Tips on Home Improvement

Home repairs can cost thousands of dollars and are the subject of frequent complaints. When selecting a contractor:

• Get recommendations and references. Talk to friends, family and other people for whom the contractor has done similar work.
• Get at least three written estimates from contractors who have come to your home to evaluate what needs to be done. Be sure the estimates are based on the same work so that you can make meaningful comparisons.
• Make sure the contractor meets licensing and registration requirements with your local or state consumer agency. Some states require licensees to pass tests for competency and scrutinize licensees for financial solvency. Some states also have a fund to cover some financial losses that result from problems with licensed contractors.
• Check to see if state or local laws limit the amount by which the final bill can exceed the estimate, unless you have approved the increase.
• Check contractor complaint records with the Better Business Bureau.
• Get the names of suppliers and ask if the contractor makes timely payments.
• Contact your local building inspection department to check for permit and inspection requirements. Be wary if the contractor asks you to get the permit. It could mean the firm is not licensed.
• Be sure your contractor has the required personal liability, property damage and worker's compensation insurance for his/her workers and subcontractors. Also check with your insurance company to find out if you are covered for any injury or damage that might occur.
• Insist on a complete written contract. Know exactly what work will be done, the quality of materials that will be used, warranties, timetables, the names of any subcontractors, the total price of the job, and the schedule of payments.
• Try to limit your down payment. State law may specify that only a certain percentage of the total cost may be made as a down payment.
• Understand your payment options. Compare the cost of getting your own loan versus contractor financing.
• Don't make final payment or sign an affidavit of final release until you are satisfied with the work and know that subcontractors and suppliers have been paid. State lien laws may allow unpaid subcontractors and/or unpaid suppliers to attach your home.
• Pay by credit card when you can. Under federal and state law, in most cases, you have the right to withhold payment to the credit card company until problems are corrected See Resolving Credit Problems.
• Be especially cautious if the contractor:
  • comes door-to-door or seeks you out;
  • just happens to have material left over from a recent job;
  • tells you your job will be a "demonstration";
  • offers you discounts for finding other customers;
  • quotes a price that's out of line with other estimates;
  • pressures you for an immediate decision;
  • offers exceptionally long guarantees;
  • can only be reached by leaving messages with an answering service;
  • drives an unmarked van or has out-of-state plates on his/her vehicles; or
  • asks you to pay for the entire job up front.

With most home improvements, federal law gives you three business days to cancel without penalty. Of course you would be liable for any benefit already received. State laws may also provide some protection. See Your Rights: 3-Day Cooling-Off Rule. If you finance home improvements with a home equity loan and don't make your payments, you could lose your home.