Tips to Avoid Construction and Contractor Scams
Each day, there are more and more scams coming into the light, and scams related to construction are no different. These scams and fraud can easily trick naive people who are looking to build their homes and can leave them dumbfounded and at loss.
In this article, we will share some of our tried-and-tested tips to follow when approaching a home building company, in order to avoid such construction and contractor scams.
Do not go for contractors who ask for money upfront:
You might find numerous home construction companies and contractors who will be asking you for an advance or for money upfront.
It has been reported that this is the most common type of ruse related to construction companies.
In most cases, your contractor will try to convince you to pay upfront as they will have to order supplies of materials, equipment, and also pay for the rent.
Thus, they will then ask you to pay at least 30%-50% of the total cost of the project before the construction process starts.
Once you’ve paid your contractor this amount, they will disappear on you in most cases. Moreover, even if they start doing slapdash work. You won’t be able to fire him as they will have all your money.
Here’s how you can avoid this from happening- in case you come across a promising contractor, who is asking for an advance, never pay more than 10% of the whole price, or just $1000.
Go for whichever amount is less, and communicate this to your contractor. This amount is ideal for getting your work started with a contractor, and also to establish a serious customer-contractor relationship. Moreover, it is also important to note that if your contractor is highly skilled and a professional, supplies of materials that will be needed will be provided to them on credit.
Always ask your contractor to get a permit
When you’re constructing your home or any other building, you will need to obtain a permit in order to get the construction process started. This permit will allow building officials to visit your building site in order to confirm that the project meets safety codes.
In case you come across unlicensed and unprofessional contractors, you will notice them skip this permit process.
They will also try telling you that the authorities won’t notice you not obtaining a permit. Therefore, you must beware of such contractors. Furthermore, your contractor could also convince you to get the permit yourself and apply for a homeowner’s permit.
However, doing this simply means that you will be lying to the authorities about who is doing the work. Also, this will also make you in charge of overlooking and monitoring all the necessary inspections at the construction site.
This is because your contractor will not be answerable to the inspector, instead, you will.
Therefore, we advise you to always ask your contractor to get a building permit. This will definitely keep you steer clear of any unprofessional and unlicensed contractors, who might scam you in any way.
Steer clear of contractors who bring up unforeseeable problems after the construction process has started
Take this as an example- the construction process has been initiated. And your contractor suddenly calls you up to inform you that the prices that were first agreed upon, have now skyrocketed.
In most cases, they might blame the cost of materials or even possible structural problems. Such as an unexpected termite issue, or any other design changes that might increase the overall cost of the project.
Therefore, such scam contractors first agree upon the final cost of the project before the construction process starts, and then jack up the price later by bringing up unforeseeable mishaps.
Whatever reason he communicates. This type of contractor will find an excuse to increase the price of the project and end up asking you for more money.
To prevent this, we recommend you call in a professional home inspector in case you want to determine whether your contractor is telling the truth or not.
We also advise you to include a procedure for any change orders in your contract before you actually sign it. This order should include all the work descriptions. As well as fixed prices for anything that might add later in the construction or renovation process.
Beware of contractors who say they have extra materials which can be cheaper
Of course, who doesn’t want cheap material supplies when building or renovating a house? However, you don’t want to go for leftover or cheap quality materials for your house, do you? Well, this is exactly another type of scam most contractors out there are trying to pull.
In order to get your attention to cheaper material costs so that your overall construction cost decreases, your contractor will tell you that they have extra materials that they can sell to you at far cheaper prices.
What you must know is that these are usually leftover supplies, which can’t be returned to the supplier. Therefore, the contractor will show up at your place with a truckload of leftover product, and ask you for a way cheaper price.
The price may definitely be a bargain. But you must steer clear of such tactics as they are risky, especially when you don’t know where the supplies are coming from and if you haven’t checked references.
Never trust contractors who avoid written contracts/agreements
Even if you’ve had a great verbal understanding with your contractor. It doesn’t mean you should trust them just because they’re good talkers. Some contractors might trick you into ways of not adding important aspects of the project to your contract.
In most cases, they will try to lure you into thinking a written agreement isn’t necessary. By talking highly and even pitching in their own ideas.
Due to this, you might end up surprised due to increased prices. Or seeing that what you had discussed in verbal chats was not included in the price. Therefore, you will end up paying them more.
Therefore, to avoid all these scams. You must always get everything in writing and review every detail before actually signing it.
