How to Spot a Home Contracting Scam
It is getting to be that time of year where we are all spending more time outside, the sun is shining, the BBQs are roaring, and we are getting things done around the house.
Many of us have spent the spring cleaning the inside of our homes, and now we are in the preferred months to take care of that pesky chimney, fix the leak in the roof, or trim the trees before they get out of hand. It is also the season for home contracting scammers to show up at your door.
While I consider myself handy around the house, these are all tasks that require an expert to handle. We all want to get the best deal out there, but sometimes a good deal is just too good to be true.
This week is PROTECT Week in Maryland and we are focusing on protecting seniors from financial exploitation. Seniors may be particularly vulnerable to home contractor scams where the scammer offers to take care of tasks they can no longer do.
So how do we make sure we don’t get taken advantage of or scammed?
Signs of a Scam:
Contractors trying to scam you often follow a set of patterns, and knowing what to look for can help you catch the scam before it happens. These are some common red flags to look out for.
If they say, “They were just in the area” - Good contractors are usually too busy to look around for work, and if they are going around neighborhoods asking to help you, they are possibly quickly trying to find an easy target.
If they ask for a large deposit - Scammers will often ask for a large deposit and ask for it to be paid quickly. They might ask for a large down payment, and anything over ⅓ of the total price is too much! You want to pay off projects as they go, incentive for the contractor to follow the job through to completion.
If they ask for cash - Any reputable contractor will accept credit or check. If they are asking for cash it should immediately raise red flags.
If you are offered a surprisingly low price - This could mean a lot of things, including walking out on a project, using subpar recycled materials from previous projects, shoddy workmanship… No matter the reason, a price that is unbelievably low is probably just that, unbelievable.
If they ask to arrange your Home Equity Loan - This is an easy place for contractors to scam you, as they could easily have the lender pay them directly and add major fees with high interest rates.
Contractor Research:
There are lots of ways to research contractors in your area, from personal recommendations and internet searches, to discussions with the sales person at your local hardware store. We recommend you follow these specific steps when choosing a contractor.
Insist on seeing references - Forcing contractors to discuss previous jobs can not only help you detect if your project will be completed on time, but will also certainly give you a better sense of their level of expertise.
Ask for their references from customers and suppliers
Ask how long they’ve been in business.
Ask if they’ve done this particular type of work before.
Do they charge for an estimate? If you have mobility issues and cannot walk with the contractor to view the house and yard, ask for photos to be taken and shown to you.
Is the contractor licensed and insured?
Many states require that a contractor be licensed in the state where they work (Maryland, Virginia, DC).
Ask to see a copy of the insurance declarations
Check a contractor’s rating at the Better Business Bureau as well as Yelp and Google.
Do not hire on the spot - You might be pressured with enticing deals, this is a strong arm tactic to get you to pay money you might not need to spend! A reputable contractor can always wait for you to make a decision
Do not go with your first inquiry. We recommend at least three different estimates from three different contractors. This will help ensure you are being treated fairly.
Checklist for Working with a Contractor:
Keep a record of all communication with the contractor (this will keep them accountable).
Check their licensing to make sure they are qualified for the specific task you are looking for, as sometimes the license won’t cover the contracted job.
Is their license up to date?
Are their sub-contractors licensed?
Are their employees and sub-contractors insured?
Obtain a written contract before work begins.
Guarantee site clean up and debris removal.
Inquire about guarantees
Labor Costs
Materials
Signed warranty from Contractor.
If a contractor is unwilling to divulge this information, or fails to maintain standard communication after you’ve asked these questions, then you should not follow through on hiring them.
Aging in place is so much better in a well maintained home so be smart, do your research, and don’t be afraid to ask all of the questions you have prepared. If you need help, ask a friend, neighbor or relative to conduct the research and to be there when the contractor comes to give an estimate.
And of course, if you need any additional help, don’t hesitate to give us a call!
Where to Go for More Information:
AARP, BBB, and your state’s consumer reporting department have fraud hotlines, databases to research contractors, and steps to prevent fraud.