With so many aspects of a home remodel or repair to consider, one thing homeowners may overlook is the potential for a contractor to scam them. These scams can come in different forms, such as overcharging for work or materials, poor quality or incomplete work, or even accepting payment and then disappearing without starting any work.
Experts in the construction industry have found that six percent of the industry’s annual revenue is lost to fraud. With the U.S. construction industry’s annual revenue at approximately $1.2 trillion, that means that $72 billion is lost to the many contractor scams that occur each year.
Thirty-seven percent of these construction fraud cases were found to be billing and accounts payable-related scams, while 42% of all construction fraud involves corruption such as kickbacks, bid-rigging, bribery, etc.
What can consumers do to protect themselves from falling victim to one of these roofing scams? RoofClaim.com has created a guide to how to identify and avoid contractor scams. It covers the red flags, as well as green flags, to look for when selecting a contractor, and it takes you through the entire process of working with a contractor, from before work starts to after the project has been completed.
In the unfortunate event that a homeowner has fallen victim to contractor fraud, there’s a section that covers the steps they would need to take to either recover their lost funds or get the contractor to complete the work that was agreed upon.
By following these tips from RoofClaim, scam avoidance is possible. With our help, you can find the right contractor for your project!
How to Identify a Contractor Scam
When you’re hiring a contractor to complete a project for you, there are a variety of common warning signs to keep an eye out for.
One of the biggest red flags is when a contractor approaches you first trying to offer their repair services for a part of your home that they claim is damaged. This is a big red flag because to truly know how your roof needs to be repaired a thorough inspection needs to be done. Never pay a roofing contractor for a repair without a roof inspection and contacting your insurance company first.
Below is a list of more red flags to be aware of when being approached by or finding a contractor.
Contractor Scam Warning Signs
Goes door to door looking for business without credentials
Pressures you to decide immediately
Accepts only cash or asks for a large deposit
Offers a “special” rate if paid all in cash or if you immediately sign the agreement
Bid comes in far below others
Offers “leftover” materials at a discounted rate
Unable to verify a physical office
Asks you to get the required permits
Has no references to provide
Can’t provide a license or insurance
A majority of the red flags will pop up when you first meet with a contractor, and these warning signs shouldn't be taken lightly, according to RoofClaim.com.
Scams can occur while the project is being completed as well, including problems like an unusually close relationship between the contractor and a vendor or subcontractor, which could lead to kickbacks or bid-rigging. Another sign to watch out for is the contractor’s unwillingness to share duties with others working on the project or insistence on maintaining most of the control.
We cover more on what to do to protect yourself from fraud during the project later on.
The Most Common Contractor Scams
While contractor scams are not limited to a certain area of the home, there are some parts of the home that are more susceptible to these types of scams. They tend to involve repairs to the exterior of the home, in areas where the homeowner would have difficulty seeing the damage for themselves.
In some cases, the contractor has been found to have created the damage themselves when inspecting that part of the home or another close to it.
One example of this is a contractor checking the roof for damage when they remove bricks from the chimney, causing more damage that will need repairs they can then charge for.
What other common forms of contractor fraud should you be wary of? Below is a list of the most commonly reported types.
Driveway Sealing: Contractors will offer a large discount to seal the driveway, but the material they use to do the job looks good at first but wears off in just a few months.
Roof Repair: Contractors will offer to hot tar the roof for a heavily discounted price, but the materials used will be of lower quality and cause the roof to leak once it rains. These scams are usually offered during the dry season, so by the time the homeowner has noticed that their roof work was done incorrectly, the contractor is long gone.
Chimney Repair: There are multiple methods contractors use in a chimney repair scam. One scam includes contractors offering chimney cleanings at a reduced rate, then removing bricks to make the chimney look damaged or in a state of decay. Another scam is to say that they noticed a threat of carbon monoxide poisoning if the chimney is not repaired immediately.
Furnace Repair: After the contractor has inspected the furnace, they may claim that it is leaking dangerous gases and could explode soon or that the furnace is too small or needs a lot of work done. If this happens, have the utility company come out to inspect your system.
Storm-Chasing: This type of contractor scam occurs after a large storm has passed through an area and caused a lot of damage, especially to roofs. Storm-chasers will demand payment upfront or cash in on your homeowners’ insurance and then leave you with unfinished or shoddy work.
How to Find a Reputable Contractor
With so much contractor fraud in the construction industry, it may seem like an overwhelming task to find a contractor you can actually trust, but there are steps you can take to protect yourself and find the best contractor for the job.
One of our missions at RoofClaim.com is to connect people with roofing contractors that homeowners can trust with their roofing repairs, and so we vet all of the professionals in our network to ensure that we can recommend them without reservations.
We know that the process of finding and vetting a contractor will involve some legwork on a homeowner’s end, but working with a contractor you can trust is well worth it in the end. Follow these tips to find a contractor in your area:
Look for a contractor who owns or works with a long-established company.
Check with local trade organizations for leads on a reputable company.
Ask your friends and neighbors for recommendations.
Be sure to find a contractor that specializes in the work you need done for the best outcome.
Once you have narrowed down your selection of contractors, make sure to do a thorough vetting of any contractor you’re considering. You can find a list of the necessary steps to take when vetting a contractor below.
Steps to Take When Vetting a Contractor
Check public reviews such as "Google".
Ask for material supplier references; reputable contractors tend to work with their suppliers for a long time. A contractor-supplier relationship that is only a few months old could be a red flag.
Contact their references, and ask to inspect the contractor’s work if possible.
Find the licensing requirements for your area and do a contractor license check to make sure the contractor’s license is current. Look through the general contractor license requirements by state to see what sort of license a general contractor in your state would need to legally perform the work.
Also check with your local business licensing office to make sure that their license is valid and they’re not using another contractor’s number; this is a common scam some contractors have been known to pull.
Do a thorough search for complaints against the business through places like the BBB, local or nearby community boards, or an online search of the contractor and their business name.
How to Protect Yourself From Contractor Scams During the Project
Now that you’ve taken all of the right steps to find and vet a reputable contractor, don’t let your guard down just yet. This process isn’t a 100% guarantee that you won’t fall victim to a contractor scam, but taking these necessary steps can greatly lessen that chance.
Contractor scams can still occur while the remodel or home repair is taking place, but you can better protect yourself while the project is ongoing by following these tips:
It’s important to meet or talk with your contractor daily to keep up to date on the project’s progress, any issues they ran into that day, or anything else that may arise with the project.
Be sure to secure your valuables in a safe spot before the project begins so they cannot be taken or damaged during the project.
Keep a daily log of everything that happens on the project site: what was completed, any issues, everyone who worked on-site that day, the weather, etc.
If the contractor increases the price of the project while it’s already underway, do not pay more than what was agreed upon in the contract.
If you discover an issue with the project, first, take pictures to document the problem before discussing it with the contractor. This way, they cannot cover the issue and deny that it happened.
If the contractor blames any structural damage they come across on an outside factor, such as termites or a beam missing, get a second opinion on the cause of the damage before agreeing to any additional work or costs.
Get all changes to the project in writing using a change order form.
After the Contractor Has Completed the Project
The project is now complete, and you’re safe from being scammed by your contractor, right? Not quite. There are still some steps a homeowner will need to take to fully protect themselves once the work has been completed by the contractor.
Check that all of the items on your project punch list have been done.
Do a final inspection of your own, and consider hiring an independent inspector to check over the contractor’s work.
Make sure to have all inspections approved.
Get written approval from the architect that the work was done correctly.
Make sure to have written warranties for materials and workmanship.
Sign all lien waivers or lien releases.
Get proof that all subcontractors and suppliers were paid by the contractor.
Make sure that the job site is clean and clear of any excess tools, equipment, or materials.
Get a final payment affidavit from the contractor.
It is our hope that RoofClaim’s scam avoidance guide will be able to help you through the process of finding, vetting, and working with a contractor you can trust during your next home repair or remodeling project.
For roofing projects, you can also choose to work with RoofClaim.com and let us match you with a vetted local contractor who can handle your roof replacement or repair.