Scams That Target Homeowners

By
Donna Freedman

January 26, 2023

Each year, millions of older Americans become victims of fraud. Schemes vary, but one type of fraud quite literally hits you where you live: the homeowner scam. Not only could you lose thousands of dollars, but also you could wind up homeless.

Scammers target older adults, in particular, because they assume that their homes are paid for, they’re often too polite to hang up or say “No,” or might not fully understand what they’re signing if they’re experiencing cognitive decline.

What’s worse is that these scams can be tough to spot because they are based on legitimate services, such as home repairs, security system installation, and reverse mortgages. However, being aware of how these scams work can help you or an aging loved one you’re caring for avoid becoming a victim.

Here’s what you need to know about scams that target homeowners—especially older homeowners.

[ Read: How Your Risk of Financial Exploitation Increases as You Age ]

Common home improvement scams

If you need to make repairs to fix problems around your house, con artists might try to take advantage of the situation. Be on the lookout for these home improvement scams.

“One day only” deals: Be wary of contractors who knock on your door and offer an unbelievable deal. Sometimes, they’ll say it’s because they just did some work in your area and want to use up the leftover materials. Or, they might claim they’re out “drumming up business” and noticed your deck needs work or your lawn needs mowing. Here’s the catch: It’s a one-day offer, and you must put down a cash deposit—or pay in full—right now.

Reputable contractors don’t push people to make on-the-spot decisions. Even newcomers looking for clients shouldn’t demand cash deposits, especially without a written estimate and a contract. In either case, you’ll probably never see this person again once you’ve handed over the dough.

Find “extra” problems: Suppose the contractor or handyman does stick around. Once they’re in your home (or working outside it), they might “discover” more work that needs to be done. Sometimes, the additional repairs are legitimate, but it’s possible that you’re being tricked into paying for unnecessary work.

A promise that insurance will pay for it: Contractors might ask you to sign an “assignment of benefits” (AOB), which means you’re allowing them to make repair decisions and bill your insurance company for the costs. An AOB can make things easier for homeowners who don’t want to deal with the insurance company directly.

Post-disaster ripoffs: After natural disasters, crooks descend in droves with “well-rehearsed, predatory practices to exploit stressed disaster victims when they are most vulnerable. As a result, survivors pay these bad actors who do little or no work,” according to the National Insurance Crime Bureau.

How to avoid home improvement scams

The NICB warns against any “contractor” who does one or more of the following:

• Approaches you offering unsolicited business
• Says they’re approved by a government agency, such as FEMA
• Asks to be paid upfront
• Balks at giving references, local and state business license information, or phone numbers and a physical address for their business
• Tells you how you should “interpret” your insurance policy

As they say: If it sounds too good to be true, it probably is. Home improvements should be done by a licensed and bonded contractor after you’ve gotten written estimates from several companies.

Home improvement loan scams

Seniors who want to age in place often modify their homes to make things easier if they develop health problems. For example, they might exchange their bathtub for a walk-in shower and install a wheelchair ramp at one of the home’s entrances.

If you or your aging parents are planning any home-improvement projects, watch out for contractors who offer to help finance the project with a home improvement loan. This could be a scam.

How to avoid home improvement loan scams

As with other types of home-improvement scams, you should never hire a contractor who actively solicits your business but won’t provide licensing information or references.

[ Read: Senior Scams and How to Avoid Them ]

Security system scams

Home security systems aren’t just burglar alarms these days. They can include cameras that let you know who’s at the door (or anywhere else on your property), monitoring of your home’s systems, and other high-tech services.

Unfortunately, scammers have learned to prey on seniors’ need for security. Some legitimate companies will go door-to-door to sell security systems. But so do the bad guys.

How to avoid security system scams

Before you let anyone in, contact the company to confirm that the work is legitimate. Use the customer service number in your existing contract, not a number that the salesperson provides. (And if the guy leaves while you’re on the phone? There’s your answer.)

Reverse mortgage scams

Reverse mortgages are loans that allow adults age 62 and older to turn the equity in their homes into a source of income. However, scammers sometimes use these loans to take advantage of older adults.

How to avoid reverse mortgage scams

Deciding whether to get a reverse mortgage is not something you should do on the spot. If you’re being rushed or pressured to sign documents, this is a red flag.

Mortgage-relief scams

It’s illegal for someone to charge upfront for helping you deal with a mortgage problem. Before they can collect a fee, you have to agree to a written offer. Most people don’t know this, which is why scammers can take advantage of people who are desperate to keep their homes.

How to avoid mortgage-relief scams

If you’re having trouble with your mortgage or have been served with a foreclosure notice, look for a certified housing counselor or other help through the resources provided.

How to protect someone you love

Older people who are in financial straits, or even just feeling the pinch of inflation, could be swayed by a scammer’s pitch. If you have aging parents or are caring for an aging loved one, it’s important to keep the lines of communication open with them and to warn them about scams such as those that target homeowners.