Your Money: Tips to avoid homeowner remodeling horrors

For antifraud Friday, we're looking at homeowner remodeling horrors and how to avoid them. From exceeding your budget to withholding contractor payments or being taken by phony contractors, here's how to avoid some financial horrors of home renovation.

Nearly half of those who have ever done a home remodeling project exceed their budget, and often aren't satisfied with the work. With dissatisfaction, of course, comes the question of whether to withhold contractors' payments. Nearly one-fifth of those dissatisfied with their most recent remodeling project withheld final payments from their builder-contractor, according to a survey last month from Bolster.com performed by Harris Interactive.

Among U.S. adults, home remodeling is an extremely stressful financial event.

Eighty-five percent of Americans consider doing a major remodeling project to their home to be at least somewhat stressful, even more so than taking out a mortgage (80 percent) and saving for college (66 percent).

Among those who have ever done a remodeling project to their home, most are likely to blame themselves or their partners for overpaying or work gone awry, as opposed to blaming a contractor, architect, real estate agent, home decorator, or interior designer.

Worse, phony contractors offer to do work on your home and then disappear with advance payments, says certified fraud examiner Leon LaRosa of LaRosa & Associates in Exton.

Here's how to avoid being disappointed, or, in the worst case, defrauded, LaRosa says:

Execute a contract describing specific details of the work to be performed, warranty details, price, and payment terms.

Require your contractor to be bonded and insured. Insurance protects against specific types of losses; however, bonds provide protection if the job is not completed to satisfaction.

Check for licensing. Most states have a licensing registry for contractors where you can locate the contractor's licensing status. Check the Contractors License Reference Site online (www.contractors-license.org). This site allows you to determine state licensing requirements and where to go to validate a contractor's license.

Check for complaints through the Better Business Bureau or your local government agency building department.

Check references of past and current work. Talk to subcontractors. Ask if payments are timely and how they are treated.