BBB Warns Of Home Improvement Scams

The Better Business Bureaus in the U.S. and Canada are warning homeowners to be on the lookout for home improvement scams. Less-than-reputable or unqualified contractors breeze into town promising a variety of services at cut-rate prices. They may show up at your door, advertise in local papers or deliver fliers to your home.

Complaints to the BBB concern a wide range of problems, including high-pressure sales tactics, confusion over contract terms, poor workmanship, incomplete job performance, over-charging and in some cases, home foreclosures.

“It’s not your lucky day when a contractor shows up on your doorstep offering a too-good-to-be-true deal on a project. The salesperson may claim he has materials left over from a recent job at your neighbor’s house or the ‘house down the street.’ This is a common ploy of fly-by-night contractors who are based out-of-state and use their pick-up trucks as their place of business,” said Steve Cole, president and CEO of the Council of Better Business Bureaus.

Complaints against home improvement/home repair contractors are among the most common consumer complaints received by the Better Business Bureau. And there is little wonder, considering how lucrative the business is. Americans spent over $200 billion in 2005 on home remodeling/repair projects, according to the National Association of Home Builders.

“There are thousands of reputable contractors who will deliver quality work, on time and within budget. Consumers can avoid costly mistakes and scams by doing some research before opening their wallets,” said Cole.

Comparing cost before making a financial commitment toward any home improvement project is very important. In doing so, you should solicit at least two or three bids from prospective contractors based on the same building specifications, materials, labor and time needed to complete the project.

The BBB advises homeowners to never let a contractor pressure them into making a snap decision. A reputable professional will recognize that you need time to consider many factors when deciding which contractor to hire.

When looking for a reliable contractor, consumers should employ a contractor with an established business in their area. Ask for testimonials or references and check them out. Look into the contractor’s standard of work and his professional affiliations; verify his insurance; and check to see if he needs to be licensed. Check with the BBB for a report on the contractor.

Do not permit work to start without a signed written contract that includes all verbal promises that were made by the contractor. Be sure that the written contract includes a start and completion date, a breakdown of the cost and information about the contractor, including license number, street address and phone number.

If you need financing for your project, it may not be wise to agree to financing through your contractor or someone he suggests. “Consumers complain that they were pressured to sign a lot of papers and only later found out they had agreed to a home equity loan with a very high rate, points and fees. Carefully read every document before you give your consent. You can usually get a better deal on financing by shopping around on your own and comparing loan terms from several lenders,” Cole added.

If you are asked to pay for the entire job up-front, this should raise a red flag. Arrange for payments to be made as parts of the job are completed. Final payment should not be due until the job is done. And, homeowners should pay by check or credit card, never cash.