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Question DetailsAsked on 6/18/2013

How much should i pay a general contractor prior to starting a job?

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12 Answers

1
Vote

I can agree with a 10% on signing as a good faith gesture. Payment as the job progreses with Big Jobs is okay. With smaller and non special order materials (under $10,000) cash on completion is industry standard>

JIm Casper

ps all terms are subject to open to change, be fair not a target.

Source: www.heartlandmastershield.com

Answered 4 years ago by jccasper

0
Votes

This varies by the contractor. At no time should you pay all money up front. I usually charge 50% up front to schedule and begin work on smaller jobs under $6-8,000 with the remaining due at completion or 50% up front and 1/4 payment midway, the rest when completed. It depends on what point my big expenditures are going to happen on that particular job. Larger jobs, about $25,000 plus, I'll generally charge 1/4 down, 1/4 on day one, 1/4 at a certain visible level of completion, and the rest when all work is done. The exception to these rules are small repairs done in a day. If I don't schedule them a week or more out I just collect the day of service. If scheduled out and I'm busy I usually get a small check of $1-300 to hold the spot in the schedule. Unfortunately customers can not always be trusted not to back out. When I've planned on guys working for a day and put off other customers to do a job it costs money if that job falls through. Therefore, it's reasonable to ask for that non-refundable deposit to cover those expenses and at least some of the expected profit for the day.


Todd Shell

Todd's Home Services

San Antonio, TX

Answered 4 years ago by Todd's Home Services

0
Votes

In theory you should not have to put anything down, as the Contractor has the right to file a builders lien against the property in event of non-payment. A reputable contractor has money in-hand to cover the cost of materials and initial labor upon starting a job - demanding money up-front for materials purchase means he is flying by the seat of his pants and not someone you want anyway.

However, the contractor business has gotten into the habit of requesting up-front payments, and there is some logic to this, at least to the extent of a down payment to ensure you are not going to back out on him after he has committed his crew and made materials pruchases for your job. You should keep any upfront payment to a minimum (maybe a few hundred dollars). If special items are being ordered (like cabinets or countertops) then pre-payment of maybe 50% will probably be required - be sure to have this is writing, and receipted for. Then once materials are delivered onsite for the job then a partial payment covering their cost plus maybe a days worth of work could be paid, with subsequent percentage payments due on satisfactory completion of specified completion of work items. Your payments should ALWAYS lag the percentage completion by 20% or so - if you let your payments get even to or ahead of completion value, the contractor loses incentive to complete the work in a timely manner, and you can get into the contractor-from-hell scenario where the job dribbles on forever, and final "punch-list" items or fixup of minor problems never gets done.

The bid and your signed contract should spell out measurement and payment terms, and of course make sure the contractor is licensed, bonded, and insured through at least the anticipated finish date; and get copies in your hands of those proofs BEFORE he starts ANY work or material delivery.

If at all possible, pay everything by credit card - you have a much better chance of getting your money back in that case in the event of trouble with the job.

Answered 4 years ago by LCD

2
Votes

LCD, I'm not sure how long you've been a general contractor but you make some good points and some questionable ones. Most contractors will process their credit cards through a third party like Paypal, Square, etc. because we don't have much demand for taking them. I only get 1 or 2 customers a year that even ask to pay that way. Then I just add the 3% fee I'm charged for processing and they get to wait a couple more days until I get the money before we start. Until I have it there are no guarantees the transaction won't be cancelled. Of course I'm a bit more lenient with repeat customers. If there is a dispute the money has changed hands enough times it still boils down to the Customer and myself coming to an agreement.


You're right that a legitimate contractor has money set aside to carry a job if needed but it would be foolish to extend ourselves on jobs more than a fraction of the cost of the job. That money is to pay employees, suppliers and our attorneys should the need arise due to a late payment, bounced check, or lack of payment altogether. All of which do happen to anyone in business long enough.


Trust is a 2 way street between contractor and customer but that doesn't mean I'll pay for their remodel. Homeowner's have to do their homework and check contractors out before hiring them just as a good contractor will do a certain amount of looking into a potential customer to make sure they actually own the house and have the legal ability to authorize the work. These are all unfortunate requirements of the business in the modern age. Just as people have had xxxx ball contractors pull one over on them so have contractors had customers try and occassionally succeed in pulling one over as well. The lien system is useless. The only chance for a contractor to get the money owned is take the person to court, then get a wage garnishment order (which is rare). Otherwise, the contractor has to keep the lien active and re-file every expiration, then wait for them to eventually sell the house. By then the impact of the financial loss of not only the money for the job but legal fees has taken affect.


This is why it is important for both the contractor and the customer to feel comfortable in the relationship and in their choices to do business together. Just because someone calls me for a job doesn't mean I have to take it. Likewise, just because I provide a bid or estimate doesn't mean the person felt good about me either. It happens. Hiring a contractor should be personal. If the parties don't get along or have a good "vibe" it's not the right match. On larger jobs they'll likely see each other every day and definitely communicate frequently. The only way that works out in the end is if both trust the other and can work together.


Communication and agreement with each other are the most important regardless of what "everyone else" does. Find a contractor you can trust and get along well with. You'll be dealing with them quite a bit in the near, and likely far, future.

Answered 4 years ago by Todd's Home Services

0
Votes


My first thought is that you should pay a general contractor nothing before starting the job, however, if you feel you must pay up front, it seems fair (to me) to pay a small percentage upfront (for materials and contractor retainment) Only within the confines of a contract that states that the contractor will get paid the remaining (already agree upon amount) if the contractor completes the work by a specified date (put the exact date of completion in the contract) and, the contractor, agrees to subtract a certain amount ($100 per day for example) from the total amount owed the contractor for each day over the agreed upon completion date that it takes to complete the job... it might be best to let the contractor choose the completion date but, once the date is agreed to in the contract before the work starts, make the contractor stick to it and lower the pay (accordingly) if they do not finish on time.... proper cleanup might also need to be in the contract... if possible, get a contractor who was referred to you and tell them who/what referred you to them so they will know whoever referred them will also be told how the job went...

Answered 3 years ago by Guest_93441531

0
Votes

Hi! This is Megan H. from our Member Care Department!I apologize for my delay!


Here's an article that might help you out: http://www.angieslist.com/articles/ho...


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Answered 3 years ago by Member Services

0
Votes

It depends on where you live. In PA there is the Home Improvement Consumer Protection Act of 2008 that states that a registered contractor can not take more than 1/3 ot the total price. However, they can take 1/3 of the price plus money for materials. I have never paid anuthing over 50% nor will I.

Answered 3 years ago by Guest_9035740

0
Votes

I'll keep it simple. A licensed contractor for any trade is only allowed to ask for 10% or a $1000.00 whichever is less for a down payment. It is against the (CSLB) law to ask for 50% down period...

Answered 3 years ago by sethbonilla

0
Votes

Who or what is the "CLSB"? That isn't a nation wide law or agency. Sadly, it is a free-for all in Texas with no licensing and very, very little regulation. Doing your homework for what is allowed and typical among PROFESSIONALS in your area is imperitive, not fly-by-nights or fresh across the border labor.

Answered 3 years ago by Todd's Home Services

0
Votes

While I can't answer for other companies, I can share with you our policy(ies). Any project we execute, in any amount, requires a deposit. This deposit is bascially a retainer fee that provides commitment from both parties - homeowner and contractor (us) alike.


The cost of that deposit is sliding scale based on the overall project cost and considerations for the client's financial abilities. Here are some examples:


Small Scale Project: Overall cost for the project is $3,500. The deposit would be 1/2 ($1,750) or a 1/3 ($1,166.67). With 1/2, the balance would be due at completion. With 1/3, a draw would be required at the mid-way point of completion and the balance due at completion.


Large Scale Project: Overall cost for the project is $17,500. The deposit would be 1/5 ($3,500) or 1/6 ($2,916.67). With both scenarios: Equitable draws would be required at specific points, appropriate to the overall job scope (such as due at completion of demo, due at the completion of framing, etc.), over the duration of the project and the balance due at completion.


We feel this is the most fair and honest approach when executing a project. This methodology allows the client to experience first hand our work etchics and caliber of craftsmanship while simulataneously allowing us to establish trust and rapport with client as the foundation of future relations.


~ My Two Cents


Leslie Crenshaw

AllPro Residential, LLC

479-966-9846

http://www.allproresidential.net

Answered 3 years ago by LCrenshaw

0
Votes

California state law is 10% of the job estimate or $1,000.00 which ever is LESS. If a contractor asks for more find someone else. This pertains only to the state of California.


Answered 2 years ago by HometownBuilders

0
Votes

In Oregon, a contractor is REQUIRED, meaning they take away your license if you cannot maintain a surety bond. A surety bond is registered with the state. Any contractor doing work in the state with a legitimate CCB# will have at minimum a $20,000 bond, and a researchable license history. If for any reason there is a breach of the contract you sign, the homeowner can then go after the bond for damages. THERE IS ZERO PROTECTION FOR THE CONTRACTOR TO GET PAID FOR HIS TIME. Leins are worthless and cost too much time and money to pursue on smaller jobs. This whole boohoo for the homeowner is unrealistic. Smart owners don't get taken advantage of, and neither do smart contractors. Do your homework. Get multiple bids. Don't give anyone money with out verifying their credentials. Remember, like Hunter Thompson said, "In a world of thieves, the only crime is stupidity". Terms are terms, and they all have reason. If someone is not willing to pay me up front 2/3 of a job that costs 3k and takes two days. What's to tell me that they are able to pay any of it. They don't have a license that I can verify, or bond that will pay me until court action is taken. So, that being said, it pretty well weeds the bad clients from the good ones.


Good ones pay, that's it!


Answered 7 months ago by Evenstay21




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