5 Ways Contractors Can Scam You

5 Ways Contractors Can Scam You

This post originally appeared on BrightNest.

The contractor business is booming!

According to Angie’s List, $135 billion was spent on home improvements last year (and another $33 million was spent on professional home maintenance).

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Unfortunately, a piece of this pie ends up in the pockets of shady characters. If you hire a contractor, you’re trusting this person to come into your home and change the most expensive thing you own. So take the necessary precautions to ensure you’re getting a stand-up deal.

Here are five common contractor scams and simple ways to protect yourself from them:

1. The Down Payment Scam

The scam: Asking for a down payment? That practice is totally normal. It’s practice for a contractor to ask for 1/3 of the total cost up front to cover purchasing material. That’s okay. What isn’t normal, however, is asking for anything more than 1/3 of the total cost.

Protect yourself: Negotiate the price of the job so you’re comfortable and don’t pay more than necessary until the job is done. Otherwise, there’s a chance shady contractors will take the money and run! Note: If you live in California, it’s illegal for contractors to ask for more than $1000 (or 10% of the project’s total cost – whichever is less) up front.

2. The Scare-Tactic Scam

The scam: You hire a contractor for one job--say a new roof--and they start talking about five other things they should fix right away. And, oh yeah, these new projects will cost you a lot more money.

Protect yourself: While their concerns may be legitimate, always get a second opinion before tacking on additional, expensive projects to a project that’s already underway. Also, listen closely to their descriptions. Are they trying to scare you? If they say, “Your chimney is about to crumble!” instead of “Your chimney could use some structural work,” there’s a good chance they’re trying to take advantage of you.

3. The Neighborhood Scam

The scam: Picture this: A contractor shows up at your door with all the necessary materials to paint your house or reseal your driveway. “I just did your neighbor’s house, and have this leftover stuff--why don’t I just do yours now, too,” he says. Great, right? Not so fast!

Protect yourself: Legitimate contractors don’t use leftover materials to do a second job. They assess each job and gather the necessary materials to do what’s right for your house. In this case, remember the old adage “If it seems too good to be true, it probably is.”

4. The Surprise Price Scam

The scam: If a contractor has given you a super low price without a contract, there’s a high chance you’re going to pay a lot more at the end of the job. This extra cost is usually because of “unforeseen problems.” Because nothing was in writing, you have no legal recourse.

Protect yourself: Always have a contract binding them to the proposed price. Avoid this surprise cost by reading your contract carefully and making sure everything is agreed upon and in writing.

5. The Lost License Scam

The scam: A contractor claims that they don’t need a license to do the proposed work, and gives you an estimate that’s hard to turn down. But, while an unlicensed contractor may cost a little bit less upfront, if they do a shoddy job, you have no legal recourse. Plus, if an unlicensed contractor has an accident, you’re in trouble and could face seriously financial issues (meaning you pay their hefty doctor bill!).

Protect yourself: Ask to see any and all paperwork up front. Most states require a license to do home improvement or maintenance work, so ask up front to see a contractor’s paperwork. Even if your state doesn’t require licenses for certain projects--Kansas, Kentucky and Illinois are in this bucket--your contractor should still be insured. Check their policy and make sure it’s current and can cover your project.

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