Destroying the 3 Bid Myth

If you needed heart surgery would you ever consider asking 3 surgeons to submit bids and then select the lowest one? The rhetorical answer is of course not. However many home owners think nothing of shelling out thousands of dollars and opening up their home to a they selected solely on his price.
Granted a project is not a life threatening operation, but it could have a definite effect on the families well being and financial health for years to come. Many factors other than price need to be considered before you can find the best contractor for a specific project.
A common tactic is to solicit three remodelers for bids. The homeowner will throw out the high and low bids and select the middle , confident he has minimized the risk by dropping the 2 extremes. Price drives the selection.
No job interview begins by negotiating salary and a remodeling project should not be any different. Before you get to compensation you should make sure you have a qualified applicant. One of the first things you do is to check references. It is important that you talk to people who have hired this remodeler to do jobs similar to yours. A beautifully remodeled kitchen or bath sheds little light on his ability to build a second floor addition to your home. You’ll want to ask the references if they had any problems with quality, payment schedule, employees or completion time.
The most telltale question you can ask is “Would you hire this remodeler again?” Some people will be hesitant to make negative comments, but the enthusiasm in which they answer this question is bound to tell you all you need to know about this remodeler.
After you have talked with the references, take a look at their work. Check out the quality of the craftsmanship and materials, overall aesthetics, creativity and how the project blends in with the rest of the house.
Also verify the remodelers licensing if required in your city/state and insurance. If you hire a remodeler who does not carry workers compensation insurance and one of his employees gets injured on the job, you could be liable for medical bills and lost wages.
One indication of a professional remodeler is membership in professional trade associations such as NAHBRC, National Association of Home Builders Remodelors Council or affiliated local association. A fly by night operator is not going to leave a paper trail by joining a professional trade association.
Another good indication of a professional remodeler is the type of warranty offered. Most remodelers offer some type of warranty. But remember a warranty is only as good as the company backing it.
Once you have done your homework and feel confident that the remodeler has a proven track record of quality and service, and then it is time to discuss the projects details and price.
As with most job applicants the decision may come down to feeling comfortable with the remodeler and being able to easily communicate with them. The remodeler is going to spend many hours in your home so it’s important you feel comfortable with them from the onset of the project. You should be able to work together with him combining your ideas and his expertise to turn your vision into a final project.
Now that you feel comfortable with the remodeler I would strongly suggest that you share your budget number with him. Your budget is not what the project will cost but is the money you have available to spend on the project. Most people are reluctant to share this budget number with the remodeler, fearing the remodeler will find a way to spend it all. If you have done your homework correctly, you should trust your remodeler, and you should realize that sharing the budget number with him will allow all of you to be on the same page. This fact combined with a professional remodelers knowledge of general costs will ensure you don’t plan too much project for your budget.
When you purchase a new car you get to see it first, you get to drive it and see how it feels. With a remodeling project, you’re purchasing a concept and you will not see the final product until after the contract is signed sealed and delivered.
This is the reason shopping works for a new car but not for a remodeling project. You can ask three dealers to price a specific make and model car and be fairly certain you are comparing apples to apples, but with remodeling the products can differ significantly.
There can be many reasons for a lowball bid including shoddy materials, poor craftsmanship, inadequate safety precautions, and lack of insurance and licensing, or the bid may be from a remodeler who has never completed a project like yours before and just missed some things.
When you have selected a remodeler to ask for a bid, make sure the bid and eventual contract is as thorough as possible, including material brand names and model numbers, allowances, total cost, payout schedule, procedure for change orders and completion date. If you ask for a penalty clause in case the project runs over be prepared to offer an incentive if it is finished ahead of time. Also remember most change orders will add days as well as money to the completion schedule.
If you have shared your budget and worked together effectively in the design and specification portion of the process then the actual contract price should not be a shock. It is the remodelers responsibility if at all possible to control the scope of the project to a level that works within your budget. That may mean giving up those custom cabinets for standard cabinets, a vinyl laminate floor instead of real hardwood, or Formica counter tops instead of granite.
Quality is never cheap and good research may seem like a headache, but see what an expensive headache really is by having a low ball bidder take the roof off your house, disconnect the plumbing from your house and leave no forwarding address as he skips out on the project. Do your homework early in the process.

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10 Responses to “Destroying the 3 Bid Myth”

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