Don't Be a Victim of These 3 Contractor Scams

Written by Doug Bonderud
Updated September 10, 2015
Remodeling project in progress
Do your research: Beware of scam artists, whether you're hiring a handyman or a homebuilder. (Angie's List)

Home repair scams seem to be on the rise, thanks to shady contractors. Here are three common “tall tales” that scammers tell — and how you can avoid them.

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Home remodeling projects are a challenge. The lure of a great deal can lead even smart consumers to make poor decisions as they try to find an ideal balance between price and professionalism.

Here are three of the most common "tall tales" you'll encounter from fly-by-night contractors — and how to make sure your reno has a happy ending.

1. The "model" builder

This contractor wants to do you a favor. He or she shows up at your door, looking a "model" home, something to show off to prospective clients. You'll get a spectacular deal that includes doing everything — bathrooms, kitchen and living areas — in record time.

You agree, a team of workers sweeps in, and work begins.

RELATED: 5 tips to avoid door-to-door scams.

In just a few months, the work is complete (and looks spectacular), you pay, and the contractor tells you to expect calls from interested clients who want to see the work. You feel great about getting a good deal and helping out a decent contractor in the bargain. So what's the problem?

Looks are deceiving

In many cases, this builder takes shortcuts to produce results that look great but won't stand the test of time.

Bathrooms are a good example. Cheap, quick builders put bathroom vents on walls instead of ceilings, causing condensation to drip down rather than being pulled up and away. Over time, this causes mold behind your drywall.

They also play fast and loose with shower drain slopes, leading to pooled water and mold in tile grout.

Always periodically check on your contractor's work, and if you wonder why he or she is doing something, ask — and then check a trusted review site like Angie’s List to see if it’s the truth.

2. The financier

This contractor wants to help you complete a big home project, something in the $50,000 to $100,000 range. He or she has a friend or relative who will finance your reno with no credit check. These deals almost always come with a very low interest rate but are available for a limited time only.

There are several possible problems here.

Where’s the money go?

First, the contractor may be getting kickbacks for the referral, or the money you pay to the finance company may be going directly to the contractor rather than being held for work milestones, meaning the contractor has no incentive to finish your job.

In addition, it's possible the agreement could put you at risk. Some financing documents contain clauses that actually make them high-interest home equity loans with low rates for only very short terms. And in some cases, those documents include clauses that transfer the deed to your home to the financier's control.

Always have a legal expert examine any such agreement.

3. The fix-it faker

This scam artist happily points out everything that's wrong with your home, citing mistakes made either by your home builder or a previous contractor. But these "mistakes" are nothing of the sort.

Copper pipes are a good example. Copper can last up to 50 years in homes. While crosslinked polyethylene (PEX) is becoming popular in new home builds because it doesn't corrode, there's no need to replace copper pipes unless they're in serious disrepair.

A small leak isn’t always a big issue

The fix-it faker will look at a small leak in your copper piping and tell you the entire system needs to be replaced. When you ask if a PEX or copper repair is an option, the contractor says the systems aren't interchangeable and a copper repair won't stand the test of time. That’s a lie on both counts.

RELATED: Handyman fraud: Watch out for these 3 classic fake-outs.

Finding a pro

Do your research before you sign any agreement, and always keep tabs on the work being done. This will help you hire a contractor who won't leave you with unfinished work, an unexpected large bill or a low-quality finished product.

If you see something you don't like, say so, and always check your contractor's answers against the knowledge of friends, family and trusted online experts; you'll avoid these remodeling scams and keep more money in your pocket.

RELATED: 4 tips to a solid contract for home remodeling.

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