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Question DetailsAsked on 11/29/2011

What are standard payment terms for home remodeling?

Contractor wants 17% down and another 36% before any work is done. This seems too high.

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8 Answers


Not necessarily. It depends on the scope of the work. There are a lot of up front and intermediate costs on the contractor's part, not to mention business operating expenses. It's difficult to discern between a crook who will run off with your money and one who has well budgetted the job. You want someone who understands and manages the budget of your job as well as others without "robbing Peter to pay Paul" as it were. Ask for references for work similar in size to yours. You don't want someone who uses the deposit of one job to fund the middle of another.

I always ask for 50% up front before scheduling and vary that if it is a large/long job which is obviously more money. Anything under $6-8,000 I generally get the 50% to cover materials and some labor costs for helpers and/or sub-contractors during the job. 25% on $30-40k jobs, I don't make anything myself until the final draw at completion. The big thing to look for is when are the draws due. If he's asking for 17% up front to schedule you and 36% at the start day upon delivery of materials and commencement of work that's not uncommon. You have something to see for the bulk of your money in the materials he has brought to the site. The next draw should either be at completion or when at least half of the work is done if it is a large job. I keep a $5000 slush fund just for gaps of a few days between draw checks and outgoing payments for labor and supplies on jobs. Most resposible contractor's will do the same. Be open and discuss your concerns with your contractor.

If you don't trust him or if he seems to be doing a ot of big talking speak to other contractors. It's important to trust him. I can't tell you how many customers I've come across who had shoddy work done and they never liked the guy who did it in the first place.

Answered 8 years ago by Todd's Home Services


I take 50% during project 40% and up on complition 10%

Answered 8 years ago by Serge Construction


There is no standard. It is what both parties agree to. Generally, the contractor will ask for an initial deposit to secure the customers scheduled start date (if not starting right away or at least within a couple days) The reason for this is that if the contractor and homeowner agree to start on a date, say a week or two later, the contractor may turn down another job or schedule the other job for a later date after the job in question. Should the homeowner decide to withdraw prior, the contractor has lost a potential job that otherwise would have been available.

In addition, should the project require a significant dollar amount of special order materials (Roof trusses, flooring, cabinets........), the contracotor does not want to get stuck with them as well as out of pocket expense should the homeowner default. Therefore, the contractor may require these materials be paid for up front prior to ordering.

On larger projects, the contractor may ask for a draw schedule. Here, the homeowner makes payments as the work progresses. This may be represented as a percentage or dollar value. This draw schedule should be detailed as to exactly what work is to be completed and how much and when the next draw is due. Again, this draw schedule may be required to purchase materials and cover labor as the job progresses. Otherwise, leveraging the contractors money would come at a cost.

It is recommended not to pay the entire job up front. A significant portion of the money should be held by the homeowner until the project is completed to his/her satisfaction and according to the original written agreement.

Generally, for me and my company, if the job is small with no special order materials, I may carry the job through to completion with only the full value paid at the end.

Mid sized projects (typical/average kitchen or bath) require an initial deposit of 30-50% and the balance at time of completion.

Larger projects like a whole house renovation/remodel or addition would be broken down into smaller percentages as the job progresses. This may be broken down into 3 to 6 draws.

Get to know your contractor. Go with your gut feeling and get EVERYTHING in WRITTING!!!. In this way, everyone is on the same page and each knows what to expect from each other.

Do your homework. Get references. Get second and third opinions. Keep in mind though the cheapest, is not always the best. General rule of thumb is to pick your favorite from the list of contractors that came in close to the same terms as each other. If the terms you get from various contractors is all over the place, get some more until you have some that are comparable to each other and pick from there.

Remember, you are the boss. You are the customer. Fair is fair and both parties should be able to communicate with each other until an agreement is found that covers both parties fairly

Answered 8 years ago by Handy Matt


I can't believe what I'm reading. What owner would hand over 40% to 50% of a project before ever completing any work? Why would I be the contractor's bank? Front loading for the contractor is great, but for the owner, it's insane. I never recommend making a down payment to a contractor before any work is complete. If a contractor needs money up front, I believe the financial stability of the contractor is in question. I have contracted milions of dollars worth of work with contractors over the past 50 years and never paid a contractor up front for work not even started. I guess it's great if you can get an owner to fund your business. Can't believe it.

Answered 4 years ago by Fivegirls


The amount of up front costs should always, first be determined by local home improvement laws. In Maryland for example, as a contractor, by law, I can ask for no more than a third down of the contract price to start. Big projects require some funds from both parties. A contractor should have funds available to make payroll in case checks don't clear etc. If a contractor doesn't have the funds to provide some "skin in the game", chances are he's not managing the business finances well and not very professional.

Answered 3 years ago by mickems



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Answered 3 years ago by Member Services


I can't believe what I'm reading. What owner WOULDN'T hand over 40% to 50% of a project before ever completing any work? Why should the contractor be the owner's bank? Front loading for the owner is great, but for the owner, it's insane. I never recommend doing ANY work WITHOUT receiving a down payment from the owner before any work is complete. If an owner can't put money up front, I believe the financial stability of the owner is in question. I have contracted milions of dollars worth of work with owners and have always received monies up front for work not even started. I guess it's great if you can get the contractor to fund someones business. Can't believe it.

Answered 3 years ago by TRex


I noticed that the answers to this question is mostly done by contractors. Of course, they would want as much up front as possible, but that doesn't mean you have to do it. The state of California recommends 10% down before a job begins, but in small or large jobs, ranging from $1000-$25000, it is recommended that payments be drawn based on major milestone of the job itself. Don't ever make weekly payments. Certain portions of the job must be done before a payment is made, and the last 10% of the total payment should be held until both parties are satisfied with the completion of the job.

Also, if there are expensive materials to be ordered up front, you can always ask to pay for those directly with the vendor and make sure you state that in your contract up front.

Answered 2 years ago by yobaby

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