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Beware These Common Contractor Scams

Hiring the right contractor for a home renovation project requires careful consideration. We’ve all heard a horror story or two about homeowners who have been ripped off or taken advantage of by unscrupulous companies or individuals. It’s critical to do your due diligence when hiring someone to work on your home, no matter the size of the project. To protect yourself, always treat a home project as a purely business transaction, and don’t be fooled by charm and smooth talk! If you spot any of these warning signs, turn around and walk (or run) away.

“I need the money up front.”

Your contractor may say they need to buy materials or rent equipment, and that they need you to give them 50% or more of the project’s total cost to get the items they need to start on your home.

What can happen: They disappear for good, taking your deposit and leaving you with the same problem as before — and a lot less cash.

Protect yourself: First, be sure to sign a contract. You want all the contractor’s details, including license number, and thorough accounting of the cost of the entire project. Next, never pay cash, and if you do put down a deposit, it should be 10% or less of the project’s cost. Some places regulate the percentage a contractor can ask for up-front, so check with your city beforehand.

“I was working in the neighborhood and noticed you needed some work done.”

Someone shows up at your door, claiming they were working on a neighbor’s property and noticed you needed x, y, or z done. They may just happen to have leftover materials that they can sell to you for a significant discount, too!

What can happen: Poor-quality workmanship plus poor-quality materials equal a terrible job on your home, whether aesthetically or structurally.

Protect yourself: Never, ever hire someone who just shows up to your door, and never hire anyone without checking references, either. To really be thorough, check out their license, insurance, and any complaints against them, too. You should get bids from at least three contractors before you start any work on your home (and at least three references, as well).

“We discussed it, so it doesn't need to go in the contract.”

Sometimes a contractor will draw up a contract that is vague on details or doesn't contain some items that you had verbally agreed on.

What can happen: If it’s not in the contract, they aren't responsible for it. They may even say that for an additional fee, you can get the terms you had discussed!

Protect yourself: Read the contract thoroughly, and do not sign it if details are missing. If you add items to the agreement yourself, both you and your contractor should literally sign off on them, by initialing the changes. Review materials, subcontractors, procedures for changes, and completion dates for each section of the project.

Never Bow to Pressure. If anyone ever says to you, sign right now and I’ll give you a discount, turn around and walk away. You should never feel under pressure to sign a contract.

“I don’t need a permit, but you can pull it if you want.”

This refers to building permits, which lay out the codes, rules, and restrictions that your project must adhere to. Not every project needs a permit, but most do.

What can happen: Your project could be out of compliance with local building codes, and you may have to make significant, expensive, structural changes to your property.

Protect yourself: Insist on permits being pulled. And they need to do it, or you could end up with a homeowner’s permit, which makes you responsible for all the required inspections, anything that goes wrong, and ultimately for the entire project. And no, it doesn't save money to pull them yourself.

“We’ve encountered some unforeseen problems and will need additional funds to address them.”

Sure, this is a real thing. Projects often go over budget.

What can happen: You end up paying a lot more money than you had bargained for to complete your remodel or renovation.

Protect yourself: Your contract should be for labor and materials, full stop. If the contractor makes a mistake in calculating the costs, it’s on him, and he must make up the additional funds. However, if you agree to steps that are not in the contract or that change the scope of the project, you can protect yourself by using a change-order. This is a sort of mini-contract that outlines any changes to the original contract and must be signed off.

If you’re excited to get your big home renovation project underway, you may be tempted to cut some corners to start faster — and maybe save a little money. The best advice we can give you is SLOW DOWN. A project that costs thousands of dollars deserves to be carefully considered, and you deserve to work with an honest, talented contractor that takes responsibility for every aspect of the changes you’re making to your home, from ordering the right amount of supplies, to hiring licensed subcontractors, to managing problems that may arise.


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