How to Spot and Avoid Home Improvement Scams

When you embark on a home improvement project, you are excited and look forward to a more beautiful and functional home. However, amid the enthusiasm, you must tread carefully to avoid falling victim to common fraudulent schemes targeting homeowners. 

This article goes into detail about how to avoid home improvement scams. We did extensive research into contractor reviews on Pissedconsumer.com to identify how common home improvement scams are present, the warning signs to look out for, and measures to take to avoid being scammed.

Key Insights:

• The most common contractor scam is quick, low-quality work without a contract.
• You must be thorough with your due diligence as 52% of home contractor scam victims said that they checked the credentials of the contractor before hiring them.
• Not to fall victim to home improvement scams, sign a carefully drawn-up contract, read customer reviews, and hire trustworthy home contractors. 

Home Improvement Scams: How Common Are They?

The home improvement market size in the U.S. was valued at $867.6 billion in 2023. It is expected to grow at a CAGR of 6% from 2024 and 2032 . 

As the market grew, so did the number of home improvement scams. According to a recent contractor corruption report, 1 out of 10 homeowners fall victim to home improvement scams. Scammed homeowners lose an average of $2,426. 

Scams related to roof improvements or changes are the most common. Fraudulent home improvement companies usually use this kind of scam, characterized by substandard craftsmanship and poor-quality materials.

Red Flags of Home Improvement Scams

If embarking on a home improvement project, you must be vigilant of the following red flags to avoid being scammed.

Contractors demand a large advance payment 

Scammers are keen to make as much money from you as possible before you realize that they are fraud. Therefore, they often ask for full payment upfront or a large down payment. 

A Backyard Escapes LLC review on PissedConsumer is proof. The consumer paid, but their contractor failed to “fulfill his contractual obligations.” As the homeowner wrote: 

Since the beginning of the project, I have paid $276,648.70…Although the work for the backyard started in May 2023, upon our prepayment, he has consistently delayed or stalled essential milestones of the backyards project…

Legitimate home improvement contractors offer reasonable deposit and payment terms and do not require you to pay for the full project upfront. The payment plan is well structured, with a 20-35% initial deposit followed by multiple payments after completion of specific tasks.

Contractors or their staff fail to show licenses 

In most states, home improvement contractors are required to have licensing. They must meet the state or local government criteria, including credentials and insurance to be eligible to work. Scammers often sidestep these legal and qualification requirements.

This is evidenced by an ANGI HomeServices review. Though the platform promises to help with any project and sounds legitimate, the customer didn’t check the documents of the worker who came to them and solely relied on the company’s reputation. However, as a result, they got a poorly done project and were robbed:

He let the suspected robber go and I let him finish the work. He uses cheap material and within a week I realized that the work was falling apart…

Aggressive Sale Tactics

Scammers often use high-pressure tactics, such as creating a false sense of urgency to rush homeowners into agreeing to a deal. They may offer you a limited-time special discount or claim that other homeowners compete for their services. 

One of the most rampant home improvement scams is when contractors show up unannounced at your door offering unsolicited services. They casually claim to have been working in the neighborhood and wanted to see if you might need their services. They might even offer a discount if you hire them immediately. 

Typically, door-to-door contractors are notorious for doing shoddy work and disappearing after receiving payment without completing the job. 

In a recent Reddit post, a homeowner said they encountered a door-to-door contractor who insisted that their house needed work. They invited the contractor to come back, take measurements of their carport, and provide a more detailed quote. Upon researching the contractor, they didn’t find much information about the home improvement company.

Source: reddit.com

Suspiciously low bids

It is a common tactic by scammers to initially provide a low estimate to get a homeowner’s interest and then raise the price after the project starts. This traps homeowners into paying more than agreed upon.

A customer reported such an incidence in Ace Handyman services review #3304683, whereby they ended up being overcharged for a poor-quality fence.

Craftsman's estimate was 4 hrs @ $120 per hr to install 8 1/2' fence, including gate. Said it was labor plus materials… When job was finished, he told me the price was $1233.00! 5 hrs labor, plus materials…

Shoddy work or incomplete projects

A common home renovation scam occurs when the contractor delivers substandard work or abandons the project entirely, leaving the homeowner with unfinished or unsafe work. This is not only frustrating but also costly, as you might have to DIY or hire a new contractor to finish the job. 

In a Construction Decks review #5299414, the customer explained that although the crew did a good job installing a new deck in their home, the job was not completed, and any efforts to reach out to the company have been futile.

How to Avoid Home Improvement Scams

Below are tips to help you avoid home improvement scams. Follow these steps so as not to fall victim to fraudulent service providers.

Consider only reliable contractors

Since the risk of hiring an unreliable contractor is high, you want to take your time to do the due diligence to establish if a prospective contractor is worth hiring. We interviewed Matt Dibara, the owner of DiBara Masonry, who shared some home remodeling tips.