How To Avoid Contractor Scams

Scam Alert Sign At one point in time or another, most homeowners have enlisted the help of a contractor to perform upgrades or repairs on their properties. Given that homes are in constant need of updates and deferred maintenance, there are a plethora of contractors out in the market, ranging from plumbers to roofers and everything in between.

The fact that there are many contractors available does not mean that they are all top notch in terms of workmanship and ethics. That is why we have prepared the top five things to look out for when dealing with contractors.

They Need the Money Upfront

This is the most common problem that can arise when an inexperienced homeowner is dealing with a contractor. They will bid their job and get hired, then request either one third up or up to one half of the total project cost upfront "to pay for materials". Homeowners should never give a contractor this much money upfront because there is a strong likelihood that the contractor will mismanage the money.

Instead, homeowners should give a very small down payment upfront, never exceeding ten percent of the total job cost. Most states set this as the maximum for the first payment. This ensures that you are willing and able to pay him for his services and gives him enough money to purchase the first batch of the materials. If he is a qualified contractor, then most of his suppliers will allow payments from him on credit anyways.

Take Their Word for It

Never take a contractor's word for it, period. This encompasses many scenarios, but primarily when you negotiate the project and the scope of work. Anything that is discussed to be built or repaired should be written into an official typed up contractor agreement signed by all parties. In this agreement, you will want to make crystal clear the tasks that are to be performed and the timeframe that they are to be performed by. Never take a verbal agreement as the final word.

Far too often, there are disagreements in the tasks that are to be accomplished and the only thing that you can go back to is what you have in writing. Be sure to sign or initial all pages of your agreement in case there are any legal disputes.

They Insist On Not Pulling Permits

Whenever there is considerable construction taking place at your property, there always needs to be a permit pulled with either the city or county. This indicates to them that all work is being performed to building and safety codes [1]. An inspector will check in on the project at different stages to make sure of this.

A common mistake that homeowners make is to allow a contractor to perform work on their property and cut corners by not pulling the proper permits. This exposes you to great liability because more often than not, the city inspectors will catch onto the work being performed. If this happens, they will halt the project and slap a violation on your property. No work can be performed until the proper permits are pulling and oftentimes that involves tearing down what has already been built without permits.

To further the point, only licensed contractors can pull permits when doing work on your property. Any unlicensed contractors who refuse to pull permits should not even be considered for your projects.

They Ran Into Unforeseen Problems

Another common problem that homeowners face with contractors is change orders during the project. Change orders are simply unforeseen tasks that come up during the project that your contractors bills you for. Oftentimes, unethical contractors will purposely bid your project low so they can win the job, but they will go in knowing that they are going to create change orders in the process to get more money.

In order to avoid this, it is recommended to clearly outline the project tasks and their costs. In addition to this, there should be a cap set for the cost of any immaterial changes to the original scope of work.

Extra Materials They Want to Sell You

The final tip to avoid getting hoaxed by a contractor is to avoid any emergency repairmen or out of the blue drive way pavers trying to perform work on your property on the spot for cheap. Oftentimes, these contractors have completed another project and they have leftover material that they cannot return. Instead, they will approach random homes and attempt to lay concrete on the spot. More often than not these jobs are of very poor quality and only serve for the purpose of them getting rid of excess material.

References
[1]: Building codes and standards