If you own a home, there’s a pretty good chance you’ll need a contractor at one point or another. Unfortunately, finding a good one is easier said than done.
According to a new study, one in 10 Americans has fallen victim to a contractor scam. The types of scams run the gamut, but baby boomers tend to be the most vulnerable, with 15% saying they’ve been a victim. Millennials were second-most likely to be victimized, at 13%.
“Scams are pretty common,” says Sylvester Criscone, senior vice president of contractor management at HomeServe USA, who’s based in Arrington, Tennessee. “It happens everywhere and to homeowners of all types. Scammers prey on people of all socioeconomic status when they spot an opportunity to make easy money.”
That’s not to say all contractors are bad — but it does mean homeowners should be careful when hiring someone to work on their house. Do you want to avoid falling for a home contractor scam? Here are the common scams and red flags to watch for.
[Questions to Ask Your Home Contractor]
Common Contractor Scams
There are many ways contractors try to scam consumers — and some are sneakier than others. One very common one is overcharging for materials.
“The contractor will purchase an excessive amount of unneeded materials, charge the entire cost to the homeowner, then return the unused materials after the job is completed and keep the refund,” says C. Scott Schwefel, a real estate attorney in West Hartford, Connecticut who’s worked with many homeowners on home improvement contracts and complaints. “Other variations of this scam involve the contractor charging the homeowner for leftover materials from a previous job or substituting cheaper materials, without the consumer’s knowledge, and keeping the difference.”
Taking a large upfront deposit — often in cash — and then disappearing is another tactic contractors might use. Others may quote a project lower to win a job and then increase the costs significantly by the end.
As Craig Ricks Jr., president of Acadian Windows and Siding in Destrehan, Louisiana, explains, “Some contractors will promise low prices and then find ways to drastically increase them, often claiming that there were unforeseen complications that required more work.”
Finally, shady contractors might even recommend work your home doesn’t actually need, often using high-pressure sales tactics or door-to-door soliciting.
“There are so many ways bad contractors can scam homeowners,” Criscone says. “They might drop by uninvited or unannounced because they noticed something about your property they can ‘help with.'”
“Even when you’ve asked a contractor to come look at a problem and make a proposal, they might use high-pressure tactics to get homeowners to make quick decisions. Unless it’s an emergency situation, decisions probably don’t have to be that quick. You should have time to get a few quotes and weigh your options,” Criscone adds.
[What to Do When Your Home Improvement Project Goes Wrong]
Warning Signs of a Potential Contractor Scam
Fortunately, experts say, you can often spot a potential scam before it gets too far.
“Some red flags to look out for include unsolicited contractors showing up at your door claiming to be ‘in the neighborhood,’ requesting full cash payments upfront and pressuring you to hire them immediately to get a discount,” Schwefel says. “Also, be wary of any contractor who asks you to obtain the work permits yourself, as this may be a sign the contractor is not licensed.”
If they don’t offer written estimates — only verbal ones — or don’t provide a contract, that’s usually a red flag, too, as is requesting an especially large deposit.
“If someone asks for a large deposit or full payment before the work has begun, this can be a red flag,” says Mallory Micetich, home care expert at home improvement platform Angi. “For some projects, a deposit is standard, but be wary of a deposit that is more than 20% of the total project value.”
Finally, if a contractor quotes you a much lower estimate than others have — or than your research had you expecting — there could also be a scam at work.
“If the price seems too good to be true, it probably is,” Criscone says. “Most contractors will probably charge about the same price for work or the prices will be within a reasonable range.”
[READ: Guide to Average Home Maintenance Costs.]
How to Protect Yourself from Home Improvement Scams
If you’re hiring a contractor for a home project, diligence is critical — particularly if your area has just suffered a big storm or other widespread event.
“If you’re doing work following a natural disaster or a large event that impacts many homeowners in your area, you’ll want to be extra cautious,” Micetich says. “When an event like a hurricane causes a lot of damage to homes in an area, demand is high and bad actors see an opportunity to make a quick buck.”
Always start your contractor search with referrals — contractors your friends or family members have used and will vouch for. Then, check out their online presence.
“Do they have a website? Are there online reviews in places like Google, the Better Business Bureau or Yelp? Even the smallest companies should have some type of online presence, even if it’s a social media account,” Criscone says. “If they don’t or if the reviews are overwhelmingly negative, that should say something. But be cautious of a company with only positive reviews. Nobody is perfect 100% of the time, which means they could have paid for fake reviews or even posted them using fake accounts.”
You should also ask for proof that a contractor is licensed and bonded and request references for past work. Then, when you’re ready to move forward, make sure there’s a detailed contract outlining all the work.
“Homeowners should always have a written contract containing all agreed-upon terms prior to the commencement of work or payments,” Schwefel says. “The consumer should not sign the contact until he or she fully understands all the terms and should never sign a contract with blanks in it.”
If you think you’ve unwittingly fallen victim to a scam, stop any payments immediately and report them to the Better Business Bureau and the state licensing board (if they’re actually licensed). Then, gather up any contracts, written estimates or other documentation/communication you might have with the person. From there, you may need to contact an attorney.
“While many states have a complaint procedure through [their] department of consumer protection, homeowners may hire an attorney to initiate a civil action to recover damages,” Schwefel says. “In some states, a contractor may be held liable for double or triple the homeowner’s damages as well as attorney fees and costs.”
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Home Improvement Contractor Scams: The Red Flags to Watch for originally appeared on usnews.com
