How can you tell if a contractor might not be reputable? To avoid renovation scams, you may not want to do business with these companies.
Signs of a Home Improvement Scam
How can you tell if a contractor might not be reputable? You may not want to do business with someone who:
* Knocks on your door for business or offers you discounts for finding other customers
* Just happens to have materials left over from a previous job
* Pressures you for an immediate decision
* Only accepts cash, asks you to pay everything up-front, or suggests you borrow money from a lender the contractor knows
* Asks you to get the required building permits
* Tells you your job will be a “demonstration” or offers a lifetime warranty or long-term guarantee
* Doesn’t list a business number in the local telephone directory
The Home Improvement Loan Scam
Here’s how it works:
A contractor calls or comes to your door and offers a deal to install a new roof or remodel your kitchen. He says he can arrange financing through a lender he knows. After he starts, he asks you to sign papers; they may be blank — or he might hustle you along and not give you time to read through them. Later you find out you’ve agreed to a home equity loan with a high interest rate, points, and fees. What’s worse, the work on your home isn’t done right or isn’t completed, and the contractor — who may already have been paid by the lender — has lost interest.
To avoid a loan scam, don’t:
* Agree to a home equity loan if you don’t have the money to make the payments
* Sign a document you haven’t read or that has blank spaces to be filled in after you sign
* Let anyone pressure you into signing any document
* Deed your property to anyone. Consult an attorney, a knowledgeable family member, or someone else you trust if you’re asked to.
* Agree to financing through your contractor without shopping around and comparing loan terms
Report a Problem
If you have a problem with a home improvement project, first try to resolve it with the contractor. Many disputes can be resolved at this level. Follow any phone conversations with a letter you send by certified mail. Request a return receipt. That’s your proof that the company received your letter. Keep a copy for your files.
If that fails, consider getting outside help like:
- your state attorney general or local consumer protection office
- your local home builders association
- your local media’s call for action lines
- dispute resolution programs
For more information visit the Federal Trade Commission