3 Tips for Reviewing Quotes from Contractors

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

8mo

Good post! I believe that the most important part of a project is getting the SOW right. Completely detailed and matching expectations of both sides.

I would add that the paperwork must be very detailed and complete. It always amazed me how a lot of my Contactor brethren would have little or no paperwork, not even a legal contract and certainly no decent Change Order contract.....

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Allan Smith
OP
Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
8mo
Quote from @Bruce Woodruff:

Good post! I believe that the most important part of a project is getting the SOW right. Completely detailed and matching expectations of both sides.
I would add that the paperwork must be very detailed and complete. It always amazed me how a lot of my Contactor brethren would have little or no paperwork, not even a legal contract and certainly no decent Change Order contract.....

Yes ideally the more paperwork and, especially, designs, the better. But to be fair this needs to scale with the size of the project. Tiling a bathroom may not need much more than an email of written scope. Building a house calls for more.
Paperwork costs money bc that means someone is spending the time on it so it just has to scale with scope.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
8mo
Quote from @Allan Smith:

Quote from @Bruce Woodruff:

Good post! I believe that the most important part of a project is getting the SOW right. Completely detailed and matching expectations of both sides.
I would add that the paperwork must be very detailed and complete. It always amazed me how a lot of my Contactor brethren would have little or no paperwork, not even a legal contract and certainly no decent Change Order contract.....

Yes ideally the more paperwork and, especially, designs, the better. But to be fair this needs to scale with the size of the project. Tiling a bathroom may not need much more than an email of written scope. Building a house calls for more.
Paperwork costs money bc that means someone is spending the time on it so it just has to scale with scope.
I believe it would be wiser to use the same paperwork for any size project. I would use a proposal, scope of work, change orders and a contract on any size job. Although of course there is less verbiage for a smaller job. I learned the more detail the better, a bathroom remodel can end up in court right along with a custom home....
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Caleb Brown

Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes

8mo

Good points. I always tell clients get itemized bids. Many GC's will quote a "x" dollar amount and then the investor believes that's the final number. Also have a contingency/whoopsie % for the rehab

1 Reply

Allan Smith
OP
Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
8mo
Quote from @Caleb Brown:

Good points. I always tell clients get itemized bids. Many GC's will quote a "x" dollar amount and then the investor believes that's the final number. Also have a contingency/whoopsie % for the rehab

So the way I've been doing this to reduce the misalignment of expectations is I'll write in my proposal a summary on each line item of what my price includes. I don't itemize the price, however, as that creates other problems.
I don't write a dissertation or anything but I'll specify that first layer of details. If I didn't write it, assume it's not included, but can always ask.
1 Reply

Alan F.

Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes

8mo

Understanding contractors license law in the state the investor is working in is very important. Many inexperienced operators ignore this. Each state is different, some mandate down payments, some use escrow accounts etc. Knowing theese facts can quickly weed out poor performing contractors. Knowing building codes and permitting requirements is also very important.

As mentioned a comprehensive SOW is paramount. I do all of my jobs like any pro does, prints & spec book.

Anecdotally an average "home improvement contract" in CA is approximately 14 pages, yep 14.

Hi Bruce! The right to cancel law is now; 3 working days (as its always been) 5 working days for customers over 65 & 7 working days for post disaster contracts.

The CSLB has pushed the "self comp" requirements out til 2028.

The master list is at 207k active licenses & continuing to drop.

2 Reply

Germain Lesur

6445 Citation Dr # F Village of Clarkston, MI 48346 · Member since 2024 · 20 posts · 4 votes

8mo

Thank you so much for posting this! We see this a lot in our market (Detroit), and it can really turn a good looking investment project into a money pit, especially for out of town investors.

A core pillar of our firm is the renovation side, and one of the biggest points of feedback we get from new clients is "well, I got a quote from ABC Handyman LLC for 70% less than your price". In this case, we always advise them to use us as a second opinion quote and go find a third. If we are way off base in our pricing, we're happy to revisit the scope, but usually the third door opens and behind it is a price that is closer to ours. Baiting and switching on rehab project pricing is very common here, and ultimately our clients that don't choose to use our services end up seeing their final bill equal or higher to what they would have spent with us anyway.

Having the right reno crew, work order management team, or general contractor is key specifically with prices and, like @Alan F. said, proper paperwork. If they know city compliance details and are organized, you'll earn every penny you spent back.

1 Reply

Ben FernandezBusiness Member

Realtor · Lancaster, PA · Member since 2025 · 169 posts · 97 votes

8mo

Great post and topic!

It is imperative investors (and contractors) are prepared with a comprehensive independent contractor agreement so key terms like these and several others aren't missed.

It keeps everyone honest and outlines expectations that otherwise could easily get missed. Mine is 4 pages and I have a shorter 2 page version.

- Schedule, timeline, compensation, incentives, termination, change orders, sow's, waiver of liability, etc.

Of course, this is the next step after the screening process you've mentioned (and you're ready to hire). Even within screening it's good to check references, state compliance and background.

[email protected]717-945-7040

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Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

8mo

Quote from @Allan Smith:

1. Be wary of the "under quote" - Sometimes unknowingly, contractors will show a lower price but once construction begins, the change orders start to pile in and the price ends up being as high as some of your other quotes, but without the upgraded service of a higher priced company. There are SO MANY sneaky ways to under-quote a job. If it's a small job, they might buy tools and then send you the Home Depot receipt and most investors won't notice. Another subtle way is to give you a low unit price ($2.5/SF to install flooring for example) but then they add 20% of SF to the quote bc they know you haven't measured it!

2. Apples to Apples - Yes of course the scope has to be the same, but go deeper. Does one quote mention anticipating needing ancillary work to accomplish your scope, while others don't? If you trust their experience, you might need to add the price of that piece to the other quotes to make it comparing Apples to Apples.

3. Timeline - Many quotes won't included start or end dates but this is possibly the 2nd most important factor to price. I have lost a lot of money hiring the lower cost contractor, only for it to take twice as long and end up not being worth it.

Cheapest quote equals:
Terrible timing
Poor quality
No license
No insurance
No warranty

Good luck!

Logical Property Management4.9453 Reviews

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1 Reply

Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
8mo
Quote from @Michael Smythe:

Quote from @Allan Smith:

1. Be wary of the "under quote" - Sometimes unknowingly, contractors will show a lower price but once construction begins, the change orders start to pile in and the price ends up being as high as some of your other quotes, but without the upgraded service of a higher priced company. There are SO MANY sneaky ways to under-quote a job. If it's a small job, they might buy tools and then send you the Home Depot receipt and most investors won't notice. Another subtle way is to give you a low unit price ($2.5/SF to install flooring for example) but then they add 20% of SF to the quote bc they know you haven't measured it!

2. Apples to Apples - Yes of course the scope has to be the same, but go deeper. Does one quote mention anticipating needing ancillary work to accomplish your scope, while others don't? If you trust their experience, you might need to add the price of that piece to the other quotes to make it comparing Apples to Apples.

3. Timeline - Many quotes won't included start or end dates but this is possibly the 2nd most important factor to price. I have lost a lot of money hiring the lower cost contractor, only for it to take twice as long and end up not being worth it.

Cheapest quote equals:
Terrible timing
Poor quality
No license
No insurance
No warranty
Good luck!
"Cheapest quote equals:
Terrible timing
Poor quality
No license
No insurance
No warranty"

Yep! And no Workers Comp, no Lien Releases, no accurate SOW, no recourse if something goes awry, and so much more.

There are good reasons that prices are higher with quality, legit Contractors.no recourse if something goes awry,
2 Reply

Allan Smith

OP

Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes

8mo

I'll admit I've hired a ton of contractors without insurance, licenses, lien releases and all that official stuff many times. Now, my GC license makes me only get insured subs so I do it way less otherwise I pay for their insurance.

But for the investors out there reading this that really want to save money starting out, you can have decent success with hiring the under-the-table type of folks. You'll always get better pricing but you have to be extremely vigilant. Micromanage everything to reduce risk. Also, the bigger the job, the more you should lean towards paying extra for the insured/licensed guy. I've always 1099'd everyone (that doesn't lie on the W9 form anyway...) and used long texts to describe the scope so they can't say they didn't know they were supposed to do X.

There are some definite drawbacks to be careful of. These types of handymen or whatever can barely tie their shoes in the morning so they'll be late, cut corners, etc. If it's a rental renovation or low grade flip you are doing, this might be okay. But just make sure to factor in the other costs that you have using the cheap guy (longer vacancy, end up paying for his home depot receipts, 10% of the time you have to pay someone else to redo it, and so on).

1 Reply

Richard F.

Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes

7mo

Reasonable estimates are a real sore spot for all involved. A lot of excellent, hardworking vendors don't have the time or skills to generate the kind of estimate that most Owners that hire out PM, or PM their own properties, and Licensed Property Managers would like to see. The Vendors that do have the time and skills, and usually one or more people that do nothing BUT estimates, often take a lot of time that the Owners/PM cannot afford. There are always short deadlines for PM estimates and projects.

Especially the often unlicensed "handyman" vendors that take on smaller jobs the Big Guys won't touch. They are terrible at estimating and have more work than they can handle, but too busy to spend much time on an estimate.

What I recommend to some, and have utilized myself quite a few years ago, when I had to create estimates for a Client property insurance claim, are estimating manuals available from hometechonline.com. The Remodeling and Renovation manual covered everything we needed, and they provide updated local pricing twice a year. They do also have a Web based estimator you can access from anywhere, although that was not an option when I was using their data, so have no experience with it.

You can adjust the rates for labor, overhead, and other variables to fit your needs. You can also assemble basic packages that you re-use, for example a complete bathroom, or kitchen, based on common room sizes. Then you just adjust for different sized rooms or other changes, keeping most of the base elements. You can also easily upgrade finish costs for higher end projects.

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3 Tips for Reviewing Quotes from Contractors

3 Tips for Reviewing Quotes from Contractors

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