Thanks to moneycentral.msn.com
Spring's the time homeowners get to work -- and shady contractors come of out of the woodwork. Here's how to smell a suspicious deal.
Article IndexBy Bankrate.com
Like most homeowners, you probably spent the winter months talking about the home improvements you'd like to make. Now that spring is here, it's time to act on those remodeling impulses. After all, spring is a time of renewal, change and new beginnings.
Unfortunately, it's also a time when shady contractors come out of the woodwork to prey on innocent homeowners. "Some are actual scam artists, while others are just incompetent or unethical," says Ellis Levinson, a consumer reporter and the author of the book "Hiring Contractors Without Going Through Hell."
The good news is that you can protect yourself against these scams. In fact, many scams are easy to detect if you take the time to become an educated, savvy consumer. "Compare prices, call references and research the project you're undertaking in advance," says Bruce Johnson, the author of "50 Simple Ways to Save your House." It seems simple, but many people find this process overwhelming.
Levinson calls it emotional laziness. "It's amazing to me how much time people will put it into buying a TV because it's fun. But when it comes to remodeling a kitchen, people have no time. They see it as drudgery," Levinson says. Ultimately, he says, doing the research to protect yourself is much easier than paying for the consequences.
To help you differentiate a scam from the real deal, Bankrate has compiled a list of the most common remodeling scams. Beware of the following key phrases, and remember, if it sounds too good to be true, it probably is.
'I just happen to be working in your neighborhood' This happens when contractors appear at your home unsolicited to inform you that they noticed some problems with your home's (insert: chimney, driveway, windows, plumbing, etc.) while working on a neighboring home. For example, a contractor might say he or she was on the roof of your neighbor's home and noticed missing shingles on your roof. This may be the case, but often no repair is needed.
More important, legitimate, established and reputable contractors tend to find enough work through word-of-mouth referrals that they don't need to be going door to door to attract customers. Be especially skeptical if the contractor drives a vehicle with no company name, no phone number or with out-of-state license plates. "Do not let these people enter your home," Johnson warns. "Often they want to be invited inside to see if something is worth stealing."
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Also, be sure to ask for proof that he or she is insured, licensed and bonded. "Homeowners that check out contractors beforehand and research their credibility are usually more satisfied with the job than if they abruptly chose a contractor," says Jeremy Zidek, communications coordinator for the Better Business Bureau in Alaska.
'I have materials left over' Sometimes contractors will offer a discount for the job under the pretense that they have extra materials and want to use up their supply. Good contractors order just enough supplies to meet the needs of each job, as often the price for supplies is included in the contract.
If a contractor has materials left over from a previous job and is making them available to you, he either didn't finish the job or is cheating the previous customer. Or he didn't have a previous job but has materials to make it look like he did.
'I need cash upfront'This contractor will take your money and disappear before or (even worse) after your project gets under way. It can be frustrating trying to chase after him, getting him to come back and finish the job or hiring someone else to clean up a messy work site. Don't ever pay in full for a project before any work has been done.
Video: Make sure your home improvements pay off
However, you may be expected to pay a down payment. "The contractor may not want to block out time in his busy schedule without some money upfront," Levinson says. He recommends creating a payment schedule with the contractor at the start -- wherein you pay a sizable portion only upon completion of a project. Johnson swears by the one-third theory.
"The most I will ever give somebody upfront -- after I have called references and checked him out -- is one third of the money," he says. He pays another third when the project is halfway done. "Their profit is in their last payment; that's what going to keep them on the job."
'I have a special offer that's good for today only' If a contractor is offering a "special deal," ask him to legitimize what he is offering. Though this is a common sales technique, you can ask for documentation of this bargain -- a flier, for example, that the contractor has mailed or delivered in the past. Or one from another contractor at a higher price.
"Anytime a contractor puts pressure on a homeowner to act quickly about making a remodeling decision, that's a red flag," Zidek says. Remodeling decisions should be made carefully, not hastily.
'I can help you finance the project' Sometimes a contractor will suggest you borrow money from a lender the contractor knows. This could indicate a home-improvement loan scam, as the contractor may be getting kickbacks from the lender.
Video: Make sure your home improvements pay off
Homeowners may believe they're financing a small remodeling project loan, when in fact they're signing for a much larger loan, if not completely refinancing their home. Never finance through your contractor without shopping around and comparing loan terms.
'I want to use your home as a model'The scam centers on the idea of using your home as a vehicle, or "show home," to advertise their services in return for a hefty discount.
Established contractors should have completed enough previous projects that they won't need your job as a demonstration.
Still more scams Though any part of your home could be a target, many scams tend to center around driveways, roofs, chimneys and furnaces:
Driveway sealant scam. If a contractor offers to seal your driveway for a heavily discounted price, find out what materials will be used as sealant. Cheap, inferior substances may look great initially but will wear off in three months.
Chimney repair. These scam artists often lure their victims via advertisements in local newspapers offering gutter cleaning at a cheap price. Once the work is performed, they claim the chimney is in dire need of structural repairs. To provide so-called evidence of this, they will make it look like the chimney is in a state of decay by removing bricks and mortar from the chimney. Note: There might be decay if you burn a lot of wood and don't get your chimney inspected every year. Another chimney scam is when a contractor says there's a threat of carbon monoxide poisoning if the chimney is not repaired immediately. This is a serious concern, so if you are unsure about whether to trust this person, get a second opinion from a reputable contractor.
Hot-tar roofing. Contractors often use substandard materials. You may not realize you've been duped until heavy rains cause the roof to leak. "If you're having major work done, ensure that your contract has a holdback clause where you withhold the final payment until 30 days after completion of a project," Levinson says.
Furnace repair. Once they inspect your furnace, they may claim it is leaking dangerous gases or is about to explode. Ask your utility company to come and inspect your system. Also be wary if they tell you the unit is too small or needs a complete overhaul. When choosing a contractor, always get several estimates on the needed repair.
Duct cleaning. Only in very unusual circumstances do ducts need to be cleaned. The scheme is called a "blow and go" because the scam artist will use a small vacuum cleaner with no special filters to stir up the dust, pollen, mold and other contaminants instead of removing them. Duct cleaning can be necessary if there is mold in the house or if the heating or air conditioning has been running with inadequate or nonexistent filtering. If you change filters regularly, your ducts don't need to be cleaned.
This article was reported and written by Alana Klein for Bankrate.com
'I have a special offer that's good for today only' If a contractor is offering a "special deal," ask him to legitimize what he is offering. Though this is a common sales technique, you can ask for documentation of this bargain -- a flier, for example, that the contractor has mailed or delivered in the past. Or one from another contractor at a higher price.
"Anytime a contractor puts pressure on a homeowner to act quickly about making a remodeling decision, that's a red flag," Zidek says. Remodeling decisions should be made carefully, not hastily.
'I can help you finance the project' Sometimes a contractor will suggest you borrow money from a lender the contractor knows. This could indicate a home-improvement loan scam, as the contractor may be getting kickbacks from the lender.
Video: Make sure your home improvements pay off
Homeowners may believe they're financing a small remodeling project loan, when in fact they're signing for a much larger loan, if not completely refinancing their home. Never finance through your contractor without shopping around and comparing loan terms.
'I want to use your home as a model'The scam centers on the idea of using your home as a vehicle, or "show home," to advertise their services in return for a hefty discount.
Established contractors should have completed enough previous projects that they won't need your job as a demonstration.
Still more scams Though any part of your home could be a target, many scams tend to center around driveways, roofs, chimneys and furnaces:
Driveway sealant scam. If a contractor offers to seal your driveway for a heavily discounted price, find out what materials will be used as sealant. Cheap, inferior substances may look great initially but will wear off in three months.
Chimney repair. These scam artists often lure their victims via advertisements in local newspapers offering gutter cleaning at a cheap price. Once the work is performed, they claim the chimney is in dire need of structural repairs. To provide so-called evidence of this, they will make it look like the chimney is in a state of decay by removing bricks and mortar from the chimney. Note: There might be decay if you burn a lot of wood and don't get your chimney inspected every year. Another chimney scam is when a contractor says there's a threat of carbon monoxide poisoning if the chimney is not repaired immediately. This is a serious concern, so if you are unsure about whether to trust this person, get a second opinion from a reputable contractor.
Hot-tar roofing. Contractors often use substandard materials. You may not realize you've been duped until heavy rains cause the roof to leak. "If you're having major work done, ensure that your contract has a holdback clause where you withhold the final payment until 30 days after completion of a project," Levinson says.
Furnace repair. Once they inspect your furnace, they may claim it is leaking dangerous gases or is about to explode. Ask your utility company to come and inspect your system. Also be wary if they tell you the unit is too small or needs a complete overhaul. When choosing a contractor, always get several estimates on the needed repair.
Duct cleaning. Only in very unusual circumstances do ducts need to be cleaned. The scheme is called a "blow and go" because the scam artist will use a small vacuum cleaner with no special filters to stir up the dust, pollen, mold and other contaminants instead of removing them. Duct cleaning can be necessary if there is mold in the house or if the heating or air conditioning has been running with inadequate or nonexistent filtering. If you change filters regularly, your ducts don't need to be cleaned.
This article was reported and written by Alana Klein for Bankrate.com
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