How to Avoid Getting Ripped Off By a Contractor

You undoubtedly know someone who has experienced a home renovation horror story: botched repairs by unskilled tradespeople, contractors who take your money and run, costs that run twice as high as expected and timelines that stretch three times longer than planned.

So how do you avoid hiring an unreliable or dishonest contractor or home service pro? How can you prevent being ripped off or scammed? Today, we’re sharing our top tips to help you get the job done while protecting yourself from fraudsters, scammers and bad contractors. Here’s how to navigate your renovation or home repairs with confidence:

1. Do Your Research

Before hiring a contractor or tradesperson, research, research, research!

• Read Reviews: Look for reviews on Google, Yelp, Homestars and the Better Business Bureau (BBB). While no contractor will have a perfect record, consistent praise or complaint patterns can give you insight into their reliability and quality of work.
• Ask your REALTOR: Your real estate agent likely has a list of trusted home services professionals, including electricians, plumbers, painters and roofers, floor installers, handymen, and more.
• Ask Friends and Family: Talk to friends, family, and neighbours who have had similar work done. Personal recommendations can often lead you to trustworthy professionals and help you set realistic expectations.
• Ask for References: Good contractors and tradespeople should easily be able to provide you with references from some of their past clients. Don’t just ask for references – call them! Ask about the good AND the bad parts of their experience. What went particularly well? What didn’t? What issues came up during the renovation and how were they handled? Were you satisfied with their communication? Did the project come in within the expected budget and timeline?

2. Get Multiple Quotes

Don’t settle for the first estimate you receive. Getting multiple quotes serves several purposes:

• Comparative Pricing: Multiple quotes help you understand the going rate for the job and identify any outliers.
• Understanding Scope: Different contractors might provide different details about the scope of work. Comparing these can help you gauge what’s realistic and what might be an upsell.

When getting quotes, ensure they’re detailed and itemized so you can understand exactly what you’re paying for and prevent unexpected costs.

3. Verify Contractor Information

Ensure that you’re dealing with a legitimate business:

• Verify Credentials: Professional contractors and trades in Toronto should have a City of Toronto Trade License and a valid HST number. You can check if someone is a licensed renovator here. The HST number should be indicated on all invoices.
• Business Address and Phone Number: Verify that the contractor has a physical address and a phone number you can call. Avoid contractors who only provide a mobile number or P.O. box.
• Professional Affiliations: Check if the contractor is a member of any professional organizations. For example, if you’re hiring an electrician, you can check if they are licensed by visiting the Electrical Safety Authority website.
• Review Contractor’s Insurance: Your contractor should have liability insurance. You can request a copy of the insurance certificate.

4. Insist on a Written Estimate and Contract

A written contract is essential for protecting yourself and ensuring clarity. It should include:

• Detailed Scope of Work: The contract should outline the specifics of the work to be done, including materials, timelines, and payment schedules.
• Start and Completion Dates: Agree on specific start and completion dates in the contract. This helps manage expectations and ensures that the project stays on track.
• Payment Terms: Don’t ever pay the full amount upfront. A typical payment schedule might involve a deposit and subsequent payments tied to milestones or completion stages.
• Warranties and Guarantees: Ensure the contract includes information about warranties for both labour and materials. This can be crucial if issues arise after the work is completed.
• Cooling-Off Period: Ontario’s Consumer Protection Act allows for a 10-day cooling-off period for goods and services contracts signed in your home, meaning you can change your mind. The 10-day countdown starts when you receive a copy of the signed contract.

5. Be Cautious with High-Pressure Tactics

Beware of contractors who use high-pressure tactics to get you to commit:

• Immediate Decisions: Scammers might insist that you decide on the spot or offer a limited-time discount to pressure you.
• Unsolicited Offers: Be wary of contractors who show up uninvited or offer door-to-door services, especially if they claim to have noticed urgent issues with your home.

Reputable contractors understand the importance of allowing clients to make informed decisions and will provide you with the time and information you need.

6. Understand Payment Methods

Be cautious about how you handle payments:

• Avoid Cash: Pay by check or credit card when possible. These methods provide a record of your transactions and can offer additional protection.
• Verify Receipts: Always ask for and keep receipts for any payments made.

7. Beware of Red Flags

Watch for signs that a contractor might not be reputable:

• Lack of Documentation: If a contractor is unwilling or unable to provide proper documentation, such as licenses or insurance certificates, consider it a red flag.
• Too Good to Be True: Be cautious of bids that are significantly lower than others. While it’s tempting to go with the lowest bid, it might be a sign of subpar materials or workmanship.
• Unrealistic promises: Some contractors make unrealistic promises and set unachievable timelines to win your business. Ensure that what they say is doable within your project’s scope and budget.
• Written Guarantees: Be cautious of guarantees or promises that are not included in the written contract. If it’s not in writing, it’s not enforceable.
• They Want to be Paid in Cash: If they’re trying to rip off the government by avoiding taxes, they might be ripping you off, too.
• Requests for Full Payment Upfront: Reputable contractors will typically ask for a deposit and offer a payment schedule tied to project milestones. Full payment upfront can be a sign of a scam.
• Poor Communication: Difficulty in getting timely responses, lack of clarity in communication, or unprofessional behaviour can indicate problems with reliability and accountability.

Always trust your instincts..your gut feeling is a powerful indicator. If you feel uneasy about a contractor or the terms being offered, it’s okay to walk away and look for someone else. Your comfort and confidence in the person or team you’re hiring is crucial.

8. Secure Your Home

Make sure your home is secure while work is being done:

• Limit Access: Restrict access to areas of your home that don’t need work. This limits the potential for theft or damage.
• Secure Valuables: Keep valuable items and personal documents safely stored away from the work area.

9. Inspect the Work Regularly

Monitoring the work as it progresses helps ensure it meets your expectations and contractual terms. Communicate any concerns or changes in expectations as they arise. When the project is complete, carefully inspect the work before finalizing payment.

10. Keep Records

Maintain detailed records throughout the project. Save copies of all contracts, invoices, and receipts and keep a log of all communications with the contractor, including phone calls, emails and in-person meetings. This documentation will be valuable in case of disputes or issues

By following these practical tips, you can significantly reduce the risk of falling victim to scams or being taken advantage of by home services contractors. Proper research, clear communication, and due diligence are key to ensuring that your home projects go smoothly and that you receive quality work from reputable professionals. Happy renovating!