Safeguards Available If You Fear Downpayments for Home Improvements

Occasionally I run into a customer who is afraid of giving a downpayment for work that they want done. They may have been burned in the past or just don’t trust themselves enough to have adequately checked out a business. Jim from Energy MastersIf, for any reason, you do not trust the person who is trying to sell you something, do not do business with them. If you do trust them but still have reservations you can check out their online profile, or simply use a credit card.

Credit Cards: Many companies will now accept credit cards. You may have to pay the 3% processing fee, but if your contractor chooses not to show up to install your replacement windows or whatever product you are having installed, you can simply call your credit card company and tell them you never received the service promised. Most credit companies will remove the charge for up to 90 days after the card has been charged.

Online Profile: Several free websites such as Google and Yelp allow homeowners to comment and rate companies. Check them out BEFORE they come to your home. It is fair to ask the owner of a company for their full name as well. In Wisconsin, you can search circuit court records online to check them out, but be careful — sometimes you can confuse someone who has the same or similar name but if you look closely you will notice they have a different birthdate, address, or middle initial. Today, nearly everyone has something in there. Even the author of this article has a ticket for not wearing his seat belt and driving a bit fast.

Better Business Bureau: The Better Business Bureau, sometimes just called the BBB, is available both online and over the phone to answer any questions that you have about a business. Their site is a bit tricky though so you have to know what to look for. Ratings are important, but even the absolute best company may have a maximum rating for A- until they meet the requirements of the BBB. Obviously if a company is only rated C or less, it should serve as a red flag, but you should also look at the amount of complaints a company has had. Is it spotless? Is there online one or two or has the company shown a pattern of poor service, poor products and poor judgement? Also check to see if customers have reviewed them. Are they positive, neutral or negative reviews? Sometimes the BBB will rate a company A+ even though they have had multiple issues with products and service. Be smart about using their website and look past just the rating.

Angie’s List: This is a tricky one. Angie’s list is paid for by the consumer which means if you want their ratings you have to pay for it. It sounds like it could be a decent service, but someone could easily buy subscriptions for their friends and relatives to artificially pump up their online ratings. If you use Angie’s list, use it in conjunction with other online rating places.

Gut Check: This may seem obvious, but if something just doesn’t feel right, that is reason enough not to move forward. Some people call it a “spidey-sense” that is “tingling” as if to warn them. But what it really boils down to is whether or not you feel your instincts are telling you that this is the right contractor or not.

So what is the right amount to put down? Many contractors require half down. Higher cost contractors often only require 1/3 down because their profits are higher. Often times you will find that the 1/2 a smaller contractor will require will be the same amount of money that the 1/3 was for a larger contractor. A good rule of thumb though is to never pay that second half until the work has been completed according to what has been written on the contract.

Why do contractors require down payments? They do this because they need to cover their materials and some of the costs of doing business. If they order products for your home and then show up on the day of install and the customer either isn’t home or refuses to let them install the product, then the contractor is not only out what they paid for the product, but they also will have to pay a restocking fee from their supplier and that is IF they allow product returns, plus they’ve lost transportation costs, delivery costs and have idled their work crew (which still needs to be paid) for the day. If a company does not require a downpayment you should be cautious of any warranty promises as there is little chance that they will be in business 5 or 10 years down the road.

Jim McGuigan is owner of Energy Masters, LLC which services the Metro Milwaukee area.

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