There are many different scenarios that determine a payment schedule in the remodeling industry. Receiving some sort of down payment at signing is a good practice to ensure a customer’s sincere intent to do the project. A payment schedule should be part of the contract language. Typical down payments are 25% to 33%. Sometimes even higher depending on the type of work being done .
A down payment is highly recommended when products have to be ordered by the contractor immediately. Doors, windows, cabinets and specialty items are usually ordered well before the construction starts. The monies collected at the closing are insurance that the ordered products can be paid for by the contractor and not he /she is left with a pile of bills if the unforeseen should happen. Dividing a project into 3 or 4 equal payments allows the contractor to keep abreast of the project’s labor and material costs. Payments are most likely tied to a production schedule with predefined milestones.
These are only suggested down payments. Although these reflect a norm in our industry down payments and a payment schedule can be what ever is negotiated between the contractor and client. The important think to remember is that a business cannot survive without a cash flow.
For more: http://www.nari.org/homeowners/faq/#FAQ154
Recent Comments