Just as we’ve heard from thousands of satisfied homeowners eager to report their positive experiences with our Best Picks, we’ve also heard far too many stories of homeowners cheated by seedy characters who pose as honest and reliable contractors. In many cases, these homeowners could have avoided a home improvement nightmare either by selecting a Best Pick or by detecting some early red flags.

Here at EBSCO Research, we take great pride in the stringent research we conduct. In order to be deemed a Best Pick™, a company must achieve an overall A grade based on over 100 homeowner reviews. Additionally, we verify that each Best Pick company carries state-required insurance and trade licenses. And because companies must requalify each year in order to retain their status, we feel confident recommending them to homeowners.

Warning Sign #1: Shady Sales Tactics

If a contractor just “happens” to be in the neighborhood and notices that your home could use some work, there’s a good chance he’s bad news. He might pull up in an unmarked vehicle, unable to provide a business card (with a verifiable street address) or proof of insurance and proper licensing, and say something like, “I’ve got materials left over from work I did down the street, so I can give you a great deal.” He might offer you a one-time-only price that seems too good to be true—it probably is. He might even resort to scare tactics, suggesting that your roof is only days away from caving in or that your deck is on the verge of collapse. Disreputable home remodeling contractors often use these aggressive sales maneuvers to try and thwart otherwise savvy homeowners from performing a thorough background check on the company or comparing their services to competitors. Don’t fall for their tricks. Any home improvement contractor worth hiring will be happy to allow you time to do some research and consult trusted resources like Home Reports/Best Pick Reports. Particularly for large projects, you should get several bids before signing a contract.

Warning Sign #2: Vague or Incomplete Contracts

Before a single nail is hammered, you should be presented with and consent to a clear and detailed contract. No trustworthy contractor performs work on a verbal agreement or a handshake. Now, unless you’re a lawyer, you can’t be expected to spot all potential red flags in a contract. But there are certain things that a solid home improvement contract should include, and their absence could signify less-than-honorable intentions on behalf of the contractor. First and foremost, the contract needs to clearly lay out all the work that’s to be done and the materials to be used. The language should be fairly specific while allowing for some degree of flexibility as circumstances deem necessary. You should also expect to find a general time frame with estimated completion dates. (Keep in mind that it’s never possible to predict precisely how long a project will take.) Other important considerations involve how the premises will be used. Where will trash and dirt be deposited? Are there neighborhood-designated quiet times during which work shouldn’t be performed? Where will equipment and materials be stored while not in use? You’ll likewise want to ensure that any agreements made concerning warranties or dispute resolution appear somewhere in the contract. And finally, if there are other factors to consider, such as regulatory requirements (permit obtainment and proof of licensing, for example), payment structure (more on that below), or theft and property damage liability, make sure they’re clearly spelled out in the contract before signing the bottom line.

Warning Sign # 3: Questionable Payment Terms

Watch out for home improvement contractors who take the money and run. If a contractor requires full payment up front, you can almost guarantee he’s not the one you want to use. Anything more than 15 percent of the total cost is perhaps questionable; a penny over 33 percent is downright ridiculous (and often prohibited by law, though this varies from state to state). Be wary also of discounts for cash payments. Shady contractors might be trying to skirt tax obligations or compensate their employees under the table. Cash payments also mean there’s no paper trail, which won’t help you a bit if you run into a dispute down the road. You’ll also want to be sure to write checks out to the business and not to the contractor himself. Some have been known to “moonlight” by representing themselves as the company itself, completely unbeknownst to the actual business. You can bet that those individuals don’t personally carry all the required insurance and licensing required to perform the work. What’s more, never trust a contractor who tries to set you up with financing from a questionable lending institution—he’s probably getting some sort of kickback. And lastly, be aware that dishonest contractors often rip you off by significantly marking up the cost of supplies. They buy middle-of-the-road materials and charge you for the very top of the line. This all-too-common practice brings them additional income and provides you with subpar materials. Ask your contractor to keep a detailed record of all project-related expenses and to be ready to show receipts. If nothing else, this lets them know you won’t be duped.


As you can see, there’s a lot to look out for when it comes to hiring a home improvement contractor. Unfortunately, the warning signs above only scrape the surface, as shady contractors are constantly devising new scams and schemes. Stick with a Best Pick, and you can feel confident in your hiring decision.

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Sources: FindLaw; MinneapolisMN.gov; MSN.com—Real Estate.

For more information on our sources, please contact us directly.