Renovating, remodeling and maintaining your home can be stressful and daunting. That’s why there are qualified professionals who can help you for a fair price and in a timely manner. Unfortunately, there are also fraudulent contractors who will do a poor job, or never even show up. Here is more information about the statistics of these scammers and steps to prevent home improvement fraud.

Home Improvement Fraud Stats

A recent infographic revealed that home improvement is a $200 billion a year industry. This means a lot of people get into the field that are likely less than qualified, which puts homeowners at risk. Some additional statistics about home improvement fraud and scams include:

  • There were $1.4 billion in fraud and scams in 2012, according to the Federal Trade Commission (FTC)
  • 13,000 home improvement complaints are filed every year to the FTC
  • 80% of contractors are likely fraudulent if they aren’t willing to provide proof of insurance
  • 33% of homeowners worry about fraud when hiring a contractor

For more information on home improvement fraud statistics, find the full infographic from HomeAdvisor here.

How to Avoid Contractor Scams

To make sure you hire an actual professional, there are a few rules and recommendations you should keep in mind:

  1. For major renovations and remodels, you might consider hiring an architect to help with the plans. Architects have experience drawing up building plans, writing contracts and getting permits. They have also worked with contractors in the past, so they know what to look for when it comes to experience, and likely know the signs of a fraudulent contractor.
  2. Be sure your contractor can show their license number before starting so you can verify it with the state contractor board. If they can’t show you their number, or it can't be verified, there’s a good chance they’re not certified.
  3. You always want to have some kind of insurance certificate or worker’s compensation attached to major jobs. The certificate must cover the project range, or you could be liable for damages to the team.
  4. You should research and get at least three to four bids from contractors in your immediate area. Watch out for any “low-ball” bids, which mean the contractor will likely do poor work or charge you additional fees. You should always ask about what’s included in the bid.

Questions to Ask a Contractor Before Hiring

As you move forward with a contractor's initial interview, there are questions you should ask to ensure you work with a true professional. Coldwell Banker recently released a complete list of questions, some of which include:

  • Tell me about your business history.
  • I’d like to know more about your team and who will be supervising my project.
  • What will the timeline be for my project?
  • What are your guarantees?
  • Will you put everything down in writing?

Contractors with a good history will be able to answer these questions and any follow-up questions without a problem. It’s the ones who stumble over their history, guarantees and contracts that you might need to reconsider. In the case of remodels and additions, you want to have everything in a contract because that’s your legal recourse in case anything goes wrong. Repairs and maintenance projects don’t always require contracts, but you'll want to include guarantees.


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