Home Improvement Scams Happen
The US home improvement industry is a $200 Billion dollar economic engine. Spawning manufacturing and sales in everything from building supplies, to landscaping, to appliance sales, to bathroom design services, it’s a busy, lucrative area of business.
The profitability and sheer variety of potential products and services involved makes home improvement a keen area of interest for criminals to run property management scams.
As a property manager, a good portion of your budget may be paid out to contractors and maintenance service providers, and via contractor estimates of repairs or renovations. There’s plenty of trust and paperwork involved to hide wrong doing.
And criminals depend on naive property owners, landlords, and property managers who lack a good system to verify work needed and statements of work done.
Home improvement can include appliance maintenance, kitchen and bathroom renos, A/C equipment and swimming pool repair, roofing, driveway paving, landcaping and more. Busy property managers are sometimes easy prey for scams of all kinds.
It’s not only Home and Condo Owners Who Get Scammed
Property investors and landlords are also targets. The scams skim plenty of money from victims, because of how property management is conducted traditionally. And scammers look to paper based systems for the usual vulnerabilities and opportunities. As an individual property manager handling fewer properties, you are actually the perfect target for scams. Some of it is your inexperience and perhaps lack of time to investigate and review work orders.
There’s a few things both consumers and property owners can look out for to avoid getting taken to the cleaners.
An infographic from Homeadvisor gives a rough estimate that management scams amount to as much as $40 Billion per year. That means such crime is likely near you or you’ve already had some of your own money scraped away. But how do you avoid it?
For Property Management Companies and Property Managers
Property management firms can be and are often victims of scams. Those who don’t have control of documentation, signatures, invoices, bills, and more are unfortunately more vulnerable to scams.
As a small portfolio manager or landlord, you’re just as vulnerable to these repair and maintenance scams. How do you know whether the repair or maintenance completed was even needed in the first place? How do you know you weren’t overcharged for parts and labor?
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And when scammers get away with a few small scams, will you get hit with something major, like a replacing a furnace or A/C system?
Questions to Keep You Safe from Scammers
- Did you review and research them carefully and not just a quick scan of Google?
- Do you get on top of contractor/vendore documentation quickly, not via the postal mail?
- Are you in receipt of the tenant repair request signed by them, for the A/C system which supposedly stopped working?
- Do you have a copy of an estimate from a real, licensed and insured contractor who visited the property?
- was there more than one contractor to get a second opinion on the big repair?
- Did the contractor send you informational pictures of repairs/changes when they were completed?
- Were there unusually low ball quotes for the work requested?
- Was the contractor repair company and repair person checked out beforehand and were they licensed and insured?
- Where did the replacement parts they used come from?
There are so many opportunities to misrepresent, steal, or hide. For a property investor, the thefts and graft could amount to tens of thousands of dollars. And if you’re hiring blindly from Angie’s List, Craigslist, or a handy man type company, it my raise concerns.
What contractors and service people believe is acceptable business, might in fact, be cheating you out of equity. A good case in point is in using shoddy parts instead of the OEM parts you expected and paid for.
Paperwork is an impersonal medium where misrepresentation can be hidden in the details From faked signatures to poorly described estimates and finished work, along with unfinished work, criminals can get creative.
Taking it Online Gives Better Oversight in Real Time
Online property management software might be handy in this respect. The fact that information is being passed in real time makes criminals nervous. Questions get asked, requests get reviewed and verified, and repair histories and expenses get seen on a computer dashboard.
This is not to suggest property management companies and contractors are out to scam when they can.
It’s with the complexity and volume of repairs and routine maintenance that scams can happen. And if you own properties in distant cities, it makes you even more vulnerable.
You need a good property management software solution to help you stay on top, and let everyone know you’re on top of things.
When scammers get wind of your increased scrutiny of invoices, work orders, and other documentation online, they begin to feel they can’t pull of these scams any longer. Even if you don’t find scams already perpetrated, you can ensure you’re more aware of future attempts. And those who work their scams on paper may not be able to do them online.
Home Improvement Fraud And Scams – An infographic by HomeAdvisor
See also: Property Management Software | Property Accounting Software | Renter Demographics | Tax Tips for Property Managers | Real Estate Portfolio Tips | Best Appliances | Starting a Property Management Business | How to Use Property Management Software | ManageCasa Property Management Solution | Tenant Screening for Property Managers