Posted by Rich-CA on August 10, 2007 at 15:38:13:
I normally have my contractors submit bids on invoices. Then I submit the selected bid to escrow for a pair of checks to be cut (50% to start, 50% on completion). I usually have them cut to my property management company who then pays the contractor.
The issue is if the check goes to the buyer, it effectively reduces the down payment since the HUD-1 matches up the incoming and outgoing funds and nets out each party’s contributions. I have found lenders look at the net outflow and if it goes back to the buyer, its a kickback.