Home Renovation Scams

As Home Renovation Demand Surges, So Do Contractor Scams. A Warning for Homeowners

As demand for home repair and renovation services climbs across the U.S., so too do scams that leave families financially devastated and projects unfinished. According to recent data, in 2024 the Federal Trade Commission (FTC) received more than 81,900 reports of home improvement scams, with homeowners losing an average of roughly $1,800 per incident.

Industry analysts say scammers exploit periods when demand outpaces available qualified labor much like the market conditions today by targeting homeowners who feel pressured to act quickly. FTC data shows overall consumer fraud losses topped $12.5 billion in 2024, with reported scams increasing in severity and cost.

“Contractor fraud is becoming a significant issue for homeowners,” says Jon Grishpul, Co-CEO of GreatBuildz.com. “With renovation costs rising and schedules tight, unqualified or unscrupulous contractors can prey on trusting consumers. Knowing the warning signs and how to verify contractors is more important than ever.”

Real Consequences: When a Renovation Turns Into a Nightmare

Homeowners who’ve never managed a major construction project may not recognize the risk until it’s too late. In one widely reported case, a Colorado homeowner lost her entire retirement savings during a $350,000 renovation project that was mismanaged and abandoned by the contractor, forcing expensive redo work and jeopardizing her home.

Common Scam Patterns to Watch For

Contractor scams often follow familiar patterns, such as:

  • Offering unusually low bids or only accepting cash
  • Pressuring homeowners to sign contracts on the spot
  • Failing to provide valid license, insurance, or bonding information
  • Claiming access to “leftover materials” at steep discounts

The FTC and consumer protection groups also highlight these red flags consumers should never ignore:

  • Vague or missing details in bids
  • Requests for full payment upfront or very large deposits
  • No written contract or refusal to verify credentials with state licensing boards

These are consistent with widely cited contractor-fraud warning signs published by the FTC.

Protecting Yourself –  Steps Homeowners Can Take

Industry experts stress this isn’t optional  verification is essential:

  • Check credentials: Verify a contractor’s license, insurance, and bond status with state or county authorities before signing anything.
  • 
Get multiple estimates: Collect at least three detailed written bids for comparison.
  • 
Use secure payments: Avoid cash payments  use credit cards or checks that provide a financial trail.
  • Research reputation: Look up contractors with the Better Business Bureau and state consumer protection agencies.

“Homeowners should think like investigators,” Grishpul adds. “A legitimate contractor is transparent about credentials and comfortable with verification checks. If someone avoids scrutiny or pushes urgency, that’s a red flag.”

As part of our Home Tu Casa series, we’re committed to equipping homeowners with not just inspiration for renovations but practical, safety-first advice. Knowing how to spot fraud, verify professionals, and protect your investment isn’t just smart  it’s necessary in today’s busy market.

Sources: FTC, Jon Grishpul

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