8 Home Renovation Scams to Avoid

November 26, 2010 / by / In

Scam artists are always thinking of new ways to squeeze more money out of honest people and run away without doing any work. Being the victim of such a crime is a horrible experience and you can prevent an incident by knowing in advance what the current home renovation scams are and avoid them all together. Here are eight well known scams that you should watch out for. (Image Source)

Payment First, Work Later: A true sign of a scam is when the contractor asks for payment upfront before he has done any of the work. Although it sounds like an obvious rip-off, many people are caught up in the heat of the moment and will end up agreeing to pay in full for the job before construction has begun. There is a very high chance that the person will take the money and run. Unless you know the guy personally, close the door on them and find a reputable contractor to bid on the job.

One Time Only Sale: The oldest trick in the book for a business is to offer someone a, “one-time only” special that will never be available again. The tactic puts a lot of pressure on the customer to make an immediate decision, which usually ends up being a bad one. Trust your instincts and realize that there will always be another sale. Instead of making a decision, let the contractor know you will wait until you receive other bids for the job. The person might seem angry at the time, but if they really want your business they will come back again with another sale.

No Credentials: The best way to pick out a scam artist from the crowd is by checking their credentials. Even if you trust the person, always ask for a reference and possibly take a look at their previous work. Make sure they are an actual licensed and insured contractor before ever getting started. You can contact the local license board and Better Business Bureau for trustworthy information about any contractor’s credentials.

Loan Financing Assistance: One of the scariest scams happening to normal people looking for a home renovation is when the contractor helps them set up a loan that is actually a cover for stealing your money, securing kickbacks, or even transferring the deed on your house. They will be enticing with their offer, like an extremely low interest rate for a large loan, but do not ever go through your contractor for a loan. Always use your personal bank for a home renovation loan, refinancing, etc. If you think your contractor is legitimate, at least have a lawyer look over the paperwork to be sure you are not being duped.

“Take my word for it”: When you are ready to undergo an expensive home renovation, never trust someone’s “word.” Always triple check the paperwork and make sure that everything that was verbally agreed upon is actually written down, legally binding the contractor to the promised work. You will be very disappointed if you depended on simple trust in the beginning and in the end the renovation was only half complete with the contractor nowhere to be found.

Leftover Supplies or Working Nearby: Scam artists know that people trust their neighbors and will play on that weakness to get you to use them for a renovation job. The person will simply walk up and knock on your door, offering to give you a steep discount on the leftover supplies from their job down the street or a slick deal since they are already working in the neighborhood. The offers might sound great, but tell the guy you will take a look at their work and solicit other bids for your project before committing to his offer. Generally speaking, contractors doing cold calls to your door like this are never reputable contractors to begin with. An honest company waits for customers to seek them out through trustworthy channels.

Fake Contractor: If a contractor shows up to bid on your job and has an unmarked truck, an out-of-state license plate, or doesn’t even have proper tools, be sure to check their credentials before you ever let them inside your home. The person can be a robber trying to get inside your house to see what valuables they can steal. A few common offers (from an unknown contractor) that are known to be scams include driveway sealant, chimney repair, hot tar roofing, and duct cleaning. If you need these services, call a reputable source to bid on the job.

New Problem During Work: A scam that often goes unnoticed is when a contractor will be half way through the job and notice that there is a major problem that needs to be fixed before continuing the work. They will give you a new quote for payment and materials to do the extra work and if you don’t know exactly what to look for, you will simply agree to fix the new “problem.” Often, there is no real problem and the person is simply trying to scam you for more money. During tough economic times, some companies will add even small problems to the bill that you usually wouldn’t look too much into. Don’t be fooled, ask an unbiased third party to take a look and offer their advice on the issue. Even if you do end up needing the work done, at least you know for sure you are not being ripped off.

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