How to avoid losing money to fake or shoddy contractors on home improvement projects

• Researching contractors on Google and social media before you sign a contract is crucial.
• Asking certain questions during interviews can help spot problematic contractors.
• Experts say you should avoid paying more than 30% of the total project cost up front.

With the home-improvement industry booming and homeowners increasingly opting to hire professionals for remodels, some experts are urging customers to be wary of potential scams.

"There are rough characters in the industry," Ross Smith, a salesman at RL Rider Remodeling, said. "You can be out of money in a hurry."

Smith highlighted some warning signs that could indicate a scammer or unscrupulous contractor:

• The contractor asks for a large deposit for a project up front. Paying more than 30% of the costs right away is unusual among professionals and can be a sign that the contractor is planning on ditching you before finishing, Smith said. Though there are exceptions to this (such as a big project that requires expensive materials), the contractor should always have a good reason to ask for a big chunk of the payment right away, he said.
• They are advertising a much lower price than anyone else. This could point to a lot of different issues, including the possibility that they'll stack on costs later on by charging you for small changes to the project, experts said.
• They waive the deductible. A deductible is the amount of money someone pays out of pocket before home insurance pays expenses. Waiving a deductible is illegal in some states, and the contractor might make up for it by not completing the project or cutting corners with quality, said Ty Smith, co-owner of Smith & Ramirez Roofing.

Contractors also shared some tips to help homeowners verify the legitimacy of a home-improvement business.

• Do a thorough check of Google and Yelp reviews, and sign up for Angi (the home services website formerly known as Angie's List). It's also a good sign if the contractor is accredited by the Better Business Bureau.
• Check if the company has a website and see if they're updating their social media with photos of completed projects. Both can be a sign that they're operating a legitimate business, especially if they're engaging with customers on social media. "If one guy is half the price of everybody, doesn't have a website, just has an Instagram account, you get suspicious," Ross Smith said.
• Give yourself enough time to consider a host of different options, and don't be afraid to listen to your gut if you feel someone is untrustworthy.
• Ask probing questions during interviews with contractors, including questions about how they handle change orders, whether they're licensed, and how long they've been operating.
• Ask your contractor for a copy of their insurance policy, and then call the insurance company to verify that the contractor is covered, Ty Smith said. This can ensure that you're not liable for any accidents that might happen on the job.