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11 Ways To Protect Yourself From Contractor Scams

contractor scamWhether it be an earthquake in California, a monsoon or Haboob in Arizona a Tornado in Iowa or a Hurricane in Bermuda, Florida, North Carolina, South Carolina, Virginia, Maryland, Pennsylvania, Boston, New York, New Jersey, Rhode Island, Vermont [Did I miss any states Irene?] You can bet on one thing. There will be scam artists that try to take advantage of desperate homeowners. Here are some ways to protect yourself from contractor scams.

Ways To Protect Yourself from Contractor Scams


Get References

Contractors will usually come with a few references. Ask for five. And for the fifth one, ask the contractor to provide a reference to someone that had to get the original work tweaked. No one is perfect, oftentimes the work that was fixed by a reputable contractor required a follow up to be fixed or tweaked again to the homeowners satisfaction. You don’t want a one and done contractor, you will want a contractor that stands behind their work, that is willing to come out again and fix any problem if you are not happy. This will give you an idea of the work the contractor does and their customer service skills. Having to find someone to fix your original contractors work will cost you money you would not necessarily need to spend if the contractor stands behind their work.

Check the Better Business Bureau database

Check out any contractors you are considering with the Better Business Bureau. If it’s a contractor that works in many states make sure you check the BBB in those states as well. This is especially important as many contractors naturally follow mother nature and the path of destruction she leaves in her wake. Make sure you don’t hire a contractor that leaves just as much devastation in their wake as well.

Check the Registrar of Contractors Office or Secretary of States Office

Check with the Registrar of Contractors office [ROC] and the secretary of state’s office in the states the contractor operates or is licensed in. You should also check with these  authorities to make sure the contractors have complied with local, state and national laws.

Ask Who Is Actually Doing The Work

Just because a well dressed, presentable and professional contractor is in your kitchen does not mean that is who will be replacing or repairing the damage to your largest investment. Many contractors hire subs or sub-contractors to actually do the work. Make sure you ask who is doing the work. Are they licensed? Licensed under the contractor in your kitchen or  another company? If something goes wrong who should you call? If the contractor is hiring subs make sure you get signed lien releases when the work is done BEFORE FINAL PAYMENT. If the subcontractors are not paid by the contractor the subcontractor can attach a lien to your property until they are paid.

Ask Your Insurance Company

Insurance companies have agreements with contractors they trust, ask them who they recommend and why? Cost is a huge factor for insurance companies, you don’t always have to go with a contractor your insurance company recommends but it may be a good idea to look outside of your insurance companies “list”.

File Your Own Claim

You should file your own insurance claim and deal with your insurance company yourself. In addition to your initial claim, your insurance company may have questions you can better answer about related damages or personal property damage. Was it just your roof damaged in the latest Monsoon or was the air conditioner damaged as well? While allowing a contractor to deal directly with your insurance company could save you time it could also cost you money if your contractor is trying to scam you.

Get a Second Opinion

Yes, you are hiring a professional to fix the damages to your home but how do you know those fixes are needed or even real? If you don’t know the difference between a broken air conditioner and and one in need of freon, you may want to get a second opinion. You can get a second opinion by hiring a home or building inspector. An inspector can tell you if the work is needed and possibly refer you to another contractor, remember #1?

Read your contract

I know it sounds obvious but many people don’t bother to read contracts before signing them. Read your contract with your contractor, does it have a beginning and an end date? Does it state clearly who will be doing the work? Is your address or assessors number correct? Are there any spaces left blank? Don’t sign a contract with any blank spaces and take your time.

Don’t pay up front

Don’t make full payment to your contractor up front. Just because it’s a contract does not mean the terms are not negotiable. I had my roof replaced after the infamous Phoenix Monsoon and hail storm of 2011.  My contractor wanted 2 payments, I negotiated for 3, the third coming after the work was checked and verified, after securing lien releases from the subcontractors

Check the work

Just because the contractor says the job is done doesn’t mean it is or done to your satisfaction. While you can probably easily tell if an air conditioner or roof was replaced, issues with your foundation or water damage may not be so easy to check. See #7

Google Em

Google can be a consumers best friend. Your contractor says you need a new flex capacitor, [yes I borrowed it from Back To The Future] Google It! What is it, what does it do, how is it fixed and how much does it typically cost to fix? Make sure you Google your contractor and any sub contractors that will be working on or in your home to find any consumer complaints. If your contractor is Contractors R US [made it up] Google,

  • Contractors R US
  • “Contractors R US” Using quotation marks “” will tell Google to find exact matches.
  • Contractors R US review
  • Contractors R US complaints
  • Contractors R US (your state)

By following the tips above you can educate yourself about what work Is really needed, how much it will cost and the best contractor for the job. It’s true, a few bad apples can ruin the bunch, most contractors are good but the cost of falling victim to a scam can cost you more that just money and therefor warrants the steps above. If you are filing an insurance claim your insurance company will typically send a check addressed and payable to you – not your contractor. Do yourself a favor and put that money to the side to pay your contractor once the job is complete. For all the worry about contractor scams, contractors are much more likely to be scammed by the consumer, some refuse to turn over insurance proceeds as promised prompting the contractor to file suit.

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Stephen

Hi I'm Stephen Garner, I'm just a guy in the title industry {in Phoenix} trying to change how real estate agents market themselves and their services. To that end, I teach my clients HOW TO leverage sales technologies like WordPress, Content, Video, Camtasia, Final Cut X, iMovie and indexable IDX solutions to convey value and help your ideal client find you online when they are most interested in learning about you and your services. I work for escrows. Hire me!

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