Is it normal for a contractor to need some money up front before starting a bathroom remodeling job for materials and some labor? How do contractors normally work it?
In Maryland, a home owner will put down 1/3 as a deposit and when the work is finished, the home owner pays the remaining balance. Or, we also offer homeowners financing if needed. With this option homeowner doesn’t pay a $1 until the job is completed. Then they have monthly installments.
I personally will not start a project without a payment of 10% or $1000 (which ever is less by law). There are contractors out there however that will ask for 30, 40 or even 50% up front. Not necessarily a red flag or reason to can the contractor, although not the best way to gain someone’s trust!!! Your contractor should have a contract that clearly explains payments and when they are due. Typically ‘progress payments’ are given at certain points throughout projects, such as upon completion of rough plumbing or rough electrical, or after sheet rock installation. Hope this helps!
No, the contractor needs to have a good, stable bank roll to support his job.
Also, that will give a good feeling and trust that you are dealing with a good stable company.
Up front is only %10 or $1000, whichever less by the law of California state license board.
Payment should be upon each progress stage of the project and leave the customer with around 20% to pay upon completion…
Hi Teresa,
Yes, most contractors will ask for money up front for materials. That’s perfectly normal. The way it tends to work is you pay either 1/3 or 1/2 of the amount up front for the job. If it’s a big job and it will take a couple weeks, they might ask for another payment mid way. Once the job is finished, the last payment is paid.
Our company will usually demo the bathroom or kitchen project and then ask for a set amount to cover the supplies (tile, fixtures, appliances, etc.) and some labor to begin the next process. The supplies needed to begin the demo are usually not that expensive and can be completed with items you already have on hand. Once the actual remolding process begins, yes, it is normal to be asked to pay a portion of the total project. The draw amounts need to be agreed upon and reflected on the written and signed contract before a project begins. This is to protect the contractor and the homeowner. A contractor should always be in constant contact with a homeowner about their project. We use a software that my customers can actually see the project schedule, see who is supposed to be where on what day and they have the ability to “message” me with any questions they may have. My customers love being a part of the process. Hiring a trustworthy contractor is the first step to having your project completed seamlessly.
A contractor can either offer financing or work on a cash basis. An all cash job would ask for a deposit of 10-30% and a draw is set up as progress on the job is made. Make sure you check out the contractor by calling the state board, the insurance company and ask for companies they do business with to so you can call to make sure they pay their bills on time.
Contractors pay depends on the type of project. On a commercial project, the contractor provides a schedule of values for the different scopes of work and each month he bills percentages of the completed work for each line item. In residential, where there is a mortgage, some lenders provide a milestone draw system with a front end deposit, or others use the percentage of completion method. In remodeling it can be a blend of the two, but often a contractor requests a small 10% up front fee and then progress payments.
It depends on the size and financial stability of the contractor. Never, ever pay a contractor more than 10% for the upfront deposit. If he has no vendor accounts, then how reliable and stable is his company? Likely, not very.
Legal payment structure may vary from state to state.
In California:
*Down payment at the time of signing the contract 10% or $1000 WHICHEVER IS LESS.
*All stage payments must read: Upon completion of OR upon delivery of, example: Upon completion of floor tile demolition and haul away the debris: $1000
*Stage payments amounts should correspond to the work being completed - no “Front loading.”