Ask Angie: Be prepared to negotiate down payment terms

Dear Angie: I am in the process of doing a bathroom remodel. How much of a deposit should I be prepared to give the contractors before they start work? – Amy O., Chestnut Hill, Mass.

Dear Amy: Down payment terms are one of those gray areas consumers are regularly faced with when negotiating with contractors. After all, handing your hard-earned money over to a contractor who hasn’t even started a job yet is enough to make almost any homeowner apprehensive.

Still, it’s not uncommon for contractors to ask for a down payment. Often, contractors must invest in materials to start a job and pull permits to do the work legally.

That doesn’t mean you have to hand over the originally requested amount, though. According to a nationwide Angie’s List poll of contractors, more than half said they require a deposit before they begin working on a project. However, most also said they are willing to negotiate down payment terms.

A good rule of thumb is to never put down a large down payment until the contractor arrives with the materials ready to do the job. In Massachusetts, contractors cannot ask for more than one-third down of the project’s total cost unless the project has special considerations – custom-made materials for example – that merit the additional deposit and are spelled out in the contract. 

If your project is particularly large, work with your contractor to establish payment schedules based on stages of the job being completed.

Also, hold back the final payment until you have inspected the completed project and are satisfied with the quality of the work. You can be sure your contractor will want to be paid in full for the work he or she does. By holding back that payment, you’ll help ensure the job is done to your satisfaction and have bargaining power should you have concerns that need addressed.

Before you agree to any job, always get three comparable estimates and make sure the job details, warranty and payment terms are spelled out in the contract that both you and the contractor sign.

Angie Hicks is the founder of Angie’s List, a provider of reviews you can trust on contractors, doctors, dentists and other service professionals. More than 1 million consumers across the U.S. use Angie’s List to help make tough hiring decisions easier.

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