Home Owners Beware – Home Improvement Scammers Are Alive and Well!

As a homeowner, you’re liable for everything that happens on your property, including uninsured injuries to your contractor’s crew. You want your contractor covered six ways from Sunday to protect your interests.

If the contractor can’t provide proof of insurance and proof of Workman’s Compensation coverage, look for a different contractor.

Ask for References

Ask the contractor to provide references – people you can talk to about the work the contractor has performed. A professional will have a long list of satisfied customers happy to share their success stories. The fly-by-nights won’t, unless they give you the number of their second cousin once removed.

Call the references and ask them about the work the contractor performed. Was it done quickly? On time? Any glitches? Any surprises? Did they clean up after the work was done? You get the idea. Of course, remember, no contractor is going to give you the telephone number of a dissatisfied customer, but you might pick up a few warning signs from previous customers – things like “They started work each morning at 6:00″ or “They left coffee cups and cigarette butts all over my yard.” Okay, not the end of the world, but an indication of the quality of service you’re likely to receive.

He or she may be a skilled craftsperson, but if s/he lacks people skills or a sense of customer service, you may be left with a great job and a bad feeling about the way it was completed. It’s a judgment call, but something worth considering.

Ask to See Examples of the Contractor’s Work

Again, the good ones will be proud to strut their stuff and show you just how good they are. Of course, it’s unlikely that total strangers will want you walking through their homes checking the newly-installed electrical outlets. However, a general contractor, a driveway contractor, a painting company or landscaper should be able to provide addresses of homes where work has been completed to the homeowner’s satisfaction. Drive by and have a look.

Get at least three estimates. Another common sense tip, but some words of warning.

Don’t necessarily go with the low-ball estimate. Use it as one more piece of information. If the lowest is also the most professional and has a pile of references, fine. The thing is, you may spend a few more dollars to get the best quality work, but the money will soon be forgotten. The work won’t.

Another cautionary note: if two of the estimates are close and one is much higher or much lower, the odd one out should be eliminated. The contractor either missed the project parameters (which will cost you more money) or he’s low-balling the estimate, only to ‘discover’ unseen damage that’ll cost you plenty.

Review your insurance policies at least once a year.Reading over an insurance policy has all the appeal of a trip to the dentist. Okay, it’s not fun – but it is necessary to protect yourself and your home. Let’s say you carry full replacement coverage on your most valuable asset – your home. Good for you. Now, let’s say you put on a $50,000 addition to your $200,000 house. If you’re like most people, you won’t remember to contact your insurance company to let them know about this increase in replacement value. And, if you don’t? Well, it’s not covered in the event of loss.

Any insurer bases its annual premiums on certain givens – the facts. So, if you initially sign-up to cover 2000 square feet, but your addition adds another 500 square feet to the structure, your insurance company won’t pay the whole claim when you’re faced with a catastrophic loss. If you’re planning to have work done on the old homestead, up your coverage for homeowner’s liability. Once again, if a worker is seriously injured while replacing your roof, you may be facing a lawsuit even though the contractor has his or her own insurance coverage.

As you make improvements to your home, make sure to up your coverage. If you swap out old, drafty windows for highly-efficient replacements, the value of your home has increased accordingly. Your insurance coverage should, too.

Read the contract until you understand it.I’ve talked about the importance of reading the contract between you and the home improvement specialist, but let’s get into some specifics. Again, it may not be the most exciting thing you’ll do today, but it will save you headaches, heartaches and cash, so forge ahead.

Read the entire contract including the fine print – especially the fine print.

Pull out the magnifying glass and review everything. If you don’t understand a clause in the contract, ask the contractor for clarification. If you still don’t understand, ask for further clarification. Never feel stupid for asking questions and demanding understandable answers. Even the legal eagles have trouble with some of this stuff

If it’s a contract for a big, expensive project, pay your attorney to review the paperwork. It’ll cost you a few dollars, but could save you thousands! And isn’t your peace of mind worth it?

If you’re reading a contract for a large project, as in a large pile of your cash, have your attorney read over the document with an eye for problem areas. It’ll cost a few hundred bucks for the legal read, but (1) it could save you thousands and (2) isn’t your peace of mind worth $250? Mine is.

If money’s tight, ask a knowledgeable relative to give the document a careful read-through. The point is, don’t sign a contract for a large job without at least one other set of eyeballs reading through all of that legalese.

As I said earlier, never a sign a contract that contains blank spaces that’ll be filled in “back at the office”. Signing an incomplete contract is like giving a total stranger your ATM PIN. Numbers can be fudged, clauses added – the fact is, when you sign an open contract, you really don’t know what you’re signing.

You want a contract that lists the stages at which additional payments will be made to the contractor. These interim payments shouldn’t be tied to dates on the calendar. Instead, they should be tied to work milestones.

Let’s say you’ve got a contract that states you’ll pay the contractor a second $10,000 on July 23 – 30 days from now. Well, where’s the incentive to work on your project rather than another one? The contactor knows she gets another $10k on the 23rd whether work has been done on your project or not. On the other hand, if the contract states that the contractor receives that $10,000 payment when the framing is done, now there’s incentive to get the framing done. Tie your payments to work milestones rather than calendar dates.

Never, ever sign a contract under pressure from a sales rep or contractor.

The high-pressure tactics are common with scammers, but even some legit contractors will tell you to sign today or you’ll miss out on our “low, low rates.” Here’s my rule of thumb: if it’s a good deal today, it’ll be a good deal tomorrow and if it isn’t, it wasn’t a good deal to begin with.

Always remember “There is no deal you can’t walk away from.”

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