What do you do to negotiate better?

Question

Hello everyone!

I am flipping my first property and negotiating with a few vendors to get better pricing (cabinets and countertops etc.) How do others go about negotiation? Do you negotiate at all when it comes to choosing the contractors or vendors? Or is it mostly just getting multiple biddings and deciding based on those options? ... Are there any industry-known services that negotiate for you?

Mason Liu · Answer

The best way to go about this is to just get multiple bids. Personally, I'm not a fan of nickel and diming contractors on their work because well...they will end up nickel and diming me on the quality/effort they put into the job I've found.

More importantly, I do think the way they provide you their bid matters a lot as well. The vendors who are detailed in their scope of work and bids tend to be more professional and handle their jobs better, and may be worth the premium (if any).

Jake Baker · Answer

@Tracy Cheon

I try not to squeeze my vendors. I will get a few bids and pick one and let the others know what I was able to get it for. I won't create any bidding wars either. I try to create transparency.

Kelly O'Keefe · Answer

I agree with the above comments. Also, I would say to do your research on the service and company. If you order a low tier company you will save money and get a low tier result. If you are flipping in the same area I may not negotiate at all. Instead I would focus on building strong relationships with the contractors in the area. Over time this will be well worth spending that extra dollar an hour, or a little more on cabinets

In my experience it is always more expensive to do a job twice and fix a mistake than doing it right the first time

Konstantin Ginzburg · Answer

@Tracy Cheon

The best strategy would be getting multiple bids on the work you want to get done. Once you have chosen a contractor, there are ways in order to lower the price such as choosing to accept lower cost material. Keep in mind though, that picking the lowest cost bid might not be the best strategy since quality of work/materials should be weighed against price as well. Selecting the cheapest general contractor might result in having to spend additional money later on as sub-par work may need to be corrected down the road. This can wind up costing you more in the long run compared with picking a higher quality general contract at the start of the job, even if they might cost a bit more up front.

Nancy Johnson · Answer

I agree with these posts. You always want to negotiate yourself, not use someone else because it is, after all, your investment. Get several bids, be extremely specific with your scope of work, and then if you need a lower price, modify the products you have chosen. When you cut the contractors pay you will get less quality. Spend your time walking your local Home Depot or Lowes or Ace Hardware. Get to know their products and the pricing. Many investors will use the same items in each house and you just adjust your list for the size sqft house you work on. That also helps your contractors work more efficiently as they know your products.

When I do a scope of work, I am very careful to actually create a spreadsheet with the exact products, SKU numbers, quantities, product name, color, which big box store, and often a picture or link of what I want. If I want a certain skim coat depth on the drywall, I say that. Two coats of paint and a primer? Say it. Every contractor is quoting according to your scope of work. If you don't specify, one may use two coats and no primer, another primer and one coat paint, or one may just do one coat paint. Powerwash 50 feet of brick? Yes, every detail goes into scope of work so there are no change orders. No guessing. It is like a recipe. Write it down for your bids.  Then add your 10% over. Ask questions. Learn quality and pricing and alternatives if your normal products are not available.

When you do that, absolutely every product list will be the same for every bid - except the labor. Then it comes down to quality and reputation of the contractor. And DO check out their pictures and reviews online. One may do more modern work, another may be used to doing farmhouse looks. Someone else may feel comfortable doing kitchens and baths but lack doing long stretches of tape and float on drywall. Make sure you like their personality and that they act like they respect your property. And you will have a long relationship. Always make sure you have several that you like and keep on call because when you have several houses working, one or two of them may be busy for 4-6 weeks. And you don't want to wait to start. As soon as you have a contract, you let them know you have work coming up and advise them when you have a close date. Remember all your investment in repairs can go into your business costs for taxes.

Alan F. · Answer

I agree with the other comments, business is about trusted relationships. These relationships are allied with you, why try to demotivate them?

I do, however negotiate the price of the house.

Erik Estrada · Answer

To be a solid negotiator you need to have a firm understanding of the true costs of services. Where most people fail is when they low ball the heck out of people, resulting in poor work. Or worse they go for the cheapest option, only to end up with an unfinished project.

I would recommend shopping around, asking for simple quotes, and narrowing it down to the quality and craftsmanship. Ask for examples of work performed in the past, and referrals/reviews.

What do you do to negotiate better?

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