Large deposit for contractor.

[glenn8]

I searched but didn't find any suitable answers.
I recently got quoted for a job to refinish a deck and do other repairs. I agreed to pay in cash to lower the cost which is ~$7000. The contract however wants a deposit for materials at over 50%. Is this amount reasonable? Should I just walk away from this? He did seems like a good guy with good experience by the way he talked and inspected the work to be done. What kind of information should obtain to ensure I am protected from fraud?
I did a google search for this guy, but nothing has come up neither negative or positive.
Thanks in advanced.

[Drthorne]

Only Pay for materials when they are delivered to your home

[glenn8]

Only Pay for materials when they are delivered to your home

Thanks. They guy wants the money before he orders. Seems he's either low on funds or wants to ensure I have the cash before he makes the order. Is this a sign or fraud or common practice?

[hitman_24]

Do you have a written contract?
Will you be getting some form of receipt?
Is this just some guy, or is this an actual company?
Is the reason the price is lower because paying cash equals no tax?

[hitman_24]

Thanks. They guy wants the money before he orders. Seems he's either low on funds or wants to ensure I have the cash before he makes the order. Is this a sign or fraud or common practice?

If he's not willing to take a risk, then why should you.
An initial deposit should never be more than 25% IMO


A LOT of contractors charge Peter in order to pay Paul

[glenn8]

If he's not willing to take a risk, then why should you.
An initial deposit should never be more than 25% IMO


A LOT of contractors charge Peter in order to pay Paul

Thanks. I'm going to try to get more details out of this guy. HST number, etc.

For the sake of the thread, what is a reasonable deposit for materials? 25%? Is it reasonable to pay this money before delivery?

[Zamboni]

Its not unheard of to accompany a handyman/small contractor to building supply when ordering-both parties protected that way.

[Maymybonneliveforever]

Reputable contractors normally have good credit for there suppliers, if not then they can usually put in on there credit card so they dont' have to pay for at least a month. I'll assume this job will be done within a month so they should be paid pretty well in full so I don't understand why they want a large deposit upfront before the material is ordered.

As long as there is a signed contract with every detail, in other words specifics and you've checked out the contractors references, HomeStars or what ever you feel comfortable with then I would only pay 25% upon the agreed signed contract.

Tha fact that you're paying cash cuts a bit done on the paper trail on your side.

[gr8dlr]

If he's got money problems, I'd be careful as trades sometimes stop work part way if they aren't paid.

Why not go with him to the store and pay for the supplies required yourself and have it delivered? That way it's your property and you're protected if he no shows. At least you have the materials and can hire another contractor.

[jenlad]

We recently did a lot of work to the back of our house, and each contractor was different.
For a custom ordered sunroom, 20% deposit on signing.
The guy who laid the tile inside the completed sunroom, zero deposit until job completed and we were happy (small job, only about $1500)
Patio/interlock company $10 deposit (yes, $10!!) with a signed contract. No payment until job was completed (total job over $10k)

[Drthorne]

read this thread

http://forums.redflagdeals.com/contractor-took-deposit-disappeared-what-do-1172210/

[BuildingHomes]

Thanks. I'm going to try to get more details out of this guy. HST number, etc.


Why? You have already decided that you want to circumvent taxes, so getting an HST number isn't going to mean anything.

If you are asking for any sort of custom product, you are paying for 100% up front as there is no way one can return it.
If you are asking for some standard materials like lumber, then yes, 50% is reasonable and then the remaining 50% when it lands on your doorstep, because then it's 100% yours.
You are trusting them with 50% and they are trusting that you will pay them the other 50%.

[jedi1648]

Dont pay the 50% deposit to the constractor, because that may be the last time u see him. This may be a bad sign that he has a cash flow problem or has been bankrupt with debts owing to the suppliers or customers, which force him to buy anything with cash.

Even if he shows up to work with some materials, he may later demand more cash up to 100% of contract price, but with job half done and with materials half delivered, and he disappears.

My advice to u is to pay more to find another contractor, who requires little deposit and u pay only when the job completes. YOur money saving attempt may turn into money lost and headache.

[Toukolou]

:arrowu:

What he said.

If you're not sure about this guy (and asking for >50% deposit would set bells ringing for me) find someone else. If this guy runs a business and doesn't have $5k (or credit) for material I would guess you will end up being an unhappy person in a few weeks.

[Rockymountain]

Why give $3,500.- to a stranger with the HOPE to see him again? Be very careful. Hope you will not be the next one posting a thread, "THE CONTRACTOR TOOK MY MONEY AND DISAPPEARS". You want so save some money. In return you may lose big money. Think again.

[stt55pot]

Why? You have already decided that you want to circumvent taxes, so getting an HST number isn't going to mean anything.

If you are asking for any sort of custom product, you are paying for 100% up front as there is no way one can return it.
If you are asking for some standard materials like lumber, then yes, 50% is reasonable and then the remaining 50% when it lands on your doorstep, because then it's 100% yours.
You are trusting them with 50% and they are trusting that you will pay them the other 50%.


These two guys are tax cheats...some one call the tax man!

[JWL]

Check BBB.org.
Ask for references and check them.
Change the "deal" so that you purchase the main materials (the wood) yourself to avoid the deposit issue entirely. You will then just be paying him for his labour and misc materials which he won't need a deposit for. Yes you'll have to pay HST but it is worth it to eliminate the risk of losing your deposit.

[jenlad]

Check BBB.org.
Ask for references and check them.
Change the "deal" so that you purchase the main materials (the wood) yourself to avoid the deposit issue entirely. You will then just be paying him for his labour and misc materials which he won't need a deposit for. Yes you'll have to pay HST but it is worth it to eliminate the risk of losing your deposit.

^^ By picking up the materials yourself, you save money because the contractor won't be billing you his time to pick up and deliver the materials, as well as any markup he puts on materials. This savings would help even out the cost of HST.

[canuckgirl]

I agree that 50% is a lot of money, though I would't think twice about 30%. Looking at this from the contractor's point as well.... what's to stop the homeowner from not paying, *after* the contractor has spent $$$$ on materials for that one job. I wouldn't pay cash, I would insist on a contract and proof of insurance and go ahead with a reasonable deposit confidently!

[dutchca]

Cash deal...asking for advice.....lol.

I hope other quotes were about 10-12 thousand or else you are paying too much and this scam artist is making out like a bandit.

Cash up front means they are on cod with supplier. only people with nad credit are cod. thats EXACTLY the person I want doing work for me.

[BuildingHomes]

Cash up front means they are on cod with supplier. only people with nad credit are cod. thats EXACTLY the person I want doing work for me.

COD with the supplier is what many people do. That way they do not owe anyone. I'm that way with the majority of my suppliers because I don't want to hold a balance.

But I am also not a bank, so I take deposits (with a contract) and order against it.

[Tripper1]

I searched but didn't find any suitable answers.
I recently got quoted for a job to refinish a deck and do other repairs. I agreed to pay in cash to lower the cost which is ~$7000. The contract however wants a deposit for materials at over 50%. Is this amount reasonable? Should I just walk away from this? He did seems like a good guy with good experience by the way he talked and inspected the work to be done. What kind of information should obtain to ensure I am protected from fraud?
I did a google search for this guy, but nothing has come up neither negative or positive.
Thanks in advanced.

Im a contractor also, ONLY pay for materials or deposit when they are dropped at your property, he should have trade accounts where he pays on 30 day terms or something, you can give him adeposit 50 is excessive 30 is more reasonable, even when paying cash make sure you sign a contract with specs and work scope
Dave

[canuckgirl]

^^ By picking up the materials yourself, you save money because the contractor won't be billing you his time to pick up and deliver the materials, as well as any markup he puts on materials. This savings would help even out the cost of HST.

A lot of contractors get discounts and don't charge mark-up. You'll lose that by buying yourself.

[Zamboni]

A lot of contractors get discounts and don't charge mark-up. You'll lose that by buying yourself.

True-there's also cashback/refund to contractors at months end....that way the customer doesn't see the discount on materials invoice.

[synaptech]

I agree that 50% is a lot of money, though I would't think twice about 30%. Looking at this from the contractor's point as well.... what's to stop the homeowner from not paying, *after* the contractor has spent $$$$ on materials for that one job. I wouldn't pay cash, I would insist on a contract and proof of insurance and go ahead with a reasonable deposit confidently!

What's to stop a home owner from paying? A lien on the home.

I've been where the OP is and if he doesn't have references then consider looking elsewhere. If he walks with the money, delays start for weeks, or doesn't finish to you satisfaction he still have your 3500. When does he want the rest of the money? have you specified exactly the jobs you want done with details?

[Cas77]

I have not read the other replies, but as a contractor I can tell you:

-Sign a contract, and make sure you understand all the details.
-Never pay for labor before work commences.
-Sign a contract, and make sure you understand all the details.
-Negotiate payment schedule for labor by milestones
-Sign a contract, and make sure you understand all the details.
-You should pay for material ON DELIVERY. The contractor should be on a MINIMUM of net-30 with his suppliers, if he's paying cash it's a huge red flag. On the other hand he needs to minimize his risk of you cancelling/defaulting and him being stuck with the material.
-Sign a contract, and make sure you understand all the details.
-Depending on the size of the job, material are usually not a 1-time purchase...and should be treated that way when paying for them (i.e. not all at once)
-Sign a contract, and make sure you understand all the details.
-Ask and contact references. You can usually figure out BS references in the first 2min of checking them.
-Sign a contract, and make sure you understand all the details.

Oh and 1 last tip, did I mention to sign a contract, and make sure you understand all the details?