Thinking of taking the lowest bid? 5 tips from homeowners who did!

March 15, 2017

By: Stacey Freed

How to tell if that low remodeling bid is a bargain — or not.

All Ed and Sheila Dornan wanted was to create a gracious entryway in their modest Ypsilanti, Mich., home. And because they’d had a wonderful experience with a local contractor before, they assumed everything would go just fine.

But this time, they chose a contractor who made a far lower bid than the others. Any guesses where this story is headed?

They said they were in a big hurry, and they thought [my estimate] was too high,” recalls remodeler Debra Moore, owner of Custom Design/Build in Ann Arbor. The Dornans had hired Moore a while back to upgrade their home’s exterior and renovate the master suite and family room.

But this time, the work was more complicated because it involved removing two structural walls, which had the domino effect of relocating electrical lines and heating ducts (never a cheap endeavor).

The Dornans chose a contractor’s bid that promised to do the work for less than half what Moore said it would cost — and in less time than her eight-week estimate.

A year later, their house was still under construction. They realized they’d made a big mistake.

It was a tough way to learn the perils of taking the lowest bid, but their experience provides a lot of insight on how to tell if a low bid is the real deal, or if it’s a giant red flag.

Here are five tips to help you avoid the same pitfalls as the Dornans

#1 Properly Vet Your Project:

Dreaming of an entirely brand-new kitchen? Thinking that $25,000 you’ve saved up ought to do it? When your highest bid comes in at $64,000 and the lowest at $29,000, you’re bound to snag the lowest bid because it’s the closest to meeting your expectations — even though your expectations are way off.

Research what projects cost in advance. Check out the National Association of REALTORS®’ Remodeling Impact Report (full disclosure: NAR is HouseLogic’s sponsor), which can help you get a guesstimate of how much various projects cost. For a complete kitchen renovation, for example, you’d learn that $60,000 is the average cost.

Suddenly that low bid looks more troubling than the high one.

#2 Properly Vet Your Contractor:

The Dornans’ low-bidding contractor was charming and a good salesperson, but, as it turned out, he wasn’t good at estimating costs or overseeing subcontractors.

Picking a contractor shouldn’t be purely a personality contest. That referral from a trusted friend seems like a great way to pick a contractor, but it has its faults.

“Whenever you get a reference,” Moore says, “check that the type of work you want done is similar to what the remodeler did for the person referring him or her to you.”

In the Dornans’ case, the friends who referred the low bidder had him do a much smaller project in their home that was nowhere near as complex as their project.

In other words, if you want a custom kitchen, don’t hire the guy who installed your friend’s new front door.

Visit a couple of projects done by the remodeler in question. See if the work is up to your standards and includes the type of changes you want done.

3 other things to know about contractors:

1. Are they licensed and insured? Contractors-license.org can point you in the right direction.
2. Do they belong to a professional association such as the National Association of the Remodeling Industry or the National Association of Homebuilders? That’s an indication they’re vested in their business.
3. What do online reviews from sites such as Angie’s List say?

#3 Compare Apples to Apples on Bids:

Everyone tells you to get bids from three different remodelers — which is smart! — but in order for those three bids to be accurately compared, they’ve got to be detailed, and they have to contain the same details.

“You’ve got to compare apples to apples,” Moore says. For example, if one estimate includes pulling permits and one doesn’t, make sure to ask about that cost. You don’t want a remodeler who’s going to start adding on costs down the road.

The estimate the Dornans got from their remodeler was not very comprehensive. But Moore says, the Dornans’ job included “some tricky structural and trim details that required design expertise and tight project management.” A too-brief bid didn’t account for such challenges and, unsurprisingly, the project reflected that poor planning.

When one contractor includes more detail in their bid, ask all other contractors to explain how they’d cover each of the costs mentioned.

#4 Motivate Contractors With Money:

It’s no secret that money motivates. And if your contractor gets too much too soon, there isn’t much to motivate them to stay on schedule — especially if their low bid has them running over budget.

The Dornans didn’t pay all at once, but their remodeler would periodically ask for money, which they would give him, and then he would disappear for awhile.

“Sometimes when that happens, it could mean that the remodeler figures out he’s in over his head, and then takes on another job to pay for the first one,” Moore says. That causes delays on your job.

The Dornans’ job was big — bigger than the low bidder thought. But if the Dornans had agreed on a payment schedule that required benchmarks and deadlines to be met before handing over more cash, they could have avoided the inconveniences (or been within their rights to fire the contractor).

#5 Build Trust With a Contractor:

Between the poor workmanship and the remodeler skipping off, nearly a year passed and the Dornans’ entry wasn’t completed. The Dornans called Moore back.

It took six more weeks to finally complete the job because Moore had to correct a lot of the previous remodeler’s work. But because the Dornans knew and trusted Moore, they could be confident the work would finally be done — and done well.

Though getting three bids is always wise, factor the trust and personal experience into the bids of those you’ve worked with before. Paying a bit more for someone you know and trust can save a load of grief (and money) down the road.

“The whole episode caused Sheila and me much distress and extra expense,” Ed says. Now, they say, they understand the value of having a contractor they can trust. In fact, they “look on Debra as a good friend.”