How Much Should a Contractor Ask For Up Front?

By Thomas Williams, All American Renovations

Wondering What if What A Contractor Is Asking For Upfront Sounds Right?

Here is what we ask for, before you have to ask us.

• A gutter-only job: 50% at contract, 50% when it’s finished.
• Any exterior project bigger than just gutters: 50% at contract, 25% at halfway, 15% at substantial completion, 10% at the final walkthrough.
• A large interior or whole-house project: a paid design phase first, then 25% at contract and eight draws after that.
• Financed, short job: 20% at contract from the lender, the balance when it’s done.
• Financed, long job (four weeks or more): 50% at contract — 20% lender, 30% you — then 50% when it’s done. This can fluctuate depending on how much or how little you are financing.

Now the part that matters more than the numbers.

Nobody in this industry talks about money terms until the customer is already ready to sign. I’ve done it that way myself for years without thinking about it. You spend weeks choosing a contractor, you get to the end, and then somebody tells you what they need up front.

That blindsides people, and I don’t like it. So this page exists to tell you in advance, including the part where I tell you what a bad answer looks like from somebody else.

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First, what “multi-trade” means, because it’s most of our work

Anything more than gutters.

A siding job. A window job. Siding and windows. Siding, windows, roofing and gutters together. Soffit and fascia with gutters. All of that sits under one schedule, and it’s the schedule most of our customers are actually on.

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The multi-trade schedule, and what each stage means

50% at contract signature.

25% at 50% completion. In practice that usually lands around the time the siding is wrapping up.

15% at substantial completion — the paint is done, the gutters are on, the job is finished but for the small stuff.

10% at the final walkthrough. You and we walk the house together, and that’s when the last of it is paid.

That’s the whole thing. Four payments, no surprises, and it’s written into the contract where you can read it before you sign.

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What the deposit is actually for

This is the question nobody answers, and “it’s our policy” isn’t an answer.

It secures your date. We schedule by contract order — the date you sign is the place you sit in the queue. Nobody jumps anybody. The deposit is what holds your spot, and that’s a real thing, not an administrative one.

It buys your material. We order and stage everything for your job so it’s sitting there when the crew pulls up. On a large project some of it is special order and can take weeks or months to arrive.

And it keeps the exposure even on both sides. That’s the honest framing, and I’ll say both halves of it:

• You shouldn’t be too far out in front of the work. At any point in that schedule, you’ve paid for roughly what’s been done.
• And we can’t be too far out either. If something went badly wrong and a customer simply decided not to pay us, we’ve already bought the material and paid the labour.

50% is fair to the homeowner and fair to the contractor. That’s why it’s the number.

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The thing I actually tell customers, and I mean it

If you’re not comfortable enough with me to pay that deposit, I don’t want you to hire me.

That isn’t a sales line and it isn’t a dare. I’ve got to a point in this business where I only want to work for people who are confident they’ve found the right contractor — confident they’re going to get the scope they asked for, the quality they’re paying for, the installation and the warranties behind it.

I’m comfortable with you paying when you’re comfortable. Most customers I have this conversation with are comfortable paying the halfway draw once the siding is done, because by then they can see what they bought.

But if the trust isn’t there at the start, it’s not going to appear in week three. You should hire somebody you don’t have that feeling about. I’d rather tell you that now than take your deposit and have you worried for a month.

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So what’s too much? Here’s my honest answer

Anything over 50% up front is a red flag.

I want to be careful about how strongly I say that, because I can’t tell you what to think about another company. I don’t know their business. But if I were sitting in the garage with one of my best friends and he told me his contractor wanted 70 or 80% up front, here’s exactly what I’d say to him:

“Ask them why.”

That’s it. That’s the diagnostic, and it costs you nothing.

Then listen to the answer. If there’s a legitimate explanation — a genuine special-order situation, a material deposit they have to post themselves — then you weigh it and go with your gut. Plenty of good contractors have a real reason for something unusual.

But if the answer is vague, or defensive, or “that’s just how we do it,” you’ve learned something. Anything over half is a tell. It doesn’t automatically mean they’re bad at their job. It might mean they’re the wrong contractor for you, and that’s worth knowing before you’ve paid them.

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And now the weak spot in my own schedule, because you’d find it anyway

“50% completion” is ambiguous. It can be read more than one way, and that’s a fair criticism of our own paperwork.

We try to make it as clear as we can on each contract. But I want to explain why it isn’t a single named event, because the reason is real and it cuts both ways.

On a multi-trade exterior job, the order the work happens in is not fully predictable. Siding, roofing, gutters, windows, doors, paint, ColorPlus — some of it has to come before other parts, some after, and any one of them can be delayed by something nobody controls.

So imagine we’d written “the draw is due when the windows are installed.” The windows get held up at the factory. Meanwhile we’ve done everything that doesn’t depend on them — tear-off, wrap, siding, trim — and we’re genuinely 60 or 70% through your job. Under that wording we couldn’t collect a dollar, on work that’s finished and standing in front of you.

An over-specific trigger is a trap for the contractor. A vague one is unfair to you. We’ve landed on the percentage because it’s the honest middle on a job where the sequence moves around.

Which is exactly why the big projects work differently

On a large interior or whole-house project, the order IS predictable. Demo, then framing, then mechanical rough-in, then cabinets delivered, then paint. Those happen in that sequence on every job.

So those get eight draws, and every single trigger is something you can see with your own eyes. Not a date. Not somebody’s opinion that the job is sixty percent done — which is the most common fight in construction billing, and a schedule tied to visible events doesn’t have it.

Two different schedules, because they’re solving two different problems. If a contractor can’t tell you why his schedule is shaped the way it is, that’s worth noticing too.

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Large projects: where the deposit sits in the sequence

On a design-build project the money comes in a specific order, and the deposit is not the first thing.

1. The design consultation retainer is paid first. That’s its own thing and [Why won’t anybody give me a price until the drawings are done? — post 54] explains how it works.
2. Then we settle the scope — all the selections made, the budget finalised, the price locked. The price you sign is the price you pay unless you change the scope or we find something genuinely hidden.
3. Then you sign, and then the 25% deposit. Same job as always: secure the dates, start procuring everything with a lead time on it.

And notice that 25% is lower than the 50% we take on a smaller exterior job. That’s deliberate, and the reason is obvious once you say it out loud:

On a $300,000 project, nobody wants to hand over $150,000 before anybody picks up a hammer. That’s completely understandable.

We still need enough to get started and to buy material. You still need to not be a hundred thousand dollars ahead of the work. So on the longest, most complex jobs we do, you’re exposed least at the start — and more than a tenth of the contract is still unpaid after substantial completion.

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What changes if you finance it

Everything above assumes you’re paying us directly. Financing works differently, and I’d rather you heard the whole shape of it now than at the signing table.

We do offer financing, including interest-free options. Our Financing Page has the current rates and terms, because those move and I’d rather send you to the page that’s kept up to date than print a number here that goes stale.

What doesn’t move is the structure, so here it is.

The lender releases 20% at contract, and then nothing until the job is finished. That’s their rule, not ours — they won’t make a second disbursement mid-project.

So on a financed job we don’t get the halfway draw or the substantial-completion draw at all. The 25%, the 15% and the 10% collapse into one payment at the end.

Which means the only question that matters is how long we’re carrying your project. And that isn’t about how big your number is. It’s about how long the work takes.

On a shorter job, the straight financing structure works fine

A siding job around $30,000 — say a week to install, a few days to paint, a day for the gutters — we can carry that on 20%.

So it’s simple: 20% at contract from the lender, the balance when the work is done. Nothing out of your pocket at signing. That’s most financed jobs, and it’s how we’d rather do it.

On a long one, it stops being sustainable

Once a project stretches to four or six weeks or longer, we can’t. That’s material ordered, dates held and crews paid for a month and a half against a fifth of the contract, with nothing coming in until the end.

So on those we ask you to cover the gap up to 50% at contract — the 20% from the lender plus 30% from you — and the remaining 50% when the work is finished.

That’s the whole rule: short job, 20% and the balance at the end. Long job, 50% at contract — 20% lender, 30% you — and 50% at the end.

And either way we carry the back half of the job before we’re paid for any of it, because that second disbursement only comes once the work is done.

We do it anyway, because financing is what makes some of these projects possible at all. But on a long project the 30% is the thing that makes it work, and I’d rather explain why than just hold the line and let you wonder.

So if you’re planning to finance, ask early where your job falls — because on a six-week project there’s a cash portion at signing, and on a two-week one there usually isn’t. That’s a real difference in what you need the day you sign, and it’s a bad thing to discover late.

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“What if a draw comes due and I don’t like what I’m looking at?”

This is the real question underneath all of this, so I’ll answer it directly.

Our answer is that we try very hard to make sure that situation never happens — and that’s a job we do, not one you do.

That’s what the project manager is for. Chris walks the work against our standards, and what I say to our guys constantly is: look at this like it was your home. If you wouldn’t be happy with it, it doesn’t pass. If it doesn’t meet our standards and our written procedures, it gets fixed.

AND HERE IS THE PART THAT COSTS US SOMETHING: if the work isn’t up to our standard, we don’t request that draw until it is.

Not because you complained. Because we don’t accept it from our own tradespeople.

I’ve had a job where a tile installation didn’t meet our standard and the customer never knew there had been a problem. Our project manager caught it, took it to the installers, and it was corrected. The customer didn’t have to notice, didn’t have to call, didn’t have to have an uncomfortable conversation. That’s what you’re paying a general contractor for.

It is our job to make sure things are done right. That is not your job. That’s why you hired us.

And the one thing we ask in return

If something isn’t right, we have to be given the opportunity to fix it.

That’s the only thing I’d ask of a customer here, and I think it’s fair.

Everything in construction doesn’t always go as planned. Anyone that tells you different, well that’s a red flag for you to decide on.

Tell us, let us make it right, and by the time the job is finished everything will be done as planned, as expected, and to our standards. That part isn’t negotiable on our end.

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What I’d tell you if you called me

• Ask for the payment schedule before you’re ready to sign anything. Any contractor who’s thought about it will have one in writing. You’re not being difficult; you’re reading the contract early, which is when reading it helps.
• If anybody wants more than 50% up front, ask them why. Then listen to whether there’s a reason or just a policy.
• If you’re financing, ask two things: what the lender releases up front, and how long the job will take. Together those decide whether you need anything in cash at signing. Almost nobody explains it before the paperwork.
• Ask what triggers each draw, and whether it’s a date, a percentage or something you can see. All three exist. Only one of them can’t be argued about.
• Ask who decides the work is good enough to bill for — you, or them. If the honest answer is that nobody checks until you complain, you’ve found the problem.
• Ask what happens if you’re not happy at a milestone. Listen for whether they’ve thought about it before, or whether they’re building the answer while you watch.
• And be honest with yourself about the trust. If handing over a deposit makes you uneasy about a particular company, that feeling is information. Hire the one it doesn’t.

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One thing about how a project like this gets signed, because you should know it before you hire anybody

Your contract is with AAX of GA Inc, doing business as All American Renovations. Where a project needs a general contractor’s license to permit, that permit is pulled through American Craftsman Homes — our sister company. Pete and I own both of them. Same two owners, same office, same people on your job.

We’re in the process of holding that license in All American Renovations’ own name, and when we do I’ll say so right here. Until then I’d rather tell you exactly how it works than let you assume.

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