How to Spot a Home Improvement Scam

If you’re considering hiring anyone to improve your home or property, take care. Home improvement scams are more common than you may think—and they can be hard to spot.

Scam contractors use a number of ways to cut corners or downright defraud unsuspecting customers. Some do sloppy or unprofessional work that requires more repair down the line, while others leave a job unfinished or disappear with their pay before work even begins.

If you’ve put in the time to come up with a plan to improve your home and you’ve found financing to pay for it, the last thing you want is for that hard-earned money and preparation to go down the drain.

Here are some of the warning signs that you might be dealing with a scammer.

They Insist on Getting Paid Up-Front

While most contractors will ask for a deposit when you hire them, be wary of any contractor who demands you pay more than a third of the total fee upfront. This is likely a scammer who will do shoddy work or leave without working at all and take your “deposit” with them when they go.

They Refuse to Supply References

Never hire a contractor without speaking to someone who’s used their services in the past. The Federal Trade Commission (FTC) advises homeowners to ask past customers detailed questions about a contractor’s work, including timeline and final cost. If a contractor is in the middle of another job, ask if you can check out their work yourself.

If a contractor refuses to furnish names and contact information of previous clients, it may be best to seek a new option.

They Have Bad Reviews on BBB or Other Sites

Before hiring any small business you’ve never used, it’s a good idea to check them out on the Better Business Bureau (BBB) website. Once there, you can read reviews and ratings and see if any complaints have been filed against the company.

They Demand Payment in Cash

The FTC recommends paying contractors with a check or credit card so you can contest the charges if something goes wrong. Cash leaves no trail and makes it easy for a scammer to walk away from a job without doing much (or any) work at all.

Their Prices Are Shockingly Low

Don’t get conned by a contractor who severely underbids all competitors. You might get lucky and find someone who is just starting out and can still do great work, or you might be dealing with someone who will cut every corner and end up costing you more than you thought you were saving. If you’re offered a bid that is a lot lower than the going price for the work, ask a lot of questions. If you only get evasive answers, look elsewhere.

They Just “Happened to Be in the Neighborhood”

The smiling contractor at your door claiming to have recently done work in your neighborhood just happened to notice your home can use some repairs, too. They suggest you hire them to do it for you—for a great price, of course.

Don’t fall for every house call. There’s a small chance you’re looking at a rookie contractor just starting to build a referral base, but it is far more likely that your uninvited visitor is a scammer who will do sloppy work, leave the job half-finished or disappear with your money. If the contractor does seem legit, look them up on the BBB site and ask for references before hiring.

They Won’t Put It in Writing

Never hire anyone to do work on your home without a written contract. The BBB advises homeowners to include as many details as possible in the contract, such as payment terms, a definitive date for the start and completion of the project, warranty information, and a clear description of the job.

Permits Shmermits

A contractor who tries to convince you there’s no need to pull permits is one who wants to avoid the authorities at all costs. You’re likely dealing with an unlicensed worker or who will cut corners wherever possible. The lack of proper permits can also cause you problems down the line when you try to sell your home.

Don’t get ripped off by a scammer! Do your homework well before hiring any contractors this (or any) season. It’s one surefire way to ensure your home improvement project goes smoothly and without unpleasant surprises.

---

This article is for educational purposes only. WeStreet Credit Union makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as legal, tax or financial advice. Nor does the information directly relate to our products and/or services terms and conditions.