage and state that it was already there when they started, while others will bid low on the project knowing that there are some underlying issues that will cost you money later on.

Protect Yourself: In this instance, the best thing to do is make sure that you contract has a clause about changes in the renovation project. Should there be a repair, or additional service required, both you and your contractor will have to sign off on it before the process can continue. This way, if you’re uncertain as to whether the damage was preexisting or caused by the contractor, you can have a third party come and take a look.

Another layer of protection would be to make sure that the contractor you hire has the appropriate contractors insurance. Targetinsuranceservices.com points out that general liability insurance provides financial coverage for contractors. This way, should the damage be proven to be the fault of the contractor, there is insurance coverage to compensate for the damages.

This is just four instances in which homeowners have been scammed by shady, unlicensed contractors. Hiring a licensed professional and knowing how to resolve conflicts as they arise can help make the home renovation process a lot smoother.. Take your time in selecting a contractor that has the experience, licensing, and insurance necessary to get the job done. While it may seem lucrative to hire an unlicensed contractor who claims to have the same experience as a licensed professional, more times than not you could end up dealing with a con artist. So do yourself a favor and complete the necessary research to find a contractor worthy of helping you to improve your home.

Article Submitted By (Derrick Manning) Community Writer

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