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How much down payment should you give a contractor?


A Chandler man says he gave a contractor a down payment to start a job and the contractor never came back to do the work.

This is a common complaint against many companies across the Valley and has many consumers wondering what they should do when a contractor asks for money before the work begins.

It can be an uncomfortable situation: You've agreed on a price, the contract is signed and then the contractor asks for a hefty down payment before they can start work.

How much is reasonable, or should you refuse and not agree to a down payment at all?

"We just found him from Craigslist," said Balbir Wadhwa.

Wadhwa says he agreed to pay Joe from J & K Handyman in Apache Junction about $1,000 to build a small kitchenette in his Chandler home. Wadhwa says he signed the contract and as soon as Joe finished prepping the room he made a request.

"You have to give me $400 in advance so I can get the material. And I'm not going to buy from the Home Depot here, I'm going to use the one near to my home, buy the stuff from there, and be here tomorrow morning at 7:30 a.m.," said Wadhwa.

Wadhwa gave J & K a check for the $400, but Joe was a no-show the next morning. Wadhwa says Joe never showed up again. All he's gotten from Joe are vague text messages about a medical emergency and a number of other excuses. Wadhwa says he left voice messages every day for almost two weeks.

"He turned his phone off.  On and off he was responding to emails only and, to today, we have not been able to speak to him on the phone," said Wadhwa.

Tyler Palmer of the Arizona Registrar of Contractors says his agency fields more than 1,000 of these type complaints a year. What's fair? Palmer says 10 percent is the industry standard for down payments.

"It just seems like it's a historical number, it's been in the industry for many years, so is it a good number? Sure.  If it's been used for that long I think you can go with that tradition," said Palmer.

Many contractors won't ask for any more than 10 percent, but if you're uncomfortable with even that amount, Palmer says shop around.  Get at least three bids for a job. A down payment may not be needed at all.

"Not all contractors require you to do so. Another option is you could go out and buy the materials, go to the Home Depot and buy them, and have the contractor pick them up when they're ready," said Palmer.

Wadhwa has demanded J & K terminate the contract and issue a full refund. He knows now that he never should have put down a 40 percent deposit.

"This is a big lesson learned for us, we are not going to give any deposits, to any contractor, in the future," said Wadhwa.

After I reached out to Joe at J&K Handyman in Apache Junction, he opened up a better dialogue with Wadhwa and refunded half the money. He also agreed to pay back the other $200, but only delivered $150. Wadhwa tells me that J&K deducted $50 for prepping the room.

Bottom line: Try not to pay more than 10 percent as a down payment.  If the contractor wants more, offer to buy the material yourself and allow the contractor to pick them up when he/she is ready to start work.

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