How to Avoid Being Swindled by a General Contractor
As an executive in the construction industry, I have witnessed some shady dealings and have seen how some contractors try to swindle clients. I find this offensive on so many different levels. There is no reason to be dishonest, it always comes back to bite you where the flesh is tender, it hurts others, ruins one’s reputation and soon ruins one’s entire business.
I have consistently found that honest dealings with clients have expanded our business and created long-lasting friendships.
Plus, I firmly believe in the reaping of what one sows adage, and that what goes around comes around.
I don’t know about you, but I much prefer to create a happy and enjoyable future, than one where I have no friends, my reputation (if I have any left) is in tatters, and where I am possibly facing some bad-tempered magistrate.
Our general contractor (GC) ran across yet another dishonest contractor this morning and came back to the office in quite a state, and so decided that I needed to do a bit more, use my knowledge to warn unsuspecting homeowners. Someone warned me that I might make more enemies than friends in my business. I don’t believe that for a second for I know many more honest people than dishonest ones, and if the later decide to dislike me I would tend to think that I have successfully forewarned some homeowners and save someone a heartache and money.
There are several ways that a dishonest contractor can try to swindle you.
1- Give the home owner a very low ball estimate.
A perfect example of this is the story of this morning I referred to earlier. We had turned in an estimate for building a kitchenette in an unfinished basement. The homeowner told our GC she was absolutely stunned that our estimate was three times higher than that of another contractor’s.
Let me just say that there is absolutely no way to do this job for a third of the price we gave her. Included in our estimate for a kitchenette were demolition of an existing room, framing the walls, rough and finish electrical, plumbing, HVAC including all the fixtures, insulation on exterior walls, drywall, paint, tile floor, tile backsplash, kitchen cabinets and an island, granite tops, all appliances, labor and material for all listed. You get the idea.
But this “low balling” is not a new tactic. Its purpose is to get the job and then start adding cost while the job is going on, claiming unforeseen expenses, change orders or situations.
Once a homeowner finds himself in the middle of a project it is very hard to fire an existing contractor and take the time to find a new one.
Solution: When you see a large price discrepancy between two estimates get a couple more bids. This will give you a very good idea of what the job should cost. There is absolutely no doubt that every project must factor unforeseen circumstances, i.e., mold is found in the walls during demolition, the house is old and electrical wiring is not up to code, previous work is shoddy and isn’t known until looked at newly. The list is unfortunately long. But more often than not an estimate can give you a very good idea of what the cost will be.
2- Not paying the sub-contractors and keeping the money.
While this scenario may not be as prevalent as the first one described, it does occur. The general contractor hires sub-contractors and keeps all the money for himself. This leaves the homeowner holding the bag and liens get filed against the house. It can result in costly and drawn out legal battles, and stress levels going out the roof.
Solution: Ask your contractor for a few references of previous clients. Find out if there are any complaints filed against him with the licensing department of your state.
3- Outrageous remodeling estimate.
This unethical practice is used by contractor who seek out clients who have no idea of construction costs. This method doesn’t work with most people, but it is done enough to be lucrative for some companies, similarly to a car mechanic swindling someone who knows nothing of car repair.
Solution: get more than one estimate.
4- “The friend and family discount”.
The work is offered to be done on off-hours and weekend as a favor and at a reduced price by someone who is not licensed or insured. Under this scenario, rest assured that no permits will be pulled and no inspections will be done. Beside the fact that this practice is outright illegal, it hits the safety issue directly, electrical is shoddy and is a fire hazard, plumbing is sub-standard and results in pipes breaking and flooding, to name but a couple of possible ramifications. This can also negatively affect the resale of your home and drive down the value of the property.
Solution: Hire a licensed and insured contractor with a good reputation. It takes very little time to look your contractor up on the internet and contact the licensing department of your state to find out if the company is duly registered and if any complaints have been filed.
5- Causing damage to create more work.
The unethical contractor damages something in the home and claims that it needs to be repaired at an extra cost.
Solution: Any damage caused by a contractor or a sub-contractor is not your financial responsibility. A contractor is legally expected to fix and pay for any damage caused during the job.
Additional signs that a contractor is dishonest:
1- Refuses to sign a contract
2- Accepts only cash as a form of payment
3- Refuses to give references, or refuses to provide a copy of his license and insurance.
4- Tells you that you will need to pull permits yourself.
Most contractors are law-abiding, decent, and do good work. The few who fall in the category of dishonesty can be avoided by following the above advice.
I wish you an easy and happy experience while remodeling.