Some simple steps to keep your bank account intact.
If you’re like a lot of people, the arrival of spring has you thinking about home improvements. Maybe it’s a new deck for warm weather barbecues, or energy improvements so next year’s heating bill doesn’t empty your bank account like this year’s did. Whatever the project, you should be careful when hiring a contractor.
Home improvement gripes are routinely among states’ top 10 consumer complaints, as they were last year in Connecticut, Missouri, Michigan, Washington, West Virginia, among others, based on recently released data. In New Jersey, complaints about home improvement contractors ranked first. In 2014, the state took action against 130 contractors, obtaining more than $2.1 million in penalties and consumer restitution. The allegations included failing to complete work for which customers had paid in advance.
In some cases, there’s outright fraud. Scam contractors go door-to-door saying they can offer a big discount because they have leftover supplies from a driveway repair or some other project they were working on in the area. They get the eager homeowner’s confidence and money and then do a disappearing act or shoddy work. Or they may say they were driving by and just happened to notice a problem with a would-be victim’s roof, chimney or other part of the home.
Another source of complaints is poor or incomplete work. A contractor may not be qualified to do the job or be that particular about quality. Sometimes contractors, no matter how well-intentioned, may go out of business without starting or completing the job.
Homeowners can encounter these issues with any project. But some home improvements are trouble prone. Here are some examples.
Driveways. Unscrupulous contractors use inferior sealants or other materials, which may be applied in a haphazard way. This is a favorite among roving scam artists who go from state to state. Homeowners often end up having to pay another contractor to correct the problems that were left behind. This is particularly prevalent in the spring.
Chimneys. One of the most common home improvement scams involves chimney repairs. Sometimes companies hired to clean and inspect a chimney misrepresent the need for repairs, which they say are needed to prevent carbon monoxide poisoning or a house fire. They may even show you photos depicting chimney damage that are really from a different home. It can be very difficult for a homeowner to verify chimney problems.
Roofs. Your roof is another area where it’s difficult to verify problems or know when a repair has been done correctly, at least in the short term. In some cases, roofers have been accused of attempting collect money for work that was never done. Roofs are a big focus of opportunistic contractors who go door-to-door to take advantage of victims of hurricanes and other storms. In Ohio, a storm-chasing roofer was sentenced in March to nearly five years in prison after pleading guilty to stealing more than $150,000 in home insurance checks from 40 people, many of them elderly. The state said the contractor used sophisticated computer software to identify storm-damaged areas and find potential victims.
Solar panels. Many companies are trying to promote the sale and installation of solar panels, sometimes by offering inflated estimates of how much homeowners can save or government rebates or tax credits for which they’d be eligible. Some homeowners have ended up with little or no benefit after having solar panels installed.
Energy audits and consultations. Some companies are all too eager to make big claims about saving money with energy-related improvements. An energy audit should be done only by a certified auditor, as the federal Department of Energy advises. It can be hard to tell if energy improvements have been performed correctly. Once insulation is installed, it’s often hidden behind a wall or other barrier.
Duct cleaning and maintenance. Companies run ads warning about the presence of dangerous mold and other contaminants in heating and air conditioning ductwork in an effort to scare homeowners into paying hundreds or thousands of dollars for ductwork cleaning. Ductwork cleaning is often unnecessary, and done improperly, can damage your ventilation system and create a health problem where there wasn’t one before, warns the federal Environmental Protection Agency, which offers advice for homeowners.
What You Should Do
Get recommendations. Never hire a contractor you haven’t heard of, especially one who contacts you. Don’t rely on print or online ads. In yet another case brought by the Ohio attorney general in March, a contractor accused of doing incomplete and shoddy work attracted customers by advertising on Craigslist and a local newspaper, according to the state’s lawsuit.
The best way to find a contractor is to ask people you know to recommend companies they’re happy with. Get the names of more than one contractor so you can get at least three written estimates. Having more than one contractor look at the job can save you money and may help you determine if a contractor is incompetent or trying to rip you off by suggesting unnecessary work, or at the other extreme, leaving out important steps.
Do your own research. Before obtaining estimates, consider searching online for information about the types of project you’re considering, whether it’s remodeling your bathroom, getting a home energy audit or replacing your windows. That can help you better understand what the contractor is saying, know what questions to ask and detect potential fraud or other problems. There are plenty of websites and forums where you can get information and ask questions. Do more research if, during the meeting with a contractor, there’s something that raises your suspicions.
If you’re counting on energy savings, rebates or tax credits, contact your local utility, which may be able to provide information or direct you to other useful resources.
See what others are saying. Before hiring a contractor, check with your state or local consumer protection agency for complaints. Look for reports on the company at the Better Business Bureau. Expect to see a letter grade of at least B-, the minimum required for BBB membership. But don’t rely on the grade alone. Examine the types of complaints people have made against the company, if any. As an extra precaution, ask the contractor for references and follow up by contacting former customers.
Check your state or local laws. Regulations governing contractors vary. Some states impose a certain cooling-off period, typically three business days, during which you can cancel a home improvement contract after signing.
Many states or localities require contractors to be registered or licensed. Some states, including Connecticut, Maryland and Massachusetts, have guaranty funds that reimburse those who obtain judgments against contractors. But to be eligible, you must have used a licensed or registered company. So verify that the contractor has the required credentials. While you’re at it, ask the contractor for proof of insurance so you don’t get stuck with the bill if a worker is injured on your property.
Get it in writing. Never rely on spoken assurances. Connecticut, Florida and New York, among other states, require home improvement contracts to be in writing. Always insist on a written contract that details the exact work that will be performed, the start and completion dates, and any specific products, such as cabinets, appliances or flooring, that are to be used, including brand names and model numbers.
The contract should require your written approval of any changes. If it’s the contractor’s job to obtain building permits and inspections (which it should be), the contract should indicate that, too.
Don’t sign the contract if you feel pressured or until you know you’ve qualified for any financing you’ll need to pay for the project.
Finally, make sure the contract contains an adequate warranty. (If there are appliances or other items from third parties, check the warranty coverage for those as well.)
Don’t pay in advance. Never pay for the entire project upfront. A contractor who insists on a large down payment may be in financial trouble, which means the company may not be around long enough to complete work or address problems you discover later on.
If a down payment is necessary, negotiate one that’s as low as possible. Some states limit the size of down payments. In Massachusetts, contractors cannot ask for more than a third down unless they must special-order materials.
File a complaint. If, despite your best efforts, you encounter problems the contractor refuses to address, start by filing a complaint with your state or local consumer protection agency and the Better Business Bureau. Ultimately, you may need to sue in small claims court, or if the project involved a substantial amount of money, consult a consumer attorney.
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