The Do's and Don'ts of Avoiding Home Improvement Scams

It can start out innocently enough. Someone approaches you who states he was working down the block. He might offer to do some work on your home because they have some materials left over from the other job. Alternately, he might tell you that your home has some damages and offer to repair it. Usually, the price you are quoted is much lower than what would be expected. However, the amount you end up paying ends up being much higher.

This is just one of the many home improvement scams that are commonly run around the country. Hopefully, it has not happened to you. However, home improvement scams have been increasing the past couple of years. This means that right now a predator could be circling your home, waiting until you are most vulnerable to strike. Avoid becoming his next victim by following these home improvement do's and don'ts.

Don't allow a stranger into your home. First, call the company of any contractor, utility worker, or inspector and confirm that they are supposed to be there. Then, check photo identification to ensure that he is who he claims to be.

Don't let any door-to-door contractors inspect your home. This is often the set up for a scam or a burglary. Ask them to leave immediately, and call the police if they don't.

Don't deal with handymen who approach you with a good deal on work because they happen to have left over material or because they are in the area. If they were that good, they would have ordered the right amount of material and be too busy to be soliciting for more work.

Do ask neighbors and friends to recommend a good handyman or contractor.

Do get several estimates or bids before hiring anyone.

Do check out the company's reputations with the Better Business Bureau before signing a contract.

Do get the following information before hiring a contractor: complete name, business name, street address (not a post office box), phone number, license plate number, and a description of his vehicle. This will be help law enforcement agencies if a problem arises.

Do confirm that contractor has a valid business license and insurance certificate. Ask to see them and then verify that they are still valid with the appropriate authorities.

Do ask the contractor for references and check them out. Get a written list of work the contractor has done in your area and examine those projects. In addition, be sure to talk to previous customers to find out how satisfied they are and what problems occurred during the work.

Do ask questions like:
· How long have you been in business?
· What liability insurance do you have?
· What kind of workers compensation do you carry?
· How many projects like this one have you completed?
· Are you a member of any national trade associations?

Do get a written contract. The contract should state the work to be performed, the costs of supplies and labor, a starting date, a completion date, the quality/grades of materials to be used, and who is responsible for cleaning up. The contract should also include the contractor's full name and address along with their license or registration number, if applicable.

Do read the contract carefully before signing it. Make sure that any oral promises or guarantees the contractor has stated are included in the written document and that the contractor is responsible for obtaining the necessary permits.

Don't sign written documents that are different from what the contractor is promising orally.

Don't deal with contractors who tell you there is no need for a written contract.

Don't forget that you have three business days to cancel any contract after the papers have been signed. Put the cancellation in writing and send it via registered or certified mail with a return receipt. Then, send a photocopy of your cancellation to the address via regular first-class mail.

Don't deal with contractors who request an immediate decision, tell you that the offer is only good for that day, or who claim that they have extra materials left over from another job. These are major red flags that indicate possible scams.

Don't pay in cash or deal with contractors who require payment in cash.

Don't sign any contract that states you will cover the costs of materials or labor if the contractor does not pay.

Don't pay more than one-third of the total payment before the work begins. Arrange a payment plan so that you pay as the work is completed.

Don't make the final payment until you are satisfied with the job and are assured that all the subcontractors and suppliers have been paid. On larger projects, at least ten percent of the total cost should be withheld for thirty days in case any liens emerge.

Do ask for a lien waiver, which states that workers and material suppliers will not ask you for money once you have paid the contractor. Otherwise, the subcontractors may hold you responsible.

Don't let the work begin until financial arrangements to pay for the work have been finalized.

Don't allow a contractor to finance your project. This usually results in unnecessary charges. Use a bank or credit union instead.

Don't consolidate other debts into your home improvement loan.

Do contact a lawyer or housing counselor immediately if a problem develops.

Do take plenty of photographs of your home before the work begins and after it has been completed.