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Consumer Question: Paying 100% Up Front
Old 04-14-2016, 02:01 PM   #1
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Consumer Question: Paying 100% Up Front

So I'm ordering cabinets for my kitchen remodel--will come to about $12,000. I've been working with the company's designer for about two months. We've exchanged many e-mails and have met twice; once she came to my house to measure. I am very happy with the design, the service, the product. However I failed to ask about the payment terms. We are at the point where I am ready to place the order and I'm told 100% payment up front is required, even though the cabinets and install won't take place until June.

I'm balking at that! So I'm now trying to get any and all info. I can on the company. There are NO reviews on the web. The company has been in business since 1995; the designer has been there 17 years; they rate A+ on BBB with no complaints over three years and are in fine standing.

Can I trust this information and go ahead? If not, what shall I do? I've expended a lot of time and energy now, and the final cost is several thousand below the other companies I looked into for the same product. The longevity and "no complaints" against the company are obviously good signs. But the request of 100% up front seems really suspicious to me. BTW this is a local company that mainly contractors use for kitchen cabinets although they do sell to individual consumers like me. I just don't know what they gain by insisting on upfront payment. And what leverage do I then have for resolution? Any insights appreciated.
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Old 04-14-2016, 02:10 PM   #2
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Is there a suitable competitor that doesn't require 100% payment upfront? If so, tell them that you are considering taking your business to the competitor because of their policy. You'd be surprise how flexible they may be knowing that you are willing to walk.

Even when I get major dental work or order new eye glasses, the doctors ask if I wish to pay upfront or over a couple of payments.
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Old 04-14-2016, 02:15 PM   #3
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100% upfront sounds unusual, and unreasonable. It seems to me more typical would be to have three or four equal payments, one upfront and one after the project is over, the others as specific milestones are met.
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Old 04-14-2016, 02:16 PM   #4
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Last few kitchens I did I paid in "stages". I'd offer half and then the other half when the cabinets are installed.
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Old 04-14-2016, 02:16 PM   #5
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100% upfront sounds unusual, and unreasonable. It seems to me more typical would be to have three or four equal payments, one upfront and one after the project is over, the others as specific milestones are met.
that's been my experience
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Old 04-14-2016, 02:19 PM   #6
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100% upfront sounds unusual, and unreasonable. It seems to me more typical would be to have three or four equal payments, one upfront and one after the project is over, the others as specific milestones are met.
What he said. No way would I pay 100% up front no matter how long they've been in business. For me that's an absolute deal-killer.
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Old 04-14-2016, 02:32 PM   #7
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No chance I'd do that. Deposit? Sure. What prevents this unknown company from taking your $12,000, declaring bankruptcy and starting over.

Even if not nefarious, I make it a point not to grant several months of interest-free loans to anyone - even the federal government as I'd rather owe taxes than get a refund! - which is what this amounts to.

Once they have your money, your ability to negotiate, withhold based on quality, etc. is much more limited and likely involves lawyers.
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Old 04-14-2016, 02:45 PM   #8
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I think your instincts are spot on. The only time I have been willing to make advance payment in construction projects is for custom/special-order items that are not returnable (custom trusses in my case).

In that case, the builder explained that he had previously been stiffed by a customer who gave a go-ahead to order custom trusses and then decided not to do the project and the contractor got stuck with them. His reasoning seemed credible and he had previously done a much smaller project for me and other projects for some friends so I conceded to the up-front payment.

I have heard too many horror stories where someone paid in advance of the completion of the work and the contractor was unresponsive or never showed up to ever consider paying in advance. In your case, if the cabinets are custom then I would consider fronting whatever the supplier requires from the contractor. If the cabinets are standard and returnable, then at most I would be willing to advance the restocking fee (if any).

I would tell them, with a wink and a smile, that I am not a bank and I do not provide my vendors with working capital.... if they are as well-established as they proclaim then they should be able to provide their own working capital and you should pay as the work is completed.
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Old 04-14-2016, 03:00 PM   #9
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I think pb4uski's suggestion is good. I would also want to pay by credit card so as to have some protection afterward.
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Old 04-14-2016, 03:07 PM   #10
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Nope. Nope. Nope. That's a bad deal, no matter how it's cut.
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Old 04-14-2016, 03:10 PM   #11
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Nope. Nope. Nope. That's a bad deal, no matter how it's cut.
+1 Once you have paid, especially in cash, your leverage is zero. And it is amazing how Jekyll and Hyde people can be before and after payment.
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Old 04-14-2016, 03:11 PM   #12
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Originally Posted by Marita40 View Post
the final cost is several thousand below the other companies I looked into for the same product. The longevity and "no complaints" against the company are obviously good signs. But the request of 100% up front seems really suspicious to me. BTW this is a local company that mainly contractors use for kitchen cabinets although they do sell to individual consumers like me. I just don't know what they gain by insisting on upfront payment. And what leverage do I then have for resolution? Any insights appreciated.
What they gain is freedom from flakes who put 10% - 20% down to have a custom product manufactured and wind up, for whatever reason, not completing the deal. There's a death in the immediate family, the house burns down, mom catches dad cheating with another woman and tosses him out, the homeowner loses his/her job....... The stories are endless. If the manufacturer can avoid that risk, they will. If it never happened, I don't think they'd worry about it.

My neighbor at my last house (this was long ago but likely still pertinent) owned a small company making custom counter tops. He was very, very busy and did mostly high tier work. He insisted on 100% payment from retail customers up front to completely eliminate his risk of customers backing out after he'd invested time and money in the project. Custom counter tops and cabinets are near worthless if not used for the original job.

He made exceptions for remodeling companies he had a long history with. It was expected, however, if the customer backed out the remodeling company would eat the loss, not him.

You'll need to check and see what your supplier's competitors are doing. You can try negotiating based on that.

Personally, if I was in the custom cabinet business and business was brisk, I wouldn't make a unique, custom product for someone unwilling to put down less than 50% and I'd do a full background check on them before beginning work.

IMHO, custom shops need to think a lot like landlords. If you have a desirable property and lots of applicants to rent it, you do a full background check, write a landlord friendly lease, get a large deposit up front, etc. If you're a high quality custom shop with a waiting list of customers, you ask for full payment up front. Or at least a large deposit which substantially protects you from loss if the deal is not completed.
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Old 04-14-2016, 03:16 PM   #13
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I wouldn't do it. The home remodeling I've had done, by various contractors, was 50% up front, and the remaining 50% upon completion. If the cabinets are custom with no chance for return and they're asking for 100% of the cabinet cost up front, and the installation and other costs upon completion, that would be more reasonable - though the cabinets aren't costing them 100% up front...
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Old 04-14-2016, 03:23 PM   #14
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Typically it is 50% upfront. I would guess your designer doesn't have the money to foot the 50% remaining on their own.

I use RTA cabinets in my apartments. A LOT cheaper. Installed by me... Less than $1,500 for the entire kitchen, including counter tops.
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Old 04-14-2016, 03:25 PM   #15
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Originally Posted by pb4uski View Post
. The only time I have been willing to make advance payment in construction projects is for custom/special-order items that are not returnable (custom trusses in my case).

.
Isn't that what OP is doing? She's ordering custom cabinets, made to her specifications and unlikely to work anyplace else, direct from the manufacturer.
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Old 04-14-2016, 03:32 PM   #16
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If the cabinets are custom with no chance for return and they're asking for 100% of the cabinet cost up front, and the installation and other costs upon completion, that would be more reasonable
I think OP is saying that the cabinets are custom. The issue of who's doing the
complete remodel job is a bit vague. Her implication is that she's going direct to a local custom shop to have the cabinets made and, I think, installed.

If you have no history with a provider of a custom product being made to your specs, it's typically hard to have them do the job without being paid up front. Especially if they have plenty of business and have learned the hard way that buyers can act erratically for whatever reasons.
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Old 04-14-2016, 03:34 PM   #17
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Isn't that what OP is doing? She's ordering custom cabinets, made to her specifications and unlikely to work anyplace else, direct from the manufacturer.
She doesn't mention that these are custom cabinets in the OP anywhere that I can see. While the overall kitchen design may be custom, the cabinets probably are not unless it is a really high-end kitchen. Typically a kitchen design is done using the same family of cabinets that come in stock widths, configurations, etc.

But even if she is ordering custom cabinets the most she should be willing to pay upfront is what the contractor would be out if she gets hit by a beer truck after the order is placed. IMO, its totally unreasonable to pay the part of the contract price relating to the installation of the cabinets until they are installed.
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Old 04-14-2016, 03:36 PM   #18
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Remember - if you pay him all up front you are essentially an unsecured creditor of his.

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Old 04-14-2016, 03:46 PM   #19
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Paying someone 100% up front? Is that a joke?
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Old 04-14-2016, 03:47 PM   #20
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Never pay 100% up front. Ever.
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