Five Top Contractor Scams

Dated: 05/22/2015

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Five Top Contractor Scams

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Home improvement projects are on the rise. Learn how to protect yourself against contractor scams that threaten to stick you with shoddy workmanship or con artists that just take your money and run.

         The vast majority of contractors are honest and hardworking professionals who take pride in their work and provide excellent services for the money they earn.

         Unfortunately, it's a fact that Crooks go where the easy money is. With American's currently spending as much as $22 Billion Yearly on home improvement projects, it's no surprise that fraud artists and con men have come out of the woodwork to target unsuspecting homeowners.
         Protecting yourself against the few bad apples requires checking references, having a solid contract and being alert to the warning signs.

Scam 1)      I'll Need All the Money up Front
         This is the most common scam reported to the Better Business Bureau. The contractor explains that because he has to order materials and rent equipment to get the job started, he needs a big percentage or all of the money upfront. Once you hand over the money, one of two things happen, the contractor disappears or he starts doing lousy work knowing that you can't really fire him because he is sitting on thousands of your dollars.

 How to Protect Yourself:

         After you sign a contract for the work, never prepay more than $1,000 or if a bigger job, 10% of the job cost to get started. That is enough to establish that you're a serious customer and enough so the contractor can get your job started. Stage payments as the job progresses so that it is beneficial for both you and the contractor. If a contractor wants upfront money to rent equipment, that's a Big Red Flag it's a Scam; professionals have their own equipment or suppliers will provide them equipment on credit.
Scam 2)      Just Take My Word for It, "Trust me"
         When you first meet with the contractor, he's very agreeable about doing everything exactly to your specifications and goes as far as making his own suggestions for upgrades and extra touches. But, when you review the contract, some of details are missing on the paperwork. The contractor says, it does not matter, I know exactly what you want," trust me,"     I will get it done.

        Then, after the contractor starts you notice things are not included that were the "trust me" items and you confront the contractor only to find that you will have to cough up additional money to include the extras you discussed.
How to Protect Yourself:

         Unfortunately, the contract you signed is the only enforceable action you have and "trust me's" can't be held accountable in court. The next time, be sure Everything you've agreed upon is on the written contract including descriptions. If you want to add any additional items or something is missing, write it in and have the contractor put his initials next to each added item Before you sign and initial yourself.
Scam 3)      I Don't Need to Pull a Permit
        Your required to get a building permit for any significant construction project. It allows the building officials to check out the workmanship and confirm that the work meets building safety codes.
        On small interior jobs, an unlicensed contractor may try to bypass the rule by telling you that the authorities won't notice. On large jobs, they may ask you to apply for a Homeowner's permit that some areas allow as an option available to do-it-yourselfers. If you do lie to the township that you're doing it yourself, it makes you wholly responsible for answering to the inspectors -- since there is no contractor involved.

        On contractor jobs, always insist on a building permit. Yes, it does inform the taxing authority about your improvements, but it also weeds out unlicensed contractors and gives you the added protection of inspectors assessment that the work complies with building safety codes.
Scam 4)      We Ran into Unforeseen Problems
        This one usually hits when the project is already underway, or almost complete. All of a sudden the contractor informs you that the agreed upon contract price has skyrocketed due to structural problems, design changes or termite damage, etc.
        The additional costs might very well be legitimate, but some contractors purposely bid jobs low to get their foot in the door and then find excuses to jack up the price later. If you are unsure if the contractor is telling the truth about structural or other problems, you can get an impartial opinion. Look into engaging a Licensed Home Inspector, Structural Engineer or even your Local Building department.

        Before you sign the contract, be sure it includes a procedure for change orders, additions containing a description of the work and a fixed price for anything that gets added to the job in progress. The extra work, whether unforeseen issues or just a change because of new items to be added, only a change order signed by both the homeowner and the contractor is enforceable.

Scam 5)      I've Got Materials I Can Sell you Cheap

        This hoax is usually run by driveway paving companies, whose materials include asphalt and concrete that can't be returned to the supplier. So the crew pulls up to your house with a load of leftover product and quotes a great price to resurface your driveway on the spot.

        Even if it sounds like a really great bargain, taking them up on the offer is risky. You have no idea who they are and you are trusting them without checking any references. Some just put a thin coat on top to make it look good and if the driveway starts cracking in a couple of months, you can bet you won't find this bunch again.

How to Protect Yourself:

        Never hire a contractor on the spot, whether it's a driveway paver, or repairman who shows up after a major storm, or a landscaper with surplus plantings, take your time to check contractors first to make sure they have a good reputation and do quality work.

Hope This Helps,

Kathleen McKinney, Realtor - REO Specialist

Platinum First Realty, 708 Main Street, Harleysville, PA  19438

Office 264-647-9800 ext 412

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Kathleen McKinney

My experience level is at your disposal ! My background in mortgages and rock solid understanding of how to finance a home ... will benefit all of mymy customers! I exceed all my customers expectatio....

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