Hiring a questionable contractor may come with risks, experts say

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Hiring a questionable contractor may come with risks, experts say

Hiring a questionable contractor may come with risks, experts say

Visoot Uthairam | Moment | Getty Images

Home repairs and renovations are expensive. To lower costs, 1 in 3 homeowners are willing to hire a contractor with holes in their resume. 

About 33% of surveyed homeowners say they’d consider hiring a contractor with a questionable reputation to save money, according to a new report by Clever Real Estate, a housing data site. 

Generally, homeowners say reputation is the most important factor when hiring a contractor (25%), followed by experience (23%), cost (19%), personal recommendations (13%), availability (11%) and estimated project timeline (10%). Clever polled 1,000 U.S. homeowners mid-August regarding their choices when it comes to renovations. 

That contractor trade-off might end up being more expensive in the long run, experts say. A questionable contractor is “someone who isn’t exactly honest with the price, may be overestimating their skills, doesn’t do high quality work, or simply doesn’t show up for the project,” said Jamie Dunaway-Seale, author of the Clever report.

“That’s someone that you want to potentially avoid,” said Angie Hicks, co-founder of Angi, an online contractor marketplace. “I would rather take someone newer to the industry than someone that has a questionable reputation.”

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The risk of contractor fraud also increases in the aftermath of a natural disaster, said Loretta Worters, a spokeswoman of the Insurance Information Institute.

“A lot of times, these people swoop in, claim they’re going to do something for you, and they take your money and leave,” Worters said. 

The Justice Department and the Consumer Financial Protection Bureau issued a warning to consumers on Wednesday about potential fraud, price gouging and collusive schemes after natural disasters.

“You don’t want to turn a bad situation worse,” Hicks said.

Here’s what to consider when hiring a contractor.

Contractor fraud can fester after natural disasters 

Analysts anticipate that Hurricane Milton could be a “once-in-a-century” storm with the potential to generate record-breaking damage as it makes landfall along Florida’s west coast on Wednesday or early Thursday. 

As homeowners juggle insurance claims and recovery efforts from back-to-back storm aftermaths, one thing to keep in mind is who to hire as a contractor.

You “really need to be careful” about contractor fraud, as you could be “victimized twice by the storm and by the fraudulent person,” Worters said. 

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Roofing is one of the more common trades that you would have to hire for after a hurricane, Hicks said. 

“A roof is something that’s going to last for 20 plus years,” Hicks said. “You want to make sure that you are working with a reputable local company who’s going to stand behind a warranty on that work as well.”

While it’s a really difficult time, it’s important to do the due diligence and make sure the person you’re hiring is certified, experts say.

3 ways to vet a contractor before hiring them

Although most professional contractors are reliable, negative experiences contribute to bad reputations in consumers’ minds, noted Clever in the report.

“A lot of people do have bad experiences, and it makes it harder for the honest ones” in the field, said Dunaway-Seale.

While it can be hard to evaluate contractors, there are a few steps you can take to make sure you’re working with a reputable person, according to experts.

Here are three ways to get started: 

1. Ask for reviews and references

“The first thing you want to do is check [the contractor’s] reputation,” said Hicks. 

If possible, start with professionals who have good reviews: Ask for recommendations from friends and family who had good experiences with a contractor in the past, Dunaway-Seale said. 

From there, look for online reviews and ask for references, experts say. As you start to get estimates, check with references to see how that firm or professional has handled jobs in the past, Hicks said.

Asking a contractor if they’d put you in touch with a prior client can be a litmus test, said Dunaway-Seale. 

“If they’re unwilling to do that, that might be a red flag,” she said. “Maybe they don’t think anyone would recommend them positively.”

2. Check their credentials

Check a contractor’s credentials and licensing to understand if they have the necessary experience to tackle the job, said Hicks.

All professional contractors should be insured and able to show their certificate proving so, according to the National Association of Home Builders. While not all states require licensing, contractors located in states that do require a license should provide a copy, NAHB noted.

The FTC and CFPB offer resources for consumers on how to avoid scams, prepare and respond to natural disasters, and how to handle your finances in such events.

“Sometimes the state insurance department will have a list of different contractors on their website as well,” Worters said. 

3. Watch for warning signs

Early interactions can give you a sense of how the contractor operates, and help you decide if you feel confident giving them your business.

“Are they giving you estimates in writing? Are they detailed? Are payments outlined?” Hicks said. 

It’s really important payments on larger projects are outlined in your estimates and how they will be handled, she said. Typically, upfront payments should not be more than 10 or 20%; you should not be paying a large deposit up front, said Hicks. 

It’s also a good idea to get two or three estimates because it can tell you if you’re having outliers in your pricing, Hicks said. 

“If a deal seems too good to be true, it probably is,” she added.

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