With summer just around the corner, many homeowners are thinking about fixing up or remodelling their homes, it’s always wise to educate yourself on signs of contractor fraud to ensure you don’t end up paying for work that never gets completed.
Following are five red flags that may indicate a contractor is not legitimate:
- The company does not list a number in the phone book. This may indicate a fly-by-night operation that will be here today and gone tomorrow. They may seem legitimate in the beginning but, as soon as you make your first payment for the job, they may vanish.
- Asks you to pay for the entire job up front. This contractor will be long gone well before your project gets underway. Or, worse yet, the contractor may have started the project, leaving you with a ripped up home and depleted funds.
- Only accepts cash. A legitimate business should have the appropriate financial accounts in place to accept a variety of payment options from clients, including personal cheques and credit cards. If a contractor only accepts cash, you probably won’t see them again once they receive a payment.
- Solicits door-to-door or telemarketers. Most legitimate contractors find enough work through word-of-mouth referrals and advertising. If they need to drum up business by going door to door, they probably are not an established, local operation. Chances are this contractor is running a fly-by-night business.
- Offers exceptionally long guarantees. The contractor may be making promises that can’t be kept solely to sucker you into hiring them for the job. The contractor could be inexperienced or may be running a fly-by-night business.
The best way to protect yourself from contractor fraud is to seek referrals from people you trust who can vouch for the contractor including friends, family, colleagues or your mortgage broker or real estate professional. Also, you could select a contractor that belongs to an association such as the Greater Vancouver Home Builder’s Association.
It’s also important to read and understand every word of a contract before signing it. If you don’t understand something, ask for clarification.
Also keep in mind that you should never sign a contract with a service professional who makes promises that sound too good to be true. Chances are, this contractor needs to create these incentives to attract customers. If that’s the case, the contractor’s record can’t speak for itself.
Be especially wary of contractors who try to scare you into signing for repairs that they say are “urgent”. Before agreeing to any additional costly repairs, seek a second opinion.
If you’re thinking of embarking upon some home improvements, feel free to call to discuss your financing options.