8 Ways to Avoid Contractor Fraud
Need a new roof, home security system, kitchen, driveway or furnace? At some point, you will. And when you do, you’ll search out reputable contractors who offer fair pricing—via the classified section of the local paper, an online search, Craigslist, or by making some calls to friends and family who know someone. Each resource provides its own set of pros and cons, and scammers use every resource.
- Reduce your risk. People don’t do their homework. People are naïve and have no clue that someone may be looking to scam them, and they think they are so smart that nobody can scam them. But if you are smart enough to know that this can happen to you and do your best to prevent it, you reduce the risks associated with contractor fraud.
- Do your homework. Read up on what the processes are to do the job at hand. While a new roof or home alarm may not be something you want to learn how to do, there are plenty of “do-it-yourself” (or “DIY”) websites that can teach you. Spending two minutes searching and 20 minutes reading can save you money and make you sound intelligent to the contractor by asking the right questions.
- Hire right. Do business with someone you know, like and trust. Use well-known brands that vet contractors and have zero-tolerance policies for shoddy work. Find a friend or other trusted source who does know a contractor and hire that contractor. Use the Better Business Bureau when looking for reputable companies.
- Get three bids. Be cognizant of how prospective contractors handle themselves, their level of understanding of the work at hand, and whether or not they voluntarily offer up references. Don’t just automatically trust the guy with the whitest teeth and lowest price. Pay attention to your gut.
- Check references. If it makes sense for the job at hand, drive by a house that the contractor referenced and actually look to see the quality of the work that was done. Often, construction jobs costs thousands—and taking the time to check work is worth your time.
- Get everything in writing. Make sure the contract that clearly spells it all out.
- Buy the stock yourself. Many contractors will request money up front to do the job. Often they need that money as a “commitment” to do the job and motivate them to fill their trucks up with the tools and stock to do the job. I recommend you go with them to whatever supplier they get their stock from and pay for it directly. If they charge a markup on the stock (it’s usually 15 percent), tell them you’ll gladly give that to them.
- Pay in thirds. You’ve already paid for the stock, so now all you have to do is pay for labor: one third upon showing up to do the work, one third halfway through the job and one third when they are done.