How to Avoid Home Contractor Scams

We all know the story. You hire a contractor who you think will do the job right and honestly, only to be slighted in the end.

You can certainly trust many contractors. But like anything, there’s always a bad apple or two that spoil everything. So how can you make sure the person you hire is going to do the work? How do you protect yourself?

Don’t Pay For the Whole Job Up Front

Many contractors will legitimately ask for a certain amount up front, usually for materials. This is common, since many contractors not only don’t have thousands in reserve to buy your materials, but they need to protect themselves as well from homeowners who fail to pay after the project is complete.

While it’s fair to pay some money to get the job going, you should beware if they ask for more than 30% up front. Some dishonest contractors may just run off on you once they get the money, or just do a sloppy job, knowing you can’t fire them since they have your money.

How to protect yourself: Never prepay more than $1,000 or 10% of the job total, whichever is less. That should be enough to establish that you’re a serious customer so the contractor can work you into his schedule.  That’s the only valid point of paying up front. If your contractor needs to rent equipment, they should be able to do so on credit with their suppliers, provided the contractor really is the professional they profess to be.

“Trust Me”

Make sure you get down in writing all the items you and your contractor agree on. Don’t just go by a verbal agreement. If you don’t get it all in writing, then a dishonest contractor may just start leaving things out. And there’s really nothing you can do about it legally.

How to protect yourself: You can’t do much legally if you don’t have a signed contract with all the details, so make sure that’s something you get up front. And if you need to add anything, make sure you initial each addition and have the contractor initial it as well.

“I Don’t Need to Pull a Permit”

Any significant amount of construction will require a permit. This will allow building officials to visit the site on occasion to make sure the work meets code.

An unlicensed contractor may try to get around this on smaller jobs by saying that the authorities won’t notice. Yet on larger jobs, it’s more likely that it will be noticed. So the contractor may ask you to get a a homeowner’s permit, an option available to do-it-yourselfers.

The problem with getting your own permit is that you will not only be lying to the authorities about who’s doing the work, but it also makes you responsible if something goes awry. That means that you have to answer to the inspector instead of the contractor.

How to protect yourself: Always demand that the contractor get a building permit. Yes, it informs the local tax assessor about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work.