Contractor Bids

Summary: Contractor bids should state clearly that payment will be for work completed, not in advance. Paying a contractor or subcontractor any money in advance can cause problems beyond your control.

Carl, I would have to argue against your advice as to not paying sub-contractors in advance.

I've worked in the past as a freelancer and the concerns that you mention about them not doing a good job are valid but as a sub-contractor without something down who's to say that the person hiring you has any money?

If you pay only a small portion down, say 25%, the contractor will need to do the rest of the job to get the majority of their money.

Also that down payment often goes to paying for the materials necessary for the job (assuming they're not separate to the cost)"

Matt

Matt,

Contractor bids should state clearly that payment will be for work completed, not in advance. Paying a contractor or subcontractor any money in advance can cause problems beyond your control.

It is the main reason you hear horror stories about being your own General Contractor.

Never pay a contractor or a subcontractor in advance! You pay only as the job is completed.

Payments can however, be in stages as the job progresses.

Certain trades such as electricians, plumbers and Heating and Air contractors supply the basic “rough in” materials, and the costs of these materials are paid when the rough in is completed and inspected.

Electrical "rough-in"

If an electrician is to supply the wire and electrical boxes during rough-in, and the electrician doesn't have credit with his supplier, I don't want to do business with him. Let somebody else hire him. His credit problems shouldn’t be mine.

As for your question whether or not the homeowner (the person hiring) has any money, it should be irrelevant as a contractor or a subcontractor can file a lien on the house for non payment!

If you don’t think that gets everyone’s attention, you haven’t been in the contracting business long enough.

On another note, when you pay in advance of a job being done or completed to a certain state of construction, you destroy the incentive to get YOUR job done (or even started) before those who don’t pay in advance.

And, what happens to your money if the contractor gets hurt (even dies) before actually starting your job?

There are more reasons not to pay a contractor or subcontractor in advance. Read Working with Subcontractors on my articles on Subcontractors.

Over the years, I believe I have made about every mistake in home building or remodeling that can be made. That's why I wrote my books and published my web site...so you wouldn't have to make the same mistakes.

Carl