Contractor scams are commonplace and can cost a lot. That’s why rental property owners should carefully research before signing any contracts. They should also be wary of contractors’ common scams to bait potential clients.
Common Contractor Scams to Beware Of
Whether it’s a construction scam or a landscaping con, contractor scams are everywhere. Many vendors will do just about anything to lure you into signing an agreement with them. Even reputable ones might pull a few tricks to sweeten the deal without providing good service.
Most of these tricks are subtle and unnoticeable to the untrained eye. That’s why it’s always important to familiarize yourself so you’re not caught off guard. Without further ado, here are some typical contractor scams to watch out for.
1. Upfront Payment
One common ploy in renovation or construction fraud cases is when the contractor asks for a large upfront payment. For example, the vendor might ask for 30-50% of the price to pay for the cost of materials and equipment.
This might initially sound reasonable, but it’s a big red flag. It might also be illegal in some states. For instance, it’s illegal in California for a downpayment to go beyond $1,000 or 10% (whichever is less).
This is a red flag because the contractor can flee with your money without providing the promised services. If they don’t disappear, they might instead do a substandard job. They know you can’t let them go, or else you’ll feel that the large downpayment was wasted.
Remember only to agree to pay $1,000 or 10% of the project price in advance. This is enough to establish that you’re serious about the project. The contractor can rearrange their schedule with that much money.
2. Verbal Promises
A maintenance, repair, or home improvement scam can come in many forms. One prime example is when the vendor gives you lots of promises. They do this by conducting a meeting and asking you what you want to get done.
The contractor may seem friendly and agreeable at first. They say they’ll perform every service according to your specifications and desires. Some may even throw in a few extras just to seal the deal.
However, if this all happens verbally and not in writing, beware. That’s because when the project finally starts, the contractor may go back on their word and not fulfill their verbal promises. They might tell you that it wasn’t included in the contract price. The contractor might then get you to pay an additional amount just to redo the project.
3. No Permits
Don’t fall for any kind of construction or renovation fraud wherein the contractor says you don’t need a building permit. That’s because you’re legally required to obtain permits for big construction projects. This lets building officials review the construction site and verify whether the work meets all the relevant building codes.
Unreliable renovation contractors will entice you to forego the permits because “it’s a small renovation, nobody will notice.” They may try to circumvent the rules for larger projects by getting you to apply for a homeowner’s permit. This is still a bad idea as it’s a permit only available for do-it-yourself projects.
Sometimes, trusting the contractor’s word for it may be tempting. Nonetheless, getting a building permit is best so the contractor will follow all the proper building codes. It also protects your investment, as there will be an independent project review.
4. Price Hikes Due to ‘Unforeseen Issues’
Some contractor scams come in the form of overbilling. They overcharge you by saying there was an ‘unforeseen issue’ during the project. They might say they uncovered a structural problem and bill you for the repairs. Some might also charge more for minor design changes after the project started.
Granted, some of these fees might not be unreasonable. However, it’s important to stay vigilant as some contractors may use these to bid low and charge high afterward. It’s best to hire a separate home inspector to ensure they don’t uncover any surprise problems.
In addition, it’s essential to clarify how you’ll issue change orders whenever there’s a design change during the project. This eliminates any ambiguity and limits surprise charges. It allows you to provide a complete work description with a fixed price of how much the changes will cost.
5. Exaggerated Damage Reports
One of the most common roof repair scams you find is exaggerated reports of damage. In these scenarios, the contractor overstates the damage the roof has sustained to bill you a larger amount. They do this to milk you or your insurance company. Some may even inflict a bit more damage to bill you a higher price.
To avoid these, it may be better to hire a separate inspector to assess the problem. This creates accountability and eliminates the chance of fake damage reports. It might cost a lot, but it’ll save you more money down the line if the roofer scams you by charging you higher.
6. Sketchy Background
Hiring any old contractor you find online may be tempting for small projects. However, hiring someone with an excellent background is often better to avoid any problems. This lets you feel at ease knowing you’re working with a licensed professional. They’re less likely to get around building codes or scam you out of your money.
That said, learning how to spot a fake contractor is essential. Make sure to do your research and review the company website. It’s also a good idea to visit their office personally to ensure everything’s in order.
In addition, it’s important to work with only licensed contractors, as unlicensed ones may have bad practices. It’s also worth checking what online reviews say about the company.
7. Fake Reviews
Online reviews are great references when you’re looking for a reliable contractor. However, remember that many online reviews are fake. Scammers often publish fake online reviews to entice clients to work with them.
The safest route is to hire a company you’ve worked with before. You can also hire vendors who have previously worked with family or friends. If you don’t have any referrals, consider asking the company for details regarding previous projects. Double-check their references to make sure the company is reliable.
What to Do When Scammed by a Contractor
A contractor scammed me. Now what? Can a contractor be criminally charged? Being scammed by a contractor can be a frustrating experience, but it’s vital to stay calm.
Firstly, report the scam to local law enforcement. Provide them with the contract and all the details related to the scam. You may also file an online complaint with the Better Business Bureau to warn others.
In addition, you can hire a lawyer if the contractor hasn’t fled or is still traceable. An attorney can tell you what legal options you have. They can also help you get your money back.
Contractor scams can be a real headache for rental property owners. They can be difficult to mitigate and even cost a lot of money. Property owners should stay vigilant and keep their eyes open for any of the aforementioned tactics.
Hiring a reputable property management company is a good way to avoid contractor scams. These companies may already work with reliable contractors for property maintenance. Look for one today through our online directory!
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