# Earnest money



## Mastercraftsmen (Jul 22, 2007)

What percentage of the bid amount do you get up front? I ask for half but will settle for thirty percent. Is that standard practice?


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## Edsollen (Oct 30, 2006)

Depending on the project, short project with high materials = higher down payment, project with low materials more labor = lower down with regular progress payments tied to identifiable points, ie inspections.
Hope this helps.
Joel


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## tnt specialty (Apr 19, 2007)

Never ask for a dime up front:thumbsup:

Likewise, I wouldn't pay anyone up front for anything I haven't received.


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## lawndart (Dec 3, 2006)

I never understood why contractors would not collect a deposit from their client, if they're providing materials. Sounds like a bad practice to me, and around here in NYC you're sure to get burned for it.

I generally ask for a deposit that covers the cost of my materials plus 10% for any unforseen expenses that may arise, and collect the balance at the end of the job. If on the rare occasion, I do a project where I'm not providing materials, I wont collect a deposit.


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## woodman42 (Aug 1, 2007)

*Material Deposit*

I always charge materials up front to pay for those materials. I have had customers who decided to change their minds after they signed the contract then you are stuck with the materials, and I don't have time to run everything back to get my money back. 1 in 100 people will have a problem with that once you explain. 
Of course we would not even be having these problems if we had more honest contractors who care more about customer satisfaction.


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## RobertCDF (Aug 18, 2005)

tnt specialty said:


> Never ask for a dime up front:thumbsup:
> 
> Likewise, I wouldn't pay anyone up front for anything I haven't received.


Seems like a silly way to do business... When you special order something for a client dont you have to pay up front? (I am assuming the answer is yes and most of the time those are unreturnable) 

I do 5-10% down to hold a spot on the schedule and then 5 days before the project is to start most of the material costs are due. If its a larger project and I can order the materials in stages then I will have them pay at the end of each stage and that will cover labor for the completed and material +10-15% of the next stage.


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## Angus (Jul 12, 2007)

We take 50% down. It pays for materials and some labor. We usually get the job done within 1 1/2 weeks from order to install. We have 30 day terms, but sometimes the builder or homeowner gets behind. It's nice to have the money to pay for it if it has to sit in my warehouse for 30 to 45 days. And any good business man/women will tell you CASH FLOW is important in any business. If it is instock materials, or I have known and done business with the client before, we do not take a deposit. It all depends on how you want to run your biz.


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## tnt specialty (Apr 19, 2007)

Sounds like there's alot of under-funded contractors out there!

In my 24 yrs. in business, as a general contractor, custom home builder, as well as a subcontractor, I've never asked for a deposit, nor have I EVER paid a deposit to a sub. 

I could count on one hand the number of times a sub has ever asked for a deposit. Sure, I've helped out a guy that was just getting started a few times in the past.

We all need to finance ourselves, and shoudn't rely on the customer to finance us..JMHO....


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## RobertCDF (Aug 18, 2005)

tnt specialty said:


> Sounds like there's alot of under-funded contractors out there!
> 
> In my 24 yrs. in business, as a general contractor, custom home builder, as well as a subcontractor, I've never asked for a deposit, nor have I EVER paid a deposit to a sub.
> 
> ...


I guess you must have the best customers who have never tried to screw you over... Personally I have not had someone try to hold back a payment to me but why should I wait till that happens to do something about it. I could do jobs without payments but if someone screwed me out of a $30,000 project that could hurt a little... Plus all the court costs and wasted time... I dont want to float that kind of money and why should I because I am not a bank.


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## skyhook (Mar 17, 2007)

(Add 35% for Uncle Sam) Get 50% up front, work to the next draw. :thumbsup:


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## Grumpyplumber (May 6, 2007)

*In thirds on larger jobs.*
*50% on anything thats a day or two, where the stock runs more than $1K.*
*Nothing up front on small "in and out" jobs.*

*I've had customers attempt to get the price down at the end of a job, claiming I over-bid, or I didn't have to put in as many hours as estimated.*
*I take 50% on jobs that might take a day or two with high ticket stock to at least know my stock is covered in the event they come across financial crisis on their own (car dies...job layoff..etc.)*

*For some reason the only customers to date that have tried any "negotiating" after completion also seem to give me the urge to go to the seven - eleven, strange, but true.*


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## KillerToiletSpider (May 27, 2007)

We never ask for anything upfront, and our contracts are written for a draw payment within 5 days of completion of 2/3 of the rough, for the entire rough, the final third of the rough is for setting tubs and and tub/shower valves, and after they are done our contract calls for a draw of 1/3 the remaining bid balance, unless there are some unusual items involved in the tubs or the valves, like a $40,000 hand carved wood bathtub that cannot be returned, that item has to be paid in full before we order it.


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## RobertCDF (Aug 18, 2005)

tnt specialty said:


> Never ask for a dime up front:thumbsup:
> 
> Likewise, I wouldn't pay anyone up front for anything I haven't received.


I have been thinking about this "policy" of yours over the last few days and I would like to know what other businesses do this? I know when I had a caterer at my wedding I had to pay a deposit and had well over 50% paid within a few days before the wedding. I also had to have 100% of the photos paid for before the wedding. 

So I am curios who the heck does business that way?


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## tnt specialty (Apr 19, 2007)

Most everyone we do business with. We don't give out "deposits", nor do we ask for "deposits".

Don't you guys get at least 30 days from your vendors? Years ago, when we were a bit larger, we negotiated for 60 days with one of our major suppliers.

A few years ago, when we were building our last personal residence, my wife paid a tile guy for materials up front. What a fiasco that turned out to be! The guy flaked. Sure we had the materials, but we had to find another tile guy, go get the tile....What a pain in the arrrzz! My wife learned a lesson; NEVER, EVER again, will she pay anybody, anything, until the work/service is performed.

Maybe there are some legitimate operations that ask for deposits. That's all well and good for them. However, my experiences typically reflect, (other than possibly for some special item), undesireable results when "deposits" are involved.


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## RobertCDF (Aug 18, 2005)

tnt specialty said:


> Most everyone we do business with. We don't give out "deposits", nor do we ask for "deposits".
> 
> Don't you guys get at least 30 days from your vendors? Years ago, when we were a bit larger, we negotiated for 60 days with one of our major suppliers.
> 
> ...



So when you have net 30 on your account and order a CRAP load of lumber and the owner flakes out and you have to deal with getting the lumber all picked up again you are not compensated for the time spent? Hell no... when someone signs a contract with me they are paying me a deposit to 1. give them time on the schedule. 2. draw the plans and get any engineering. 3. get the permit. 4. order materials. So if someone flakes out what am I supposed to do about the 1 month of time I have blocked out? I am sure I can fill it but it might take a few days to get material on site. What about the permit fees? or the time I spent drawing and on the phone getting everthing lined up... How about any subs that have blocked time out of thier schedule?? 

Say what you like but I will never do projects without deposits.


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## Grumpyplumber (May 6, 2007)

*I never heard of that, ever.*
*Starting a remodel, addition with nothing up front?*
*Where are you?*


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## kevjob (Aug 14, 2006)

tnt specialty said:


> Sounds like there's alot of under-funded contractors out there!
> 
> In my 24 yrs. in business, as a general contractor, custom home builder, as well as a subcontractor, I've never asked for a deposit, nor have I EVER paid a deposit to a sub.
> 
> ...


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## skymaster (Oct 23, 2006)

No tickey no shirty:no: Deposit 100% of the time or I dont take job. My experience has been those who cant or wont give a deposit is a shure sign that money problems are heading my way. Just my way of biz. Doesnt mean I am right just my way. I re checked my business cards and I dont see 'Bank" on it.:no:
JackM


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## philtx (May 19, 2007)

In reading this I think of the words of a boss I had years ago......."I'm not the finance company for someones job....I want money upfront."


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## lawndart (Dec 3, 2006)

tnt specialty said:


> Most everyone we do business with. We don't give out "deposits", nor do we ask for "deposits".
> 
> Don't you guys get at least 30 days from your vendors? Years ago, when we were a bit larger, we negotiated for 60 days with one of our major suppliers.
> 
> ...


Then you're not doing your homework before hiring people to work. A simple check of their home improvement license with the DCA will tell you if a company is famous for screwing people over with deposits, or doing sub standard work. Assuming that you own and operate a licensed business you should know better.


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