Avoiding contractor rip offs
We've got seven recommendations to help you avoid getting ripped off by a home improvement contractor.
Thu, Feb 09, 2012 at 03:27 PM
A recent poll on the website Angie’s List found that 16 percent of people sampled did not take the time to read home improvement contracts before having work done on their property.
“The contract is the most important thing,” says Cheryl Reed, director of communications for the site, which charges users a subscription fee for independent reviews on local contractors across the United States. But reading isn’t enough. Reed recommends knowing and doing the following to avoid getting ripped off.
“Hire only licensed and bonded contractors who are insured for liability and worker’s compensation,” says Melanie Bedwell, a public affairs supervisor for California’s Contractors State License Board (CSLB). “Get proof of these things right up front.”
The CSLB protects consumers by licensing and regulating the state’s construction industry. Laws vary from state to state so check the dot gov website to find out what is needed in your community. Permits may also be a requirement, and it’s up to you as a homeowner to know. A reputable contractor will get them for you, making them then responsible for completing your job according to code.
“Angie’s List is where consumers can go to find the best contractors, who to hire and who to avoid,” says Reed. Ask these same questions around your local community. The Internet is most useful for due diligence, which is something Bedwell says is a secondary step you must do.
“Check your local Better Business Bureaus and your state’s website, which may inform you of past disciplinary action,” she says. “Even minor infractions can inform the contract to better protect you.”
“Ask previous clients about timeliness, communication, subcontractors and for any advice they wish they had known,” says Reed, stressing how imperative it is to go see examples of work.
Call at least one subcontractor and ask what the work environment is like, if they are paid on time and treated well. Make sure any concerns you have from this part of the process become part of the contract too.
“Insist on a payment plan that is tied to progress because that is great incentive for work to continue quickly,” instructs Reed. Deposits of 10 percent to 15 percent of the contract price are common, and up to 50 percent is acceptable if the contractor needs to prepay for many custom needs. Never give cash for payment, as checks and credit cards provide proof and protection as they can be cancelled if need be. Hold on to at least 10 percent of the money you owe until every item on your punch list is done and inspections are complete.
“Consumers have the responsibility of knowing what they want and what it should cost,” says Reed. Get at least three bids in writing so you can compare exact details. Also apply this to materials you need. Often contractors can get better pricing than you, but you can only know for sure if you know the make, model number and price for large items.
“Never sign a contract for the total you have budgeted to get the job done because there will always be some surprises or unexpected delays,” says Reed.
Even the most honest contractors run into situations that they cannot predict, and if they have to spend more time it will cost you more money. Agree on how this will be handled in the contract to protect your relationship with your contractor when things do not go as planned.
“We help step in and help mediate complaints as an independent third party,” says Bedwell of the CLSB, and many other states do as well. Angie’s List provides a call center that can help if a project goes bad with a reference from their list.
Knowing where to turn for help before an emergency exists is the best thing you can do to protect your property. Whether it’s an urgent renovation or a necessary mediation, your homework protects the investment you are making in your home.