Even with homebuilding in the doldrums, there are contractors ready to take you for a ride. So doing your homework before you hire one is good advice. And while most contractors deliver the service they promise, some will still work all the angles. Here are three of the top scams, according to the National Association of Realtors, a trade group, and ways to avoid them:
ScamYour contractor says he needs 30 percent of the project’s cost upfront, since he has to rent equipment. You write the check and the contractor starts doing sloppy work, thinking you won’t fire him as you’ve already paid him thousands.
BamPay up to 10 percent of the total or $1,000, whichever is less. This tells the contractor he should put you on his schedule. And by the way, suppliers typically give reputable contractors materials and rentals on credit.
ScamIn discussing the project, the contractor agrees with you on all details. You read the contract and see that some specs aren’t mentioned, but you know he understood you when you were talking so you sign it. When those extras aren’t worked on, you confront the contractor and he says you’ll have to pay more.
BamYou’re cooked. There’s no legal recourse since you signed the contract. In the future, be sure the contract includes every spec, and if you add anything, initial it and insist the contractor initial it too.
ScamThe contractor says a building permit isn’t needed, and stresses that a permit informs the local tax assessor about your upgrade.
BamInsist that the contractor get the permit. It’s legally required for significant construction—local building inspectors will periodically inspect the work and confirm it meets safety codes. But even with smaller interior jobs, demanding a building permit has its advantages. It screens out unlicensed contractors and as the work progresses, it provides you with a third-party review of the work.
Finally, before you agree to anything, be sure the contract deals with change orders, detailing the work and price for jobs that are added as the project proceeds. This comes up sometimes, and whether it’s the homeowner who makes changes or the unexpected occurs, such as structural problems or termites, it’s better to work this out beforehand. For more information, read our advice on How to hire a contractor.
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