Avoiding Home Improvement Scams

Wednesday, January 30 at 02:00 PM
Category: Arvest News

Signs of a Home Improvement Scam

Finding a capable and reliable contractor is important — a home improvement project gone wrong can cost you more than money; it can lead to delays, subpar work, and even legal problems.

A good ad isn’t proof a contractor does quality work. Find out for yourself. Check with friends, neighbors, or co-workers who’ve had improvement work done. Also check out a contractor’s reputation on online ratings sites you trust. Get written estimates from several firms, keeping in mind the lowest bidder may not be the best choice.

How can you tell if a contractor might not be reputable? Don’t do business with someone who:

  • Pressures you for an immediate decision.
  • Only accepts cash, asks you to pay everything up-front, or tells you to borrow money from a lender the contractor knows.
  • Is not licensed. Many states, but not all, require contractors to be licensed and/or bonded. Check with your local building department or consumer protection agency to find out about licensing requirements in your area.
  • “Just happens” to have materials left over from a previous job.
  • Knocks on your door for business or offers you discounts for finding other customers.
  • 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.

For more tips, check out Hiring a Contractor.

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.

Source: Federal Trade Commission

Tags: Consumer Protection, Financial Education
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