How much should I pay my remodeling contractor upfront?

Be sure the details of your project – including payment terms – are spelled out in a contract signed by both you and the contractor. (Photo courtesy of Angie's List member Jeff O. of Rochester, N.Y.)

Be sure the details of your project – including payment terms – are spelled out in a contract signed by both you and the contractor. (Photo courtesy of Angie's List member Jeff O. of Rochester, N.Y.)

Dear Angie: I want to renovate my bathroom. How much should I expect the contractor to ask for a down payment? – Anne S., Montclair, N.J.

Dear Anne: Down payments are a standard practice in the remodeling industry, but you should be careful about how much to put down. Never, of course, pay the full costs up front.

A reasonable down payment is acceptable. Don’t pay anything, though, until you have a contract that spells out the payment structure. I recommend tying future payments to progress on the job and holding back at least 10 percent until the job is complete to your satisfaction.

Some contractors might ask for a small down payment to secure your spot on their schedule or to help cover early up-front costs, like pulling permits.

There are, of course, some exceptions. If, for example, you are special-ordering a bathroom fixture, or are having one custom made, expect to include the cost of that with your down payment. Your contractor doesn’t want to pay for that up front only to have you change your mind midway through the project, leaving him or her stuck with something custom they can’t use.  

New Jersey doesn’t have any specific rules related to down payment limits, so depending on the contractor, you might be able to negotiate how much you pay up front. California, for example, limits down payments to 10 percent of the project price or $1,000, whichever is less. New York requires a contractor to put a homeowner’s down payment into an escrow account, with specific rules about how it can be used, or prove he or she is bonded to insure the down payment. In New Jersey, contractors are required to be registered with the state Division of Consumer Affairs, so that’s something you’ll want to check.

Be sure the details of your project – including payment terms – are spelled out in a contract signed by both you and the contractor. Keep in mind that, by law, your contractor must allow you three business days to void the contract, should you change your mind.

Of course, you don’t want to hand your hard-earned money over to just anyone. Be sure to get at least three estimates and thoroughly research those contractors’ backgrounds before you decide who to hire.

Angie’s List collects about 65,000 consumer reviews each month covering more than 720 home and health services. Angie Hicks compiles the best advice from the most highly rated service pros on Angie’s List to answer your questions. Ask Angie your question at askangie@angieslist.com


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Avoid contractors who ask for full payment up front

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Many contractors ask for a deposit, or down payment, of some sort to hold your place on their schedule or to pay for some materials in advance, but consumers should never pay the full amount in advance. (Photo by Katie Jacewicz)
Many contractors ask for a deposit, or down payment, of some sort to hold your place on their schedule or to pay for some materials in advance, but consumers should never pay the full amount in advance. (Photo by Katie Jacewicz)

Angie Hicks responds to a member who wants to know if it's a smart choice to pay a siding contractor in full before work begins. Hicks explains that it's alright to pay a down payment up front, but it's a major red flag to pay a contractor in full before a project is completed.

Comments

In my 29 years experience in this field and with all my past and present jobs always my down payment is 10 % and the balance on a progress payment leaving no more than 10 % toward the end, once the owner is satisfied with the work the final payment is paid. The only time I will ask more on down payment is if the owner asks me to purchase the fixtures,tiles, etc for them

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