The Contractor Everyone Thought Was Too Expensive

[Drago Stanimirovic]

Answers to my latest thread reminded me... A few years ago, I watched an investor spend weeks negotiating the purchase price of a property.

He knew every comparable sale in the neighborhood. He negotiated repairs. He pushed for credits...

He celebrated saving a few thousand dollars before closing.

Then it was time to choose a contractor.

Three estimates came in. One was nearly three times higher than the lowest. The highest bid was dismissed almost immediately. "Too expensive."

The lowest bid won.

For the first couple of weeks, everything looked fine. And then the phone calls started.

A crew didn't show up. Materials were delayed. A few things "weren't included." Change orders appeared. The completion date moved... and then moved again.

Only later did everyone realize the three contractors hadn't actually bid on the same scope of work.

The lowest number had simply left more of the story off the page.

By the time the project was finished, the money that had been "saved" on the contractor had disappeared many times over.

Holding costs, extra interest, unexpected repairs. Weeks of lost time.

Watching that project unfold changed the way I look at bids.

Today, when someone tells me, "This contractor is the cheapest," my first question isn't about the price. It's whether we're even comparing the same job.

If the scopes aren't the same, the prices don't mean much.

Real estate investors spend a lot of time negotiating purchase prices.

I've learned that the people you hire after closing, and how clearly they define the work, often have a much bigger impact on your profit than the price you paid for the property.

(Has a contractor ever made- or broke- one of your projects?)