Getting extremely frustrated with contractor quotes

44 Replies

@Bryan Gambina

Some thoughts: 

  • How many bids did you receive per scope? Let's say you asked five contractors and got five bids in the same ballpark. If that is the case, there's probably some kind of factor that's increasing the bids. What that can be, I have no idea.
  • In terms of how contractors determine price, it somewhat depends on how sophisticated the contractor is. Some folks just work off a rule of thumb or "gut feeling." More sophisticated contractors use various bidding software to get the most accurate quote as possible. But as a general rule, contractors price their bids by setting a target margin. For example, let's say that you are a contractor and you have a potential job that will cost you $100k. If you are aiming for a gross margin of around 40%, you need to bid around $166,666.67 to get there. On top of that number, you can start adding PITA fees and other x-factor fees. 
  • In terms of contractors charging more for labor depending on the area, it's whatever the market dictates. As a general rule, the higher the pricing, the more scrutiny you will face from the owners. So contractors that can charge more are probably "better" than contractors that can't. And by "better," I don't necessarily just mean their skills as a contractor. Maybe they are better at marketing, customer service, sales, etc. 
  • Also note that, as a general rule, contractors aim for higher margins for residential jobs than commercial jobs. Why that's the case is complicated but it mostly has to do with the fact that: (1) residential customers can be very demanding with little knowledge; and (2) commercial/industrial jobs have lower margins but much larger contracts.
  • Along those lines, the high-end residential market is a tricky market. Some people can deal with it; others can't. But the level of demand/finishing for a high-end job can truly get out of hand depending on the whims of the owner. So it's not unusual for contractors to add significant "fluff" to your bids to deal with these changes. 

If it makes you feel any better, a contractor that aims for around 30% to 40% gross margin will end up around EBITDA around the low teens if they do everything correctly. An owner of a small contracting business may make six figures after salary and distributions (especially if the owner actually does the work). But the construction world isn't an industry with crazy margins. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

I don't deal with contractors a ton, but I did learn early on that the larger their yellow page ad, the more expensive they're going to be.  Same goes for social media presence.  My guys don't have websites or yellow page ads.  
They also don't drive $70k trucks with their name all over them.

You need referrals as mentioned.  I would ask my carpet installer, my carpet cleaner, my apt cleaner, my yard guy, my wife's hairdresser, my gym instructor or gym friend, my librarian, my pastor, etc.  Ask an influencer that knows a ton of people.  

A lot of the trades people you are already using know someone or have a family member in another complementary trade.  They also may actually need the work.  Good luck!

Originally posted by @Bryan Gambina :

Hello all,

I am new to Bigger Pockets, but I've been involved in a rehab for over 3 years now. I'm in a 1,800 sqft SFH rancher. I gutted half my home and put an addition on, and as I tore everything apart, it became evident that everything needed to be done, soup to nuts. Anyway, at the time, my thinking was there was no way for me to afford having a contractor do all this so I decided to continue doing everything myself. Fast fwd three and a half years and I'm trying to finish this and started reaching out to local contractors. The quotes I am getting are double, triple, quadruple, and even ten times what the average ranges are, even when referencing J Scott's book "The Book On Estimating Rehab Costs." Looking at me, there's no way I have "I'm rich" tattooed across my forehead, so I'm trying to figure out a) what am I doing wrong ? b) where are these contractors that give reasonable estimates ?

Here are some examples:

Siding (home and detached garage) = $40,000

Framing a 20' long load bearing wall = $5,000

Installing forced air HVAC system = $16,000

Concrete repair = $12,000

New Driveway = $110,000

Landscaping and hardscaping = $500,000 (yes you read that right)

I get multiple estimates and they all seem to fall in that idiotically high range.  On top of that, these contractors refuse to do cost breakdowns of the estimate so I can see where the prices are coming from.

Any help or even a finger point in the right direction is greatly appreciated!

Sincerely,

Bryan Gambina 

Those seem crazy high I don’t care where you are from.

Call around more, there has to be better pricing.  Thumbtack, local property managers, local bigger pockets meet up,

Someone has to have reasobale numbers .

As for the hardscaling and landscape quote... I can only assume you have been quoted by a true artist and what he leaves you will build in value over time... like the Mona Lisa 

That is the most outrageous quote I have ever heard of.  Unless you have 1000 acres  

@Victor S.

If he's going to respond like that, he can back it up with info and contribute to the thread. Most on this thread, digging Ive done, other contractors Ive talked to say these prices are insane yet he doesn't bat an eye at them, so I have to wonder why ?  I don't mind saying I'm wrong, but I'd like to learn why. Isn't that one of the reasons we are all here, to learn ?  On a more professional note, I do appreciate your comments Victor. You bring up a good question.  What is keeping me from bypassing someone like Matt, getting my GC license and the $50k liability insurance and getting contractor pricing myself ?   Is that a viable approach in your opinion ? Do RE investors, flippers, property managers, etc utilize something like that ?

In the midwest, I expect to pay 2-3x the cost of material to have that kind of work done. Don't call contractors, call subs for a specific job-- in the winter for anything that can possibly be done then.

Originally posted by @Bryan Gambina :

@Victor S.

If he's going to respond like that, he can back it up with info and contribute to the thread. Most on this thread, digging Ive done, other contractors Ive talked to say these prices are insane yet he doesn't bat an eye at them, so I have to wonder why ?  I don't mind saying I'm wrong, but I'd like to learn why. Isn't that one of the reasons we are all here, to learn ?  On a more professional note, I do appreciate your comments Victor. You bring up a good question.  What is keeping me from bypassing someone like Matt, getting my GC license and the $50k liability insurance and getting contractor pricing myself ?   Is that a viable approach in your opinion ? Do RE investors, flippers, property managers, etc utilize something like that ?

 proof is in the pudding lol run the cost/benefit analysis and see where you end up. i'm not a contractor, but finding good people that do solid work (i.e., your laborers) and not eff up is near the top of the list. i bet a lot of large(r) flippers have their own crews. 

Originally posted by @Patricia Steiner :

Bryan, there's a lot factoring into the prices you received.  Builders are complaining about the "unrelenting cost increases" of building materials. Another is the labor issue/shortage.  Contractors are in high demand right now and some trades like framers are in short supply.  Also, most of the items on your list require more skill, permitting, and are time consuming.  That cost breakdown?  That ended a long time ago in my market.  

Don't scream but other than the landscaping/hardscaping, the quotes aren't shocking me.  For example:  "Framing costs $7 to $16 per square foot to install top and bottom plates with studs. When including drywall, you'll spend $20 to $30 per linear foot. Framing costs change slightly for load bearing walls, with the type of material used, and for door and window openings." (End/Average Cost HomeAdvisor).

My recommendation is to get creative:

  1.  Look for trades already working in your neighborhood.  I had a concrete repair to my driveway done very inexpensively by following a concrete truck to a neighboring property and asking if they thought they might have enough concrete left over to fix my driveway. The guys did it as "side job" on their lunch hour for cash.  It was a commercial crew and their work was stellar.
  2. Go on Thumbtack to bid your jobs. I got two great contractors who had just left their employers to start their own companies that way. They now do work for my clients.
  3. Go to a wholesale nursery and ask if they do install.  Hang out at Home Depot on Thursday when the nursery workers are stocking and see if they're interest in side work. 

The book on estimating rehab cost is being rewritten every day.  You'll be the expert when your rehab is over.  I look forward to reading your book!  

 +1 for Thumbtack, I've hired many contractors on there and haven't had an issue yet (knocks on wood). 

I think Thumbtack can be good and bad.

This is just my view from the contractor.  You are charged $50 a lead and sometimes up to $100,  thats a ton of money for a lead.  I was on thumbtack about 4 years ago and I spent 90% of my time chasing around bids and only landed about dozen.  I then jacked my rate up for thumbtack leads because I was tired of the chasing.  Seems like most of the leads where when the had friends over and boozed up and wanted to show off to friends by doing home improvements and they never closed.

Thumbtack can be great, because lets be honest most contractors suck at marketing. So it gives them a lead source.  The turnover is insane on that website, they just blow thru noobs, so you can get what you pay for on that lead stream. 

The way I have gotten most of my great lead sources are at my local lumber yard.  I suggest you go to the office on a Mon, Wed or Friday morning.  Bring a couple dozen dounuts and talk to the contractors that come in.  A local lumber yard is usually where the good contractors go.  They don't go the box stores.  Also ask the lumber salesmen, they can be a great source of good quality contractors.

@Bryan Gambina  I'd love to know the contractors who quoted you these numbers.  Framing and HVAC seem reasonable in the market we're in today.  Siding, driveway and of course landscaping are crazy.  You don't have to be a licensed contractor to hire subs directly or get a fair price.  Get out there and meet people.  Ask around, visit a Highs in the morning or a Burger King at lunch.  Introduce yourself when the guys get out of their truck.  Visit new construction sites and talk to people.  Knowing some Spanish helps.  I learned this from my husband who is a roofing and siding contractor.  This is how he finds subs and this is how property managers find him.  I just finished a renovation on the Eastern Shore and didn't know that many trades in the area.  The building is on a main street in town and has a porch.  I sat out on the porch a few Saturdays for a few hours and called numbers on the sides of the trucks that went by.  I figured that if guys were working on the weekend, they must have some work ethic (a good start).  If they answered the phone and turned around the truck to meet with me, they must have a decent level of responsiveness and urgency (even better).  I found my painter, landscaper and a laborer this way.  I already had my electrician, carpenter, and plumber... just needed a mason.  For that, I asked the nice guy at the brickyard who he recommends for a small job.  Try being creative.  In general, stay away from any one who advertises, is award winning, or sends out a salesmen to quote your job.  This should narrow your search.  Good luck!

Bryan you are not the one at fault here. You gave it your honest best, and several of the replies seem to be saying you made a mistake in taking this on. Or your personality is getting in your way. (its not) Reminds me of when I would hear from bosses who said I was "abrupt" or "demanding". I used to get fired so much for meeting deadlines ahead of schedule!

That said, I really feel for you. Persevere! When I do any fixing, I am the GC, and I hire contractors who may also be used to being "the boss". But i don't call myself the GC. Really dont care. I search for folks who listen well and love their work. And do what they say. I prefer to avoid the ones who brag constantly about their wonderfulness.

I have had some nightmarish times but it always revolved around money. I had one guy who thought I should just give him money. They are all bigger, stronger, and more used to violent behavior ... I guess I'm lucky ...  I wish you the best, just think how great your house will look when it's done ...

I've had pretty good luck with Craigslist. Also what about high school shop teachers who know of former students who are working in construction ... Nextdoor.com is a good local referral site.

Originally posted by @Merritt S. :

In my state, contractors are required by law to write up detailed contracts. They cant just say "New roof - $10000". They must specify the work to be done, and the type of product installed. So for instance, "Tear off existing shingles and underlay. Repair, as needed, any roof decking with the same or comparable material. Install new roof, including 15lb felt, 25-Year asphalt shingle, metal valleys, drip edge...". It must be specific enough for the customer to understand what will be done and what quality of materials will be used. They do not need to tell what type of nails, but would put in a blanket statement it will be done to code and to industry standards. They are not required to put a price point on every component though, for instance separating out the labor and materials.

After years of kids being told they all need to go to college and that the trades are for dummies, the trades are in shortage of labor and full of dummies, while a person practically needs a college education to flip burgers. Most of the contracts I see do not stand up to the requirements, and I have had to re-write them myself sometimes.

The sentiment that contractors run from abandoned jobs can not be understated.

"Can I get a discount if I help you?"

"Uhm...no, actually I would need to charge you more for that."

 I write detailed contracts, I do not write detailed quotes with breakdowns. I can do a basic quote in 10 minutes a detailed one will take 1-2hrs. I would spend at least 20hrs a week doing estimates for jobs I will never get if I wrote breakdowns on all my bids. 

The reason you're not getting "realistic" pricing is because you're not being realistic. You cannot take out an exterior wall and reframe it in 1 day by yourself. You need a minimum of 2 knowledgeable guys to get it done. You also need to add in the time for drawings, running to file the permit, picking up the permit, waiting for the inspector to show up, etc. I did a 15 minute repair the other day and charged for 3 hours because of all the work the home owner didn't see. $5k is definitely high to me (and I am in an expensive area) but I am sure a chunk of that is from contractors not wanting to work with you. 

First of all welcome to Bigger Pockets. 

There's a saying in the trades: "Labor is $50/hr. $75 if you watch, $100 if you help." 

 Just keep shopping, you'll find someone you click with eventually. Ask some local realtors/friends/facebook for references, pick guys up in the parking lot at the Home Depot in the morning, hang out at local hardware stores, stoop to craigslist, or do like I do and hire your redheaded stepson as an assistant, snort some go-go juice and get it done yourself.  

Hope that helps and good luck!

Originally posted by @Patricia Steiner :

Bryan, there's a lot factoring into the prices you received.  Builders are complaining about the "unrelenting cost increases" of building materials. Another is the labor issue/shortage.  Contractors are in high demand right now and some trades like framers are in short supply.  Also, most of the items on your list require more skill, permitting, and are time consuming.  That cost breakdown?  That ended a long time ago in my market.  

Don't scream but other than the landscaping/hardscaping, the quotes aren't shocking me.  For example:  "Framing costs $7 to $16 per square foot to install top and bottom plates with studs. When including drywall, you'll spend $20 to $30 per linear foot. Framing costs change slightly for load bearing walls, with the type of material used, and for door and window openings." (End/Average Cost HomeAdvisor).

My recommendation is to get creative:

  1.  Look for trades already working in your neighborhood.  I had a concrete repair to my driveway done very inexpensively by following a concrete truck to a neighboring property and asking if they thought they might have enough concrete left over to fix my driveway. The guys did it as "side job" on their lunch hour for cash.  It was a commercial crew and their work was stellar.
  2. Go on Thumbtack to bid your jobs. I got two great contractors who had just left their employers to start their own companies that way. They now do work for my clients.
  3. Go to a wholesale nursery and ask if they do install.  Hang out at Home Depot on Thursday when the nursery workers are stocking and see if they're interest in side work. 

The book on estimating rehab cost is being rewritten every day.  You'll be the expert when your rehab is over.  I look forward to reading your book!  

 finally some one gives some sane advice - rather than the usual - ask for references..thanks much

Originally posted by @Bryan Gambina :

Angie Shires

Ned Carey

Tim Johnson

Max T.

Kenneth Garrett

Matt Groth

Lee Bell

Mike Dymski

Lynette E. 

I really appreciate your inputs, I do!  That being said, I feel there were a lot of assumptions made and that's probably because I didnt go into that much detail since I was trying to see if anyone else was in general agreement.  I apologize for not going into detail so here some detail to hopefully clear things up and would again like to hear your inputs:

The property I purchased needed everything.  I chose to tackle the interior of the house first and in doing so gutted most of the interior of the house as mentioned before.  I will admit I had zero idea what I was doing to begin with, but I did hire a mentor/licensed GC for 8 weeks to coach me through most of this. I understand 8 weeks isnt a lot of time to master a trade, but given my background it was more than enough to get me started.  Furthermore, none of the estimates I received was to finish work I had started or didn't feel like finishing or am not capable of finishing.  I reached out to contractors to get estimates for things that are still on my list and have not gotten to yet and haven't even touched yet, so I dont understand some of these responses.  Yes they see the work thats going on.  Im 95% complete on my part of the renovation and addition. I dont want to spend another 3-4 years doing a driveway, landscaping, hardscaping, the exterior,  and the other items I mentioned, none of which I have touched yet as stated before.  So Im trying to sub out the work to people who are faster than I am, but I want a fair price!

Ned = Thanks of responding.  I'm in Columbia, MD, which as you know, is pricier than Glen Burnie as an example.  A yard of concrete is a yard of concrete, lap siding is lap siding, and labor per hour is labor per hour.  It honestly bothers me immensely that both myself and the homeowners around me get quoted higher pricing than someone in another county.  I would love an explanation as to why that is please.  Given that materials cost the same within a 20 mile radius, the only reason I can come up with for the cost being higher is that a contractor knows they can get more money out of someone who doesn't know any better from a higher priced area, which is highly unethical in my book and it infuriates us.  

Tim = Thank you for responding. 

1) Why cant they just say that, why waste both of our time? 

2) I will try to be better at that approach, I feel I am being detailed though, but will see what I can polish. 

3) As an example, the home I purchased did not come with HVAC.  I asked a very reputable small business to come out to price a full system.  I will yield to the professional on this since I admittedly dont know much about J load calculations and duct drag and so on and so forth.  I kept my mouth shut and let the pro do his thing, and got quoted double what I was expecting.  Again, any quote Ive gotten I keep my mouth shut.  I dont play dumb and I dont act pompous, I try not to give them any reason to flex the price in either direction.  Im honestly at a loss as to these quotes. 

4) See #3, but I honestly just say Im in the middle of an interior renovation, I dont have time to focus on the driveway (for example), Id like a quote please to have the disintegrated asphalt driveway replaced with concrete. 

5) This is alluding to work thats started and unfinished.  As stated above, these quotes are for work I havent started yet. 

6)  I will reach out to some, thanks

Kenneth, thanks for responding too. 

Concrete repair = I have a pool that was built in the early 70s.  There is approximately ~3000 sq-ft of concrete decking around the pool, some of which has sunk or cracked and needs to be lifted or replaced.  This quote was to remove and replace approximately a 15' x 15' portion of that area. 

Driveway is approximately 125' L x 10' W, no hills, bends, or any significant grade. 

I still dont understand why the area matters?  Materials are the same within the given area and so is labor given the people I have conversed with.  How is this justified ?

Matt = Thanks for responding.  See above, but the quotes aren't on anything I've touched yet.  As for siding, half the house is brick, so we are really only talking R&R for siding for half of an 1800 sq ft house.  Again, nothing Ive touched yet.  The only thing I've touched is the addition that doesnt have siding because its brand new.  So given that these quotes are based on work I havent started yet, any ideas ?

Lee = thanks for responding, driveway is approximately 125' L x 10' W, no hills, bends, or any significant grade. Eye roll is right. 

Mike = I will continue to do so.  These quotes are spanned over the last 3 years, so Im still not sure what Im doing wrong.   Thanks for responding. 
 

 Lynette = thanks for responding.  My portion of the renovation and addition is 95% complete, these are other things I havent tackled yet and dont want to spend another few years doing myself. I do have to say that after almost four years of doing this every day, Id be willing to put my work up against any professional.  I may not be as fast but the quality and knowledge of code is on par. Furthermore, regarding the contractors I have hired and surrounding neighbors have hired, Ive seen their work.  Its fast, sloppy, incomplete, not plumb, level, or square, lumpy mudding, etc.  When you are charging hourly rates like that, yes we/the homeowner expect the work to follow suit. Lastly, Im not a hoverer.  I was a mechanic in high-school and through college, and I know how bother some it is. 

In closing, I feel like Im trying to be taken advantage of.  My goal is to get all of this off my plate so I can focus on RE investing and am using my home as a primer for finding a good contractor or gc to work with  so I can use them for my upcoming investments......and am severely striking out.  I dont agree with a contractor charging higher prices given your zip code, thats unethical to me, and unless given a justification, will continue to fight that. I have a very good idea as to what it costs be a contractor given my mentor, and he continues to keep me updated with the market, the problem is he now lives out of state and obviously can't physically help in person anymore.   I really appreciate your inputs and ask you to continue to give me inputs given my feedback above.  

Looking forward to Re investing! 

@Bryan you definitely have a point . The one thing I am in disagreement is wth regards to location based pricing , that is common in most service businesses

But somethings that tend to be over hyped commonly here are - that costs vary crazily depending on location , Ofcourse there are extremes in anything , but most of the numbers in your quotes cannot be attributed to just location based costs. 

Also like some suggested , you not being nice to them or demanding extra details is making them give excess bids. So if you are nice to them and serve coffee every morning and not question anything , will you get a good rate ? ofcourse no , Its better to throw your cash in trash bin rather than losing money like that . If being nice solves contractor problems , then you wouldn't see these many postings . An unscrupulous contractor is unscrupulous , no matter you are nice / not nice .

So the root cause of your problem is simple , you just bumped in lot of bad contractors. There are lot of good contractors out there , who work honestly , but the harsh reality is that th percentage is less . I would suggest to collect some innovative ideas mentioned by experts in this thread , and in general google search and try them . Understand that , most of the answers to these type of postings , simply say that we don't have enough information or they assume and accuse that you are the worst guy so that's why you are getting absurd bids .

A honest and skilled contractor might charge you more price depending on complexity , but he won't give you absurd bids and waste every ones time , So keep searching

And finally - no matter the way you find the contractors , either through referral , thumbtack or any other process , don't take anything granted . Especially referral doesn't mean anything , if you want price savings , and want to manage the project without GC , you have to be vigilant and make sure , everything is on track . 

Wish you luck and hope you and the good contractor get connected and you both make money.

Originally posted by @Jane S. :

Bryan you are not the one at fault here. You gave it your honest best, and several of the replies seem to be saying you made a mistake in taking this on. Or your personality is getting in your way. (its not) Reminds me of when I would hear from bosses who said I was "abrupt" or "demanding". I used to get fired so much for meeting deadlines ahead of schedule!

That said, I really feel for you. Persevere! When I do any fixing, I am the GC, and I hire contractors who may also be used to being "the boss". But i don't call myself the GC. Really dont care. I search for folks who listen well and love their work. And do what they say. I prefer to avoid the ones who brag constantly about their wonderfulness.

I have had some nightmarish times but it always revolved around money. I had one guy who thought I should just give him money. They are all bigger, stronger, and more used to violent behavior ... I guess I'm lucky ...  I wish you the best, just think how great your house will look when it's done ...

I've had pretty good luck with Craigslist. Also what about high school shop teachers who know of former students who are working in construction ... Nextdoor.com is a good local referral site.

very well said . 

Originally posted by @Bryan Gambina :

Matthew Paul, school me then, take my example above to Patricia and tell me why I'm wrong. 

 quick suggestion - ignore some of the contractors that respond here if your BS meter shoots up  , you should read their other posts and you will understand if you even want to engage with them. 

After participating in this discussion, I realized the guy I was interested in working with wasn't gonna be right for me (couldn't seem to write an estimate, gave me an outrageous & insulting price, etc) so I've been on the phone every day this week really beating the bushes. I found more possible leads by looking for "handyman" because I need a generalist. Most of them were able to submit estimates in a day or two. I eliminated the big outfits like Bordner, that's not my cuppa, and it's amazing how just listening to them talk reveals their personality.  Most are too busy to suit my schedule, but I met someone today who had his own contracting co. & that's his real love, not what he's doing now, which is why I met with him (youth services). Anyway, I feel like this is gonna happen. BTW I got a bid of $1100 (labor only) to lay a vinyl plank floor 400 sq ft. Yikes... 

Originally posted by @Bryan Gambina :

@Victor S.

If he's going to respond like that, he can back it up with info and contribute to the thread. Most on this thread, digging Ive done, other contractors Ive talked to say these prices are insane yet he doesn't bat an eye at them, so I have to wonder why ?  I don't mind saying I'm wrong, but I'd like to learn why. Isn't that one of the reasons we are all here, to learn ?  On a more professional note, I do appreciate your comments Victor. You bring up a good question.  What is keeping me from bypassing someone like Matt, getting my GC license and the $50k liability insurance and getting contractor pricing myself ?   Is that a viable approach in your opinion ? Do RE investors, flippers, property managers, etc utilize something like that ?

It is a good idea to get your GC license . Actually a great Idea . You find a good set of different subs and you sell and sub the jobs , you manage the job . Once you are feeding guys lots of work you can start to dictate pricing .  Excellent $$$ in roofs , siding and windows these have the highest margins and shortest time frames to complete  , and most of the time you are not inside someones house .  The best part is you have NO MONEY AT RISK . You get a deposit when you sign the contract , usually 1/3 and then you set the terms for the following payments . You as a contractor supply the contract which covers you and follows local laws and regulations . Offer financing and take a cut from that also . 

    I dont flip , I buy and hold . If a house is a deal , I fix and rent it out , I can always flip it later , in the mean time its making me money .

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