Dishonest contractors have been using scams for a long time, and they can hurt more than just your wallet. This article will guide you in selecting the right contractor for your next home improvement job to avoid being ripped off.
You can also check out the following articles and videos from home improvement expert Danny Lipford on how to select the right general contractor for your next home improvement job to avoid getting ripped off.
Contractor scams target homeowners undertaking renovations or repairs on their properties. Dishonest contractors rip off unsuspecting homeowners by misrepresenting qualifications, inflating costs, performing shoddy workmanship, or taking large deposits upfront.
Fortunately, drawing from my two decades of experience in the real estate industry, I’m aware that homeowners can avoid predatory general contractors through research and caution. You can find numerous tips for vetting, hiring, and working with a handyman and various tradespeople in the articles and videos above.
Common Red Flags Signaling Contractor Fraud
You should watch for red flags that may indicate fraudulent or unethical behavior when hiring any contractor. Being able to spot these early warning signs can help you recognize a rip-off and avoid falling victim to a home repair scam. Examples of homeowners who have fallen victim to home-improvement scams include contractors accepting substantial deposits for work but failing to follow through, vanishing with the homeowners’ money. Additionally, there have been instances where contractors begin a project, collect a significant deposit, and then abandon it, leaving the work incomplete. Furthermore, there are cases where homeowners neglect to insist on a written contract before work starts, exposing themselves to risk from dishonest contractors.
Some common general contractor red flags include:
- Refusal to provide a contractor’s license and insurance documentation
- Vague on project details, materials, timeline
- No references from satisfied recent customers or the Better Business Bureau
- Total cost of quote far lower than other contractors’ estimates
- Requires a very large down payment or credit card upfront
- Only provides a verbal agreement, not a written contract
- Won’t pull required permits for the work
- Asks you to obtain materials yourself
- Old, worn vehicles and equipment
If you notice any of these warning signs, you should politely end the discussion and look for an honest, qualified general contractor or repairman to take on your remodel project.
Key Questions to Assess a Contractor’s Trustworthiness
I recommend as a homeowner that you thoroughly screen potential general contractors to avoid getting scammed. Be sure to ask these important questions:
- How long have you been in business? Look for 5+ years of experience and check their Better Business Bureau rating.
- Are you properly licensed and insured? Verify credentials.
- Can you provide recent references? Call them.
- Will you provide a detailed written contract? Review terms closely.
- What are your down payment and progress payment policies? Avoid large upfront deposits.
- What is your projected timeline? Confirm schedule expectations.
- How will you maintain a clean, safe worksite daily? Verify practices.
The answers and documentation provided can help assess if a contractor is trustworthy. Reputable general contractors will respond openly without hesitation. Any reluctance could signal a potential scam.
Follow up with phone calls to references asking about their experience working with the contractor. Get details on the quality of work, timeliness, cleanup, and more. Speaking to previous homeowners can provide tremendous insight.
Finding a Reliable, Trustworthy Contractor
You can find a trustworthy contractor by being proactive:
- Get referrals from friends, your Realtor, or family members who used them successfully.
- Check ratings and social media reviews on sites like the Better Business Bureau.
- Verify licenses are active and in good standing.
- Search state and local consumer protection agencies for complaint records.
- Meet in person and contact legitimate business references to confirm quality work.
Although no process is foolproof, taking these steps will help identify a dishonest handyman, repairman, or general contractor. Protect yourself by being an informed homeowner.
Avoiding Contractor Scams
Avoiding contractor scams comes down to due diligence. Use the tabs below to see how you can protect yourself before and after hiring a contractor:
Take these simple steps to avoid contractor scams:
- Thoroughly vet contractors – check credentials, experience, reputation
- Require a detailed contract with payment terms, total cost, and timeline
- Get multiple bids to help identify inflated pricing
- Inspect work regularly and document with photos
Once hired, take steps to protect yourself:
- Make payments only upon completing agreed-upon milestones
- Document all interactions and take photos of work
- Keep communicating about any issues or concerns
- Don’t make the final payment until all work meets your standards
Being an educated consumer is your best defense. Taking the time upfront to research and compare legitimate business contractors can save thousands down the road.
FAQs About Avoiding Contractor Scams
Should I ask for proof of insurance and bonding?
Yes. Reputable general contractors readily provide documentation of active insurance and bonding to protect you if they damage your property.
What's a typical down payment percentage?
20–40% down is common for large jobs. You should avoid contractors asking for a lot of money upfront, as it’s easier for them to take the money without completing the job.
What if a contractor doesn't get the required permits?
Consider it a major red flag. Legitimate business contractors always obtain necessary permits before starting work.
When can I safely make the final payment?
Only after thoroughly inspecting all work and being 100% satisfied. Never make the final payment in advance to a general contractor or handyman.
Additional Resources
- Avoiding Contractor Scams (article)
- Hiring a Contractor for Home Remodeling Projects (article)
- Questions To Ask When Hiring a Contractor (article)
- Do You Need a Contract? (article)
- Sensible Payment Plans (article)
- Hiring an Electrician for Your Home (article)
- Hiring a Professional Painter (article)
- How to Hire a Roofer for Your Home (article)
- Hiring a Qualified Plumber for Your Home (article)
- Hiring a Tiling Contractor (article)
- Do You Need an Architect or a Designer? (article)
- Hiring a Good Interior Decorator (article)
