Up to 50% Deposit

I'm an OB and currently I'm getting quotes for steel framework and aluminium framed windows. Some of the suppliers are stating in their quote they want up to 50% deposit with the placement of the order.

This immediately gets my back up with no way will I hand over 50%, which could be in the vicinity of $20k without receiving something in return. I also ask myself the question do they apply this to the smaller builders (as you're aware the OB is the biggest building company in the country) who are my likely to go bankrupt etc than I/we are.

I realise and will place a deposit of up to 10%, and unless they have a really good price I won't be dealing with them.

So I'm just wondering how many other OB's have experienced this?

We paid about $5000 deposit on two house lots of windows, which was probably in the vicinity of 50%. That's the only deposit we've paid on the whole job, but then we are known in the area, so that probably helps. Or not as the case may be :o.

We have an account with most of the suppliers that we have used. The ones we don't have either invoiced us or we have paid COD. We didn't get an account with Bunnings, so have been paying by card over the phone the day before delivery.

Regarding the deposits, you have to look at it from their point of view. Windows are made to order, even though they are standard sizes, because they are difficult to store, easy to damage, and there are so many colours and sizes that keeping an inventory is not practical.

When we made aluminium windows, we would have to place an order with the factory to supply the frames. They were all made to order and we had to pay them regardless of whether we were paid. We would receive them and assemble and glaze them. If someone ordered a house lot and then pulled out, that left us with a big problem. It happened once and we finally sold the last window from that order about a week before the business shut down 5 years later.

They don't know you and despite your best intentions, things happen, people go bust, get hit by buses, or just do a runner. It happens all the time.

Rod,
good luck! I doubt you'll find anyone to make you your windows:rolleyes: . As to whether they apply the 50% deposit rule to smaller builders, it generally applies to all non-account holders.

Mick

Interesting though, the Building Services Act in Qld sets a limit on the amount of deposit that can be held, and even forbids splitting the contract into labour and materials components to prevent this sort of thing happening.

Technically a builder in Qld could have a subcontractor prosecuted for taking a deposit of that size!

Cheers,

P
;)

Quote:

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Originally Posted by bitingmidge

Interesting though, the Building Services Act in Qld sets a limit on the amount of deposit that can be held, and even forbids splitting the contract into labour and materials components to prevent this sort of thing happening.

Technically a builder in Qld could have a subcontractor prosecuted for taking a deposit of that size!

Cheers,

P
;)

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Yep its similar here in WA where the builder can seek a max of 6.5% of the total contract value at the start.

In my situation I'm the builder dealing with a supplier.

My experience of being an OB is that I had to put down a deposit before work commenced (such as making windows, frames, trusses), but I don't recall it being as high as 50%. I think it was more like 20%. BUT I had to pay 100% when the job was completed, before it would be delivered.

Chris

Quote:

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Originally Posted by rod1949

as you're aware the OB is the biggest building company in the country

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That's where you are wrong, they are not part of the biggest building company but part of a large collection of individuals who are building their own house.

Most of the OB's cause tradesmen and suppliers hassles. They usually change their mind after placing orders or have run out of funds when the goods are ready for delivery or are not ready to receive it when ready. I know there are exceptions but unless the suppliers and tradesmen know you, as Silent C has pointed out, they will insist on large deposits to cover themselves for these eventualities.

Quote:

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Originally Posted by bitingmidge

Interesting though, the Building Services Act in Qld sets a limit on the amount of deposit that can be held, and even forbids splitting the contract into labour and materials components to prevent this sort of thing happening.

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Interesting indeed, and similar legislation exists in most states, but this has to do with a builder and his client and not between a builder and supplier or subcontractor.


So pay up and be done with it, or see if you can get a bank guarantee in favour of your supplier, but make sure that the specifications on your order are specific and cover everything that you need, including delivery arrangements.


Peter.

I used to love ob's when I was building,
but I wouldn't work for them for any money.

I'd roll into a window manfacturers and say "how much for all the old stock in yer graveyard (the odd sizes & cancelled orders)

Best deal I made was 150 windows for a grand.
Sold a houselot next day for $1500 and built a few houses with the rest.

Gotta love the lot that changes their mind when the wind changes:D

Hi Rod1949. Don't know if this will help as I'm in QLD, but we're OBs too and placed an order for $5,500 worth of aluminium stacker doors. The window/door company requested 50% deposit when placing the order. I've since been told that it is illegal to request a 50% deposit on any order that is over $3,000 in total. With all my timber purchases, they were usually in excess of $3,000 and I just gave them a $1,000 deposit when placing my order.

Quote:

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Originally Posted by Bushlander

Hi Rod1949. Don't know if this will help as I'm in QLD, but we're OBs too and placed an order for $5,500 worth of aluminium stacker doors. The window/door company requested 50% deposit when placing the order. I've since been told that it is illegal to request a 50% deposit on any order that is over $3,000 in total. With all my timber purchases, they were usually in excess of $3,000 and I just gave them a $1,000 deposit when placing my order.

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Thanks for that Bushlander.

My opinion - open your own wallet. Essentially most OB manuals explain to the OB how to hold off on payment, only give payments on completion, .... essentially it boils down to using the supplier/tradies credit rather than their own. Any wonder why the majority of decent tradies steer clear of OB's.

Quote:

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Originally Posted by Eastie

My opinion - open your own wallet. Essentially most OB manuals explain to the OB how to hold off on payment, only give payments on completion, .... essentially it boils down to using the supplier/tradies credit rather than their own. Any wonder why decent tradies steer clear of OB's.

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I don't have a problem with paying cause I don't like it hanging over my head. And I don't have a problem with a deposit of up to 10% on the placement of and order for my steel wall and roof framing. But 50% is a bit rich.

Eastie! Would you dish out $20K up front with nothing to show for it? I don't think so.

Rod,
let's turn this around. Would you be willing to to buy in materials for $40,000 worth of work with only a $4,000 deposit? If Joe Blow the O.B. changes his mind (as they often do) you'd be out of pocket $36,000.

Midge,
I should know this (but my head's too full of other stuff and I've taken to avoiding most of this stuff :o ) - is the supply of windows considered building work under the BSA legislation. Yeah, it's manufactured for the job, but how does it differ from, say, ordering an oven in a particular configuration for your house?:confused:

Mick