Home Remodeling Bids: A “Good Deal” Can Come With A Stiff Price

Collecting home remodeling bids can be both an exciting and nerve-wracking experience. How do you know which bids are ideal, and which ones to avoid?

When it comes to remodeling your home, cutting corners is a recipe for disaster. It’s not to say you need to instantly jump to the highest bids, because that doesn’t necessarily guarantee anything.

But be cautious about any bids that are well below all the others.

What seems like a great deal could actually mean spending a heck of a lot more later, and we’ll give some examples of how that happens.

Licensed vs. Unlicensed Contractors

By NC law, a contractor cannot bid on a job larger than $30,000 unless they are licensed. The process of becoming licensed ensures the contractor is aware of and following local laws for safety and compliance, and signals a degree of skill and competence.

If your project receives several bids at the $40,000 or more level, for instance, and one bid is at $27,000, you might be wondering how that contractor could charge so much less.

It’s not because the other contractors are greedy or unfairly marking up materials.

Dollars to donuts it’s because the low-priced contractor is not licensed. When creating their bid, they have to jerry-rig aspects of it to fall below that $30,000 cut off where they can no longer legally bid.

But won’t leaving certain things out create obvious issues?

It certainly can, and here’s the tricky part about this tactic: the law only says that contractor cannot create an initial bid over $30,000. If the project starts at $25,000 and then incurs $10,000+ of additional fees later on, they can usually squeeze by without legal issue.

But it’s not simply an issue of trying to avoid surprise fees mid-project.

Half-Finished Jobs That Require Rescuing…

The other troublesome aspect of this that we’ve observed over the years is where a contractor who is both unlicensed and less technically competent bids on a job that, in reality, is beyond the scope of what they can handle.

They toss out a low bid that attracts attention, and they get selected for the remodel. Part way through the project they run into an issue, such as:

• They opened up a wall to make electrical or plumbing changes, make a mistake that causes damage, and then aren’t sure how to proceed, abandoning the project.
• They tried to remove a load-bearing wall without reading architectural drawings and cause structural damage, and are unable to resolve the newfound issue, abandoning the project.
• They get halfway into the project, then propose a whole bunch of additional fees for aspects of the remodel that weren’t covered in the proposal (but should have been), charge the homeowner a bunch of extra money, and then still realize that completing those portions of the job are beyond their capabilities.
• They spend more of their budget on labor or materials than anticipated, and refuse to go further without more money from the homeowner, essentially holding completion hostage.
• They do not obtain the proper permits for the remodel, the city finds out about it, and shuts the project down where it stands.

Obviously in any of these situations the homeowner is in a bad spot.

What happens next rather often, unfortunately for the homeowner, is that a different contractor needs to come in to rescue the project and get it back on track.

This means more hassle, more money, and very likely having to go beyond the original time line to complete everything properly.

Not to mention that it can be difficult to get a contractor to commit to the job after the fact. This is because it’s not always clear to the second contractor how much of the first contractor’s work was done well, and therefore not always clear whether it’s just the obvious issues that need attention.

“Once you touch it, you own it.” That’s a saying that’s true in a variety of industries, and for a second contractor coming in to resolve someone else’s mistakes, it means a degree of apprehension about saying, “Yes, I can fix this for $X.”

Because what if partway into the resolution you discover that half of the plumbing the other contractor did is not to code? Now the only way for this remodel to resolve properly is to go back and redo that work as well. And if the second contractor were to skip that part in favor of trying to give the homeowner’s a break financially, it means that if there are issues later, that second contractor is the one the homeowner will look to for answers.

That’s just real talk about a scenario we’ve seen homeowners run into too many times.

The Takeaway…

Ideally, always try to get at least 3 bids from contractors on any remodel you have in mind. If one bid is surprisingly lower than the others, be leery of it or at the very least, ask a lot of clarifying questions.

Make sure each proposal you receive is thorough and clear. You want to fully understand how they will be completing each portion of the job, and it should be clear to you that all materials and other costs are taken into account.

You are better off with a proposal that is somewhat higher cost that is also far more thorough, and leaves you with the peace of mind that things are well thought out and unlikely to go wrong. It’s also preferably to anticipate the costs of things in advance than to keep running into new fees along the way.

Also, insist upon clear time lines. Experienced contractors can put together an organized plan and project real completion dates. You never want to feel like your contractor is making it up as they go along, with the end date continuously being pushed back.

Trust the experience and the openness of a real discussion.