Tall tales your contractor tells

(Money Magazine) -- Even honest contractors occasionally play a bit fast and loose with the truth. All tradesmen are looking to maximize profits and minimize hassle -- and that can end up costing you extra money.

So don't take everything a contractor says as gospel, says David Fogt, chief of enforcement for the California Contractors State License Board. Try these strategies to neutralize three classic fibs without harming your working rapport.

What he says: "I don't have any wiggle room on my price."

What he means: "I'm hoping you'll pay my boom-time rates."

During the real estate bust, even top contractors have been forced to drop their bids as much as 10% to 40% to compete for the dwindling pool of jobs. Yours surely has too -- unless he thinks he has your business locked up at any price.

How to respond: Get bids from a couple of other well-regarded companies -- and let your contractor know. Says Bob Peterson, a spokesman for the National Association of Home Builders: "That'll make me sharpen my pencil."

What he says: "I need money upfront for materials."

What he means: "I have to pay outstanding bills from other jobs."

Any well-established tradesman has 30 to 90 days to pay his suppliers. Asking you to prepay is a sign that he's either had his credit revoked or needs cash for something else (which could leave him short on your job). Regardless, you don't want to put your dough at risk if he suddenly can't complete the project.

How to respond: Tell him you'll prepay the lesser of $1,000 or 10% of the price, says Fogt. If you have a costly special order that's non-returnable, offer to pay the supply house directly. If he balks? Another $1,000 or 10% will show him you're serious -- but don't cough up more.

What he says: "You'll save on property taxes if you skip the permit for a small job."

What he means: "My life would be easier if we did this job illicitly."

Even a small job requires a permit if you're installing walls, wiring, or plumbing lines. Inspectors check the crew's licensing, insurance, and code compliance. But if you aren't adding square footage or a major amenity like a new bathroom, you won't see a property tax hike, says Bill Carroll, president of the International Association of Assessing Officers.

How to respond: Politely insist on a permit, and expect to pay $300 to $500 for the application fee and the contractor's time. And don't let him talk you into getting the permit yourself. Then you bear all the responsibility for compliance -- and you shouldn't let a contractor off the hook that easily.

Do you have an 800-plus credit score? Or have you pulled your score up past 700 after a financial setback? If you'd like to talk about it for an upcoming issue of MONEY magazine, send your name, age, phone number and a few details about your story to imangla@moneymail.com.