It happened after Hurricane Andrew.
Hundreds of homes had been destroyed or badly damaged by hurricane-force winds and water. Thousands of homeowners and business owners filed insurance claims. Legitimate contractors, now in great demand, tripled or quadrupled their fees overnight to repair or rebuild homes. If you could even find a legitimate contractor.
Some homeowners weren’t that lucky. In some cases, scam artists posing as contractors took the cash and disappeared, leaving homeowners with a hole in their wallet the size of the holes in their walls.
Will the same situation play out in San Bernardino County, California, where, at last report, wildfires had destroyed nearly 3,000 homes? Possibly, but homeowners who wary of the contractors they hire might avoid getting scammed right after they’ve been burned.
Thousands of homeowners file home repair fraud complaints with their state attorney general’s office each year. In the last few years in Illinois, for example, more than 2,500 complaints have been filed, according to the attorney general’s office.
The National Association of the Remodeling Industry recently offered up ten warning signs that your contractor may not be legitimate.
These include: not being able to verify the name, address, telephone number or credentials of the remodeler; being pressured into signing a contract; being told that you can get a “special price” if you sign on the dotted line today; not being given references, or being given fake references; information given to you by the contractor is out-of-date or no longer valid; you are unable to verify the license or insurance information; you are asked to pay for the entire job in advance, or to pay in cash to a salesperson instead of by check or money order to the company itself; the company cannot be found in the telephone book, and is not listed with the local Better Business Bureau, or with a local trade association, such as NARI.
In some states, homeowners have a “right of recision,” which allows them to cancel the contract within a specific period of time, often three days. This grace period allows you to change your mind and declare the contract null and void without penalty if the agreement was solicited in your home.
If your state allows homeowners to cancel a home improvement contract, and the contractor does not offer, inform or extend notice of your right to cancel, it should be a warning sign.
Finally, NARI says that if you are given vague, partial, or reluctant answers to your questions, you could be facing trouble down the line. Contractors should be delighted to answer all of your questions, and to continue providing answers until you understand the scope of the work and are satisfied with the information you have received.
Finding a good contractor can be difficult, and many homeowners simply start by taking a walk through the yellow pages. That isn’t generally the best way to go. Instead, try to get some referrals from friends, relatives or colleagues who have had work done recently and felt like they had a good experience using their contractor.
Make sure all contractors are licensed, bonded and insured before you call them to talk about the job. You should also make sure that no complaints have been filed with the Better Business Bureau in your state.
The Arizona Registrar of Contractors, which regulates construction contractors in that state, suggests you obtain written bids from at least three licensed contractors and be cautious of bids that seem too good to be true.
You should also negotiate a detailed agreement that spells out the list of materials to be used (with specifications and, if possible, warranty or model numbers), and the date work will start and finish and any special requests or features.
The contract should also include the total price you will be paying as well as the payment schedule. As a general rule, don’t pay more than 25 percent upfront, and hold back at least 10 percent until you are completely satisfied with the job.
To protect yourself, be sure to ask if there is a cancellation penalty, and ask to see all necessary building permits (if the contractor is responsible for obtaining the permits). Finally, put all change orders in writing (a change order is a request you make to a contractor to do something different than is called for on the blueprints, and you make it in writing so you can prove what you had asked the contractor to do). Make sure you either hand them to the contractor directly or fax them to his or her office. Always keep a copy of all change orders.
Whether you’re rebuilding following a disaster like the recent California fires, or you’re adding on the master bedroom and bath of your dreams, it’s easy to get taken by a scam artist posing as a contractor.
And in a puff of smoke, your dream could become a living nightmare.