Telltale Signs You're Being Scammed By Your Home Renovation Contractor

With most home renovation costs averaging about $48,000, you want to make sure that your money is well spent and your results satisfactory. When placing your home in anyone's care, you also want to make sure that they're trustworthy, since you will likely have to live with the results of their work. Unfortunately, just like any else high-budget, there are plenty of scammers looking to take people unaware and make off with their money, often leaving behind second-rate work, if they do anything at all. 

So how do you confidently move forward with a contractor, especially if you don't have recommendations or experience to go off of? While there are lots of tips for hiring a home remodeling contractor, there are also plenty of red flags you should look out for during the process, and even as you begin to work with someone. Remember to trust your gut, and don't make the mistake of looking the other way when you notice things that seem off to you in fear of rocking the boat. You should be able to openly communicate your concerns with any contractor, and if you feel that you can't, that should be yet another red flag telling you that this isn't the person you want working on your home.

Your contractor can be casual with a lot of things; they can show up in jeans and a T-shirt, ask to be referred to by a nickname, or pepper in anecdotes through your conversation. There are some things your contractor shouldn't be casual about, though. The first is your contract. 

Saying that they don't need a firm or detailed contract is a huge red flag. Always get written proof of your agreement with the contractor, and be sure to have a copy of it with signatures. You should hire a lawyer to draw up this contract and go over it carefully. Don't buy an excuse that you can go over this sort of thing later; if the contractor keeps putting off signing a contract, it's your sign to look elsewhere.

Another thing they shouldn't be casual about is answers to your questions. Deflecting your questions, giving vague answers, or saying that details can be hammered out later is something to be suspicious of. Realtor Magazine reports that 25% of home improvement scammers are evasive or flat-out refuse to answer questions. 

There are plenty of excuses that a contractor may give you for their lack of a history. They may say that they're new to the area, for one. According to the Federal Trade Commission, a popular tactic that scammers employ is literally showing up out of nowhere in the form of knocking at your door looking for business because they just so happen to be in your city at the moment. 

They may also state that their website is down, or say some license or another is on its way and has been delayed. While, of course, there are bound to be some people with legitimate reasons, they should be able to give you another way to check up on their background and credentials. The FTC says to confer with your local Home Builders Association and consumer protection officials to make sure that your contractor is legitimate.

Make sure to do your research when it comes to local laws and regulations, and attain proof that your contractor has proper licenses and identification. If they don't yet have those licenses, confirm that they are in the process of getting them and that they have been attained by the time the project starts.

Another thing to consider, especially if your contractor doesn't have the licenses they need when you first begin talking, is how they go about getting them. Any contractor asking you to secure permits should be a huge red flag, as the Federal Trade Commission reports that this is something many scammers will do. If they try to weasel their way out of pulling permits by saying it can be done after the job, or by attempting to convince you that no one will notice if you don't have them, is a cause for concern.

Any laissez-faire attitude in regard to legal matters should be heavily scrutinized. While it is not always required for a contractor to have insurance, for example, you should heavily consider why they don't want to carry it before proceeding. Another legal avoidance tactic they may employ is not giving you job specifics, or only discussing these things over the phone or in person instead of getting it to you in writing. In fact, a contractor that shies away from getting anything to you in writing is a red flag.

Money is the scammer's goal, and so the way any contractor treats yours is highly indicative of their intent. The number one red flag that a contractor may be taking advantage of you is that they ask for the full payment before they start their work. If you give them this large sum of money, there's little to stop them from taking it and disappearing. The same can be said about an overly large down payment; even if they're not getting the full sum, it's still a lot of money that they can swipe.

They may also give you an estimate that looks good at first, but fish for more, as 23% percent of contractor scams do. While there are sometimes unexpected complications that will require more funds — such as a part of your house not being up to code upon closer investigation — you should always be wary of additional costs. If they're going way over their estimate, adding on random charges (payments for deliveries, materials, permits, or work that wasn't outlined in your contract or estimate), or continuously finding more things that need to be fixed at high dollar amounts, you may be getting scammed.

Perhaps the biggest red flag in terms of money is if they ask for cash only. Dealing exclusively in cash is rather risky; you should get a signed receipt for your transactions, or better yet, a signed affidavit before you hand any of your money over. 

Life happens, and it's understandable when sometimes someone is late, or hard to reach. But when it becomes a pattern, there's cause for an alarm. This especially goes for your home contractor; if they are continuously elusive, it may be time to find someone else to work on your home. Why? According to Realtor Magazine, a contractor constantly arriving late or missing their appointments with you is the red flag that tips off 40% of scammers' potential victims. 

Refusing to answer when you try to communicate with them is another way scammers can try to get away with doing shoddy work or disappearing without doing any work at all. They may send you through an endless loop of emails, texts, and voicemails, stating that one way or the other is the way they can actually be contacted in a timely manner, and then changing their answer to make you feel like the breakdown in communication is your fault. They may not answer your questions in a timely manner to avoid having to give up information that will help you identify them as a scammer or a fraud, or give you evasive answers on progress updates; another red flag that tipped off 25% of potential scam victims. 

You should always have time to think through your answer and take your time in selecting your home contractor. A potential contractor who pressures you to say yes right away is a red flag. This can come in many forms. They may claim some kind of deal or discount that only applies if you say yes in the next few hours, or they may claim that they're only in your area for so long, or perhaps say they don't have time to wait for you to make up your mind because they're in high demand. 17% of contractor scams will use this high-pressure sales tactic, according to Realtor Magazine. 

Contractors who are not local to the area could be "storm chasers" looking to do shoddy repair work in the wake of high demand for home renovation work after natural disasters, or could be looking for another way to give you the slip once they have their money by denying a permanent location. 

Deals can be a red flag, too, and not just in relation to time-pressuring. They may say they have materials left over from a previous job, or tell you they know a lender that you can borrow money from. The latter can lead to a home improvement loan scam, which is another thing to watch out for. 

You don't want your home to be partially cut off to you, especially when a whole home remodel project can take four to six months. Hearing a contractor saying that they can get your project done especially fast may make them a tempting option, but it's important to be realistic. If you have a handful of estimates, and they all claim that the project will take six weeks, and a guy comes along claiming he can do it in one, he may be running the most common contractor scam; doing fast, poor work, and often without a contract. 

A low estimate can be another thing that sounds really good in concept but may often be a lie, as they may significantly increase the cost once the project is already underway or may add or change your subcontractors during the project in order to charge you a higher price. 

If anything your contractor offers you sounds too good to be true, it sadly probably is. Be aware of those looking to take advantage of you by offering you an amazing deal, and if you do happen upon something that sounds good, make sure to get it in writing and added to your contract. 

Similar to having no reliable history is not having a website. It's 2023, and professionals no longer have an excuse for not having a website, even if it's just a small WordPress or company Facebook page. You should be able to look over the services they provide, photos of their work, testimonials, and reviews. Their contact information should be clearly listed and they should be easy to reach — look out for fake emails and phone numbers. Many contractor websites will even list the exact license that the professional carries, which is another good sign.

A lack of a website can indicate a few things. They may not be who they say they are, for one. A website certainly isn't an infallible way to prove that the person you are hiring is who they claim to be, but it's a great start. If they can't show you their past work, and if you can't find any information on them, proceed with caution. 

They may also have only bad reviews and don't want them to be connected to them. Many scammers or shoddy home contractors will be reluctant to share their references, so always do your due diligence. You'll want to look at both old and new reviews to ensure the quality of their work and their current employees. Don't proceed with any deal until you're able to look at the history of their work.

Scammers want you easy to manipulate, and one way they'll do it is by confusing you. They don't want you to be able to think through what they're saying with reason and rationale so that you are unable to make clear decisions. For example, one huge scam that took place in the Fall of 2022 was an antivirus/malware scam during which the scammer would go through a ton of technical jargon in order to confuse their victims and access their bank account information. 

This can also apply when home improvement scammers suddenly add new costs to your estimate. They may say that they need to do something that they didn't previously account for, and that it's going to cost a lot of money, but when you ask what it is and why it needs to be done, you may get hit with a ton of jargon that doesn't make sense to you. No one likes to feel dumb, so often times you may begrudgingly give them the go-ahead. If you do ask for clarification, you may just get more jargon, or worse, they may try to make you feel unintelligent for not understanding or try laugh off your concerns. 

This can happen with contracts, too; always have your lawyer either draw up the contract or carefully read it over so that you are not blindsided by an agreement that you didn't fully understand due to jargon. 

Similarly to having no verifiable history to look into is the scammer who approaches you first. This, again, can be the person who comes right to your door to attempt a sale, but there are other ways that scammers will get in touch with you. 

Getting social media messages or emails from strangers should be a red flag. They may be convincing; some will say they saw something you posted online, which could be true — scammers may look for posts where people are asking about who to hire and attempt to use that as their foot in the door. They may also say that someone sent you their way, especially if they approach you on social media, as they may be able to look into your connections, or that they're a friend of a friend.

Don't trust "contractors" that come to you. Instead, do your research, and get recommendations from people that you know and trust.