The top 10 ways a bad contractor can scam you

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[00:00:27] Eric Goranson: So if someone's knocking on your door and they're. Going, Hey, I was just in the neighborhood and we're looking to do Welcome to Door-to-Door salesman, and you are usually talking to somebody that is paid to have a script. They don't know what they're looking at, they are not an expert, and they're trying to get your name and number When it comes to remodeling and renovating your home.

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[00:01:09] Eric Goranson: If you wanna find out more about us, head over to around the house online.com and, uh, you can find everything from our videos to all the podcast, to the radio show. Everything else is hiding over there at around the house online. Dot com. And don't forget our premium content. We're gonna be doing some, uh, exclusive episodes over there.

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[00:01:58] Eric Goranson: But just like any [00:02:00] segment of the population, there is that kind of criminal element out there. Or quite frankly, the ones that just get caught up in bad business practices and sometimes it's not something that is, um, That is criminal sometimes it's just, oh my gosh, it's the economy and they were not good at managing their business.

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[00:02:55] Eric Goranson: Could there be some big issues out there as far as having, you [00:03:00] know, too much, uh, cashflow problems that they don't even know? Because there's, they just don't have a good stopping point. And what can happen is, is when things slow down, they don't realize that they've been operating on what I call float.

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[00:03:34] Eric Goranson: And this is when, especially home builders and people like that had no idea that they were bleeding out financially. And so maybe it's the big truck payment, maybe that uh, they lost their butt on a couple jobs and they didn't realize it, but nobody is going back and job costing and looking to see how much profit was in each job, and they just kept moving [00:04:00] 'cause they're busy.

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[00:04:22] Eric Goranson: There are certain states that don't really have contractor licensing and when you have, don't have contractor licensing, it can be really tough. And it's surprising me in 2023. There are states out there that don't have this basic level of consumer protection and quite frankly, protection for the contractor as well.

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[00:05:12] Eric Goranson: Now, I can call up and say, you know, I'll make up a contractor name, a b c construction, and I can call up and say, Hey, um, I'm looking to hire a b C construction. What do you guys have on record? And they'll pull it up and say, Hey, you know, these guys have been around for 40 years. They've had two consumer complaints.

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[00:05:56] Eric Goranson: Here in my state, they have people actively looking [00:06:00] for illegal unlicensed contractors, and I'm good with that. I'm so tired of people skating around the rules and trying to be cheaper to try to go around good, hardworking contractors out there. And the ones out there that are working under the table, off the books, cash only, that kind of stuff.

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[00:06:44] Eric Goranson: So here's the nextdoor, one of how to find illegal contractor and. Recently, I don't know how it is, was how it is now, but as of last year, the last time I talked to my state licensing board nextdoor would not give them [00:07:00] access to go after them. They were, you know, illegal contractors were pretty protected there.

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[00:07:27] Eric Goranson: And boy, here's the pictures, what he did. Really good stuff. And all of a sudden people think, wow, I'm gonna save some money. There's a guy working for cash, and guess what? The scam begins. And that's what happens on Facebook Marketplace next door. I see it all the time. It's one of those big ones right there.

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[00:08:04] Eric Goranson: 'cause it can just literally be the wild west. And uh, that's where I've got a big concern about that. But not being licensed bond insured, yeah, that's an issue. So as far as a consumer, what I want you to do before you end up going out there and getting going on that project, before you have the estimate, I want to call, find out if they have that license, bond and insurance and they're good.

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[00:08:48] Eric Goranson: You will as a consumer. So make sure that you've got that. Make sure, and, uh, as I've said before, if you're a, a listener to the show, When you have this licensed bond insured, it [00:09:00] protects you. And then also make sure that they've got workers' comp insurance. If they have employees out there that are working on your job site or subcontractors or subcontractors out there, make sure that they are all covered by workers' comp.

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[00:09:32] Eric Goranson: Permanently, uh, or worse than that. So you wanna make sure and protect yourself around the house. We'll, right back after these important messages. Don't.[00:10:00]

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[00:10:24] Eric Goranson: We're gonna be doing a lot more here with, uh, social media in the coming months. So something to stay tuned to. So we've been talking today about the top 10 ways a bad contractor can scam you. And like we were talking earlier, there's many, many great contractors out there. I'm just trying to make sure that we don't have the bad ones.

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[00:11:00] Eric Goranson: Uh, last segment we talked about not being licensed upon uninsured. The next one up here is not giving a detailed estimate out front. My biggest concern is when someone gets, you know, to get an estimate from a contractor and it says, kit remodel. $42,000. New cabinets, and it's a single page estimate. I'll be honest.

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[00:11:45] Eric Goranson: Here is my favorite way to find out and work with a customer as a contractor and a designer, which ends up helping him out the most. And so let me explain. What I like to do is I like, my favorite way of [00:12:00] doing business is for a contractor to say, Hey, I am going to go out and buy all your materials using my discount and my cost, and then I'm gonna mark it up 15, 20%, whatever that is.

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[00:12:32] Eric Goranson: I don't wanna buy the materials. And then you get stuck because they're not responsible generally for those materials you are. So if they go install your brand new kitchen faucet and they put it in and you told 'em to put it in and that was a defective faucet, they can charge you if it's defective. The second installation, when they buy it, it's their problem.

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[00:13:12] Eric Goranson: And that's what happens when you buy the materials. So that's one of those things that I really want you to make sure that that detailed estimate is upfront so you know what it is. 'cause one of the most common things that I see out of contractors that are bad, And this is how they compete against contractors or good, they will sit there and know that you have two estimates for a hundred thousand dollars.

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[00:13:55] Eric Goranson: Then all of a sudden you get on the project and you're like, Hey, that's not the Baldwin [00:14:00] hardware I wanted on my cabinet knob. Oh, oh yeah, I missed that. No, no, I have just the off the shelf Home Depot stuff. You're like, well, that's a thousand dollars worth of cabinet hardware. Ah, sorry. Missed it. And then you start finding all of those things that that contractor missed.

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[00:14:48] Eric Goranson: It takes time and I have no problem with them, with you paying for that front, and I would prefer to see accredited back at the job site later if they get the project. 'cause I [00:15:00] think that is an important one to make sure that you've got things taken care of, right? I wanna make sure that that contractor is getting paid, that they are covered and they, they are compensated for that.

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[00:15:28] Eric Goranson: Because they're gonna spend the time allotted to get you the information you need to make the decision. So that's a good one there. Now that's something I wanna make sure that you have dialed in. That's good to go next up on the list, third on the list, doing the next job on the float of other projects.

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[00:16:07] Eric Goranson: This is somebody that just has poor business practices and they're going through and they are floating. Your deposit check is paying to finish the last guy project and to get going on this one. And that's where these things go sideways. So be very careful about doing. The job correctly and watching for that float.

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[00:16:52] Eric Goranson: And what happens is, is that maybe you paid the contractor $20,000 for the cabinet package, but they didn't put that towards the cabinet [00:17:00] package. They put that towards the last project they're finishing up, for instance, or making payroll or whatever. It's right. So this is what I want you to be careful with.

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[00:17:28] Eric Goranson: So take a look, understand the laws in your state, city, municipality, whatever it is, and make sure you understand what those lien laws are because that way you understand and make sure that's taken care of. And yes, you should understand this because sometimes you're gonna get a lien release in the mail and go, what?

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[00:18:08] Eric Goranson: So make sure you're there and that's understood. So that's all part of that, you know. Um, Paying for the materials. And making sure that that's understood and that's really helpful. Now the next one here coming up we're gonna talk about is an environmental one. And this one can be very expensive 'cause I've seen this turn into a disaster.

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[00:19:08] Eric Goranson: Welcome back to The Round The House Show. This is where we help you get the most outta your home through information and education. Thanks for joining us today. We've been talking about the top 10 ways a bad contractor can scam you. And of course there's plenty more than 10, but we're gonna go down through the list here and, uh, just for all you contractors out there, we are trying to expose the bad ones.

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[00:19:51] Eric Goranson: And if you're in a home 1978 or older, basically, um, you know, check with your local laws. But in most cases here in the United [00:20:00] States, you have to be lead paint certified to work on a house that's older. Now, a lot of these are e p, a federal government stuff that is either handled by the feds or by the local state or, or whatever, but know that you have to follow those rules in an older home.

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[00:20:45] Eric Goranson: Yes. 2004. So a lot of people out there mix up the asbestos and the lead paint. They go, oh, as asbestos was done in 78? No, uh, asbestos was used in a lot of materials up through [00:21:00] 2004 and technically until this last year. It has still been legal companies just went, Hey, we're not gonna kill people out there with this, so we're gonna, we're gonna get it out of our system and not start and not use it.

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[00:21:32] Eric Goranson: And so these are things that we don't wanna see happen. And these are things, I mean, I can tell you what I saw when the lead paint law first came into effect. I was in the Seattle area and somebody had a painter on their house scraping the outside of the house. They didn't really have tarps down. And the neighbor freaked out because some ships got over into their yard.

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[00:22:21] Eric Goranson: So these are things that you really need to make sure that those laws are being followed and that testing is done. Now there's less and less lead paint issues out there. 'cause guess what? People have been stripping it, putting new siding on. There's less and less of it as it goes, but it still doesn't mean that you don't have to test for it.

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[00:22:56] Eric Goranson: So these are things I want you to really be very careful with. [00:23:00] All right, the next one on the list here, which is, um, boy, this one's, uh, number six. Not installing things correctly around water, and I'm talking about, you know, the, one of the biggest offenders is that tub, shower, or shower system. Not installing that correctly.

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[00:23:45] Eric Goranson: If that stuff is not spelled out for you, be very concerned. And so, uh, and the other thing is if I icy drywall going in behind a shower, unless it's a, uh, Unless it's one of those, uh, plastic glue on kits or something. [00:24:00] Basically, if I see drywall going in behind a shower, I am concerned that you have the wrong person on the job because in my book, um, there is no reason why anyone should be tiling over drywall in a shower.

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[00:24:35] Eric Goranson: Are they flashing around there to make sure the water's getting kicked off, that you don't have water? Getting down on the framing of the deck that's protecting it. These are all things I wanna see you take care of to make sure it's taken care of. Again, just to reiterate this, I can't tell you how many times I have gone in and remodel and went, Hey, why is what's going on in here?

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[00:25:21] Eric Goranson: So these are things that I want you to make sure that you've got dialed in and it's understood what's going on. So that's a key one right there. Now, here's one of the biggest scam techniques. We'll talk about this. It's kind of a sidebar here on this, but it's really one of the biggest scam techniques that I've seen with door-to-door salesman, and I never buy anything that is installed on my house from a door-to-door salesman.

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[00:26:09] Eric Goranson: And you, you are usually talking to somebody that is paid to have a script. They don't know what they're looking at. They are not an expert, and they're trying to get your name and number so they can send somebody over to close the deal with you. Now if someone ever comes and knocks on my door and I do have a no soliciting sign, which is nice, but if someone's knocking on my door and they're saying they were just quote in the neighborhood doing another job and they wanted, unless they're next door and you're waving at 'em and there's having a conversation, no, do not stay away from it.

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[00:27:11] Eric Goranson: You're gonna see more people going down this road as far as contractors. So be very weary. Any of those. And then the other one too is, is the high pressure sales technique. And there are companies out there that are really good at this, and foundation companies are one of 'em where they sit down and say, okay, this is gonna be a $60,000 job.

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[00:28:15] Eric Goranson: So I want you as a consumer to be able to do that research and understand what's going on. And make some thoughtful decisions on what you're doing. Be very careful of that high pressure sales person that's coming over if they're putting the screws on you. Be prepared and think twice about doing business around the house.

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[00:29:03] Eric Goranson: Welcome back to The Round the House Show. This is where we hope to get the most outta your home through information and education. Thanks for joining us today. We've been talking about the top 10 ways a bad contractor can scam you. And as we know there's a lot of great contractors out there and just wanna make sure we're not bagging on the good ones out there.

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[00:29:37] Eric Goranson: This is something that really needs to be visited in that contract. I wanna see. Exactly at what points you make progress payments. Is it weekly, monthly? When is it? Because so many bad things happen when that's not documented of when people should be getting paid and what those benchmarks are. And then at what point do they, you [00:30:00] know, get a project complete.

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[00:30:22] Eric Goranson: That way there's no debate and there's no argument down the road. That way you're also providing them a clear time when they get paid, as well as how, what has to be done so they can get paid. So usually this will push things along and keep it on schedule. And that's a key to working with construction is keeping it on schedule and making sure it's done correctly.

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[00:31:08] Eric Goranson: And this homeowner, uh, who is kind of a hot mess to be honest. Uh, had some, uh, day laborers working around the house outside of the remodel. I. And this can burn a contractor. And I watched this contractor spend thousands of dollars trying to defend themselves in something that wasn't their fault. So they hired this person from a temp agency or whoever to come out there and work.

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[00:31:50] Eric Goranson: Because they had directed that person that they could put stuff in the dumpster when this person later in the day got hurt. That showed [00:32:00] up on the contractor's workers' compensation insurance, and it was the employee of the homeowner. So these are things you gotta be really be careful with as a contractor and as a homeowner.

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[00:32:36] Eric Goranson: So make sure that's happening for you. So that's a big one right there. Next up is not pulling, building permits and not getting final inspections. These are things that will burn you down the road. So let's say you get a kit tree model, a contractor says, oh, I don't, I'm not gonna pull a permit. We're gonna be okay.

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[00:33:15] Eric Goranson: The problem is if you go down the road and go to do a remodel again, and we had this, and I've talked about in a previous episode, but we ended up trying to do a kitch remodel that that, um, couldn't happen because of the addition that was done by this major contractor. And of course there was no way they could get that thing knocked out because what happened was is that, uh, it was never finalized and had to be brought up to new building code.

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[00:34:04] Eric Goranson: So this is kind of a can of worms if you're gonna do the building permit route, which I think you should. If you are, you need to walk that all the way through the process. If it's not something that's required in your area, then it's not a big deal. But the building permit is just keep in mind, it is there to protect you and health, safety, welfare.

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[00:34:46] Eric Goranson: So something to think about with that, that if you're going down that road, make sure you go down that road and finish it all the way. That's another one that's very expensive. Now the other one that I've seen that's been a [00:35:00] massive problem out there is that you've got somebody that is a contractor. They end up doing all the other skilled trades things really poorly when they were supposed to have people that were licensed, bonded, insured.

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[00:35:34] Eric Goranson: That can be a big issue because now all of a sudden you have someone doing a trade that they were not trained in and it might not meet building code. So make sure that your electricians are doing the electrical work, your plumbers are doing the plumbing work. I would really like to see if you're doing a bathroom, that you've got both of those trades in there.

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[00:36:19] Eric Goranson: The right part, you know, so you can do that because I tell you what, I see more issues because somebody did it wrong and it got missed during an inspection or something like that, or there wasn't one. So spend the time, make sure you get it dialed in, and then do the research to make sure you're not getting scammed and that you've got the right people in there.

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[00:37:00] Eric Goranson: And these are things I want you to see if you can get taken care of so you're not wasting that money because, I have too many people I know right now that are getting projects redone because they brought the wrong people on the job. And, uh, I just wanted to see if we could get out a really good public service message to everybody on how to hire a contractor and what the bad ones are doing to take your money away from you and, uh, without a care to what's going on in your home.

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[00:37:47] Eric Goranson: And, uh, you, I, I don't wanna see you lose money, and I don't want, you have to do a project twice. So that's the, that's my tip of the day. There is just take the time, go through the steps, and it should work out correctly for you [00:38:00] and, uh, you know, if, if you don't have contractors licensing in your state, Start asking your representatives why those consumer protections aren't there because, uh, I think you really need it.

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[00:38:28] Eric Goranson: We're gonna have some new, uh, section to the website coming up here soon. Might even be up at the time this radio show airs or podcast airs. We're gonna have a bunch of new projects section in there, so it'll be something for you to take a look at and that's gonna be a ton of fun. All everybody have a great rest of the week.

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[00:39:18] Eric Goranson: And, uh, I'm not talking about the house lists and I'm gonna use air quotes there issue, but really trying to get people that are out there working into homes that they can afford. We'll do that just as soon as around the house returns