It is crucial to have a clear payment schedule in place before finalizing a contract. 

This is particularly important for extensive renovation projects, as financial discrepancies can lead to delays or even abandonment of the project. Collaborate with your contractor to establish a mutually agreeable plan.

Prior to initiating negotiations, establish a budget. In case funding is required, it’s best to explore various options to secure the most favorable terms. Exercise caution before agreeing to interest rates or monthly payments that could pose challenges in the future. 

Once these decisions have been made, contact regional contractors to obtain estimates and move forward.  Then it’s time to settle the bill. Here are some things to keep in mind:

CASH OR CARD? 

If a bidder insists on being paid in cash during negotiations, it might be best to consider other options. Without the documentation provided by credit card payments or checks, there is no evidence of payment being made. This could have serious implications in the future. The Federal Trade Commission also advises against contractors who demand full upfront payment or encourage the use of a specific lender that they are affiliated with. 

The most convenient way to keep track of payments is through credit card transactions. However, if you choose to write a check, retain copies of all financial records, including a copy of the payment, a clear explanation in the memo section, and proof of deduction from your account.

PAY AS YOU GO 

The amount you need to put down for a down payment will vary depending on the scale of your project. For extensive renovations, a substantial sum may be necessary to cover the cost of materials. 

Once the initial payment is made, establish subsequent payments based on milestones achieved rather than on any specific date. This approach incentivizes your contractor to closely follow the agreed-upon construction timeline.

FINAL PAYMENT 

Prior to submitting the last remaining payment, conduct a thorough inspection of the project to verify that the work has been completed according to your specifications.

The Federal Trade Commission recommends a sign-off checklist that includes: 

• Obtain proof that subcontractors and suppliers were paid. 

• Inspect and approve all completed work. 

• Make sure the job site is clean and that tools, equipment and other materials have been removed.