How do you sanity-check a contractor’s rehab estimate?

Question

I’ve noticed contractor estimates can be hard to judge because the total number doesn’t tell you much by itself. A $45k bid can be solid if the scope is complete, or completely useless if it leaves out electrical, HVAC, permits, cleanup, or finish level assumptions. When you’re comparing bids, what actually tells you a contractor knows what they’re doing? Is it the detail in the line items, how they explain allowances, how they handle unknowns, or whether the number matches what you already expected?

Mohammed Rahman · Answer

I agree with Bruce.

Even if you're not an expert in every trade, having a basic understanding of what's involved makes it much easier to spot omissions or questionable numbers.

Getting multiple bids is huge too. Sometimes the value isn't even in the pricing itself, but in seeing where contractors disagree on the scope. If three contractors mention electrical updates and one doesn't, that's something worth digging into.

I also like using the inspection report as a starting point. It's not a complete scope of work, but it can help identify items that should at least be discussed during the bidding process.

At some point, experience becomes one of the best sanity checks. Until then, comparing bids, building your own scope, and asking a lot of questions can go a long way.

Always happy to connect - my DMs are always open!

Octavia Richardson · Answer

Hi Ali!

Bruce and Mohammed hit it on the head. I would add, create yourself a spread sheet for tracking, like they stated, use the inspection report as a base and build what you believe the scope is from there. Once the bids come in, strive for an absolute minimum of 3 bids per trade, the more the better. Evaluate how thorough the proposal is. You are looking for cost breakdowns to see how transparent they are, what clarification they included to ensure they are clear on what is carried, the exclusions to see if they are leaving out important scope that will then have to be added in later causing scope/budget creep. That’s typically the approach when directly hiring subs. If General contractors are providing lump sum cost make them break it out so that you can truly evaluate apples to apples. They should provide a schedule of values, noting how much each trade scope will cost. You are spot on with your approach, allowances are important to note when there are items that are unclear but assumptions should be defined otherwise they can run away with it later on. How they approach unknowns give you an understanding of how they operate. Do they truly know what they are doing or are they just trying to win another job. A walkthrough or virtual meeting to walk through the full scope is helpful also to see how much they understand about the project.

Experience does play a factor in the review, as Mohammed said. This process becomes more streamlined the more you do it. Let me know if you have further questions or need any assistance. Best of Luck!

How do you sanity-check a contractor’s rehab estimate?

Most Popular Reply