June is National Homeownership Month, an opportunity for U.S. residents to reflect on the importance of the home and its role in their lives. With a median asking price of $225,500 for a home, becoming a homeowner takes dedication, patience and smart budgeting. For many first-time homebuyers, closing the deal on their purchase is a time of celebration and gratitude. While moving furniture and solidifying paperwork might seem like the biggest obstacle to enjoying their new home, it doesn’t take long before they find their first major home improvement project.
Avoid home improvement scams
Purchasing a home is one of the largest and most significant investments consumers make in their lives. It is essential to exercise caution when contracting services for home improvement projects to protect their investment. In 2021, consumers across the U.S. reported more than $1.1 million lost to home improvement scams to BBB Scam Tracker, with a median of $944 lost per report. Scammers often impersonate well-known or established companies and, after receiving initial payment, will disappear without even beginning the project. Desperate to establish communication, homeowners reach out to corporate or local offices for the company only to learn that the person who sold the job is not an employee.
Home improvement scams often begin with an unsolicited offer from a door-to-door salesperson or an ad posted on social media. While not all door-to-door solicitors are scammers, BBB recommends carefully evaluating any contractor utilizing this method to provide service, especially in the aftermath of damaging storms or other natural disasters. Some businesses may lack the proper insurance to cover unintentional damages to your home or yard during the project, use sub-quality materials that will not last, or lack licensing required to conduct repair or renovation work in your area. Be especially wary of contractors who claim to have been working in the area and have leftover material they can use to complete your project at a discount.
Tips for both new and seasoned homeowners to help them contract with confidence
Receive at least three quotes. BBB strongly recommends that homeowners looking to contract services for any work receive at least three quotes from separate businesses before settling on a final decision. Receiving multiple quotes allows homeowners to have a solid understanding of pricing and services and contributes to their ability to have an informed conversation with their chosen contractor about the project’s price. Homeowners who take the time to interview multiple companies before deciding who to contract can be confident that they are not overpaying for services.
Never pay the total project cost upfront. Even if the contractor offers a significant discount for paying the total cost of the project upfront, BBB always recommends staggering payments through the length of the project. Staggering payments allow the homeowner to inspect the work at specific milestones, ensuring that the work is completed to their satisfaction before releasing the next payment installment. Homeowners should avoid contractors practicing aggressive tactics or insisting on receiving full payment before beginning the project, and most deposits should range between 10-30% of the total project cost. Some contractors may require a more significant down payment due to the price of materials or other clearly communicated issues. Still, homeowners should avoid any contractor that asks for greater than half of the total project cost upfront.
Understand licensing requirements. Depending on the type of work the homeowner wants, state or local regulatory agencies may require different licensing. In those industries that typically require licenses (electricians, HVAC, plumbers, pesticide applicators, etc.), spend the time to double-check the license is valid with the applicable agency. The contractor should be forthcoming in describing exactly how the homeowner can verify the license is active. Keep in mind that the homeowner may be held liable for work completed by an unlicensed contractor that does not comply with building codes or results in property damage.
Be wary of ‘too good to be true’ deals. As is common in any marketplace transaction, critically evaluate any deal that seems too good to be true. Trust in your intuition and have a basic understanding of the standard cost of the project by receiving multiple quotes. Offering goods and services at steep discounts for a ‘limited time’ is a common tactic of scammers and con artists to encourage consumers to make immediate decisions before verifying the legitimacy of the business or individual.
Learn more tips on hiring a trustworthy and reliable contractor.
For more information
Better Business Bureau hosts an online resource center for homeowners to understand the various aspects of home ownership and improvement or repair projects at BBB.org/HomeHQ. In addition to advice when contracting plumbers, electricians, roofers or landscapers, the resource center also provides information about mortgage lenders, home inspectors and real estate agents. Homeowners can use BBB’s search engine to find contracting services near them, both BBB Accredited and not, to assist in their decision-making process.
If you have experienced a home improvement scam or questionable business practices, report it to BBB Scam Tracker or file an official complaint online at BBB.org. Information provided may prevent another person from falling victim and help others make informed decisions when seeking contracting services.