You’re planning a home improvement and hopefully got three estimates from contractors that you checked out with the Better Contractors Bureau. You have decided on one as your contractor and call him to let him know he has the job and set a date for him to come over to sign the contract and discuss the specifications, approximate start and completion dates and most important to him the payment schedule.
You check the contract over to make sure it contains the contractor’s company name, address (not P.O. Box number), phone number, correct price, specifications, and the payment schedule. You find that he’s asking for a large down payment and three progress draw payments that are tied to various phases of the project’s progression phases.
This is where you have the upper hand and hold all the so-called cards! (money) Never give a large down payment! It’s suggested that you give a good faith deposit of no more than $500. Where specialty items have to be ordered such as custom cabinetry, custom windows or doors or any other items that will only be able to be installed in your home he will usually ask for more but it’s advisable to tell the contractor when he produces proof of the actual placed order you will then give him a draw for the item.
The regular payment schedule in the area is usually a small good faith down payment and then three progress draws. Always make sure the payment coincides with the work that’s done. For example in the case of an addition if the contract states one third when the mason starts the foundation don’t pay it until you see the materials are on the site and the mason is actually working. The same for a framing draw or other similar work done.
Any remodeling contractor worth his salt should have enough credit to buy materials and pay subcontractors to get the work started. However some suppliers want payment up front on specialty items and won’t except credit so in this case the contractor is within his right to ask for payment before ordering.
Most jobs will entail changes so be sure that you get the specifications and cost in writing and signed by both parties! Again don’t pay for a change upfront and only when the change is started. No matter what the draw schedule is that you agree on always protect yourself and keep a large enough balance to insure that the job is to your satisfaction.
A walk through final inspection should be mandatory and usually produces a punch list. If the job is completed and the punch list only has a few minor items on it such as some missing caulking or a molding that needs replacing and the balance is large then you should work out a payment for the balance holding enough to insure the contractor returns to finish the punch list items. Do not add to the punch list after the initial one so be sure you have listed all your concerns.
When the job is finished hopefully it was an enjoyable experience and you can recommend the contractor to friends and relatives. Good Luck with your project.