When someone comes to your house and starts smashing down walls, tearing out appliances and punching holes in ceilings, it's best to know exactly who you are dealing with.

As a smart homeowner, you've already used Bankrate to lock in a low interest rate on a home equity loan and to find out which remodeling projects pay you back the most.

Now is no time to get nailed by a shoddy contractor.

According to the remodeling activity indicator released Jan. 13 by Harvard's Joint Center for Housing Studies, Americans spent $149.5 billion on home improvements last year, up 4.3 percent from 2004's total.

Lots of work means lots of contractors -- and lots of ways to get scammed.

Slam the scam
In 2005, the Better Business Bureau received 5,728 consumer complaints regarding construction and remodeling services, ranking relatively high at 22 out of 2,840 complaint classifications.

Sheila Adkins, director of public affairs for the Council of Better Business Bureaus, says there are three main reasons for the flood of complaints:

• Homeowners don't get all the details written into the contract before signing it.
  
• Homeowners select contractors based on price alone without investigating their backgrounds.
  
• Homeowners get duped by outright scams.

These fly-by-night artists fall into three broad categories.

There's the lowball artist, a shady operator who intentionally bids below his legitimate competitors, then makes costly changes or skimps on workmanship to recoup a profit.

Then there's the slipshod businessman whose intentions may be honorable but whose incompetent estimates and overall poor judgment end up costing you money.

Last, there's the con man, an outright criminal who promises anything at any price, demands his money upfront and vanishes.

"These are the door-to-door home contractors who claim to be doing a job at your neighbor's house, they have leftover materials and would be happy to patch your leaky basement, repave your driveway or check your furnace," says Adkins.

Protecting yourself against the con artist should be easy, she says.

"Contact your local BBB and ask for a list of members in that industry. That's just being a wise consumer," Adkins says. "If you're spending several thousand dollars, I think you want to make sure you're giving it to a reputable company."

Contracting 101
OK, you've successfully avoided the outright scam artists. But you're not out of the woods yet. There are plenty of other ways your remodeling budget can head south, the first and perhaps most important being the failure to calculate an accurate budget.

To get a ballpark idea of what your project will cost, check out the median national averages as compiled by Remodeling magazine.

Remodeling costs: national averages

Kitchen (major remodel) $43,862 Bathroom addition $22,977 Bathroom remodel $10,499 Home office remodel $13,143 Basement remodel $51,051 Two-story addition $80,133

Source: Cost vs. Value Report, Remodeling Online

A number of other Internet sites can also help you arrive at a more accurate budget for your remodeling project. One of the best is ImproveNet, which helps calculate the cost of labor based on the size of your job, materials you might want to use and the quality you desire.

Next, you need to determine which types of home professionals you'll need to hire.

For minor work, an experienced general contractor likely will be the most cost-effective. A specialized contractor, however, may save money over a general contractor by knowing the timesaving tricks of the specialty.

If major work is involved, especially if there are design, aesthetic or structural issues, an architect may be needed to draw detailed plans and obtain permits. To save on costly architectural fees, consider instead a certified or licensed designer who generally specializes in particular types of projects (kitchens, interiors, baths, etc.). Or consider a design/build contractor who specializes in seeing major renovations through from start to finish.