Home Renovation Scams Spike

Home Renovation Scam Spike: How Owners Can Reduce Fraud Risks

As home repair and renovation demand rockets across the U.S., so do scams that are leaving families financially devastated and facing unfinished projects. Recent national reporting reveals fraudsters raked in nearly $5 million from over 40 homeowners in one US state’s contractor scam alone, abandoning half-built houses and vanishing with clients’ funds.

This follows industry data showing the Federal Trade Commission (FTC) received more than 81,900 reports of home improvement scams in 2024, with homeowners losing an average of about $1,800 per incident. H

Homeowners are often targeted when prices are high and demand outstrips supply — conditions that characterize the current renovation market. With costs increasing and labor scarce, unscrupulous or unqualified contractors are exploiting homeowners’ urgency and vulnerability. Experts warn this isn’t isolated — about 1 in 10 Americans report being victimized by contractor fraud, with average losses exceeding $2,400.

Scams Surge as Renovation Demand Explodes — Homeowners at Risk of Losing Tens of Thousands

For consumers who’ve never dealt with contractors before, the emotional and financial stakes are immense. In one heartbreaking case, a Colorado homeowner lost her entire retirement savings and faces foreclosure after a $350,000 renovation turned into a scam and required costly redo work.

With renovation scams trending upward and fraudsters adapting ever more sophisticated tactics, this topic presents a timely, visceral consumer story with real financial consequences for families nationwide. GreatBuildz CEO Jon Grishpul is available to break down the latest fraud trends, tell real homeowner stories, and provide actionable advice on avoiding and responding to contractor scams – topics like these.

Contractor scams often share familiar patterns:

• Offering abnormally low bids or only accepting cash.
• Pressuring homeowners to sign contracts immediately.
• Failing to provide valid license, insurance or bond information.
• Claiming leftover materials from a nearby job at a huge discount.

Red flags consumers must not ignore:

• Vague or missing project details in bids.
• Contractors demanding full payment upfront or unusually large deposits.
• No written contract or refusal to verify credentials with state boards.

Industry analysts stress that verification is not optional. Always check a contractor’s license, insurance, and bond status with your state or county authority before signing anything — especially if the project exceeds $5,000 in cost, as certain states legally require escrowed construction accounts for such work.

Homeowners can also protect themselves by:

• Getting multiple detailed written estimates.
• Verifying contractors with the Better Business Bureau and state licensing boards.
• Avoiding pressure to pay cash or sign immediately.
• Using secure payment methods like credit cards or checks for traceability.