Reghan Winkler: Don’t contract your savings with a scam

June is National Homeownership Month, an opportunity for U.S. residents to reflect on the importance of the home and its role in their lives. According to the U.S. Census Bureau, the median asking price for a home is $319,000.

Becoming a homeowner takes dedication, patience and smart budgeting. For many first-time homebuyers, closing the deal on their purchase is a time of celebration and gratitude. While moving furniture and solidifying paperwork might seem like the biggest obstacle to enjoying their new home, it doesn’t take long before they find their first major home improvement project.

Avoid home improvement scams

Home purchasing is one of consumers’ largest and most significant investments in their lives. It is essential to exercise caution when contracting services for home improvement projects to protect their investment.

In 2021, consumers across the U.S. reported more than $1.1 million lost to home improvement scams to BBB Scam Tracker, with a median of $944 lost per report. Scammers often impersonate well-known or established companies and, after receiving initial payment, will only disappear after even beginning the project. Desperate to establish communication, homeowners contact corporate or local offices for the company, only to learn that the person who sold the job is not an employee.

Home improvement scams often begin with an unsolicited offer from a door-to-door salesperson or an ad posted on social media. While not all door-to-door solicitors are scammers, BBB recommends carefully evaluating any contractor utilizing this method to provide service, especially in the aftermath of damaging storms or other natural disasters.

Some businesses may need more insurance to cover unintentional damage to your home or yard during the project, use sub-quality materials that will not last or lack licensing required to conduct repair or renovation work in your area. Be especially wary of contractors who claim to have been working in the area and have leftover material they can use to complete your project at a discount.

Tips to contract with confidence

• Receive at least three quotes. BBB strongly recommends that homeowners looking to contract services for any work receive at least three quotes from separate businesses before settling on a final decision. Receiving multiple quotes gives homeowners a solid understanding of pricing and services. It contributes to their ability to converse with their chosen contractor about the project’s price. Homeowners who take the time to interview multiple companies before deciding who to contract can be confident that they are not overpaying for services.

• Never pay the total project cost upfront. Even if the contractor offers a significant discount for paying the project’s total cost upfront, BBB always recommends staggering payments throughout the length of the project. Staggering payments allows the homeowner to inspect the work at specific milestones, ensuring that the work is completed to their satisfaction before releasing the next payment installment.

Homeowners should avoid contractors practicing aggressive tactics or insisting on receiving full payment before beginning the project, and most deposits should range between 10-30% of the total project cost. Some contractors may require a more significant down payment due to the price of materials or other communicated issues. Still, homeowners should avoid contractors who ask for more than half of the total project cost upfront.

• Understand licensing requirements. Depending on the type of work the homeowner wants, state or local regulatory agencies may require different licensing. In those industries that typically require licenses (electricians, HVAC, plumbers, pesticide applicators, etc.), spend the time to double-check that the license is valid with the applicable agency. The contractor should be forthcoming in describing how the homeowner can verify the active license. Remember that the homeowner may be held liable for work completed by an unlicensed contractor who does not comply with building codes or results in property damage.

• Be wary of ‘too good to be true” deals. As is common in any marketplace transaction, critically evaluate any deal that seems too good to be true. Trust in your intuition and have a basic understanding of the standard cost of the project by receiving multiple quotes. Offering goods and services at steep discounts for a ‘limited time” is a common tactic of scammers and con artists to encourage consumers to make immediate decisions before verifying the business’s or individual’s legitimacy.

For more information call your BBB at 419-223-7010 or email [email protected].

Reghan Winkler is marketing communication director serving Better Business Bureau Toledo and Lima.