How to Examine a House for a Residential Bid

Contractor going through a bid
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Homeowners are becoming more selective when it comes to whose bid they accept for a remodel job. After all, they have to live with the finished product so they rightly want and expect the work to be done to their standards and at a reasonable price.

The problem for the average contractor is that many seem to be less than knowledgeable about the bidding process. That means that if you understand how it works are able to present an attractive and competent bid, you stand a better chance than average of landing the job.

The biggest mistakes contractors make when bidding on remodels revolve around the basics. They miscalculate the time it will take to complete the job, the material and labor costs, and what they will need to pay out to subcontractors if the job warrants it (and most do). The good news is that, if you become familiar with these four steps, you don't have to find yourself in the middle of a disastrous and unprofitable remodel project.

Step #1 – Get Familiar With the House

This is an essential part of the process as it will help ensure that the advice you give to the homeowner is sound. Some homeowners want to treat the initial stages of a remodel job like an interview. The rationale is that the contractor knows his or her business and can accurately estimate the cost of a job based on the desired materials, room dimensions, and so forth.

It is recommended that you never agree to take on a project without a walk-through.

It may seem like an elementary part of the process but an alarming number of contractors do just that. They consider a home remodel a small job and they tend to approach the same types of jobs the same way every time. The problem is that not every home is the same and sometimes homeowners simply have unrealistic expectations of what can be done.

A walk-through and a thorough assessment of the job with the client can eliminate numerous problems before they emerge.

Step #2 – Accurately Calculate All Related Costs

There are a number of online tools available to homeowners that claim to be able to accurately calculate the cost of a remodel. While you always want to remain sensitive to the initiative that people take in planning their remodel (and their desire to save money), it is important to first understand that there are better tools available to you and that it is explained thoroughly to the homeowner where all the various costs play into the bottom line price of the job.

Construction jobs are almost always more complex than the homeowner thinks. With that in mind, a little professionalism can go a long way. Remember that you are the authority in the transaction but it is important that the client has his or her voice and is able to understand precisely what needs to be considered in making their project a success.

Some of the more popular considerations for remodel projects include:

  • HVAC system requirements – how will the remodel affect ductwork and other parts of the existing system?
  • Custom finishes – switching to a brand new décor often has unconsidered costs involved
  • Special equipment – will you have to rent any tools or other equipment to get the job done?
  • Hauling and demolition – what is the full extent of the remodel?
  • Materials and labor – what are the real costs involved here?

Step #3 – Ensure Profitability

A low bid may be attractive to the homeowner but keep in mind that you need to make money, too. Be certain to include your overhead fees. This is an area where many contractors find their profits disappear. Will you need new tools to complete the job? How many sub-contractor hours will you need to pay for? What about branding and marketing? All of these things need to be considered in your final price. Remember that the average profit margin for a remodel job can be as high as 20% but often winds up as low as 3%. Don't let that narrow margin disappear by bidding too low.

Step #4 – Personally Submit Your Bid

You have a much better chance of landing the job if you sit down with the homeowner and discuss your bid in person. This gives you the immediate opportunity to field questions and explain the various costs involved. An informed client is more likely to accept a bid even if the amount is higher than anticipated so take care of that when you present. Don't mail or email your bid. The longer the client is allowed to think “that's really expensive...” the faster they will be to reject. Nip the problem in the bud by being available right then and there to answer questions.

You can also help lessen the chance of a rejection by not simply handing the bid to the client to read. Walk through it and explain as you go. This will eliminate a number of objections and help the client feel as though he or she is making an adequately educated decision.