Getting Three Estimates from Contractors

Many Home repair/renovation-advice TV segments, government pamphlets, web pages, newsgroup postings, and so on, advocate that the homeowner get three (I've even seen recommendations for more) estimates before selecting a contractor. These advisers then have a variety of methods to proceed: average the estimates and keep looking, pick the middle, pick the guy you like, or sometimes they provide no further advice. The homeowner, lacking any better criteria, may very well take the lowest bid or estimate. Consequently, often the homeowner then gets the lowest quality job.
Most of these advisers don't encourage the homeowner to spend time actually educating themselves on the type of work they want.
For residential jobs, everything associated with houses, the standard is for the estimates to be free to the homeowner. Thus, contractors are wasting time, gas, and aggravation unless the estimate yields a job. Occasionally, a homeowner will recognize this and thank the contractor for his time, but usually the homeowner is oblivious.
Let's look at this form the perspective of the *average* contractor, that is, average in his ability to land jobs. Assuming all customers get three estimates, the contractor must then do three estimates in order to get one job - a day's work, perhaps. When we factor-in the many customers who will never buy the job from anybody, the contractor's ratio gets worse. When we figure-in that the contractor must refuse some jobs, the ratio gets worse yet. So how does the contractor compensate for this loss? The same way stores compensate for employee-theft and shoplifting, they charge the paying customers for it. That's where all the money comes from.
What else does the contractor do to limit his losses? He qualifies his customers. In other words, if while on the call with a potential customer, the contractor perceives the customer to be shopping, or worse, *just* shopping, the contractor will then find some way to end the call. The then rejected potential customer may try the next contractor on his or her list, but he of she has lost the opportunity to use the rejecting contractor, and often these people are the best contractors.
Sometimes when you can get something for free, it's not ethical nor beneficial to take it.
How then should a customer select a contractor? First he or she should educate themselves on the work that needs to be done. Then, calling a few contractors is fine, and even getting three estimates is correct in some situations. But indiscriminately wasting people's time is abusing the system and it will put off the contractor who is perhaps the homeowner's best bet.
-- (||) Nehmo (||)
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Nehmo Sergheyev wrote:

good point, nehmo!
i so often read on these groups the advice "get three written estimates" even for jobs amounting to a few hundred bucks. in a lot of areas, you would be lucky to get someone to call you back let alone get a written estimate.
when i was a contractor, i refused to bid on jobs if i knew there were other people bidding on it. first, i had plenty of work without bidding. second, i believe in doing first rate work. if i was underbid, it was because the competitor either forgot something, or was cutting corners that i was not willing to cut.
in the instances where i was required to bid, i bid it high enough to make sure that i wouldn't lose on it. if you can find a contractor you can trust, pay him by the hour. it might be cheaper in the long run.

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If you refuse bidding on project when there are other bidders I would not even talk to you and not advise anyone to use you in any project. Bidding is choosing best person or company to do the job at best price, it is not choosing the winner solely on price. When you want to buy a car do you come to the first car dealer and buy first car you are offered?
Providing good reliable estimates along with details how and when the project will be done is important part of a professional be he a general contractor or aircraft designer. If you think you waste time think when military contractors like Boeing and Lockheed Martin put tens of millions of dollars to create full functioning models to show to military in hope to win a bid. And only one is a winner, other loose.
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Sasha wrote:

That's a two way street, isn't it? If the contractor doesn't do competitive bidding, the first thing they'll ask you on the phone, before they even come out to look at the job, is if there will be other bidders. If so, they won't talk to you. These are not the guys that advertise in the yellow pages. They generally have more work than they can handle, so what's the point in advertising and engaging in competitive bidding?

If I've done my homework, know the dealer's cost for the car, and he accepts my offer, sure. Why not.
But we're not talking about cars. We're talking about custom construction, not a commodity. There are many more factors involved.

That's certainly one way to look at it, and I can understand the reasoning. But if you look at the situation from a different angle you may see things differently.
I do not bid on jobs. There's really little point. I already know my price is going to be higher than almost anyone else. Not because I'm making more money, but because I refuse to do anything less than the best work I can. The attention to detail and experience I offer isn't a commodity. I'm the only one offering my services. To some people it's not worth the money - I don't work for those people so there's really no reason for me to give them a bid.
All of my work comes from referrals. People have seen my work and know what to expect. Unfortunately (or not) I have to turn work away as there's only so much of me to go around. I tell people I do fine work and I expect to get paid accordingly.
For people that aren't interested in the highest quality of work, and the higher or highest price, well, there are always other contractors who are happy to take that work. Everyone wins.
R
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Nehmo Sergheyev wrote:

With regards to your first question, from a contractors point of view, I think you best answered the question yourself when when you say the contractor "qualifies" his or her customers. Thats all one can do.
We have always chosen to flip your scenario on its head making "us" the ones who "choose" to work for the customer not the other way around. Qualifying the customer is exactly what we do. That said, we have always been fortunate to have work booked out a for months or even years, which has allowed us to basically say "hey, you want on the list, fine, but dont waste my time if your not serious". Of course we say it nicer than that, hehe.
In our business we have always been up front and honest with the customer telling them point blank that the detailed quoting process is a very time consuming and costly investment and that we will give them some very clear/firm numbers based on the general scope of their project but then it is up to them to decide, based on our work/references, and their "feel" for us, whether we take it to the next level. Once a more firm commitment is made we will begin to invest the real time but we are not doing itemized quotes on speculation.
As far as the customer goes, I personally think very little of the decision to commit to a given contractor is based on the quote. Perhaps in commodity type work (replacement windows, simple decks, etc.) its different but I am talking more in the line of homes, additions, design work, and so on. Our experience is that it is more so based on their impression of you, your work, your ideas, and so on. From our customers we know that we are more often the higher contractor rather than the lower. Our customers have always said the decision is all about a combination of reputation, references, ideas/creativity, personality, and the like. Price is almost never in the list.
Commodity work would be a whole different ball game in which I wouldnt want to play, but none the less much of the same applies. It definitely applies to landing more work down the road and building a better reputation making one more sought after allowing one to get out of the commodity business.
Thats just our take on it, Mark
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Nehmo Sergheyev wrote:

order to reduce your energy costs. Then locate the contractors that do things in the proper order! - udarrell
--
Air Conditioning\'s Affordable Path to the "Human Comfort Zone Goal"
http://www.udarrell.com/air-conditioning-total-heat-enthalpy-latent-heat.html
  Click to see the full signature.
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> How then should a customer select a contractor?
I'm having a new one off house built. Here is how I selected a builder. I may have the numbers slightly wrong but it went something like this....
Long before we needed to select one I was out looking at other projects. Any nice house being built I would stop and chat to whoever was on site. Several builders showed me around houses that they were working on. The quality difference was amazing but so was their attitude. Usually I asked a few questions that I half knew the answer to. Sometimes I got the answer "oh you don't want to worry about that - we take care of all that". Humm. In such cases their card was usually torn up before I got back in the car. Others were much more responsive and they explained how they did things and why they did it their way. Of around 12 builders I met, two impressed me enough to go on the short list. One was very keen as he was just finishing a superb house down the road from our site - lets call him Builder A.
For the short list my architect recommended two companies and my Quantity Surveyor also recommended two. So we had six in total. We sent out an initial letter to all six together with a 3D CAD drawing/render showing what the house was like and a one page description. We asked them to let us know if they were interested in bidding. I think 5 said yes and 1 declined.
I then went to visit the 5 builders. I asked to see two projects - a house they had completed and a house in progress. I guess I spent about two hours with each builder. I was able to cross one off the list - they mainly built small estates of nearly identical design and of a lower standard than I was looking for.
So we sent out four drawing packs (each of which contained about 40-50 drawings and a specification that ran to 50 pages). We asked for sealed bids to be returned in 4 weeks (or was it 6 weeks?).
Most bids arrived on the last day. Three were nearly identical and were within 1% of the figues that my QS had estimated. One was about 5% lower. This bid was from builder A who had been keen to get the job and who had impressed me when I met him. Due to the complexity of the project my quantity surveyor wanted to check the winning bid to ensure nothing had been missed - it hadn't so he got the job.
The project is now around 75% completed and our builder continues to impress. The quality is about the best I've seen.
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You met Builder A in the second paragraph. You could have just gone with him then and saved everybody a bunch of trouble.
-- (||) Nehmo (||)
CWatters wrote:

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"Even getting three estimates is correct in some situations?" If someone has a legitimate job to do, there is nothing wrong with getting 3 estimates period. No one is forcing any contractor to come give an estimate. And if someone is dumb enough to think they are doing the contractors a favor by not getting three estimates, while most people do, they can live with the consequences. Do you think the contractor is going to give the guy that only calls for one estimate a break? LOL
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Yes but would he have given me the same price had he known he was the only bidder?
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CWatters wrote:

Maybe, maybe not. Seems to me that you're impressed with the guy and he's earned your respect. If so, why assume that he'd have jacked up the price if he thought he was the only bidder? Why don't you ask him and get back to us with his answer?
I think it's fine the way you went around finding a builder and I'm glad it worked out for you.
R
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I like to get a feel for any potential clients on the phone to make sure they really have an interest, and that they aren't just kicking the tires. If they are kicking the tires, I usually give them a five minute education on the phone, and a round number for repairs or maintenance, which is what I specialize in. One of the first things I do is find out who referred me to them so I can get a feel for what type of client (by association) they might be for me, and see if we can be a good fit for their requests.
I do not go to see clients on the weekend unless I am backed up, or they are in some kind of trouble and need something fast. There is no reason for me to waste a family day talking to somebody that didn't think enough of what he or she is getting into to take an hour off work during the week. Worse, if they have so little respect for your work ethic and responsibilities, think how they will be later on. Those folks don't ever think that you had a long tiring week doing your stuff; they think it is your job to exhaust yourself, and if you aren't willing to do that some are honestly amazed. Years ago I actually had some prospective clients tell me that I needed to make a decision on whether I was a family man or a business man. I now only see past clients of mine on the weekend at their request, but funny, it doesn't happen but maybe once a year. No kiddin'!
I have been in business long enough for myself (coming up on 25 years) that I don't really care much about my fellow contractor's bids. We are all different people, and we all bid differently. I have built enough of a clientele over the years that I no longer have to sit politely across from some pudgy, balding, bespectled accountant in a golf shirt that is spending more time telling me about his summer "in the trades" that lets him know "where I'm coming from" than his own project. I don't spend too much time listening to some frustrated husband trying to deconstruct my estimate so he can proudly announce to his spouse how much money they think I am making. My idea of "Let's make a deal" is "please read the estimate".
I don't care if anyone else is bidding on the job or not. My price is the same no matter what, and that is probably why I have repeat business without too many competitive bid situations.
A lot of my best clients are women. They know what they want. They have a plan. They have a budget. They are usually ready to go. They don't try to impress me with their 6 week stint as a construction worker during spring break one year. I don't have to listen to some nitwit babble on about "man stuff". And best of all, they don't show off for their spouse by showing them they know how to handle construction people.
My work is all word of mouth and referral. In almost 25 years, I have advertised twice, and it got the me the kind of clients I didn't want. I do all my business on my cell phone so I can be easily reached, and know almost all of my clients by first name. My phone calls usually start with "Hey Robert... how's it going? I was wondering if you could stop by sometime soon and see me about _________________________". << fill in the blank>>
Stay in the business long enough and do good work, and your business and clients will take care of you. Then the bullshit factor goes to half, you get better jobs with more money in them, and the people know about your work and don't mind paying for extra if they know they are getting exactly what they want.
Robert
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That is an astounding statement, although contradictory to the usual spew here. It was also my experience. I was a licensed steel erection contractor for nine years. At the end, I did welding repair work and carport repair work for 275 apartment projects, several builders, a few hotels, various US Gov't agencies, and U Haul.
I got and kept my business by being honest, dependable, thorough, and doing good work with a 100% guarantee. I got all my business either by soliciting them, word of mouth referrals between property managers, or people finding me because my work spoke for itself.
I still have work hanging in Las Vegas at major hotels, businesses, at Hoover Dam, at hundreds of apartment projects, Nellis AFB, and other places.
As the man said, do a good job, charge a fair price, learn how to handle tire kickers, guarantee your work, go the extra mile, and you will be about as busy as you want to be unless you are located in a bad market. Don't mess with any break even work, even if it is for a good customer unless it will return in spades. (I would even do "free" work that amounted to a ten minute gate weld, but I would always roll it in on another job down the line."
Some of the earliest advice I got from successful people was .......... do a good job, the money will follow; employees are the kiss of death; don't listen to people who say they have more work for you if you do this job cheaply; and listen to your gut.
Steve
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snipped-for-privacy@aol.com says...

I had one comment to me - "you're putting this man's kids through college - you want to put your own kid through college".
???!!?
Why wouldn't a GC want to put his kids through college?? What - that's evil or something?? And isn't it my business to earn enough, or pace out any remod work correctly, to deal with my own kid's college finances?

Wow - interesting. I'm a woman, and have had good luck with contractors while most of the folks around me want to swap horror stories with me. I don't have any. But I've always gone with the contractor who I can communicate with, and seemed the most on top of the job during the estimate. Mebbe this is why?

Yes, I'm on that status with a contractor. Niether he, nor the mason who did an extensive foundation repair for me last year, are in the phone book (not under business, anyway). They're both all word of mouth.
Banty
--


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snipped-for-privacy@aol.com wrote:

Great post. It all sounds eerily similar to our years in the trade and Im sure is the same for many. For about the past 10 years we have taken to boldly suggesting to many husbands that letting their wives do most of the steering is potentially the wisest thing they could do. Our best jobs have always been those where the wife manages the job and the husband just stands back and says "hey, this is her puppy, I just hand over the cash". Project goes smoother, ideas flow and are received better, it goes on and on.
A funny example was a second story tear off we did for a couple. The husband was an engineer and his motto was "the more walls the better". His reasoning was you can hang things on walls, put desks against them, shelves on them, and so on. The design had a large second floor landing/common area that served three bedrooms and a bath. It was a decent sized space but the design was such that there was really no way to incorporate the footage into the other rooms. He argued endlessly to wall off the stairs (which would have made them dark and tunnel like) because he could hang stuff on that wall. We suggested balustrade with a nice sitting area, some nice lighting, and such. A bit of a decadent space. He took the idea like hitting Linda Blair, in the excorcist, with holy water. His wife fought hard for our option. Over several days their battle escalated to what seemed like a near divorce! Finally he furiously gave in. On the last couple days of the project while we were wrapping up the punch list they had family over for a party. While we were doing some things in the master bedroom we overheard the guests ooing and ahhhing over the sitting area and how beautiful it was. We then heard him say "yes, yes, and can you believe they all wanted to build a wall here closing in the stairs?" We chuckled as he stuck his head in the room and snickered.
Mark
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