How To Best Pay For A Remodel

Question

I wanted to know if anyone can recommend a way to pay a contractor that doesn't accept credit cards with a credit card to protect oneself from being ripped off. I think Googlepay or Ebay might be an option with little to no fees, but I am open to other options.

Thanks!

Peter M. · Answer

Why not the other way around? What happens if he walks with your 10k check and never starts? I understand good faith and the trouble finding contractors who agree to that arrangement but if you have never used this contractor before you really don't know.

Peter M. · Answer

Why don't you just avoid this and agree to pay based on draws pending inspections? Agree on the final price, tell him you will pay directly upfront for the materials (he must provide the invoice and you pay the retailer-not him.) Then if it will take 4 weeks, you will pay 20% at the end of each week. Once the job is complete and you verify, he gets the last 20%-material cost. Contractors make their profit when a job is finished so the last payment is the one he cares about most. He can keep his people working with the draws each week. You need a detailed contract for this though.

Dave G. · Answer

Another protection option (vs not accepting cc) for a contractor is they can file a mechanic's lien against your property for non-payment. Not preferable for them, but an option.Or, you could have a third party hold the funds, like an escrow account to disburse only after contract terms are met.Or how about structuring progress payments with the contractor? Example below:1) 30% - reimburse for delivered materials (make sure they are delivered to your property)2) 25% - rough finish (e.g. framing & drywall) - 3) 25% - final finish (e.g. flooring & painting 4) 20% - final acceptance (full quality inspection of all work)

Manolo D. · Answer

For the readers and from a contractor’s perspective, there are hard contracts, there are easy terms. There are two sides of a coin, if contractor finds that they don’t want to do it, it’s easier to walk, plenty of other clients floating around. Both client and contractor have their own system, and there are lines that we will not cross, one example of this personally is accepting credit cards. We will have to sign up, pay monthly fees, pay the 3% per transaction, have our credit scores checked, and get approved. Yes, 20k is about $600, and guess where it will come from, not me, but even if you pay for that $600 for your 20k protection, there is still a risk of charge backs up to a year, so even if we finish our job january get fully paid, and you can dispute that on december and claim that we did not honor our 1 year guarantee and warranty, then have it taken out of our banks in a blink. So I’d suggest get yourself educated on bonding, or talk to your state’s contractors consumer protection department and talk to them how you get protected. For sure a handyman will walk out on this kind of protection.

Manolo D. · Answer

Brian M. You have our protection in the world, it is called contractor’s bond. In CA, a client is protected up to 15k. So if I sign a 100k contract, half way and I billed and got 50k, then we end the contract, your next contractor wants 60k for finishing up, most likely you will get the 10k difference. Or if he signs up and collect 15k from you and never shows up, you’ll get that 15k from the surety company. Given of course he is licensed and all that. It takes the same time as disputing a credit card charge and a contractors bond claim. all about 3 months.

Joseph M. · Answer

@Peter M. Thanks. Its an 8 week project for $40K so I am leaning towards $10K check to start as a sign of good faith, and then $10K every 2 weeks with a credit card.I will also pay for materials directly to the supplier.

Joseph M. · Answer

@Manolo D. I hear what you are saying and I think this guy is trustworthy, but nevertheless, I think we should both have protections. I am thinking of doing $10,000 in check and $10,000 on credit for the first $20,000 so we both have some protection.

Manolo D. · Answer

Brian M. So what protects the contractor from charge backs or if he did good and honest work and you simply decide to call your cc company and dispute the charge? If the contractor has money in their bank and bank decides to just take it and give to whoever disputes it or holds that amount until resolved, what then? The contractor does not accept credit cards, so what’s keeping you from moving on? It’s called terms of an agreement/contract for a reason, each party has their own system and their way of protection/running their business.