Home renovations are more than just aesthetically appealing. They enhance your comfort and increase the value of the house. Whether you want to undertake a kitchen improvement, install new roofing, or do a complete makeover, every homeowner wants their project to go smoothly.
Unfortunately, home improvement scams have become widespread throughout the US. Numerous home builder reviews indicate how they can negatively affect people from all backgrounds.
These scams take different forms, from substandard work to unprofessional contractors, leading to financial losses, property damage, or emotional and mental stress. Hence, it's essential for homeowners to prioritize thorough home inspections to detect potential warning signs early on.
Key Insights:
- Home improvement scams may have various forms, ranging from poor-quality work to fraudulent contractors.
- The most common red flags to watch out for when choosing a home improvement contractor include demand for large advance payments, too-low bids, aggressive sale tactics, and lack of licenses.
- Not to fall victim to home improvement scams, sign a carefully drawn-up contract, read customer reviews, and hire trustworthy home contractors.
This article will discuss various typical home improvement scams and equip you with practical tips and techniques to identify and avoid them.
Home Improvement Scams: How Common Are They?
The home improvement market size in the U.S. grew by more than $84 billion between 2021 and 2022. It is expected to reach $577 billion in 2023 and over $620 billion by 2025.
As the market grew, so did the number of home improvement scams. A recent report showed that homeowners have lost over $82 million in home improvement scams in the last two years.
Scams related to roof improvements or changes are the most common. 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 or the entire amount at once
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…
On the contrary, legitimate home contractors or home improvement companies work with a payment schedule aligned to the project targets. 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
To acquire a home improvement contractor license, specialists have to meet specific requirements that prove that they have the necessary skills, qualifications, knowledge, and experience. If you are dealing with home improvement service providers unwilling to show their licenses, they are likely a fraud.
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…
At the end the reviewer warns those who are planning some home improvement works:
Please hire a contractor for your home improvement. Do not go on Angi some of these people are not legit you do not know who you are letting into your home.
Suspiciously low bids
When prospecting for home improvement contractors or companies, beware of those whose bids stand out for being much lower than others. Although it might be tempting to go with their seemingly lower price, chances are that they will deliver subpar craft, use low-quality materials, or increase costs later.
Aggressive Sale Tactics
Another typical red flag for contractor scams is high-pressure selling, where the service provider rushes you to sign a contract immediately. They may offer a limited-time deal or insist that you make a decision fast without allowing you enough time to do your due diligence on the company or to discuss the project details.
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.
Matt advises that you vet the company carefully before hiring them. Look at the contractor’s website to understand their history, where they are now, and why they are in the home improvement industry.
Ask for the contractor’s license number and check the services that they say they provide. You want to hire a company that specializes in the service you are seeking as they are more experienced and skilled.
Read online reviews
Read the company’s online reviews to get a sense of its credibility among previous customers. Avoid home improvement contractors that have low ratings and numerous complaints. Also, avoid companies whose reviews seem too good to be true. It is likely that the reviews may be fake.
Check customer complaints and feedback on multiple platforms and social media
for a well-rounded perspective of its reputation.
If, despite your best efforts, you fall victim to a home improvement scam, take advantage of your consumer rights protection and report the problem to officials.
Get a written contract and read it carefully
A legitimate contract is essential for ensuring a transparent and professional relationship with your home contractor. It protects your and the contractor’s interests.
The contract should be detailed and cover all the aspects of the project, including costs and payment plan, scope of work, key milestones, start and completion date, etc. Insist that the contractor provides warranties and guarantees for work, quality, and materials in the contract. They should also indicate that they have liability insurance for the home improvement services offered.
Other important components in a home improvement contract include the procedure for dispute resolution and a termination clause. Ensure that you both sign the contract to signify mutual agreement. Do not work with a home contractor who insists on starting work without a contract or those who offer vague documents.
Watch Out for Scams and Enjoy Your Home Improvement
Many homeowners undertaking upgrades and renovations are oblivious to home improvement scams. To avoid falling victim to contractor scams, look out for any of the aforementioned red flags. Stay vigilant, and if anything feels off with the contractor, either investigate further or stop cooperation with them.
Have you experienced a home improvement scam or come across fraudulent contractors? You may leave a review and share your experiences.
Legal disclaimers:
- While every effort has been made to ensure the accuracy of this publication, it is not intended to provide any legal, medical, accounting, investment or any other professional advice as individual cases may vary and should be discussed with a corresponding expert and/or an attorney.
- All or some image copyright belongs to the original owner(s). No copyright infringement intended.
