HOME IMPROVEMENT SCAMS

To help you differentiate a scam from the real deal, Bankrate has compiled a list of the most common remodeling scams. Beware of the following key phrases, and remember, if it sounds too good to be true, it probably is.
Key phrases to beware of:
"I just happen to be working in your neighborhood."
"I have materials left over from another job."
"I need the cash up front."
"I have a special offer that's good for today only."
"I can help you finance the project."
"I want to use your home as a model."
"I just happen to be working in your neighborhood."
This happens when contractors appear at your home unsolicited to inform you that they noticed some problems with your home's (insert: chimney, driveway, windows, plumbing, etc.) while working on a neighboring home. For example, the contractor might say he or she was on the roof of your neighbor's home and noticed missing shingles on your roof. This may be the case -- but often no repair is needed.
More important, legitimate, established, and reputable contractors tend to find enough work through word of mouth referrals that they don't need to be going door to door to attract customers. Be especially skeptical if the contractor drives a vehicle with no company name, no phone number or with out-of-state license plates. "Do not let these people enter your home," Johnson warns. "Often they want to be invited inside to see if something is worth stealing."
Also, be sure to ask for proof that he or she is insured, licensed, and bonded. "Homeowners that check out contractors beforehand and research their credibility are usually more satisfied with the job than if they abruptly chose a contractor," says Jeremy Zidek, communications coordinator for the Better Business Bureau in Alaska.
"I have materials left over from another job."
Sometimes contractors will offer a discount for the job under the pretense that they have extra materials and want to use up their supply. The truth is good contractors order enough supplies to meet the needs of each job, as often the price for supplies is typically included in the contract. Further, if a contractor has materials left over from a previous job and is making them available to you, he either didn't finish the job or is cheating the previous customer. Or he may have never had a previous job but has materials to make it look like he did.
"I need the cash up front."
This contractor will take your money and disappear before or (even worse) after your project gets underway. It can be frustrating trying to chase after him, getting him to come back and finish the job or hiring someone else to clean up a messy work site. Don't ever pay in full for a project before any work has been done. Note: you may be expected to pay a down payment. "The contractor may not want to block out time in his busy schedule without some money up front," Levinson says. He recommends creating a payment schedule with the contractor at the start -- wherein you pay some portion only upon completion of a project. Johnson swears by the one-third theory. "The most I will ever give somebody up front -- after I have called references and checked him out -- is one third of the money," he says. He gives them another third when the project is halfway done. "Their profit is in their last payment because that's what going to keep them on the job."
"I have a special offer that's good for today only."
If a contractor is offering a "special deal," ask them to legitimize what they are offering. While this is a common sales technique, you can ask them for documentation of this bargain -- a flyer, for example, that the contractor has mailed or delivered in the past. Or one from another contractor at a higher price. "Any time a contractor puts pressure on a homeowner to act quickly about making a remodeling decision, that's a red flag," Zidek says. Remodeling decisions should be made carefully, not hastily.
"I can help you finance the project."
Sometimes a contractor will suggest you borrow money from a lender that the contractor knows. This could indicate a home improvement loan scam, as the contractor may be getting kickbacks from the lender. Homeowners may believe they're financing a small remodeling project loan, when in fact they're signing for a much larger loan, if not completely refinancing their home. Never finance through your contractor without shopping around and comparing loan terms.
"I want to use your home as a model."
The scam centers on the idea of using your home as a vehicle or "show home" to advertise their services in return for a hefty discount. Established contractors should have completed enough previous projects that they won't need your job as a demonstration.
Still more scams
While any part of your home could be a target, many scams tend to center around driveways, roofs, chimneys and furnaces.
Driveway Sealant Scam: If a contractor offers to seal your driveway for a heavily discounted price, find out what materials will be used as sealant. Cheap, inferior substances may look great initially but will wear off in three months.
Chimney Repair: These scam artists often lure their victims via advertisements in local newspapers offering gutter cleaning at a cheap price. Once the work is performed, they claim the chimney is in dire need of structural repairs. To provide so-called evidence of this, they will make it look like the chimney is in a state of decay by removing bricks and mortar from the chimney. Note: There might be decay if you burn a lot of wood and don't get your chimneys inspected every year. Another chimney scam is when a contractor says there's a threat of carbon monoxide poisoning if the chimney is not repaired immediately. This is a serious concern, so if you are unsure about whether to trust this person, get a second opinion from a reputable contractor.
Hot Tar Roofing: Contractors send mailings, telemarket, or go door-to-door in this scam, offering a price that sounds too good to be true & want to do the job immediately. They often use substandard materials. You may not realize you've been duped until heavy rains cause the roof to leak resulting in damage to the building's interior. Sometimes you can't determine the quality of the job until after it has been completed. "If you're having major work done, ensure that your contract has a hold back clause where you withhold the final payment until 30 days after completion of a project," Levinson says.
Furnace repair: Once they inspect your furnace, they may claim it is leaking dangerous gases or is about to explode. Ask your utility company to come and inspect your system. Also be wary if they tell you the unit is too small or needs a complete overhaul. When choosing a contractor always get several estimates on the needed repair.
Duct Cleaning: In very unusual circumstances do ducts need to be cleaned. The scheme is called a "blow and go" because the scam artist will use a small vacuum cleaner with no special filters to stir up the dust, pollen, mold, and other contaminants instead of removing them. Duct cleaning can be necessary if there is mold in the house or if the heatinf or air condition has been running with inadequate or nonexistent filtering. If you change filters regularly, your ducts don't need to be cleaned.

IF REMODELING THE KITCHEN IS WHAT YOU WANT TO DO

and what kind of new appliances might you need, what's worked well for you, what hasn't or how can you dispose of your old appliances; well consider replacing older, less energy-efficient appliances first. Visit manufacturer web sites for the latest appliance designs and availability in your area to test new products. The National Kitchen & Bath Association is a not-for-profit trade association representing the kitchen and bath industry. They offer several articles that will lead you through the remodeling process. The Association of Home Appliance Manufacturers has some good hints and some useful links in the Consumer Information section of their website.

NEWS ON UPCOMING HOME SALES

Pending Homes Sales Index Declines While Some Regions Are Up
WASHINGTON, July 03, 2007 -
Pending home sales, a forward-looking indicator, shows existing-home sales may ease but should stay fairly close to present levels in the months ahead, according to the National Association of Realtors®.
The Pending Home Sales Index*, based on contracts signed in May, rose in the West and Northeast but fell in the Midwest and South. The national index stood at 97.7 in May, down 3.5 percent from a downwardly revised April index of 101.2, and is 13.3 percent lower than May 2006 when the reading was 112.7. In April, the index was 10.4 percent lower than a year earlier.
Lawrence Yun, NAR senior economist, stressed that housing activity continues to be impacted by tighter lending criteria and a lack of buyer confidence. “Some transactions are being postponed from mortgage market disruptions,” he said. “But better supervised lending will put housing in a fundamentally healthier state over the long term.
“Mortgage purchase applications are trending up, with some of the rise due to buyers reapplying for alternatives to subprime financing. Nonetheless, home sales should stay close to present levels in the months ahead given an accumulating pent-up demand,” Yun said.
The pent-up demand results from slow household formation, which is significantly below levels that would be expected in a period of job creation and economic growth. “As consumer confidence improves, home sales will rise,” he said.
The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
Annual changes in the index are more closely related to actual market performance than are month-to-month comparisons. As the relatively new index matures and seasonal adjustment factors are refined, the month-to-month comparisons will become more meaningful.
The PHSI in the West rose 5.6 percent in May to 95.4 but was 13.7 percent below a year ago. In the Northeast, the index increased 3.8 percent from April to 93.1 but is 9.6 percent lower than May 2006. The index in the South fell 7.6 percent in May to 107.2 and was 15.4 percent below a year ago. In the Midwest, the index dropped 8.9 percent in May to 89.4 and was 11.7 percent below May 2006.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries. # # #
* The Pending Home Sales Index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.