How to Avoid Contractor Scams

If you or someone you know was effected by storm damage, please share this article. It offers advice for hiring a contractor that I submitted in August in response to an eLocal poll on this topic, and it’s based on my experience as communications director for a nonprofit homeowner advocacy organization that I co-founded. UPDATE: New advice links added (11/1/2012 )

Wayne Caswell, Modern Health Talk, wins eLocal's Most Articulate Award

Hurricane Sandy slammed into the northeast this week and did lots of damage to homes, so if you need repairs, this article is about how to avoid potential scams.

 Avoid “storm chasers,” those unscrupulous contractors that show up after disasters to prey on people in a hurry to fix their homes. You can recognize them by the magnet signs on their trucks and their temporary offices and phone numbers, and you may also notice yard signs popping up everywhere to promote their services.

• Deal only with local contractors, because if a problem occurs, it’s easier to resolve. Local businesses are also more concerned with protecting their reputation, so make sure they have a physical address and ideally a local address (not a P.O. Box). You can verify that it’s a real address with the Street View feature of Google Maps. One reliable source is the yellow pages since storm chasers won’t be listed there.

Contact the Better Business Bureau to check contractor status, but pay particular attention to how long they’ve been listed with a local address. Storm chasers can register themselves and get a AAA rating until complaints are reported.

Angie’s List is another good reference, because it has both good & bad consumer comments. Although there’s a small membership fee (about $60/year), it’s probably worth it.

Ask your insurance adjuster for contractor references.

Ask your contractor for customer references (and call them).

Ask what State agency regulates the contractors and contact them to make sure the contractor is registered or licensed, whatever the law requires. Promptly report any contractor problems to the State regulatory agency. Note that States like Texas don’t require roofers to have a license, and that leaves consumers with less protection.

Know that local laws often favor builders, remodelers and contractors rather than homeowners (at least here in Texas).

Don’t pay anything up front, not even for materials. It’s common for a contractor to do one good job and then canvas an entire neighborhood referring to the first, getting up-front payments and then disappearing.

Make sure the contractor has workman’s comprehensive and liability insurance.

If you can, require a performance bond since that provides a source for collecting damages if problems or disputes occur, even if the contractor files for bankruptcy protection or skips town.

The written contract defines the rights of each party, so understand your contract and get help from an attorney if you don’t. Avoid contracts with a mandatory binding arbitration clause, since arbitration almost always favors the contractor.

If you’re about to undertake some major home repairs due to storm damage, then also consider remodeling features for aging in place. This website has lots of ideas, and you can search for keywords like “universal design” or “remodeling” or check out our description of certified professionals.

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