Remodeling your home? Watch out for scams

May 23, 2011: 10:35 AM ET

NEW YORK (CNNMoney) -- For many homeowners, the warmer months is the prime time to remodel a kitchen or bathroom. But beware -- there are some contractors who may offer you a deal that's simply too good to be true.

Here are a few warning signs to keep an eye out for:

home remodeling
Home remodeling could cost you more than you think.

Tip 1. Avoid "one-time" offers

Before you sign on the dotted line with a contractor, check to see if the deal is legit.

One huge red flag? Any special "one-time" offers you may get from a potential contractor.

Lou Manfredini, a former remodeling contractor and Ace Hardware's home expert, says "one-time offers" simply don't exist.

Stay cool for less

The National Association of the Remodeling Industry (NARI) says don't be pushed into these high-pressure tactics. If someone shows up at your door unsolicited, or claims they have enough materials from a neighbors' project to do work on your home right now, don't fall for it.

In fact, one of the top scams of 2010 was at the hands of these door-to-door salesmen offering to fix up your house, according to the Better Business Bureau. Any reputable contractor will let you take the time to do your homework.

Also, NARI warns to watch out for these types of offers during storms and disasters, when some contractors may be looking to make a quick buck.

Tip 2. Check out your contractor

Appearances can also be a tip-off a contractor is not on the up and up.

Take a look at their van or truck; if there's no logo or company identifier, that's a warning sign.

Before anyone picks up so much as a hammer or nail in your home sweet home, ask for proof of insurance, if they're licensed, and for references.

And when it comes to references, don't just ask who they worked for last week, but ask also about clients from five years ago and see how the quality of their work has held up, Manfredini says.

Avoid 4 common remodeling mistakes

Check for complaints with the Better Business Bureau at BBB.org as well as if they're members of the National Association of the Remodeling Industry by going to NARI.org.

Also, keep Grandma and Grandpa in mind. Many elderly folks might not be tech savvy, so before any work gets done on their home, help them out by checking on references and making calls to their local Better Business office.

Tip 3. Money matters

In this economy, it pays to shop around to get the best deal on your remodeling project.

An easy rule of thumb?

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Get about three bids or offers on your work. Once you've finally picked your contractor, don't offer any more than a 10% deposit, and be left holding about 20% of the costs to ensure the contractor will come back, according to Manfredini.

The Help Desk answers your questions about remodeling.

Also, make sure you're not overpaying. Check out Remodeling magazine's latest "Cost vs. Value" Report to see the average cost for many popular remodeling projects, as well as see how much of the costs you'll recoup.

Get everything in writing, including your payment plan set up at different milestones of completion on the project.

If a contractor asks for payment in full -- and in cash -- before work is even started, NARI says be skeptical.

Finally, don't be afraid to ask a lot of questions; it's your house after all.

Go with the age-old advice: If it sounds to good to be true, it probably is.  To top of page

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