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How to Avoid Home Improvement Fraud (and What to Look For)

September 19th, 2022 |

When renovating or updating your investment property, you want to hire trustworthy, skilled contractors. But how do you know which housing contractors are legitimate? The following blog post explains how to avoid home improvement fraud.

Warning Signs of Potential Fraud

If you know the warning signs, you can spot a potential scammer. Here are some common tactics to watch out for: 

  • Door-to-door solicitation — the contractor knocks on your door or leaves a flyer, claiming they are in the area.
  • High-pressure sales — the contractor pressures you into making a fast decision
  • Offers of a lower price due to “surplus material” — could mean that they never finished a previous job
  • No verifiable credentials — the contractor will not provide references, business address or proof of license and insurance
  • Contractor asks you to obtain required permits — a legitimate contractor will apply for necessary building permits.
  • Contractor requires full payment upfront and in cash — payment should be by traceable check or credit card after agreed-upon project milestones are met.
  • Contractor refers you to a lender they know — you could end up paying high Interest rates while the contractor has little incentive to finish your project.

Work with Licensed Contractors Only 

Before hiring housing contractors, ensure they have the required license and insurance. Your state or county government has a list of licensed housing contractors. In Massachusetts, for example, you can verify a contractor’s license online with the Office of Consumer Affairs and Business Regulation.  

Get Bids From at Least Three Contractors 

Don’t sign on the dotted line until you’ve received bids from at least three contractors. Take your time, and do not let anyone pressure you into making a quick decision. Get written estimates that show a description of the project, materials, anticipated completion date, and price. Remember that the lowest bid is not necessarily the best option. Ask for an explanation if one estimate is much lower or higher than the others. 

Get Recommendations From People You Trust 

When looking for a reliable home improvement contractor, get recommendations from people you know and trust. Ask the contractors themselves for references and photographs of past projects. A legitimate contractor will be happy to provide references and their contact information. Contact the references and ask if you can see their completed projects.  

Have a Written Contract — and Read it!

Once you have found the contractor you want to hire, ensure you have a written contract. You should receive a copy of the contract to keep for your records. Besides the contractor’s name, address, and contact information, the contract should include at least the following information  

  • Contractor’s license number
  • Estimated start and finish dates
  • Description of work to be completed 
  • Cost of labor 
  • Cost of materials
  • Payment schedule
  • Warranty information
  • Your right to cancel if the contract is not signed at the contractor’s permanent place of business

At RH Blanchard, we provide reliable, transparent general contracting services to Boston-area property investors. Get in touch today and ask for a free quote.