Homeowner construction scams are fraudulent tactics used by dishonest contractors to exploit unsuspecting homeowners. These scams typically occur during home renovation or repair projects and can result in financial loss, unfinished work, or poor-quality construction. Homeowners, especially those unfamiliar with the construction process, are often easy targets because of the large sums of money involved and the trust placed in contractors. By being informed and vigilant, homeowners can better protect themselves from falling victim to these schemes.
Top 10 Homeowner Construction Scams
#1. The “Lowball” Bid
A common scam where contractors offer an incredibly low quote to win the job, only to raise the price later with claims of "unforeseen problems" or hidden costs. They bait homeowners with a seemingly great deal, but the final bill is often much higher than anticipated.
How to Avoid: Always get multiple quotes from different contractors and ask for detailed breakdowns of the costs. Be wary of any bid that seems too good to be true.
#2. Demand for Large Upfront Payments
Some contractors ask for a large percentage of the total project cost upfront, only to disappear or deliver substandard work. In some cases, they may request full payment before any work begins.
How to Avoid: Never pay more than a small deposit before work begins. The industry standard is usually around 10-20% upfront, with payments tied to project milestones.
#3. Unlicensed or Uninsured Contractors
Hiring contractors who aren't properly licensed or insured is risky. These contractors may do shoddy work or leave you without recourse if something goes wrong. In some cases, the homeowner may even be liable for damages or accidents on the property.
How to Avoid: Always check that the contractor is licensed and insured. You can verify their credentials with local authorities or contractor licensing boards.
#4. Disappearing Contractors
A disappearing contractor is one who starts a project, takes a portion of the payment, and then vanishes before completing the work. Homeowners are left with unfinished projects and no way to recover their money.
How to Avoid: Work with established contractors with good reputations. Break payments into milestones and only release funds after inspecting completed work.
#5. Poor Quality Materials or Substitutions
Some contractors may substitute high-quality materials with cheaper alternatives without informing the homeowner. This reduces the project's overall quality and longevity.
How to Avoid: Include detailed material specifications in your contract, and periodically inspect the materials being used during the project.
#6. Verbal Agreements Without Contracts
A scam where contractors rely on verbal agreements, making it easier for them to dispute or ignore commitments. Without a written contract, homeowners have little recourse if the work goes wrong.
How to Avoid: Always get a detailed, written contract that outlines the scope of work, materials, timeline, and payment schedule.
#7. Unnecessary Repairs
Some contractors will suggest extra work that is not required, inflating the final bill. Homeowners who are unfamiliar with construction may agree to these unnecessary repairs, believing they are essential.
How to Avoid: If additional work is recommended, get a second opinion from another professional before agreeing to any changes.
#8. Out-of-the-Blue Doorstep Salespeople
Scammers often show up unsolicited at homeowners' doors, offering deals on home repairs or improvements. These salespeople claim they have leftover materials or that they noticed an issue with the house. In reality, they are often unqualified or seeking to scam homeowners with shoddy work.
How to Avoid: Be wary of any contractor who approaches you uninvited. Do your own research and hire contractors through referrals or reputable sources.
#9. Phony Permits or Code Violations
Contractors may claim that extra permits or fees are required to fix code violations, charging homeowners for fake permits or inflated fees. They might present official-looking paperwork to make the scam seem legitimate.
How to Avoid: Always verify permits and code requirements directly with your local building authority before paying any fees.
#10. “Storm Chasers” Post-Disaster Scams
After a natural disaster, fraudulent contractors, often referred to as “storm chasers,” flood into affected areas offering quick, cheap repairs. They often lack local licenses and provide poor-quality work or disappear after receiving payment.
How to Avoid: Only hire local contractors with established reputations in your community. Be cautious of out-of-town workers who show up after a disaster.
These are some of the most common scams targeting homeowners during construction or renovation projects. By recognizing these red flags and taking proactive steps, you can safeguard your home and finances. Do any of these constructions scams stand out to you as particularly shocking? Cast your vote below about which one you think is the worst.