Avoiding Home Improvement Scams

Your home is likely to be your most valuable financial asset. So be extra careful when you hire someone to work on it.

Tips for Hiring a Contractor

• Deal only with licensed contractors who meet state requirements for minimum competency.
• Verify license status and check for any past disciplinary actions using License Lookup.
• Educate yourself about the type of contractor you need for the job. Read What You Should Know Before You Hire a Contractor. 
• Ask friends and neighbors for referrals. A paid advertisement isn't necessarily a good indication of the quality of a contractor's work, and not all online reviews are unbiased or truthful.
• Get written estimates from at least three contractors. Don't automatically choose the lowest bidder! Ask for explanations on price variations among proposals.
• Insist on detailed contract, including agreed-upon start and finish dates. Licensed contractors are required by law to provide a written contract for residential work, signed by both parties.
• Don't rely on verbal agreements. Get all guarantees, warranties, and promises in writing.
• Limit your down payment or deposit. A reputable contractor should be able to front the costs of most supplies without a large sum of money from you. 
• A good rule of thumb is an initial deposit of no more than 10% down or $1,000, whichever is less.
• Unless the job requires custom-made items or special orders, in which case an initial down payment should be no more than 30% of the total value of the contract.
• Consider making payments during the project contingent upon completion of certain tasks--that way, if the contractor is behind schedule, your payments are delayed.
• Don't pay 100% of the bill until the work is 100% complete.

Tip-Offs to Potential Rip-Offs

Not all contractors operate within the law or regulations.

Here are some warning signs. Watch out for scams or an unlicensed contractor who:

• Solicits door-to-door (you have a three-day right to cancel a contract negotiated in your home!) 
• "Just happens" to have materials left over from a previous job
• Pressures you into making an immediate decision
• Asks you to pay for the entire job up-front
• Only accepts cash payments
• Asks you to obtain required building permits

If you are victimized by a licensed contractor who engaged in improper or dishonest conduct, and unable to recover on a court judgment, you may be eligible for monetary relief from the Contractor Transaction Recovery Fund. 

For more information about contractor licensing, visit the Board for Contractors website.