Contractor Scams: How to Protect Yourself

Contractor Scams- How to Protect Yourself-150x150Because construction projects are a big business in the United States, it is no surprise that they have attracted all kinds of scammers and fraud artists. Every year, home remodeling fraud costs home owners all over the country thousands of dollars and a considerable amount of stress. The number of people who are being scammed daily is anyone’s guess, as many people don’t even report being scammed to the authorities. Whether you’re renovating your own home or you want to flip a house for an investment property, you could be a target for scamming.

Scammers are mostly preying on the elderly and singles, and simply disappear once they receive a deposit or do a poor job. The best and only defense against contractor scams is you. Before hiring a contractor, you should research them thoroughly and look at the company’s reputation, previous work, and feedback from other customers. If you want to start investing in property that requires a contractor’s help, know that it is often a long and involved process, so ask yourself before you get started if you want to invest in real estate. Here are some of the most important warning signs that should make you think twice before hiring someone:

Watch Out for These Warning Signs

1. Little or no identification. Contractors who are professional and care about their image have more than just their name on a van. Business cards and uniforms are a good sign that you are dealing with a professional, but these can easily be faked, so you will need to look further. Ask your contractor for his business address, business license and insurance certificates. Then run a check on all of them to make sure they are valid.

2. Soliciting. A common tactic of a scammer is to go door to door, telling home owners that they have some material left from a previous job and is willing to make some repairs on your house for cheap. They might also tell you that they have looked around and can suggest where your home needs repairs. Hiring one of these contractors will leave very little evidence to track them down if they turn out to be scammers.

3. Asking for money up front. Another type of contractor scam is to ask the home owner for up to 50 percent of the project price up front to buy supplies. Then, once you have paid the money, they either pack up and go, or do a poor job knowing that you won’t fire them, since you have already invested money in the project. A good way of protecting yourself from this scam is by never prepaying more than 10 percent of the project total.

4. Contract lacking all the details. When first talking to a contractor, they might agree to everything that you are asking for, but not include it in the written contract. Some contractors will tell you everything you want to hear just to get the job, but you must not just take their word for it, and ask to have all the details in writing on the contract.

5. Unforeseen problems. Blaming structural issues or damage, the contractor might inform you after the contract was signed that the price for the project will be much higher than what was agreed upon. The extra fees may be legitimate, but some contractors will look for jobs like this, where they can increase the price after the construction project has started. Hiring a professional home inspector before starting a major project is a great way of protecting yourself from both legitimate issues that may arise and scams. If you are investing in property, this should be done before you purchase the home so you don’t buy a home with extensive and expensive structural issues and damage unknowingly.

Any of these warning signs should influence you to think twice before hiring that contractor. The best way in which you can protect yourself from scams and fraud is by hiring only reputable contractors that can be thoroughly checked. A trustworthy professional contractor will not pressure you into signing anything, and work with you to determine exactly how much the remodeling project will cost. If you need a contractor for an investment property, be sure that the property has potential to make enough money after the contracted work is completed.

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