Down Payments

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powerslave

Senior Member
Location
Land of Lincoln
I just finished watching a talk show program on Fox where they were speaking about unethical home remodeling contractors. They had the guy from Trading Spaces on there and he warned everyone about giving any money to a contractor upfront. He said that it was a big red flag.

I do primarily service work but also remodel/additions. Comm. office build outs.
On larger projects I ask for 1/3 down payment, 1/3 after rough in and 1/3 after completion.

How do some of you guys do it?
 

peter d

Senior Member
Location
New England
powerslave said:
They had the guy from Trading Spaces on there and he warned everyone about giving any money to a contractor upfront.

Well, they certainly are the authority on contracting, aren't they? :roll:

Pay no attention to such nonsense.
 

iwire

Moderator
Staff member
Location
Massachusetts
As a customer I have no issue giving the right contractor some money up front.

A sign if my real intention to complete the job.
 

powerslave

Senior Member
Location
Land of Lincoln
That's what got me. Here's a young guy that works for a T.V. network that probably has very little to no experience in entering such contracts yet he was put forth as such an expert.:roll:
 

480sparky

Senior Member
Location
Iowegia
peter d said:
...Pay no attention to such nonsense.

Too bad there's so many that do.

For unknown, new customers, I require a small deposit. Usually 5 or 10%. I tell them I do this in order to secure the manpower and scheduling. If they balk, I explain that I've had too many cases where someone says they want me to do the work, but when the time comes, they've gotten someone else or have decided not to have it done. A deposit just forces them to commit to the deal.
 

growler

Senior Member
Location
Atlanta,GA
powerslave said:
I just finished watching a talk show program on Fox where they were speaking about unethical home remodeling contractors. They had the guy from Trading Spaces on there and he warned everyone about giving any money to a contractor upfront. He said that it was a big red flag.


They really should be a little more clear when warning homeowners of an up front payment.

I do agree that if a contractor shows up and wants a large cash payment or even a check to his personal account that's a big RED Flag. I think that is the point they are trying to make ( don't get scammed ).

On the other hand if the contractor has a contract with the homeowner, a permit has been pulled and materials delivered it's time for that first payment. I don't consider this a large payment up front because the job has started.

 

Dennis Alwon

Moderator
Staff member
Location
Chapel Hill, NC
Occupation
Retired Electrical Contractor
I have never gotten a down payment for a job. I have been in business for 28 years and have only not collected a few hundred dollars. I take percy with me and there is never an issue. :grin:

BTW this is percy-- you know Percy Sledge-- When a Man Loves a Woman.

15025%20SLEDGE%20HAMMER.jpg
 

powerslave

Senior Member
Location
Land of Lincoln
growler said:
They really should be a little more clear when warning homeowners of an up front payment.

I do agree that if a contractor shows up and wants a large cash payment or even a check to his personal account that's a big RED Flag. I think that is the point they are trying to make ( don't get scammed ).

On the other hand if the contractor has a contract with the homeowner, a permit has been pulled and materials delivered it's time for that first payment. I don't consider this a large payment up front because the job has started.


That's what made me mad. They didn't differentiate.


I know there are some rotten contractors out there. I have dealt with some of them personally. But what about the unethical homeowners? There should be an Angie's List type site where contractors can go to check the background of their potential customer.
 

satcom

Senior Member
Dennis Alwon said:
I have never gotten a down payment for a job. I have been in business for 28 years and have only not collected a few hundred dollars. I take percy with me and there is never an issue. :grin:

BTW this is percy-- you know Percy Sledge-- When a Man Loves a Woman.

15025%20SLEDGE%20HAMMER.jpg

In business for well over 28 years, and we get down payments or every job, including service calls where we get a dispatch fee. You have to remember the business is our only means of income, so we don't treat it like a hobby.
 

480sparky

Senior Member
Location
Iowegia
powerslave said:
That's what made me mad. They didn't differentiate.


I know there are some rotten contractors out there. I have dealt with some of them personally. But what about the unethical homeowners? There should be an Angie's List type site where contractors can go to check the background of their potential customer.

If you really want to do that, there is. It's called a credit check.

Equifax
Experian
TransUnion
 
powerslave said:
I know there are some rotten contractors out there. I have dealt with some of them personally. But what about the unethical homeowners? There should be an Angie's List type site where contractors can go to check the background of their potential customer.

I read about this company in the Hartford Courant awhile back. It's obviously more for checking up on GCs than homeowners, though.
http://www.forinoreport.com/index.php
 
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nakulak

Senior Member
I like the idea of a downpayment - I feel that it solidifies the contract between the two parties. But I also understand the fear of conmen, and when I did that type of work (residential) if the homeowner was skittish then I would accept a check when we showed up to do the job. Here in maryland they have an entity called the home improvement commission which mandates restrictions on any homeowner contracts, including limiting the downpayment to 28%(if memory serves). I think its a great thing to have this oversight because there are too many fly by nights ripping off homeowners, and I think more states should have this kind of licensing.
 

ike5547

Senior Member
Location
Chico, CA
Occupation
Electrician
Dennis Alwon said:
I have never gotten a down payment for a job. I have been in business for 28 years and have only not collected a few hundred dollars.

That's been my experience, also.
 

Rawls007

Member
I don't worry about homeowners too much, never had any problems collecting when the job was finished. GC's on the other hand.........
 

satcom

Senior Member
Rawls007 said:
I don't worry about homeowners too much, never had any problems collecting when the job was finished. GC's on the other hand.........


I don't know where these areas are where where homeowners are no problem, but in the area we work, homeowners forget where their check book is, claim the us postal service has the check, my husband makes out the checks, i will send it in the mail, just don't hold your breath waiting, we use to get hung for about 30% of the billing, so we never work with out a down payment or advance credit card pay.
 

LLSolutions

Senior Member
Location
Long Island, NY
I will always offer a written contract if I request money upfront. Makes the customer feel a bit more secure, giving thousands of dollars to someone you've only known for a fews days or weeks. I've never felt bad about asking for money upfront, it shows a commitment on the customers part. I personally like the 1/3 at signing, 1/3 at some nice midpoint, maybe after a rough inspection is complete if it suits the job and one at the end. 50/50 is ok but its more for you lay out and for the customer. Commercial GC's are another story.
 
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nakulak

Senior Member
satcom said:
I don't know where these areas are where where homeowners are no problem, but in the area we work, homeowners forget where their check book is, claim the us postal service has the check, my husband makes out the checks, i will send it in the mail, just don't hold your breath waiting, we use to get hung for about 30% of the billing, so we never work with out a down payment or advance credit card pay.


the wife: my husband writes out all the checks
the husband (different day): my wife has the checkbook
 
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