tip - don't put large home improvement projects on credit cards.
credit card rates and payments are high, they are not tax deductible and you may be
spending without a plan.
to use a home
improvement loan, they are
available as either first or second mortgages
More Improvement Tips
Home repairs often cost thousands of dollars and
are the subject of frequent complaints. Select from among several well
established, licensed contractors who have submitted written, fixed-price bids
for the work.
Do not sign any contract that requires full
payment before satisfactory completion of the work.
Whether youíre planning an
addition for a growing family or simply getting new storm windows, finding a
competent and reliable contractor is the first step to a successful and
satisfying home improvement project.
Your home may be your most valuable financial
asset. Thatís why itís important to be cautious when you hire someone to
work on it. Home improvement and repair and maintenance contractors often
advertise in newspapers, the Yellow Pages, and on the radio and TV. However,
donít consider an ad an indication of the quality of a contractorís work.
Your best bet is a reality check from those in the know: friends, neighbors,
or co-workers who have had improvement work done. Get written estimates from
several firms. Ask for explanations for price variations. Donít
automatically choose the lowest bidder.
Depending on the size and complexity of your project, you may choose to
work with a number of different professionals:
General Contractors manage all aspects
of your project, including hiring and supervising subcontractors, getting
building permits, and scheduling inspections. They also work with architects
Speciality Contractors install
particular products, such as cabinets and bathroom fixtures.
Architects design homes, additions,
and major renovations. If your project includes structural changes, you may
want to hire an architect who specializes in home remodeling.
Designers have expertise in specific
areas of the home, such as kitchens and baths.
Design/Build Contractors provide
one-stop service. They see your project through from start to finish. Some
firms have architects on staff; others use certified designers.
Donít Get Nailed
Not all contractors operate within the law. Here are some tip-offs to
potential rip-offs. A less than reputable contractor:
offers you discounts for finding other
just happens to have materials left over from
a previous job;
only accepts cash payments;
asks you to get the required building
does not list a business number in the local
tells you your job will be a
pressures you for an immediate decision;
offers exceptionally long guarantees;
asks you to pay for the entire job up-front;
suggests that you borrow money from a lender
the contractor knows. If youíre not careful, you could lose your home
through a home improvement loan scam.
Hiring a Contractor
Interview each contractor youíre considering. Here are some questions
How long have you been in business?
Look for a well established company and check it out with consumer protection
officials. They can tell you if there are unresolved consumer complaints on
file. One caveat: No record of complaints against a particular contractor
doesnít necessarily mean no previous consumer problems. It may be that
problems exist, but have not yet been reported, or that the contractor is
doing business under several different names.
Are you licensed and registered with the
state? While most states license electrical and plumbing contractors, only
36 states have some type of licensing and registration statutes affecting
contractors, remodelers, and/or specialty contractors. The licensing can range
from simple registration to a detailed qualification process. Also, the
licensing requirements in one locality may be different from the requirements
in the rest of the state. Check with your local building department or
consumer protection agency to find out about licensing requirements in your
area. If your state has licensing laws, ask to see the contractorís license.
Make sure itís current.
How many projects like mine have you
completed in the last year? Ask for a list. This will help you determine
how familiar the contractor is with your type of project.
Will my project require a permit? Most
states and localities require permits for building projects, even for simple
jobs like decks. A competent contractor will get all the necessary permits
before starting work on your project. Be suspicious if the contractor asks you
to get the permit(s). It could mean that the contractor is not licensed or
registered, as required by your state or locality.
May I have a list of references? The
contractor should be able to give you the names, addresses, and phone numbers
of at least three clients who have projects similar to yours. Ask each how
long ago the project was completed and if you can see it. Also, tell the
contractor that youíd like to visit jobs in progress.
Will you be using subcontractors on this
project? If yes, ask to meet them, and make sure they have current
insurance coverage and licenses, if required. Also ask them if they were paid
on time by this contractor. A "mechanicís lien" could be placed on
your home if your contractor fails to pay the subcontractors and suppliers on
your project. That means the subcontractors and suppliers could go to court to
force you to sell your home to satisfy their unpaid bills from your project.
Protect yourself by asking the contractor, and every subcontractor and
supplier, for a lien release or lien waiver.
What types of insurance do you carry? Contractors
should have personal liability, workerís compensation, and property damage
coverage. Ask for copies of insurance certificates, and make sure theyíre
current. Avoid doing business with contractors who donít carry the
appropriate insurance. Otherwise, youíll be held liable for any injuries and
damages that occur during the project.
Talk with some of the remodelerís former customers. They can help
you decide if a particular contractor is right for you. You may want to ask:
Can I visit your home to see the completed
Were you satisfied with the project? Was it
completed on time?
Did the contractor keep you informed about
the status of the project, and any problems along the way?
Were there unexpected costs? If so, what were
Did workers show up on time? Did they clean
up after finishing the job?
Would you recommend the contractor?
Would you use the contractor again?
You have several payment options for most home improvement and
maintenance and repair projects. For example, you can get your own loan or ask
the contractor to arrange financing for larger projects. For smaller projects,
you may want to pay by check or credit card. Avoid paying cash. Whatever
option you choose, be sure you have a reasonable payment schedule and a fair
interest rate. Here are some additional tips:
Try to limit your down payment. Some state
laws limit the amount of money a contractor can request as a down payment.
Contact your state or local consumer agency to find out what the law is in
Try to make payments during the project
contingent upon completion of a defined amount of work. This way, if the work
is not proceeding according to schedule, the payments also are delayed.
Donít make the final payment or sign an
affidavit of final release until you are satisfied with the work and know that
the subcontractors and suppliers have been paid. Lien laws in your state may
allow subcontractors and/or suppliers to file a mechanicís lien against your
home to satisfy their unpaid bills. Contact your local consumer agency for an
explanation of lien laws where you live.
Some state or local laws limit the amount by
which the final bill can exceed the estimate, unless you have approved the
increase. Check with your local consumer agency.
If you have a problem with merchandise or
services that you charged to a credit card, and you have made a good faith
effort to work out the problem with the seller, you have the right to withhold
from the card issuer payment for the merchandise or services. You can withhold
payment up to the amount of credit outstanding for the purchase, plus any
finance or related charges.
Improvement" Loan Scam
A contractor calls or knocks on your door and offers to install a new
roof or remodel your kitchen at a price that sounds reasonable. You tell him
youíre interested, but canít afford it. He tells you itís no problem, he
can arrange financing through a lender he knows. You agree to the project, and
the contractor begins work. At some point after the contractor begins, you are
asked to sign a lot of papers. The papers may be blank or the lender may rush
you to sign before you have time to read what youíve been given to sign. You
sign the papers. Later, you realize that the papers you signed are a home
equity loan. The interest rate, points and fees seem very high. To make
matters worse, the work on your home isnít done right or hasnít been
completed, and the contractor, who may have been paid by the lender, has
little interest in completing the work to your satisfaction.
You can protect yourself from inappropriate
lending practices. Hereís how.
Agree to a home equity loan if you donít
have enough money to make the monthly payments.
Sign any document you havenít read or any
document that has blank spaces to be filled in after you sign.
Let anyone pressure you into signing any
Deed your property to anyone. First consult
an attorney, a knowledgeable family member, or someone else you trust.
Agree to financing through your contractor
without shopping around and comparing loan terms.
Getting a Written
Contract requirements vary by state. Even if your state does not
require a written agreement, ask for one. A contract spells out the who, what,
where, when, and cost of your project. The agreement should be clear, concise
and complete. Before you sign a contract, make sure it contains:
The contractorís name, address, phone, and
license number, if required.
The payment schedule for the contractor,
subcontractors and suppliers.
An estimated start and completion date.
The contractorís obligation to obtain all
How change orders will be handled. A change
orderócommon on most remodeling jobsóis a written authorization to the
contractor to make a change or addition to the work described in the original
contract. It could affect the projectís cost and schedule. Remodelers often
require payment for change orders before work begins.
A detailed list of all materials including
color, model, size, brand name, and product.
Warranties covering materials and
workmanship. The names and addresses of the parties honoring the
warrantiesócontractor, distributor or manufacturerómust be identified. The
length of the warranty period and any limitations also should be spelled out.
What the contractor will and will not do. For
example, is site clean-up and trash hauling included in the price? Ask for a
"broom clause." It makes the contractor responsible for all clean-up
work, including spills and stains.
Oral promises also should be added to the
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 sellerís permanent place of business. During the
sales transaction, the salesperson (contractor) must give you two copies of a
cancellation form (one to keep and one to send back to the company) and a copy
of your contract or receipt. The contract or receipt must be dated, show the
name and address of the seller, and explain your right to cancel.
Keep all paperwork related to your project in one place. This includes
copies of the contract, change orders and correspondence with your home
improvement professionals. Keep a log or journal of all phone calls,
conversations and activities. You also might want to take photographs as the
job progresses. These records are especially important if you have problems
with your projectóduring or after construction.
Completing the Job:
Before you sign off and make the final payment, use this checklist to
make sure the job is complete. Check
All work meets the standards spelled out in
You have written warranties for materials and
You have proof that all subcontractors and
suppliers have been paid.
The job site has been cleaned up and cleared
of excess materials, tools and equipment.
You have inspected and approved the completed
Where to Complain
If you have a problem with your home improvement project, first try to
resolve it with the contractor. Many disputes can be resolved at this level.
Follow any phone conversations with a letter you send by certified mail.
Request a return receipt. Thatís your proof that the company received your
letter. Keep a copy for your files.
If you canít get satisfaction, consider
contacting the following organizations for further information and help:
State and local consumer protection offices.
Your state or local Builders Association
and/or Remodelors Council.
Your local Better Business Bureau.
Action line and consumer reporters. Check
with your local newspaper, TV, and radio stations for contacts.
Local dispute resolution programs.
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