Housing and Community Development Department
Fair Housing - Avoiding Real Estate Scams - Tipoff to Ripoffs
If you are planning a small repair project, like repaving your driveway or a more extensive remodeling project like adding a family room to your home try to look beyond the lowest bid when selecting a contractor. Refrain from considering a contractor's Yellow Page Ad as an assurance of the quality of work you can expect.
From the start, you can eliminate what might be less-than-reputable contractors by considering a list of traits common to rip-off artists. Both the Federal Trade Commission and the Better Business Bureau have found the following list of attempts to be indications that a contractor may not have your best interests in mind:
- Solicits door to door: Be suspicious of contractors who attempt to gain business by visiting door-to-door. Good contractors do not need to drum up business by making "cold calls."
- Offers discounts for finding others customers: Good contractors rely on referrals from satisfied customers or word-of-mouth advertising for a large percentage of their customer base. There is no need to offer a discount in order to bring in more business. A good contractor's work should do the talking!
- Has materials left over from a previous job: It is not your lucky day when a contractor shows up on your doorstep offering a cut-rate price on a project because they have materials left over from a recent job at your neighbor's house or the house just "down the street." This could be a ploy of "fly by night" operators or handyman who are based out-of-state and use their pick-up trucks as their place of business.
- Asks you to get the required building permits: This could be a sign that the contractor is trying to avoid contact with the local city permitting agency. Perhaps he is not licensed or registered, as required by your state or locality. A competent contractor will get all the required and necessary permits before starting work on your project.
- Does not list a business phone number in the local directory: This a definite red flag, it could indicate that the contractor does not have an established local business presence. Or, that he may be relying on a home answering machine to "screen" customer calls.
- Pressures to make an immediate decision: A reputable professional will recognize that you may need time to consider the many factors involved when deciding which contractor to hire. You should always check references. Look into the contractor's standard of work and his professional designations and affiliations; verify his insurance; check to see if he needs a license, and if so, one that is valid; get written estimates from several firms based on identical project specifications, and always contact the Better Business Bureau and the local consumer protection agency to see if they have any additional information for you.
- Asks you to pay for the entire job up-front or demands only cash: Whatever the reason, never pay for the entire project up-front. Payments should be made by credit card or check so that you have a record of payment and can provide proof if necessary. Do not pay anything until after the first day of work, and then pay up to one-third. Make additional payments during the project contingent upon completion or a defined amount of work. Do not make the final payment or sign an affidavit of final release until you are satisfied with the final work and have proof the subcontractors and suppliers have been paid.
- Suggests you borrow from a particular lender: Do not agree to getting financed through your contractor or someone he suggests. Many people have been ripped off when they agreed to use the contractor's suggested lender; signed papers in a rush; only to find out later that they had agreed to a home equity loan at a very high rate of interest with points and fees. Always secure you own financing by shopping around and comparing all available loan terms.
Before doing business with anyone, call the Better Business Bureau at 713-868-9500, press "0" to speak to an operator or go online www.bbbhou.org.