Paying contractors upfront asks for trouble
Ihave received a lot of emails recently from homeowners who hired out work to be done in the spring, only to have the contractors demand to be paid a substantial amount of money upfront.
If you pay it, you hope the contractor is going to show up and do the job right. Here’s the thing about hope: You hope for things you can’t control. For example, you hope the weather next week will be nice. You might hope to win the lottery.
Forget about hope when it comes to contractors!
Here’s what you need to know about paying upfront: When you do this, you put yourself at an immediate disadvantage. If your contractor takes off or does poor work, you’ll never ever get all your money back (not to mention attorneys’ fees should you pursue legal action).
There jobs where a deposit is normal and required. If your job requires the purchase of nonreturnable customordered products, the supplier often asks for a 50 percent deposit.
But in all other cases, it’s not wise to pay upfront. If a contractor asks you for a deposit like this, be prepared to ask these honest questions: Mr. Contractor, do you pay your employees in advance? Do you pay your sub-contractors in advance? Do you pay your suppliers in advance or do you have open accounts and get billed monthly? Since you don’t pay anyone in advance, why are you asking me to do it?
I’ll give you a few reasons: The contractor might be using your money to pay off his Ever see a house that seems to be under construction for a year or so? The reason might be that the contractor was paid too much money upfront.
last job. Your contractor may be in a cash bind. The contractor may not have credit at local supply houses. Why is that? I could go on and on and on with reasons.
I wrote about this in my weekly AsktheBuilder.com newsletter, and the bricklayer in Cincinnati who used to do all my jobs posted his response on Facebook: “As a contractor, I’ve always believed I will make you happy to pay me! Have never asked
for a dime up front.”
This bricklayer is a pro. Professional contractors have no fear that you’ll pay them. They know they’ll satisfy you. They have plenty of cash in their business account. They don’t need your deposit to make payroll that week or to pay for the supplies they need.