Good building contractors are worth their weight in gold for both homeowners and real estate investors! They'll do the necessary work for you at a fair price and make your property look great, thus increasing its value! Moreover, if you're an investor and you establish long-term relationships with reliable contractors, you may well receive a discount on their services, saving money in the long run. Bad contractors, on the other hand, can cost you dearly, not only in terms of money but (for investors) in terms of reputation as well. Scam artists like to prey on homeowners, in particular. They use shoddy materials, find endless ways to charge money, leave jobs unfinished and on and on.
Obviously, whether you're a homeowner or a real estate investor, you want to avoid bad contractors at all costs. So, here are some common-sense guidelines to help you choose quality individuals or companies. Guideline 1: Make sure the contractors are licensed, bonded and insured by the state. Also, check with the Better Business Bureau. Guideline 2: Ask for at least three references, then contact those references and ask for their opinion of the work done by the contractor. Also, ask if you can view the results.
Guideline 3: Ask around! If you're an investor, check with other investors about contractors. If you're a home owner, check with neighbors and ask to see the work done by contractors on their homes. Guideline 4: Ask for bids or proposals from contractors and evaluate them carefully.
Price is a consideration, of course, but it shouldn't be the sole criteria in accepting a bid. You want quality work delivered at a fair price. Contractors to Avoid Con artists are endlessly inventive at scamming people out of their money. Nevertheless, here are some common contractor scams to be aware of. (Most scams are aimed at homeowners, but investors also need to be alert to other, more sophisticated scams.) Scam Tactic #1: The contractor explains a low price by stating the material is left over from another job.
He or she begins the work and everything looks good. But then, he says he requires additional money to buy more materials. Once you provide the money, he disappears, and you're left with an unfinished job on your hands and empty pockets. Scam Tactic #2: The contractor asks for all the money upfront.
Once he has it, he disappears. You can avoid this scam by paying the contractor only for each step as it's completed. Scam Tactic #3: The contractor quotes you a low price for construction or repair and then uses substandard materials to get the job done. Use a local building inspector's services to prevent or identify this kind of fraud.
Scam Tactic #4: The contractor charges you a fee to do a job inspection and the writing up of an estimate. He tells you the fee will apply to the cost of the work. Once you pay the fee, he never comes back. Reputable contractors don't charge for inspections or estimates.
Scam Tactic #5: The contractor "low balls" you. That is, he quotes a very low price for the work, does it, and then hits you with a bill far beyond the original quote. If you protest, he becomes belligerent and claims you didn't read the contract right and often bullies you with the threat of legal action. So, to prevent this fraud, get a contract in writing before work begins and make sure it clearly spells out the works to be done; e.g.
specific steps and costs, timelines, dates, etc. Key Point: Use common sense when selecting contractors. Follow the old adage—if the proposal sounds too good to be true, then it probably is!.
Jack Sternberg is a nationally recognized expert on real estate investment who's been in the business for more than 30 years. Sternberg's deals have totaled over $750 million and he's been to the closing table more than 1,500 times. For more, visit http://www.askjacksternberg.com
