Use common sense to avoid contractor scams

You and your home can be hit anytime with all kinds of repairs that necessitate the services of a contractor.

You may need roof repairs, an upgrade to your insulation, or repairs resulting from sudden water or storm damage. This is a review of some basic precautions when it comes to finding and hiring a contractor. These suggestions apply to hiring general contactors, typically someone who performs or oversees three or more trades, or a specialty contactor, who only does a single trade, such as roofing.

Fortunately, the vast majority of contractors are honest and competent. But that doesn't mean there aren't plenty of folks out there who'd like to scam you, while others can cost you money through sheer incompetence. So, as with any business transaction, take a “buyer beware” attitude when dealing with contractors. A lot of this is common sense, and may seem simple and obvious, but that's often where people get complacent, and end up getting taken advantage of.

Understand it

The more you know about the type of work you're going to have done, the better off you'll be. It might be a new roof or some repairs to your driveway, but start with some research. Take the time to learn a little bit about the most commonly used products and procedures for a job of your type. You'll quickly become familiar with some of the terminology as well, and you might also learn a bit about average costs, either in your area or at least nationally.

Much of this research can be done online with a few simple searches. If possible, I also suggest visiting a couple of local stores to see some of the products you might be interested in, so you have a better feel for what they are and what they look like.

Don't fall for it

One of the oldest scams in the book is the contractor or salesman who goes door to door and offers homeowners a special deal on “leftover materials from a job down the street,” or a special discount if the homeowner will become a “show house” or “sales house” for new siding or new roofing at a special discounted price.

In that same vein, don't try to get a bid over the phone. You might get a contractor telling you, “I can usually do that sort of job for around 1,200 bucks,” just so he can get you interested. That might sound like a great deal — way less than you thought the job would cost — but you're leaving the door wide open for all kinds of trouble down the road.

Make sure the contractor sees the job in person. After the contractor has seen the job, get a written estimate that's as detailed as possible. The estimate needs to include a description of the work to be done, specifications of the materials, and the exact price.

Check up

• Ask the contractor for referrals from past customers, and be sure they're for the same type of work you want to have done. Pick up the phone, call the referral, and ask if you can drive by their house, see the actual work, and talk to a real person about the contractor's performance. If you can, go by one of the contractor's jobs in progress, so you can see the condition of the jobsite.

• Check the legal end. If your state or municipality requires that a general or specialty contractor be licensed, then get the license number and make a call to check it out. You can quickly find out if there are any claims pending, and if any claims have been settled. You also want to know what the bond and liability insurance requirements are, and confirm that the contractor meets those requirements. Furthermore, contractors that have employees will be required to have workers compensation insurance, so make sure that policy's in place as well.

All of this is public information and is available for simple checking online through your contractor's licensing agency. This is no joke: You can be left holding a very expensive bag if you deal with an unlicensed or uninsured contractor!

• Get a contract. Notice the word “contract” hidden in “contractor”? It's there for a reason. When you've checked out a contractor and are satisfied enough to hire him or her, get a written contract, not a verbal one. It should spell out the work to be done, the materials to be used, and the agreed-upon price. But the contract also needs to spell out the start and stop dates for the job, when payments are due, and what happens if one or both of you don't perform under the terms of your agreement.

The financial end!

OK, here's the big one, so pay very close attention:

DON'T PAY FOR WHAT HASN'T BEEN DONE.

Never, and I mean NEVER, pay for work that hasn't been done. I don't care what kind of discount or other incentive you're offered, never pay the contractor more than a small down payment at the beginning of the job. Make payments as the work progresses, up to the amount of work that's been completed — if 25% of the job is done, the contractor deserves 25% of the money.

Also, never pay in cash, because you have no record that you ever made the payment.