How much should a contractor ask as a down payment?...?

Question

And when should that be due? Before services start? I am looking for others opinions. No details needed about contracts just simply ..how much (what % ) and when?

Answer 1

A lot ask for 1/3rd down, 1/3 "half way through" and 1/3rd at completion ..

This varies .. on a large contract, eg. a complete house build, this may be split into 1/10ths .. (if enough 'stages' can be identified ..eg 'planning permission granted', 'foundations dug', 'foundations poured', 'structure complete', 'roof complete', 'structure water tight', 'first fit', 'second fit', 'site cleared', 'building approvals granted / certificates issued' etc)

Answer 2

It really all depends on what type of contractor you are talking about.  I know home builders are very strict with their pay schedule.  I have worked for a landscape design / build company as well as an excavator.  Our payments are usually set up as follows:

50% Due Prior to Commencement

25% Due at 50% Completion

25% Due Upon Completion

We have various types of contracts that we have set the terms differently but the above is generally what our contracts look like.

Answer 3

What I normally do is I split the bill up into 3 sections for instance if the job is 500.00 then I will pay the contractor 166.00 in the beginning and then 166.00 half way into the job then the rest once the job is done and correctly done.

Answer 4

There are many different markets.  I know at my company when we contract out to another company we don't accept anything down, we just receive payment when the job is complete.

In the consumer markets I know smaller contractors ask for a % down in order to buy supplies.  I don't think their is a flat % to be used accross the board.

Answer 5

10% on most projects-- how ever a home is probably dictated by any bank that is doing the construction period fiancing