Arranging Payments reprinted courtesy of ServiceMagic

Homeowners always have questions in regards to how much to pay a contractor when home improvement work first begins. What is an appropriate down payment? Should money be paid during construction, but before the work is complete? And when is the final payment due?

In paying for home improvement projects, every consumer has heard stories about contractors receiving cash payments and not coming back.

This article will address the homeowner "payment dilemma" posed above. To respond to questions about how and when to safely make payments to contractors, we first need to distinguish between projects of different sizes and complexity. For the purpose of simplicity, we will address the way to approach the payment for home improvement projects into the following 3 areas:

• Small Maintenance or Repair Projects
• Custom Projects
• Larger Renovation Projects

  Small Maintenance or Repair Projects
  A plumbing or electrical repair is an example of a small maintenance or repair project. Fixing a door, window, or mending a fence are additional examples. These types of projects usually take less than a day to complete, and are billed as either an hourly charge, or fixed fee to the homeowner. With small projects such as these, payments are usually made upon successful completion of the project. Upon successful completion of the work, the contractor is paid in full. With small jobs like these, down payments are not necessary because the contractor has the ability to "finance" the work and pay for the materials until payment is received. As projects start to grow in scope and complexity, however, most contractors don't have the flexibility to provide this kind of project financing.

  Custom Projects
  Custom projects provide a homeowner with specialized work where products and services are tailored for unique applications. Custom kitchens and baths, countertops, built-in cabinetry and shelving, and even custom painting projects fall under this category. With this kind of custom work, materials are being purchased that are created specifically for these projects. With this kind of work, some kind of down payment is usually required to order the custom materials. For example, a custom kitchen or bath cabinet order requires a 30% to 50% down payment to get the cabinets built. The cabinet manufacturer knows that if the homeowner were to change his mind after making the order, that the manufacturer could be "stuck" with this custom cabinetry that was created for their specific application. Due to this custom application, the manufacturer protects their investment of time and materials by asking for up to half of the payment to produce the cabinets, and may require the remaining half upon delivery of the cabinetry to the jobsite.

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