Home Renovation Scams and How to Avoid Them

Trista - October 31, 2021

13. Watch Out For Low Bids. It Could Be A Scam!

Common wisdom says to go with the cheapest option. However, there is a reason for the adage that if something sounds too good to be true, it usually is. You may think that you are getting a great deal by paying two dollars for a skirt that ordinarily costs $100. That is, until you realize that there is a massive rip in the back and the zipper is missing. Then you find that you wasted two dollars! The mangoes marked half off at the grocery store may look appealing. That is, until you squeeze one and find it rotted. Cheaper is not always better. Sometimes, more affordable is straight-up rotten. According to MyMove.com, the same concept applies to contractors who are trying to scam you.

An example is a contractor coming in to give you a quote for the work you want to do on your home. They may then scratch a number — a pretty low number, compared to the other quotes you may have gotten — down on the back of a business card and hand it to you. Do not fall for this trick! If you want a solid quote for the work that you need to do, you need a detailed, itemized quote. That way, it that will not actually cost you more money down the road. There needs to be an estimate of hours, cost per hour, the different parts needed, everything required to get the job done. Otherwise, when you sign the dotted line, you will be signing away both your bank account and the structural integrity of your home.


12. The Mother Of All Scams Ends With A Loan Against Your Home.

According to the Federal Trade Commission, some of the most wicked contractors will try to scam you out of your home itself. The scam goes something like this. The person will approach you with the offer to do a home renovation project, such as putting a new roof on your house to get those solar panels you have wanted to install. The only problem is that you were not planning on this project and did not have the funds. Never fear because the contractors know a lender who will be more than happy to offer you a great deal on financing. Oh, surprise, the lender is actually in the neighborhood and has the paperwork for you to sign.

The paperwork for financing may not have been filled in, and the contractor and lender may rush you to sign without reading it carefully. They do not want you to know that the paperwork for financing is a loan against your home, and once you sign it, you will have very few options. The contractor will do very shoddy work that could actually damage the structural integrity of your home. You will be left with much more than a bill paying for those “services.” If you do not come up with the money right away to pay the contractor, you could end up losing your home.


11. How Can You Avoid This Costly Home Scam?

To avoid this scam, as with any other fraud, make sure you do your due diligence. NEVER allow a contractor to approach you and convince you that they will do quality work on repairs that you desperately need. That goes double if you were not even aware that you needed these repairs. ALWAYS shop around, and ALWAYS read the contract thoroughly. If you need to arrange to finance, make sure that you do so on your own.

Why? Don’t allow a contractor to introduce you to their partner in crime. They could be setting you up with another scam artist! Use the bank you trust because the people there will be aware of red flags that could cause the bank to lose money on the renovation job. That way, you can have peace of mind knowing you are making smart decisions with your money and your home. Keep reading to learn about how you can avoid car scams, too.


10. Buyer, Beware Of Flooded Cars.

This one may not be a home repair scam. However, if you accidentally end up with a flooded car, you will end up with a flood of car repairs. In turn, it could derail your budget for what you need to do to keep up with your house. A flooded car has gone underwater, such as in a hurricane that flooded a populated area or a river overflowed its banks. When water gets into the car’s mechanical parts, it causes corrosion. Over time, it can ruin all of the electronic components. The damage may take years to appear. Nevertheless, it is irreversible and will turn the car into a lemon. Mold on the car’s furnishings may not be visible at first, but it will take over and could make everyone riding in it sick.

According to Consumer Reports, the unprecedented hurricanes of 2021 led to hundreds of thousands of cars being flooded and hundreds of thousands of flooded cars already on the roads. Don’t think that you don’t need to worry about buying a flooded car just because you don’t live in hurricane country. They have usually transported far away before being sold. How do you spot a flooded car before you inadvertently buy it? Keep reading for more information that can help you avoid this costly scam.


9. Here’s How To Spot A Flooded Car Before Wasting Your Money.

Vigilance is key in every aspect of purchasing a vehicle. Paying attention to the front end before you sign the paperwork can prevent problems on the back end after you already have the car in your possession and are responsible for payments. A flooded car is given a new “salvage” title. However, the marking that indicates this can be very plain or even obscure. Why? Because some states require a letter or number code.

What should you do before you sign the paperwork for your new car? Call your insurance company to ensure the car can be added to your policy. The insurer will identify very quickly if the vehicle has been flooded and will say so. After all, the insurance company wants to keep its costs down and may do so by refusing to insure a salvaged car.


8. The Contractor Should Order All The Materials For The Job.

Ordering new materials can be expensive, and let’s just face the facts: home renovation projects are not cheap. Owning a home is not cheap. However, doing your homework now and making sure that you are buying quality materials for your project can save you a lot of money down the road. Heck, it could even protect the structural integrity of your home! According to AARP, a big red flag for a home renovation scam is that the contractor offers to use surplus materials from a previous job. You may not want those surplus materials to go to waste, but a good and reliable contractor will only order necessary.

A contractor with surplus materials likely over-billed the previous client and ordered unnecessary materials. This situation is not one of “his loss is my gain.” No, his loss is a sign that you need to stay away from this contractor! Surplus materials could also mean that the contractor did not even finish the previous job. And again, there is the genuine possibility that the scammer is trying to get you to sign a contract without reading the fine print. After all, there is a limited amount of surplus materials available, and you want to make sure that they go to you.


7. Do This If You Want To Save Money On Materials, Instead.

If you want to save money on materials, look for a surplus or salvage store. You can get suitable quality materials at a pretty low price and without the red flag of a contractor just happening to have surplus materials. Just make sure that you are not falling for another scam! Make sure that the surplus store you are going to has a good reputation, and check the quality of the materials yourself.

If the wood looks like it has been used previously, it probably has. If the nails are crooked, they were perhaps pulled out to be re-used. Make sure that you go for quality over price to save yourself numerous headaches down the road. Keep reading for more details about home renovation scams. Our experts understand what red flags to look out for. Not only that, but ways you can avoid losing money and your complete hope for the future.


6. Do Not Take The Contractor’s Word For Anything.

You may think that scams only happen online nowadays, but there are still plenty of people who go door-to-door. They may have the cliché glistening smile that is supposed to convince you of integrity and good intentions, and the handshake from roughened hands may be convincing that this person really is the one for the job. But be aware that scams still happen door-to-door, and your job is to protect yourself, your family, and your home. So make sure that you absolutely do not ever fall for the trick of the person looking you in the eye and telling you, “Take my word. I wouldn’t lie to you.”

This is one of the oldest tricks in the book. The idea is to win you over with charisma so that you will automatically be inclined to sign the dotted line and hand over the money. Nevertheless, according to OppLoans, lawyers have a reason for wanting everything in writing: because you cannot just take people’s words for anything. This is not to induce cynicism and insist that you cannot trust people. You cannot trust people you just met yet insist that they are 100% believable and act with integrity.


5. Do Not Trust Anyone Immediately.

To follow up with the last item, you shouldn’t trust people you just met. That goes for both business and pleasure. In this case, trusting a contractor right away can cost you hundreds to thousands of dollars. Not only that, it will waste your time, energy, and only add to an already stressful situation. So what should you look out for when it comes to home renovation scams? The scam begins with the would-be contractor telling you what work they can do on your home.

You add in some of your own ideas, and the contractor nods enthusiastically. Yes, all of your ideas will be implemented! Those ideas are not in the contract that you sign, but no worries. You had such a clear verbal understanding with each other — you took the contractor’s word — that those details were completely missing. The problem is that if a lawyer has to get involved, they will not give two cents about anyone’s word. All that matters is what is in writing. The contractor will say that those details were not included in the contract and will cost you extra if you still want them. The lawyer will have no choice but to agree.


4. Do Not Pay With Cash.

As previously mentioned, if you are dealing with a contractor who insists on only taking cash or check, just say no. Credit card companies may have blocked them from engaging in unethical business practices. You also do not want to work with a contractor who insists on a substantial down payment. According to the Federal Trade Commission, the safest way to pay for any home renovation project is through a credit card. People cannot trace cash payments. If the whole home renovation project ends up falling flat, you will have few options for justice if you pay in cash. Checks offer slight protection. Of course, that is only to the extent that you can cancel the check before the scammer cashes it.

However, credit card companies are very adept at tracing where their credit cards are being used and the reputation of the company or individual receiving the payment. If they report that a particular proprietor acts with poor ethics, they can stop all future payments to that entity. They also can offer options in case there are problems with the quality of the work. Putting money on your credit card instead of shady financial institutions can also prevent any financing scams. Again, if the contractor tells you not to bother using your credit card or acts confused when the credit card company declines to process the payment, take that as a clear sign that you do not want this person inside your home.


3. Do Not Believe A Shiny Printed Flyer.

You may see a flyer in the mail, on your car’s windshield, or placed on your front door, advertising the services of a contractor in the area. Flyers lend an air of credibility, but it is a false one. The temptation is to believe that only a reputable company would be able to get flyers designed, printed, and distributed, but nothing could be farther from the truth. Anyone can use a design program on the computer to create flyers and then have them printed. Anyone can get a logo made and copyright that logo. According to HomeAdvisor, you should be wary of any home improvement offer that you learn about through a flyer.

Likewise, anyone can take out an ad in the phone book, but the phone book requires something that a flyer does not: an address. While an address does not provide foolproof protection, it is at least somewhat traceable. Radio ads can also be sketchy. The station’s producer may require some kind of proof that this proprietor is legitimate before advertising; there is no guarantee. You may be getting the impression that finding a good contractor who will not scam you is hard. Yes, you are correct. But again, you want to look for contractors who have a solid reputation in the community. If someone cannot recommend a contractor that they used, you can guarantee that person had a bad experience with this contractor.


2. Leave Honest Online Reviews About Scams.

The best protection against scams is communal protection when you and the people in your community are actively working to keep each other safe. So make sure that you play your part in protecting your friends, family, and neighbors from home renovation scams. Did you find a good home renovation company or independent contractor? They did solid work on your house without any financial mishaps. There was nothing about needing extra funds partway through the project or providing a grossly misleading quote. If that is the case, let people know.

Was everything done on time and of the best quality possible? Share on social media by posting reviews on websites like Twitter. Even better, sites such as Yelp and Google for direct reviews. If the contract has a Facebook business page, make sure you comment. Spare people the pain of losing their shirts in a home renovation scam by letting them know whom to work with.


1. Spread the Good Word.

Likewise, did you come across a fraudulent contractor who was basically running a big scam? Even if you did not sign the paperwork, let people know that this shyster does not have any success. Hopefully, the neighborhood can run them out of town. Do you see someone going door to door in your neighborhood? Are you sure that this person is a fraudulent contractor running a massive home renovation scam? Start calling your neighbors to let them know what is happening. Better yet, call the police and inform them that a suspicious individual is canvassing your neighborhood. If you are concerned about the term “suspicious” being a bit too overbearing, keep in mind that running scams are illegal. Public safety requires that scam artists be apprehended, preferably before they fool the next person.

Did you hear a radio station playing an ad for a contractor that you know is corrupt? Give the station a call or send an email to inform the staff there of what you know. Radio stations do not want to be advertising for businesses that may do a disservice to their listeners. They just may take your words to heart and stop advertising for fraudulent companies. Employ the power of social media by posting first-hand accounts on the internet. People who are considering working with a particular company may see your negative review and think better. Also, make a report to the Better Business Bureau. The BBB may not take legislative action. However, the agency can report on its website not to work with a particular contractor.