How to Avoid Getting Ripped Off When It Comes to Home Improvement

Posted by on Monday, August 31, 2015

Stonebridge Mortgage Group_12 Ways Homeowners Can Avoid Home Improvement Rip Offs
We’ve all heard of contractors who took thousands of dollars and vanished, or home renovations that lasted much longer than they should’ve, with work so low quality, it had to be completely redone. These scenarios may sounds horrifying to you, but if you study up, you can prevent yourself from scammed by a bad contractor. Below are 12 tips to make sure you get the work done for the best price.

Beware of people who knock on your door. Good contractors rarely have to solicit business, and those who want more customers try advertising, not door-to-door solicitation. People who knock on your door are often thieves or scammers who will take your money and do a shoddy job, then disappear. Or they may even rob your house.

Avoid contractors who seek a big payment upfront. A reputable contractor will ask for 10 to 25 percent of the contract price before the job starts, then ask for progress payments as the job is completed, with the schedule detailed in the contract. The only time a big upfront payment may be legitimate is if you need a large quantity of custom materials to start.

Check licenses, references and insurance. Ask for references, proof of insurance and license documents, both contractor and business licenses. Then call to verify that everything is still current and valid. You may want to be named as an additional insured on the contractor’s policy while he is working at your home. If you’re interested, ask the contractor to add you to the policy and then bring you back the paperwork with you listed.

Check courthouse records for litigation. In most municipalities, the basic information is online, though you may have to pay a few dollars to read it in some municipalities. If the contractor has been sued, read the lawsuit and, if possible, contact the complaining homeowner for details.

Check for complaints against the contractor. This step should include checking in with the Better Business Bureau, local building departments and state licensing agencies. Remember to search for both the individual’s name and the company name.

Read online reviews. Reviews are not be-all and end-all, since anyone can get friends or relatives to write positive online reviews. Cannon Christian, president of Renovation Realty in San Diego, says he finds the negative reviews particularly useful because he learns a lot from how businesses respond to those reviews.

Avoid contractors who suggest working without permits. While permits cost money and add time to the project, working with them also brings a second set of eyes to inspect the work. If you get caught working without permits, you could be subject to fines. In addition, unpermitted renovations can cause problems when you sell your home and may jeopardize your insurance coverage. “Your home is your single largest investment, and it’s an issue of safety,” Contant says. Don’t work with a contractor who suggests you, rather than he, get the permits.

Talk to current customers. Past customers who love their new kitchens may have forgotten that the contractor showed up late every day. Ask for phone numbers of current customers and visit a job in progress to talk to the homeowners.

Beware of high-pressure sales tactics and “buy it today” pitches. The cost of labor and materials is not going to change by next week. “Don’t be lured by some great deal,” Hicks says. “A deal today should be a deal tomorrow.”

Draw up a very specific contract. Make sure it includes the exact materials, down to brand name and item number, as well as the schedule of progress payments and the timeline for the job. “The detail in the contract matters a lot,” Hicks says.

Get lien releases from subcontractors. If the contractor doesn’t pay his subcontractors, those companies could come after you and put a lien on your house. As each subcontractor finishes the work at your home, get a lien release. You can make receiving those part of the progress payment schedule.

Withhold at least 10 percent of the total payment. You shouldn’t hand over the entire amount due to the contractor until all inspections are completed, lien releases are in hand and you are completely satisfied with the work. Once you make the final payment, it’s hard to get the contractor to return to fix those last few items on the punch list.

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