Top Five Contractor Scams and How To Avoid Them

Dated: October 29 2019

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Many times, homeowners end up shelling out money to contractors “for materials” and they end up getting stuck with a job that is half done or not done according to what they wanted.

While most contractors are honest, hardworking professionals, a few bad apples can spoil if for everyone. Here are five ways to identify if a contractor could be scamming you, and how to protect yourself:

Scam 1: I’ll Need the Money Up Front

            This is the most common ruse reported to the Better Business Bureau. Some contractors might say that they need the money upfront to order materials and rent equipment to get the job started, let’s say maybe 30-50% of the project up front. Once you’ve forked over the money, one of two things typically happen: They disappear on you, or they start doing subpar work knowing that you can’t really fire them because they are sitting on thousands of dollars of your hard-earned money.

            How to protect yourself: Never pay more than $1,000.00 or 10% of the job total, whichever is less. That’s the legal maximum in some states, and enough to establish that you’re a serious customer so the contractor can work you into his schedule-the only valid purpose of an advance payment. As to the materials and equipment rentals, if they are a professional in good standing, their suppliers will provide them on credit.

Scam 2: Take My Word for It

            When you first meet with a contractor, they are very agreeable about doing everything exactly to your specifications and they even might suggest their own extra touches and upgrades. Some of the details they mentioned don’t make it into their contract agreement, but you figure it doesn’t matter because you had such a clear verbal understanding with them.

            Pretty soon, you notice that the extras you’d discussed aren’t being done. You might confront the contractor, but they tell you that they didn’t include those features in their price, so you’ll have to live without them or shell out additional money to redo the work.

How to protect yourself: Unfortunately, you have a few-if any- legal options against your contractor because you signed a contract that didn’t include all the details. Next time make sure everything you’ve agreed on is written into the project description. Add any items that are missing, put your initials next to each addition, and have the contractor initial it too-all before you sign.

Scam 3: I Don’t Need to Pull a Permit

            You’re legally required to get a building permit for any significant construction project you do to your home. A building permit allows building officials to visit the site periodically to confirm that the work meets safety codes.

            On small interior jobs, an unlicensed contractor may try to skirt the rule by telling you that the city won’t notice. On other large jobs that can’t be hidden, the contractor may try another strategy and ask you to apply for a homeowner’s permit, an option available for a to-do-it yourselfer.

            By taking out your own permit for a contractor job means that your lying to the city about who’s doing the actual work. It also makes you responsible for monitoring all the inspections, since the contractor doesn’t answer to the city inspector, you do.

How to protect yourself: Always demand that the contractor gets a building permit. Yes, it informs the local tax assessor about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work.

Scam 4: We Ran into Unforeseen Problems

            Typically, the job is already under way, or perhaps even completed, when this one hits. Suddenly your contractor informs you that the agreed-upon price has increased. They blame the discovery of structural problems, like a missing beam or design changes that you made after the job began.

            The additional fees might very well be legitimate, but some unscrupulous contractors bid jobs low to get the work and then find excuses to jack up the price later. If your unsure whether your contractor is telling the truth about the structural problems, you can get an impartial opinion from a home inspector, the local branch of the National Association of Home Builders, or even your local building department.

            How to protect yourself: Before signing the contract, make sure it includes a procedure for change orders-mini contracts containing a work description and a fixed price for anything that gets added to the job in progress. The extra work, whether it is related to unforeseen building issues or homeowner whims, can proceed only after the charge order is signed by both homeowner and contractor.

Scam 5: I’ve got Extra Materials I can Sell You for Cheap

            This hoax is usually done by driveway paving companies, whose materials-hot-top asphalt and concrete-can’t be returned to the supplier. With this type of scenario, a paving crew pulls up to your house with a load of leftover product and quotes a great price to resurface your driveway on the spot.

            Even if it’s a great bargain, taking them up on the offer is risky if you have no idea who they are, and you haven’t checked their references. What if the driveway starts cracking next year, it’s very unlikely you will find this crew again and be able to take recourse.

            How to protect yourself: Never hire a contractor on the spot, whether it’s a driveway paver, an emergency repairman who shows up after a major storm, or a landscaper with surplus plantings. Make sure you take the time to check out contractors to make sure they have a good reputation and do quality work before you hire them.


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