Home improvement scams are on the rise, targeting unsuspecting homeowners with fraudulent schemes and shoddy workmanship. It pays to stay informed and vigilant to avoid falling prey to these scams.

So how can you tell if a contractor might not be reputable? According to the Federal Trade Commission, here are some red flags to watch out for:

  • Scammers knock on your door looking for business because they are “in the area.”
  • Scammers say they have materials left over from a previous job.
  • Scammers pressure you for an immediate decision.
  • Scammers ask you to pay for everything up front or only accept cash.
  • Scammers ask you to get any required building permits.
  • Scammers suggest you borrow money from a lender they know.

How to Avoid a Home Improvement Scam

  • Consider only contractors who are licensed and insured. Check with your state or county government to confirm a contractor’s license, and ask the contractor for proof of insurance.
  • Get contractor recommendations from people you know and trust.
  • Check with the local Home Builders Association to see if they have complaints against a contractor. Also search online for the company’s name with words like “scam,” “review,” or “complaint.”
  • Read reviews with a critical eye. Read customer reviews to find out more about the contractor and use online rating websites you trust to see what others are saying about the contractor.
  • Get multiple estimates. A written estimate should include a description of the work to be done, materials, completion date, and the price. Don’t automatically choose the lowest bidder. And ask for an explanation if there’s a big difference among the estimates.
  • Read the contract carefully. Contract requirements vary by state. Even if your state doesn’t require a written agreement, ask for one. Before you sign a contract, make sure it includes:
    • The contractor’s name, address, phone number, and license number
    • An estimated start and completion date
    • Any promises made during conversations or calls related to issues such as the scope of work and the cost of labor and materials
    • A written statement of your right to cancel the contract within three business days, if you signed it in your home or at a location other than the seller’s permanent place of business.

Don’t pay the full amount for the project up front. Some states actually limit the amount of money a contractor can ask for as a down payment. Contact your state or local consumer agency to find out the law in your area. And never make the final payment until the work is done and you’re satisfied with it.