 | Guard Against Home Repair Rip-Offsby Dianne Molvig
Most people have a healthy suspicion of anyone peddling goods or services door to door. But too many consumers throw caution out the window when it comes to "special deals" on home repair and remodeling.
Talk to your credit union loan officer about financing your home repairs.
It works something like this. A contractor shows up on your doorstep saying he's just resurfaced a driveway in the neighborhood. He's noticed your driveway also is in disrepair, but, lucky you, he has leftover asphalt from the other job. It would do both you and him a favor, he points out, if he could get rid of the surplus asphalt by using it to resurface your driveway--at a discount price, if you pay him in cash.
Warning signs are flashing all over the place, unnoticed, because the contractor had you with the word "discount." He sprays some hot oil, not asphalt, on your driveway, making it look like he actually did something. By the time you realize you've been duped, the contractor is long gone, and so is your money.
Psst! Need a watch ... or a new roof?
A legitimate contractor would never make the type of offer just described, says Gregory A. Miedema, president of Dakota Builders, Tucson, Ariz., and a member of the National Association of Home Builders. "That's not the way a professional markets his services," Miedema says. "We don't go up to someone and say, 'Hey buddy. I've got a deal on these two-by-fours.'"
Traveling home repair contractors aren't the only problem. Disreputable contractors may establish a local business and then do shoddy work, pad their fees above what they quoted at the outset, and stiff their suppliers and subcontractors. The latter practice leaves homeowners facing bills for materials and services they thought they'd already paid for. To elude irate customers and creditors, these contractors leave town, or they close up shop and start another company under a new name.
Legitimate contractors �don't go up to someone and say, 'Hey buddy. I have a deal on these two-by-fours.' �
These various rip-offs are nothing new; they've been in the news for years. Still, dishonest contractors keep finding new prey. "People hear about this," notes Tom Joyce, director of public affairs for the Better Business Bureau of Chicago & Northern Illinois, "but they think it won't happen to them."
Go with a pro
To make sure such scams don't happen to you, ask questions of the contractor you're considering hiring, such as:
- Do you have a license?
Licensing requirements vary from state to state, or even within a state from one community to the next. Call your local government officials to find out what, if any, requirements exist in your area. If a contractor must have a license, ask to see it. Consumers also can call local officials or, in many areas, go online to check whether a contractor is licensed.
- Are you bonded and insured?
A bond is a guarantee from a third party standing behind a contractor. This assures you the contractor is solvent. Again, check local requirements. Some government entities, for example, require a contractor to be bonded before issuing a license.
Insurance covers personal liability, worker's compensation, and so on, to protect the consumer's home policy against any losses incurred by the contractor--for instance, if a worker falls off your roof, or someone backs a truck into your fence. Get the insurer's name and contact information from the contractor. "Have an insurance certificate sent to you directly from the insurance company," Miedema advises. That way you're sure the policy is legitimate and in effect.
Call your local government officials to find out what, if any, licensing requirements exist in your area.
- Do you have references?
Ask for names of other customers--and then be sure to call them to hear their stories. Look at completed jobs. You also can learn a lot about a contractor by visiting a site where work is under way. Besides the contractor's references, ask around for referrals from people you know. Check with the folks down at the local lumberyard, too. They know which contractors are getting lots of work--and paying their bills on time.
- Do you belong to a local builders' or remodelers' association?
A contractor need not belong to such groups to be in business. "But being a member means that I take my business seriously," Miedema says. "It shows I'm in this for the long haul. It's not a hobby."
Dig deeper
Other excellent sources for information about a specific contractor include your area consumer protection agency and Better Business Bureau. There you can find out whether others have filed complaints against the contractor. Keep in mind, though, that complaints can be bogus, just as some contractors are. But it's a bad omen if a contractor has a file of many unresolved complaints.
The national Better Business Bureau maintains files on more than two million businesses and organizations in the U.S. and Canada. You can search online, where you'll also find contact information for your local Better Business Bureau.
Check out a contractor's reputation before you commit to having any work done, Joyce recommends. What's more, always keep in mind that old consumer protection motto. "If a deal sounds like it's too good to be true," Joyce points out, "it probably is." Check out a contractor's reputation before you commit to having any work done.
| Nine warning signs |
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Steer clear of any contractor who:
- Shows up offering to do a job because "we're in the area." Another ploy used on elderly consumers is "You called us to come out to do your roof. Don't you remember?"
- Presents a business card with a post office box number, no street address. The company may be a fly-by-night operation. Also, check your local phone book to verify whatever address and phone number a contractor gives you.
- Stalls when you ask to see proof of licensing (if required in your area), insurance, and bonding.
- Asks you to get the building permit. That may indicate the contractor has no license or bonding.
- Rushes you to sign a contract. Take the time you need to review a contract, and always get at least three written bids on a job before you hire anyone.
- Offers a bid far below those you obtain from other contractors. Going for the big bargain is asking for trouble.
- Demands payment in cash.
- Demands more than half the payment in advance (some states set even lower limits on down payments).
- Offers to arrange financing for you. You'll end up with a home equity loan with a high rate and/or excessive points and fees. Never sign up for any loan without fully understanding the terms and comparison shopping. You'll find a much better deal at your credit union.
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