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Situation Analysis

Situation Analysis

Home Improvement Scams and How to Avoid Them

Home Improvement Scams and How to Avoid Them

Next to buying a house, a home renovation can be one of your most significant investments. Whether you are adding a room, upgrading a kitchen, or repaving a driveway, there are a lot of moving parts involved requiring the use of a contractor. When there is that kind of money involved, it can be an enticing target for scammers who can find a number of ways to liberate you from your money. Here are some of the more common home improvement scams to watch out for.

Asking for Payment Up Front

You should expect to make a reasonable down payment on the cost to do a project. But, anything more than one-third of the total cost should raise a red flag. Each state sets a maximum amount a contractor can collect as a deposit, so be sure and check with your state’s contractors license board before making any payments. Also, most contractors are willing to negotiate down payments, so don’t feel compelled to accept the first offer.

Low Ball Bids

Be leery of contractors that come in with a really low bid. It’s possible the contractor doesn’t understand the true scope of the project, which is not good. But it is more likely they are low balling the bid with the intention of hiking up the price by tacking on additional costs once the project is underway. If you receive a bid below 15% of competitor’s bid, do more due diligence on the contractor.

They Avoid Putting Everything in Writing

To avoid the scammer who keeps hiking your costs, be sure that everything is in writing. The contract should include a complete schedule of work, cost breakdowns, payment terms, and procedures for changes. If you or the contractor suggest any changes to the project, agree to terms and add it to the contract. The contract should include the contractor’s licensing, bonding and insurance information.

Natural Disaster Opportunists

In the wake of a major natural disaster, like a hurricane or flood, it’s not uncommon for scammers to comb the neighborhood in search of desperate homeowners who want their homes repaired. Considering that most legitimate contractors are probably fully booked at times like this, the person who happens to be free at that very moment is probably a shady contractor. The work will most likely be inferior or incomplete but, by the time you notice, they will be long gone with your money.

Free Mold Testing

There’s nothing scarier for a homeowner than an outbreak of mold. However, if someone shows up at your door claiming to be a “mold inspector,” finds mold, and then says he can have it removed by the end of the day, show him to the door. Finding and fixing a mold problem is much more involved, requiring an in-depth inspection, special tools and a couple of days to remove.

Other ways to know you may be getting scammed:

  • Contractor doesn’t want to pull permits. This is a major red flag and an indication the contractor is not licensed or is trying to cut corners.
  • Contractor asks for a quick decision. Legitimate contractors understand the necessity of taking some time to think things over.
  • Contractor claims to be working on another project nearby and has leftover supplies to offer at a discount to start a project for you.
  • Door-to-door salespeople offering “limited time only deals” to upgrade roof, doors or windows.

How to Make Sure You Don’t Get Scammed

When it comes to hiring a contractor for home improvement or repairs, it’s “buyer beware” at its extreme. You are the first and last line of defense against shady contractors. Fortunately, there are some simple steps you can take to keep them at bay.

  • Never consider a contractor who can’t present a surety bond. The surety bond is your protection against contractors who fail to complete the job.
  • Before agreeing to any terms, verify the contractor’s credentials with the state licensing board.
  • When searching for a contractor, start with neighbors, friends, and family who have had good experiences.
  • Ask the contractor for at least three testimonials with examples of their work.
  • When speaking with references, find out how the contractor performed on the job. Were they on time? How well did they manage the subcontractors? Did they have the right materials to do the job? Were they courteous with the neighbors?


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