Contractor Fraud: How to Avoid

Don't fall prey to these common come-ons

Avoiding contractor fraud largely depends on knowing when an offer is just too good to be true. Here are a few of the most common home repair scams and how to avoid them.

Free Inspection.  This is probably the biggest home repair scam around. A contractor advertises a "free, no-obligation" inspection of your home, and shows up all shined and polished and proceeds to conduct the inspection. The result, however, is always the same:

"Mr. and Mrs. Homeowner:
I'm afraid I have some bad news: your house is about to crumble into ruin and you'll need XYZ repair to be done just as soon as possible. Luckily for you, we're running the XYZ Whizbang Special today only, and if you'll just sign here on the dotted line we can get started right away."

Contractor Fraud:  How to AvoidThis approach is common with roofers who always find bad shingles, waterproofing companies that tell you your foundation will collapse if you don't sign up for an overpriced sump pump, and many others.

In New Jersey, a home repair contractor conducting free inspections was recently indicted for fraud. His "game" was to inspect crawl spaces, tell the homeowner he found a big problem that really didn't exist, and then charge for the repair. Since most of his victims were senior citizens, they were never physically able to go into the crawl space to check for themselves.

Always remember the old adage: there's no such thing as a free lunch. Contractors who conduct free inspections are just looking for an excuse to sell you something, whether you need it or not. Next time one comes your way, tell them "no thanks!"

Multiplication: Some home repair companies will offer seemingly great deals just for the privilege of getting into your house to see what other jobs they can stir up. This "multiplies" the number of sales they can make.

Chimney sweeps are really famous for this kind of contractor fraud. They'll offer a $50 chimney cleaning special and almost always find that you need some kind of repair that involves an additional charge. One New Jersey homeowner responded to an ad for a low-cost chimney cleaning only to be told by the contractor that he needed a $3,500 chimney liner. The chimney company told him his house would probably burn down if it wasn't installed right away. Further investigation revealed the liner already existed and was functioning perfectly.

So be wary of any contractor's attempt to "panic peddle" an expensive repair. Always get a second opinion from an impartial source, like a professional home inspector, before authorizing the work.

Limited offers: Remember the old late-night TV commercials that warned "call before midnight tonight"? Salespeople have lots of tricks to make you think that the offer will vanish if you don't make a quick decision. A good deal today will probably be a good deal tomorrow, so don't be bullied into making a rash decision you may later regret.

Apples and oranges: When shopping for any home repair product or service, be careful to always compare apples to apples. Some contractors will offer a cheaper price and switch the product to save money. For example, if you plan to install new windows, decide which brand you'd like to buy and then have all potential installation contractors bid on the same product. Don't be lured in by a seemingly low price; always ask yourself what the contractor could be leaving out.

In-home sales: Some home repair contractors will do just about anything to get into your living room to make a sales pitch. They figure the chances are strong you will make the purchase decision if they stay around long enough.

At a recent trade show for homeowners, I feigned interest in a gutter guard product to test the company's sales pitch. The salesman claimed he couldn't give me a cost estimate for the product until he "saw the job." Even when I pressed him by describing the house as a typical 60-foot-long ranch with a front and rear gutter and four spouts (about the easiest gutter job I could think of), he still wouldn't give me an answer!

To avoid contractor fraud, stay away from companies like these. Prices for basic services should be quotable without the contractor sticking his foot in your door. If you do make a rash purchase decision and have second thoughts, remember that most states have a mandatory three-day "cooling off" period during which you can cancel any home repair contract without obligation.

If you're ever unsure about the need for a repair or the estimate you're given, getting a second opinion from an expert, objective professional like a home inspector can be worth its weight in gold, and a great way to avoid contractor fraud.