If you own a house, chances are you will need to renovate it at some point. This requires spending money to hire a contractor you can trust to get the job done right. Finding the right contractor for the project might be intimidating, which makes it easy to fall victim to scammers, many of whom consider home improvements a favorite target for their nefarious schemes.
Scams abound in many sectors of the home improvement industry, from landscaping to roofing, plumbing, and home additions. In 2021, the Inspection Support Network reported a median loss of $1,700 per scam and a total loss of $206.9 million in the last 14 years. So, it’s only worthwhile to learn about various tactics scammers employ to swindle unsuspecting homeowners.
This way, you won’t naively sign any contracts or checks that will leave you regretting the entire renovation process. So, what are the top seven home improvement scams to look out for?
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The High-Pressure Sales Scam
This scam tops the notoriety chart. It involves a con artist who approaches a homeowner with a deal that’s too good to refuse—perhaps, a discount or a limited-time offer. While it doesn’t hurt to take on such promotions, the approach with which you’re presented leaves no room for you to weigh your options.
For instance, you may not have enough time to compare estimates from several contractors or read the fine print of your agreement before signing it. This exposes you to all sorts of hidden fees or clauses. To err on the side of caution, never hire a contractor on a whim, no matter how reasonable the offer sounds.
Before appending your signature to a contract, ensure you’ve carefully read and understood every detail.
The Phony Contractor Scam
In this scam, you might get a call from a fraudster posing as a representative of a reputable home improvement firm. The bad actor usually starts by asking if you’re thinking of renovating your home and directs you to their installation team who will come over to conduct an inspection on your property.
Once you agree, the fraudster sends their associate who poses as a contractor to your home. This person comes with the intent of gathering more information about you and your property. One way to prevent this scam is to verify a contractor’s information through Nuwber to understand if they are who they claim to be.
The Door-to-Door Scam
This tactic is similar to the phony contractor scam. But in this case, the scammers are unlicensed or uninsured and their only hook to get you on board is to provide cheap or free renovation. They typically show up at your doorstep after a storm or disaster with claims of operating within your neighborhood and having enough materials to meet your needs.
It sure sounds like a good deal to have a contractor nearby that offers cheap labor. But here’s the catch: you’ll get subpar materials and shoddy workmanship for your money. There’s also a high chance you’ll incur more expenses fixing your home after hiring one, or worse, land in hot water with a municipal court for a code violation.
Home renovations usually entail some form of inspection or permit, and they are solely reserved for licensed contractors. Inspectors will know if you’ve violated a building code if they discover unauthorized work. That’s why you should never hire a contractor on the spot without verifying their license and insurance.
In addition, only pay the full amount after the job is done to your satisfaction.
The Insurance Scam
It’s not uncommon for disreputable contractors to sell homeowners on renovation projects falsely touted to be covered by insurance. This could be a roof installation, siding replacement, or room additions. Of course, there’s no covered event such as a fire outbreak to validate the work, but the scammer may convince you that the project is exempt from your policy.
This act is known as insurance fraud and is a criminal offense. It partly accounts for $45 billion in yearly losses in the insurance industry and usually results in jail time or lawsuits. If you’re offered such a proposition, be sure to check its legality with your insurer before giving the contractor the nod.
Scammers often target homeowners with low quotes. While dirt-cheap proposals seem appealing, they’re often offered as a way to secure your contract before a con artist presents the actual figures. Kindly bear in mind that cheap labor often translates to poor quality of work.
Before hiring a contractor, compare several estimates and always go for one that offers an upfront, itemized, and realistic breakdown of expenses for a particular project.
Handshake Deals or Verbal Agreements
You should never agree to a deal over a handshake with a home improvement company. If you do, you should start suspecting them and keep looking. Verbal contracts are hard to enforce since you cannot provide a verifiable document. Always stick with written agreements and check all the details in the contract to ensure you’re not lowballed.
The “As Advertised” Scam
A slapdash product or service may be portrayed as the real deal, endorsed by a trusted company, celebrity, or media outlet. However, this is just a trick to fool you into paying a princely sum for a knock-off. And even if it’s legit, it may be overpriced, compared to other similar offers.
That said, you should always verify any endorsement before procuring a product or service from a home improvement contractor, even if they are backed by your favorite celebrities or influencers. Besides, they get paid to promote businesses, whether they benefit from their offers or not.
Find out what “actual” homeowners are saying about them. This will throw more light on what to expect when you hire their services or use their products.
Home renovation or improvement is a big investment that requires adequate planning and research before starting. However, there are several traps that await unsuspecting homeowners who don’t vet a contractor well enough, such as those discussed in this guide. As such, it’s in your best interest to be aware of them so you can steer clear.