A man writes a check for a down payment on what he believes will soon be his new deck, only to continue looking out the patio door at some dirt and the holes that had been dug for footings that never got poured. Another family has contracted with a "company" to paint the exterior of their home, but 3 weeks later the job is only half finished and the painters seem to work on no certain schedule. And then there is the widow lady that is convinced by someone that if she doesn't do the work to her home soon the damage to her house will be irreparable. These stories are all to familiar to those of us who live in the metropolitan area. Yet these stories are played out every day on the pages of our newspapers and we see and hear about them often on programs.

     Why are areas being converged upon and plagued with home improvement scams brought on us by people whose only concern is a dollar, and by those who have no conception of what honesty and integrity is? What can legitimate contractors do to set themselves apart from these type of operations, and what can the homeowner do to protect themselves?

1.  While there are laws on the books regarding the licensing of all who operate a business in South Dakota, very little enforcement takes place. The chances are that a person will not be caught operating without a license in South Dakota .
 
2.  For those who do get a business license, in most home improvement fields there is absolutely no testing required to show training or competence in the field in which that business is going to operate.

3.  Some homeowners who are taken advantage of usually feel embarrassed by what has happened and may never report the contractor to the appropriate authorities. So with no repercussions at all and no fear of being caught at what they are doing, a person can just move to the next neighborhood and continue taking advantage of homeowners.  Legitimate contractors are often at a disadvantage from the time their phone rings from a homeowner who is seeking to have some work done.  A legitimate contractor realizes that he is bidding many times against people who can do work sometimes substantially cheaper than he can, because of the way some of the "competition" are running their operation.  He also knows that for those homeowners who have been burned in the past, or know of someone who has, that he may be viewed with suspicion and distrust, and to those that have been fortunate enough to have not been treated wrongly before, he may seem overpriced compared to what someone else has bid. Therefore, the only defense the legitimate contractor has is his reputation for honesty, and the quality of the work which many times he will not even get a chance to demonstrate.  Many times a legitimate contractor who wants to succeed must spend more time and money to compete with someone who is not playing by the same rules, and in the end though it appears on the surface that the legitimate contractor makes more profit because his bid may be a few dollars higher, he is actually more often than not making a much smaller profit.

 4.  Another problem facing the legitimate contractor is that in some areas the opportunist has created a different scenario.  I remember giving an estimate to a wealthy and affluent family in an area that was surrounded by million dollar homes in all directions.  After presenting the bid, we were told that the price was too low and therefore the job was being awarded to someone else.  Only after reviewing 2 more estimates that we advised them to get, did they realize they were a victim of what could be called "zip code bidding."   Zip code bidding is bidding a job based on the area and apparent wealth of the community, rather than a fair price, others would call it "price gouging."   In one part of the county you may be too high and in another you may be too low.

What can the homeowner do to protect themselves and at the same time not be unreasonable with their contractor?
1.  All homeowners must take it on themselves to compare equal bids and not be lured and enticed necessarily by the lowest bid.  Many times there is a reason a company will put in a low bid.  Perhaps the low bid does not have to take into account overhead that many other companies do (taxes, insurance, licensing, etc.).  Or it could be that the labor he uses to complete his jobs is not paid according to the wage scale of those he is bidding against.  There could be any number of reasons a company comes in as the low bidder, and this is not an effort to discredit always the low bid.   Because just as some homeowners may be lured by the low bid, others may equate quality with price and be lured by the high bid.  There are many companies who may come in the low bidder who are absolutely credible and trustworthy and will do a superb job, but it is up to the homeowner to determine why there may be a difference between bids to insure that they will not be a victim.  Always compare apples with apples and oranges with oranges.  More often than not, if their seems to be a big discrepancy in estimates, the difference can usually be found in the comparison of what is being offered, and the equality of those offering their bid on the work.  If there is a difference that seems substantial the homeowner must find out why in order to prevent possible problems once the project is underway.  If there appears to be no major difference in services being offered, other than price, then the homeowner may want to get a third or even fourth bid to help them better compare.

2.  Next, a person close to signing a contract with a home improvement contractor should always make sure that they are properly licensed and insured and that their workers are covered by workers compensation insurance. (This fact will often explain a large difference in estimates received).

3.  Inquire about the crew that will be coming to the home. Are they permanent employees?  or does the company pick up day labor on an as- needed basis or college kids?

4.  Ask for references of projects the company has done, and if it is possible look at some work they may have done in the area.  After all of this is done and after all bids have been compared, consider one more fact.  Do you feel comfortable with the person you are dealing with?  And can perhaps what may be your largest investment, be trusted to them?  While there is no guarantee that some of the things mentioned above will be complete assurance against problems, we believe that it is an excellent start.