6 Ways to Avoid Home Improvement Fraud

Beware of possible home improvement scams whenever you need to finance a home improvement project. Remodeling your kitchen or bathroom can invite home improvement fraud if you’re not careful about choosing the right contractor for your home. Below we highlight six ways to recognize and avoid home repair scams.

What Is Home Improvement Fraud?

Home improvement fraud is a scam or deceptive trade practice against a homeowner who agrees to pay for home repair services.

Home improvement fraud can include the following acts:

• Charging high prices for low-quality home repair work

• Accepting payment for a dining room remodeling project and never performing the work

• Manipulating a homeowner into financing unnecessary home repair work

• Misrepresenting yourself as a qualified home repair contractor when you lack the necessary skills or credentials

• Pressuring homeowners to borrow against their equity to finance a bathroom remodeling project they cannot afford

• Price gouging when homeowners need to finance a roof replacement and additional emergency repairs following a natural disaster 

How to Protect Yourself From Home Improvement Fraud

Below we highlight six way you can protect yourself from home improvement scams:

1. Find Licensed and Insured Contractors

If you’d like to remodel your living room, finding licensed and insured contractors to perform the work may protect you from home improvement fraud. 

States may issue home repair contractor licenses to qualified individuals. You may choose to hire licensed home repair contractors who have general liability insurance.

2. Get Referrals

You can get referrals from friends, family, and commercial referral services that can connect you with experienced home repair contractors. 

If someone you trust can vouch for the professionalism of a home repair contractor, such input may help you avoid home repair scams.

3. Check With a Local Home Builders Association

The National Association of Home Builders may have local associations in your home state that can help you find qualified home remodelers. You may research their backgrounds before inquiring about their services.

4. Get Estimates

Getting estimates can help protect you from home improvement fraud. If you have bedroom remodel ideas and want to know how much the project would cost, you may request official estimates. An experienced home remodeler may be happy to give you a quote or estimate.

5. Review Down Payment Amount

Contractors may demand a down payment before performing any home improvement work at your home. The down payment amount may be a flat rate or a percentage of the estimated job cost. You can review the proposed down payment amount to see if it makes sense to you.

You may review whether the down payment amount is fully refundable if the contractor fails to perform the work as promised. You can always cancel the work order if you’re uncomfortable with the contractor’s down payment demands. Never make a down payment if you fear the contractor is attempting to scam you.

6. Review the Contract

Reviewing the contract before signing any documents can help prevent you from becoming a home improvement fraud victim. You can review the terms and conditions to make sure the contract meets your expectations.

Making sure the contract is right for you is a crucial step — one that may help protect you from possible fraud. You can reject any contract that exceeds your home renovation budget.

What Can You Do if You Are a Victim of Home Improvement Fraud?

Whether you own a mansion, bungalow, or tiny home, here are some actions you can take if you’re the victim of home improvement fraud:

Contact the Contractor

You may contact the contractor if you’re unsatisfied with the contractor’s service. The contractor may be willing to offer a partial credit or some other form of relief. 

Unless the contractor flees or goes off the grid, contacting the contractor with a complaint can make a difference if you’re seeking an amicable resolution.

Contact Local Home Association

If you’re a member of a homeowners association, the association may be willing to provide support if you report being the victim of home improvement fraud. Such associations may be sensitive to any activity that negatively impacts the community.

Contact Dispute Resolution Programs

You may contact community dispute resolution programs if you’re the victim of home improvement fraud. You can check whether these programs exist in your state. You may also contact the police if you’re interested in filing a criminal complaint against the parties that defrauded you.

Contact Local Media Networks

You may contact members of the press — local newspapers, online journalists, broadcasters, and mass media — and explain to them how you’ve been defrauded in a home repair scam. Journalists may be willing to report your story to raise awareness on home improvement fraud.

Contact an Attorney

Victims of home improvement fraud may seek relief in the courts. You may contact an attorney if you’re planning to take civil action against a home repair contractor. Hiring an attorney can be costly, so you may consider using a personal loan for legal fees:

• Hiring an attorney and covering the costs of litigation can be one of the reasons to get a personal loan

• The average personal loan interest rate is lower than the average credit card interest rate

• You can get personal loans from banks, credit unions, and private lenders

The Takeaway

Home repair scams can target any homeowner, including seniors and people who have disabilities. Finding trustworthy contractors may help you avoid home improvement fraud.

Lantern by SoFi can help you find personal loan offers to finance home improvement projects. Just provide basic information about yourself and the loan you need, and Lantern can guide you in the process to apply for a personal loan with the lender of your choice.

Compare personal loan interest rates with Lantern.