What is a fair down payment on a remodel project?
Should a homeowner be suspicious if a contractor asks for 50% as a deposit?
We have Completed thousands of projects over the past 35 yrs in just Windows and Doors alone. From our own loyal customers to the new. Even with the sub-contracting we do for the larger construction co’s, we always get paid a portion up front. All these jobs have required planning time and materials. Door or windows to be ordered, permits or ,special ordered window products from vendors and local distributors. It would only be natural for the customer to pay for the portion that is fair. Most companies will require all non-installation material to be paid up front, like expensive patio doors. windows and doors . Big box retailers do not accept partial payments, but smaller contractors will usually. Also a contractor that cannot acquire a working line of credit at the bank or vendor, is probably too risky to do business with, unless you personally know him or her.
However, gaining that trust and assurance from the customer is all about honesty, and integrity. If your contractor is the kind that needs to ask for more money down than which is typically done... He’s probably borrowing from "Peter to pay Paul" That’s a big red flag, of a poorly run business. Eventually the customers at the end of the line will lose.
So what do you do?
For larger projects Ask the contractor for a "performance contract" especially if your concerned about Him having to much of your money on the front end of the project. He should be able to present a case for why he needs whatever money he needs up front. In all estimates should disclose what the down payment is for, what materials will be bought and ordered with those funds and, when the contractor expects to be paid the next portion with a date and time. Good contractors, allow a "hold out" portion for the end of the larger projects, to cover concerns over punch list items. When the punch list is done, the customer pays the final invoice, and gets a Lien waiver. The assurance for both side of the deal is in the contract that’s why they call it contracting.
Buy law all State lic. Contractors have to show you what they have allowed for the products, materials and labor for your projects. They don’t have to show you their cost but they do have to show you what each portion is and the break down in the Bid. The also have to show you what they owe to the sub-contractors as the sub can also lien your property, if not paid on time. A good contractor will have a performance contract, a 7018.5 lien doc, and even a permit waiver if your not wanting one from him. But instead want to pull it yourself which is allowed by law and will cost you less then his permit. (The fine from the city is not worth the few dollars saved.) On top of all this he should have a warranty disclosure on paper or web site, and a clear project management plan. "Start to finish". He should have all this prepared if he’s on top of things.
In the defense of the contractor not getting more then a small percentage, he can not be expected to bank roll the project. And , most people would agree that the customer should be more then willing to have some skin in the game so to speak. Many of the materials whether they are windows and doors or siding and roofing are somewhat perishable, and not always returnable. So for large projects the material portion payment is needed to get things rolling and the performance portion should be in line with the actual work having being completed in accordance with a "professional workmanlike fashion" Everyone has some over-head to cover. But if the work is not up to snuff , then the performance contract allows for a legal remedy.
Smaller projects should be handled with a well written estimate, signed by the customer. It should outline the overall scope of the project and keep things clear as to time of start and finish of the project. Payment is usually due upon completion, and the same day.