Home sellers often need to hire contractors for repairs, renovations, or even major remodels, especially in the wake of a major natural disaster like a hurricane or tornado. It’s in these situations especially that homeowners are susceptible to a contractor scam. For example, contractor scammers bilked people in New Jersey out of millions after the passage of Hurricane Sandy. But you can protect yourself if you know what to look for and how to hire reputable contractors. Let’s see, then, how to avoid a contractor scam in Metro Detroit .
Contractor Scam Red Flags
The first component of avoiding a contractor scam in Metro Detroit is knowing the warning signs and red flags to be on the lookout for. Most scams start with a phone call or knock on the door out of the blue. Typically, legitimate contractors contact you only after you first reach out to them. Additional red flags include:
- Driving vehicles with out-of-state license plates
- Not having a local address, just a P.O. box or even a hotel address
- Demanding payment or a cash deposit up front
- Driving vehicles without a company name and/or logo on them
- Being on any of a number of law enforcement lists
Do be aware, however, that just because a contractor is from out of state, she isn’t necessarily seeking to perpetrate a scam. But you have to make sure. Below are some to things you can do to make sure the contractor is reputable and so avoid any contractor scam.
Check Licenses, Insurance, and Bonding
In many states, contractors – from plumbers to electricians to roofers– are required to have state and local licenses. Before you do anything else, you should ask to see these licenses and any pertinent supporting documentation. Industry experts advise jotting down license numbers and calling “the appropriate licensing authority to make sure the contractor is legitimate.”
In addition, contractors should carry insurance to cover any damages (which your own homeowner’s insurance typically won’t cover if the contractor isn’t insured). So be sure to get proof of insurance. This will help you avoid a contractor scam in Metro Detroit because it’s just a matter of course for reputable contractors to carry such insurance. Another way to avoid becoming a victim of a contractor scam is to check the contractor’s reviews on reputable third-party review sites. And don’t forget to check out her Better Business Bureau rating.
Demand Four References
It’s fairly standard practice for contractors (and many other professional service providers) to be ready to produce three references. But don’t stop there – demand four references. Here’s what a top insurance source suggests with respect to the fourth reference: “request they provide someone who had to call them back to fix a problem with the contractor’s work. If the individual can say the contractor fixed the problem to his satisfaction, then you have a good idea of what kind of work he does and whether he follows up until the homeowner is satisfied.” A legitimate contractor who really wants your business will go the extra mile to provide that fourth reference.
Get Written Estimates
Another way to avoid a contractor scam in Metro Detroit is by getting written estimates, never just a verbal one. In addition, that written estimate should be on company letterhead with all the standard pieces in place, such as company name, logo, and contact information.
The written estimate should also be detailed and itemized, listing all the repairs or segments of the work and prices for each one. The estimate should clearly state how much of the bill is for labor and how much for materials. In addition, it’s standard practice for bids and estimates to come free of charge. If the contractor can’t or won’t provide such an estimate, then look out.
Have a Signed Contract in Place
If all of the above things check out and you’ve decided to go with a particular contractor, then the next essential step to avoid a contractor scam in Metro Detroit is to get a signed contract in place. In fact, any legitimate contractor will be eager to have a signed contract.
Make sure the contract is filled out correctly and fully with no blank spaces that an unscrupulous contract could fill in later – to your detriment. And if you find any of the language in the contract dubious or unclear or ambiguous, don’t sign. Tell the contractor you want time to review it further and think about it. If this makes the contractor nervous or if she balks at this idea, there’s a red flag.
Consult Your Agent
An additional precaution you can take to avoid a contractor scam in Metro Detroit is to consult you experienced real estate agent. While your agent can’t recommend or reject contractors, she does have knowledge of this kind of work – how much it costs, how long it should take, and so on. Our agents can provide this kind of valuable assistance.