How much money down does a remodeler or contractor typically ask for to start a job?
There are many different options that determine a payment schedule in the remodeling industry. Receiving some sort of down payment at contract signing is a standard when hiring a contractor for a home remodel project. A payment schedule should be part of the contract. Typical down payments are 25% to 33%. Sometimes even higher depending on the type of work being done and the cost of the construction project . A down payment is highly recommended when products have to be ordered by the contractor immediately. Doors, windows, cabinets, flooring and specialty items are usually ordered well before the construction starts and can take weeks to receive. If these items are not ordered ahead of time, it can result in lost days and added to time to project completion. Dividing a project into 3 or 4 equal payments allows the contractor to keep up with the project’s labor and material costs. Payments should be made on a percentage completion basis unless material needs to ordered in advance. In other words, don’t pay for drywall material when the foundation is being poured. A good contractor will keep you informed of upcoming payments and schedules. A good safety net for the homeowner is to hold on to the last 10% of the money due to the contractor until all work had been completed. This includes final construction punch list items. Don’t let a contractor walk away with all the money if he/she hasn’t finished the job. There is simply no incentive for him/her to come back finish the remodeling job.
These are only suggested down payments for San Antonio and surrounding areas. The important think to remember is that a business cannot survive without cash flow. Do some research before you hire any contractor to do any kind of home improvement project. Google the company name and business owner name. Talk to former clients and get their feedback about how their project went. Make sure the contractor is licensed and is a member of the Better Business Bureau.