In late 2023, The Star reported that 5 homeowners in Rawang had been duped by a conman posing as a renovation contractor, collectively losing over RM127,000.
12 months earlier, NST reported that another group of five homeowners were swindled out of nearly RM1 million by a fake renovation firm. It also reported that the number of victims cheated by this renovation company could be as high as 60 homeowners.
In Malaysia, the rise of renovation scams has become a big issue. Renovating your home should be an exciting and rewarding experience, but falling victim to a scam can turn it into a nightmare. Understanding the warning signs and taking precautionary measures is crucial to safeguarding your investment and ensuring your project runs smoothly.
How did these con artists convince their victims?
Here are some tactics that renovation scammers often use to trick homeowners into signing with them:
Tempting you with super low quotes: Scammers often attract homeowners by offering quotes that are much lower than the market rate. These low prices might seem like a great deal at first, but they usually come with hidden costs or result in shoddy work. Then, if you are still hesitant, they will act hurt, as if they worked very hard to negotiate with their suppliers for you. This is to guilt you into agreeing to proceed.
Creating a false sense of urgency: To pressure you into making a quick decision, scammers might offer limited-time discounts or promotions, claiming that you need to sign the contract immediately to take advantage of these “special” deals.
Promising unrealistically fast completion: Everybody always wants the work done “before CNY”, right? The scammer will always promise to make it happen, however impossible it may seem. These promises are usually too good to be true, leading to delays or incomplete work.
Showing you an impressive portfolio of previous works: Scammers might use images that they’ve taken from the internet, stock photo sites, or even from other contractors’ websites, passing them off as their own work. They may even photoshop them to make them look like high-end projects they’ve completed.
To help you avoid becoming another statistic, here are some essential tips to keep in mind before you engage your renovation contractor.
1. Get the Contract Down in Writing
The renovation works should be outlined in a contract that clearly lists the particulars of the renovation company and the managers in charge. It should also cover project milestones, payment schedules and permits, aligning with what was discussed during the consultation and quotation stages. Additionally, material specifications, completion dates, grace periods, and cost breakdowns should all be precisely stated.
Be wary of renovation firms that don’t give a breakdown of works, but instead bundle it into a few line items with lump sum. They may also tell you, “don’t worry, we are flexible. Any change, can settle later”. This is not a good sign.
Then, take your time to review the contract in detail, especially the payment terms. If anything seems unclear or ambiguous, don’t hesitate to ask for clarification or request a rewrite in more straightforward language.
If your contractor is unwilling to address your concerns or amend the contract before you sign, this is a significant red flag, and it might be best to seek out a different contractor.
For larger constructions jobs such as whole-house construction from empty land, CIDB has also provided a contract template that you can use.
2. Pay in Stages According to the Agreement
A common guideline is to pay no more than 25% of the total project cost as a deposit. Subsequent payments should align with the project’s milestones or a predetermined payment schedule that reflects the completion of each phase.
A deposit exceeding 25% of the total cost can be cause for concern. If a contractor pressures you to pay more upfront, make sure it’s justified, as this could indicate an intention to take your money and disappear. Stick to the standard deposit amount to filter out unreliable contractors.
One victim was asked to pay RM197,000 before work started. Then, the company asked for another 40 per cent as they claimed to have completed half of the renovations. But when the homeowners checked, it turns out that the work was not even 50 per cent done.
Retain the final 5% of the payment until the project is fully completed to your satisfaction. Don’t let yourself be rushed into making payments before thoroughly inspecting the work. Conduct a detailed walkthrough of the renovated areas, ensuring that all installations, such as cabinets and lighting fixtures, are in proper working order. This final inspection is crucial to avoid unexpected costs down the road.
3. Use Escrow Platforms for Payment
Using an escrow platform, such as Recommend Pay, can provide an additional layer of security. These third-party services hold your funds until all the terms of your agreement with the contractor are met. Only then will the payment be released to the contractor, ensuring both parties are protected.
This method offers contractors the assurance that they will be paid promptly and according to the agreed terms, while giving you peace of mind that your funds won’t be misused. Make sure the use of the escrow platform is clearly outlined in your contract, and choose a platform that both you and your contractor are comfortable with.
4. Verify the Contractor’s Reputation and References
Before committing to a contractor, it’s crucial to check their track record. Spend some time researching online reviews and testimonials from previous clients, whether on platforms like Recommend.my or social media. Don’t hesitate to ask the contractor for references and follow up by contacting these past clients directly.
A reputable contractor will have a solid history of satisfied customers and should be transparent about sharing their references. Take the extra step to contact those references to double check.
At the very least, you should do the following checks on them:
- Do they have a valid business registration (SSM)? For big projects, avoid paying deposits directly to an individual
- Google the company name. Have they been mentioned in social media or forums?
- If they shared any photos of previous works, do a “search by image” at images.google.com to see if any of those images were taken from other websites, and being falsely claimed as their own works
- Are all the portfolio images only of 3D renderings? Ask for actual on-site photos
5. Visit the Contractor’s Current Projects
If possible, take the time to visit one or more of the contractor’s current job sites. This gives you an opportunity to observe how they operate, the quality of their work, and their level of professionalism. If you can, talk to the workers themselves to ask whether the project is on schedule, as well as to understand the working relationship between them and the person you are dealing with.
6. Understand the Warranty and After-Sales Service
Before signing the contract, make sure you discuss the warranty and after-sales service with your contractor. A trustworthy contractor should offer a warranty that covers defects in materials and workmanship for a certain period. Ensure the terms of the warranty are clearly stated in the contract, including what is covered and for how long. Also, inquire about their after-sales service and how they handle any issues that may arise after the project is completed.
Pay close attention to how a contractor communicates with you during the initial stages. Prompt and clear responses are indicators of professionalism and reliability. If a contractor is slow to respond or gives vague answers about the project timeline, payment terms, or contract details, this is a sign to consider other options. A trustworthy contractor will be transparent and responsive, ensuring you feel confident and informed throughout the process.
Choosing the right renovation contractor can be a daunting task. Recommend.my helps you renovate with more confidence by doing some of the preliminary checks for you. For example:
- Recommend.my only allows registered companies with valid SSM to list as renovation contractors
- We prioritise contractors that have customer testimonials and star ratings
- We don’t allow contractors to get testimonials from anonymous users. Contractors on our platform can only get ratings and reviews from customers that have hired and completed the job through our platform
- We provide a way for contractors to show their portfolio of work, along with details of the location, budget and scope
- We provide an escrow payment where we hold part of your money and only release it when the work is done
Even with these checks, no system is foolproof. By staying informed and detailed, you can ensure your home renovation is a positive experience and a memorable journey!
To find the right contractor for your renovation, visit Recommend.my.
