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Down Payment Amount on Home Improvement Project (Urgent!)

10 years ago

I have a contractor that is asking for a 25% down payment on a
$13,000 project. Does this sound "ok"? I was under the influence that a
down payment should be 10%.

Any help is appreciated as this is quite urgent. Thank you in advance!


Added Note:

When
the other contractor arrived in person to be able to prepare a quote on the
project he told me he would require $1,000 to "lock me in", so I assumed
that would be the down payment but now I have this situation.

Comments (22)

  • PRO
    10 years ago

    How soon will the project start? Will the contractor have to order a lot of materials in advance? It's quite possible that he will need that down payment to start the job. Why not have a frank discussion with him and let him explain his reasoning? Have you talked to his references? That should give you more confidence in him, hopefully.

    Maxwell VII thanked Cynthia Taylor-Luce
  • 10 years ago

    Honestly, this is the first time I've ever hired a contractor and while I'm not a complete idiot, I am going in with quite a bit of ignorance.


    I have no idea when the project will start. I was about to begin pressuring him/them to at least give me a start date. I also don't know if they will have to order a lot of materials in advance. I would assume they had most of the materials already since this is all they do?


    Yes, I'm going to call him today since this email tag is driving me crazy. First it took him over a month to finally send the contract, then it was wrong, then he fixed it and now I have this strange payment schedule with no dates.

    I went with this guy (haven't signed contract yet) because he was highly recommended to me by someone else (not a customer, just someone who's seen a lot of his work).

  • PRO
    10 years ago

    Oh dear, the contract must state a commencement date and a completion date. These are red flags so no wonder you're nervous. Ok, the first thing you must do is talk to his customers. Ask for contact information for all the people he's worked with for the past two years and talk to them about their experience with him, both his workmanship and his integrity/reliability. Have you seen any ratings for him online? If you are not comfortable by then, I would keep looking for another contractor who will be more open with you and satisfy all your questions. If you are this uncomfortable now, then I don't see the situation improving as the work begins. Please stay in touch and don't hesitate to update this thread.

  • 10 years ago
    last modified: 10 years ago

    If you are already having communication problems and delays, and if you feel pressured, then maybe this isn't the right contractor for you. I wouldn't assume anything, I would sit down with him and hammer out dates - start dates, expected completion dates, dates by which you will need to make various decisions for him to continue the work, dates payments are due, contingencies for payments (eg if he is behind schedule, are you still required to pay on time?). I would also discuss things like ordering materials and the timing/responsibility for that. Most contractors wouldn't have materials on hand specifically for your project, but then again I don't know what the project/type of contractor is.

    Edited to add, Cynthia is correct, you must talk to references before the contract is signed. You are putting out what I assume is a great deal of money to you, you should be fully satisfied with all aspects before signing anything at all.

  • PRO
    10 years ago
    last modified: 10 years ago

    25% isn't bad for a project. Many ask for 50%, depending on the job, but it shouldn't be weeks or months before the job starts. There should be a contract to go with it - what's expected of you and what's expected of your contractor. The "lock me in" part sounds cheesy. For contractors, accepting jobs without deposits plays havoc with the cash flow. They can be out a large amount on material costs with some time before payment is due, particularly if longer than 30 days, which is after many of their material costs are due. Other jobs have material costs due at the time of purchase. Small jobs with short timelines are easier to cope without deposits. If there are several jobs at various stages while waiting for payments to come in (particularly with seasonal work), contractors can be really hurting for cash, especially early in the season.

    If the contractor is in demand, then perhaps a small deposit to "lock them in" might be a necessity to get them booked. It shows a commitment on the part of the homeowner and won't result in a lot of work being put in by the contractor to prepare crews and materials only to have no further contact. That's a great place to be in for a contractor: Knowing that they are the best in town with regular income and well ahead of their competitors in terms of reputation and being able to select and schedule crews, materials and clients with less concerns that they will have to chase final payment.

    Scheduling sub-contractors can be a tricky task for smaller businesses. Larger businesses can throw their weight around a little, but smaller businesses are at the whim of the weather and market to a larger degree. A deposit allows for contractors to schedule subs knowing that payments will be forthcoming. A company doesn't last long if it cancels scheduled work with subs too many times. The busier the season, the further out that the subs will need to be booked as well.

    If you have concerns about the honesty of the contractor, listen to that little voice in your head and do some research. Most are above board, but a few that make the news leave a bad taste for everyone.

  • 10 years ago

    Thank you all. Unfortunately, I feel I'm somewhat "stuck" with this contractor as I ran from the other contractors for even seedier practices (unwillingness to put anything in writing, trying to force me into a contract, not even willing to give me an estimate at all, complete unwillingness to even come out to give me a quote, leaving me hanging for weeks, not even getting back to me at all, etc.).

    This is the last contractor left in my area (120 mile radius) who does this type of work. I'll see what I can do.


    Sorry if this seems like an incomplete reply. I'm in a rush and just disheartened over all of this.


    Thank you all again.

  • PRO
    10 years ago
    last modified: 10 years ago

    Maxwell: the 120 mile radius probably has a lot to do with it. $13,000 is a lot of money to you, but to a renovation company, it's a small job when they likely have 6 figure jobs on the books.

    For me, I'll need to be pretty sure of my work and competitiveness if I travel a long way for the quote. I can't get in my pickup and go to just a local quote without it costing me something in the order of $100+. 120 miles each direction is 4 hours away from office admin or work site tasks plus time on the quote. There's a lot of content that can't go in a contract and generalizations need to be made. As for start dates, etc, with those distances involved, there's probably similar concerns about getting commitments from subs. 120 miles probably involves a new set of subs who I would be unfamiliar with, or overnight or weekly accommodations. I would still have to stand behind the job they do even though I'd be hiring them with little background information on their work.

    For hands-on contractors, many times they can't get a quote to you immediately. At other times, some contractors are not going to concern themselves with getting a quote for a $13,000 job if there are several $100,000 jobs waiting to start. Or they might not be able to give you a definite start time on a $13K job, because they intend to shuffle your work in around several larger jobs, any one or more of which could blow out by several weeks or longer. That's the nature of house renovation. Just some rain on the scheduled day of a concrete pour in a rural area can set the renovation timeline back on a job by a month.

    A $13K job probably means hiring a sub or two part-time. A $100K job means keeping a full time crew employed. If there isn't a signal of some commitment at the other end, they will bump a quote down the list of priorities for other quotes that they know will more likely go ahead. Is it fair? Probably not, but it's what many have to deal with.

    I don't know the nature of the work you want done, but you might try and chase a semi-retired builder or individual handyman operation for comparisons. Have a discussion with your contractor as Rev. Gardens suggests.

  • 10 years ago
    last modified: 10 years ago

    Thank you (all) again. The contractors I was actually able to contact were all within a 55-60 mile radius. It's only that my search was within a 120-mile radius. There are no other contractors "stretching out" to even a 120-mile radius was my point. Excuse me for being unclear. I was in quite a rush.

    I did as suggested here and asked for everything in writing, and the contractor sent me an an email saying it made him "uncomfortable" and that he would be withdrawing the bid, so I guess this dilemma is over.

    In all honesty, it's a bit of relief as I was more than questioning their integrity with all that had gone on.

    Edit: And for purposes of explaination, 55-60 miles is as close as I can get. There are no contractors which are any closer.

  • PRO
    10 years ago

    IMO Contractors do not stock building materials as each job has its own needs so 25% seems quite fair to me. And be prepared for travel expenses when looking again. Conversation is a must and the adage of haste makes waste is a good one in this case.This is a huge expense and you need to get a contractor that you can talk to and if that takes more time then so be it

  • 10 years ago

    You probably dodged a bullet Maxwell...... On to plan B! (or C?)

    Maxwell VII thanked ascorsonelli
  • 10 years ago

    Yes, I understand now 25% is fair. I always thought it was 10%. I was ready to compromise (adjust?) for that one. It was all of the other things that were just intolerable. This contractor has been dragging his tail for almost 2 months, didn't want to put anything in writing, wouldn't return my phone calls, took 3 weeks to even get the emails started claiming they were contacting by email but could provide no proof, treated me like they were doing me a favor, etc. I could go on and on, probably just isn't enough room here.

    I did dodge a bullet. I guess I felt cornered at the time dealing with these people and were tolerating more than anyone should. I did find one more contractor, but we'll see how it turns out. There are actually two more contractors but one I decided not to use because of their ratings being low everywhere for taking deposits but never starting the work.

    It's either this last company or me and a handyman try to figure out how to do this by ourselves. This area is just a disheartening one to live in when it comes to doing ANY type of business. Everyone always feels like they're doing you a favor by taking your money and most of the times they don't even want to do the work that goes along with it.



  • PRO
    10 years ago

    what exactly are you trying to have done?

    Maxwell VII thanked Revolutionary Gardens
  • 10 years ago

    I'm trying to get an in-ground pool resurfaced, along with all new hardware (pump, filter, valves). I'm thinking of just doing the hardware this year (myself if I must) and leaving the last company for next year. I don't know. Maybe I'll have better luck then.

    As I said, it's all just been very discouraging trying to deal with these people.

  • PRO
    10 years ago

    Okay this is where you have gone wrong you call apool company to see to this not just some random contractor

    Maxwell VII thanked Patricia Colwell Consulting
  • 10 years ago
    Not sure where you live, but around me, where pools are opened for the summer only, any spring work needs to have a signed contract by December, if not earlier.

    That said, if the guy is too busy to be in touch with you in a timely way, he should just say so.
    Maxwell VII thanked Bookwoman
  • 10 years ago
    last modified: 10 years ago

    Patricia, these are pool companies. They refer to themselves as contractors here so I did also. Sorry for lack of clarity.

    Bookwoman, I was told signed by February/March here to get open availability but they all drug their heels so long it's now April. I started all of this in January. And yes, I agree with you. That's "not how it works here", I was told though by several people. I wish it was.

    It's all conflicting. I was told start calling in January and get a "spot" by February/March (for the Summer) but when I called companies in January most had the "it's too cold to start thinking about this yet" mentality and didn't want to move. I then resumed in February, whereas, I was lucky we had an early Spring warm up. But then each one dragged their heels until now it's April.

    All irrelevant now really. Where I made my mistake was expecting any professionalism at all. I've decided to put this project off until next year since I only have one company left.

    What I'll do is just fix up the equipment myself (if I can, if not then use a pool guy/electrician) and leave the resurfacing and tiling for next year. I have too many projects to spend 3 and 4 months on each trying to JUST set something up.

    Sorry to anyone who reads this thinking I'm just a bitter person. I'm just fed up with the "professionals" in this area.

    You're reading a guy who just finished cleaning up a flooded garage because nobody would come out here for 5 days until their schedules were "clear" to stop a plumbing leak.

    Just fed up.....

  • 10 years ago
    last modified: 10 years ago

    13K for all that you want??? I'd say that was part of the problem in getting anyone to work with you.. Word has gotten around the local contractor community.

    You're going to have to inquire much further out. And double your budget to entice even them to drive the distance.

  • 10 years ago
    last modified: 10 years ago

    And to answer your question, probably 25% to 50% down is way more like it.

    Maxwell VII thanked smileythecat
  • 10 years ago

    Sophie, I'm not getting you. $13K was that specific contractor's bid. He was actually the most expensive of the bids so far, but that wasn't an issue as I was more concerned with the quality of workmanship and customer service than the price. It's just a simple resurface and some new equipment. There is no "all that I want" lol.

    And yes, thank you smiley. I do understand this part of it now. I was more familiar with 10% down as the usual.

    Again, the issue here isn't cost. The issue is bad business practices.

  • PRO
    10 years ago

    It depends on your state. In the state of California, a contractor can not charge more than 10% of the total cost of the project as a downpayment, or $1000 depending on which is higher. With a $13k project, he should not be charging more than $1000 as a downpayment. However. If he is doing work immediately, and has to cover cost of materials, that's a different story. I agree with Revolutionary gardens though. This thread will fill up with a LOT of opinions. Talk to the contractor, do your research. I also don't think you will accomplish anything from posting here aside from opinions, which will work against you.

    Good luck!

    Maxwell VII thanked User
  • 10 years ago

    Yes, thank you. This issue was already resolved as once I asked to be treated professionally, the contractor withdrew the bid.

    That was what I was accustomed to, 10%/$1K down. I now both know and understand it may be higher. I thank you for your input.