Is this typical for dealing with "Flippers" - Contractor Talk - Professional Construction and Remodeling Forum

wizendwizard · 01-18-2008, 11:45 AM

In December i was approached by a Real Estate Investor.
He inquired if i gave "Free" estimates, this was because his last contractor was charging $275 per estimate.

I have now done 7 estimates for him. He hasn't produced any work until now. He has finally came through with a house to do work on. After submitting Estimate, Proposal, and Contract for approval. This morning i recieved this email:

Received your proposal/work schedule/payment for *** ********* **.

I get my monies from ********** **** Services, a group of RE Investors

out of Cola. *** *****, a licensed contractor, appraiser, and also

underwriter for this group, conducts ALL on-site inspections

prior to Draws. *** stipulates that he does not pay contractors

any up-front monies. I see that your contract reads homeowner pays

$7787.50 upon signing of contract. You might want to change that

to receiving $10383.33 as your 50% work completion after day-2.

Day-1
Day-2
receive draw of $10383.33..........50%
Day-3-6
Day-5
receive draw of $2595.83...........75%
Day-7-9
Day-10
receive remainder of $2745.84...100%

Please call me upon receipt of this email.

As of my schedule, on Day 1, all materials are to be on the job and sub's hired and ready to go. What i want to know from my professional assosciates on CT is this......Would you do it this way? Would you walk away? Would you stick to your payment schedule? I've already taken my stand and made my decision as to what i am going to do, I just want to get your take on this.

philner · 01-18-2008, 11:59 AM

Just my two cents but I would be very leary. Let me rephase, I would run. Any time I let myself get into a situation like that, it is always trouble. The guy isn't available that day, They only cut checks on the 15th and 30th, the funds haven't cleared the bank, there's a million excuses. I deal with the man in charge,not through middlemen and commitees, this has disaster written all over it. If they don't trust you don't trust them. When they start coming up with lots of official "rules" that aren't your way of doing bussiness, unless it's a government agency or a fortune 500 company, I tell them that my policies can't be waived and reconsider if I want to do the job even then. They want you to be thier banker and take all the risks. just my 3three cents worth. Phil

Tscarborough · 01-18-2008, 12:20 PM

No.

Michaeljp86 · 01-18-2008, 12:34 PM

I agree with everyone, better safe then sorry. I think its better to turn it down they having to spend months of lost time because you had to do paper work over it and go to court.

I would just tell him how you do it.

**Double-A** · 01-18-2008, 12:52 PM

Quote:

Originally Posted by wizendwizard

I get my monies from ********** **** Services, a group of RE Investors out of Cola. *** *****, a licensed contractor, appraiser, and also underwriter for this group, conducts ALL on-site inspections prior to Draws.

What i want to know from my professional assosciates on CT is this......Would you do it this way? Would you walk away? Would you stick to your payment schedule? I've already taken my stand and made my decision as to what i am going to do, I just want to get your take on this.

He has his investors, so let them invest their money and not yours. He can pay for materials prior to installation instead of you. You're not the lumber yard.

I can almost promise this "licensed contrator, appriaser and underwriter" will not show up on C.O.B day two, or even on day three. You'll submit your request for a draw, and he'll give you a 'roundtoit'.

Which means, you'll get your on-site inspection and draw he he gets around to it.

Forget it. Find a clientèle that doesn't want you to be their employee. They already have their mark, but he turned out to be smarter than they, 'cause it seems he's getting paid to inspect, oversee and appraise their properties as well as get his cut of the action.

Let's see, licensed contractor, appraiser, inspector, underwriter... damn, just paste a big ol' S on his chest and hand that man a cape. I bet when he's not doing any one of the above, he wears glasses and goes by the name of Clark Kent.

Back away from this one, don't even turn your back to them to run. Just back away. And if you drop your wallet handing them a business card, just kick it to the next county before you bend over to pick it up.

wizendwizard · 01-18-2008, 01:00 PM

Thanks Guys! I will now post the email i sent in response to this and before posting it on here!

Mr. *****,
I regret to say, If your contractor/investor has issues about up front monies, then he isn't working by industry standards. Our contract/payment schedule is written in terms and attorney approved to ensure just and fair payment. Also written in terms to be fair and equal in responsibilities of work/payment by both parties.
Of my associates, 20,000 contractors located all over the U.S. and Canada, Not 1 will walk onto a job with no up front payment.
Therefore, I am afraid that due to the inability to come to arrangement on this matter, we can no longer do business together. While we at Adept Home Repair appriciate your business and sincerely wish this situation were different, we simply cannot operate a business with no upfront money. Thank You for your time and interest in Adept Home Repair.

Anthony D. Phillips
Adept Home Repair

RizzoMaryland · 01-18-2008, 01:03 PM

WALK...He wants to minimize the risk on his end and put it on yours. Your terms or no terms!

Not to mention, the bureaucracy of his business venture sounds suspect at least. "Someone else does the inspection, someone else writes the checks...etc"

kevjob · 01-18-2008, 01:10 PM

Run Forest Run! He is trying to have you take all the risks and he wants all the profits. We don't even talk to flippers anymore, they all want it yesterday for hack prices!

Wonder why the other contractor is charging for estimates with this guy!

**ProWallGuy** · 01-18-2008, 01:30 PM

Quote:

Originally Posted by wizendwizard

because his last contractor was charging $275 per estimate.

There is your first RED FLAG. He probably would've failed the qualifying process at this point. Why do you think his last contractor decided to start charging for estimates? I doubt it was because he read Mike Finley's thread on this issue, and highly likely he didn't want to deal with the BS anymore, or was tired of doing estimates with no return.

Quote:

Originally Posted by kevjob

Wonder why the other contractor is charging for estimates with this guy!

CrimeCrusher · 01-18-2008, 02:05 PM

WALK, RUN, DRIVE, FLY away from this guy. He is full of S**t. You are already out almost $2,000 for the estimates you have done. If you get involved with this guy you may most likely regret it. There is to much other stuff out there. Give the other contractors a call that he has used and find out why they left or started charging for the estimates. THEN, spread the word about this guy so no one else gets burned. If that is the case.

wizendwizard · 01-18-2008, 02:55 PM

Quote:

Originally Posted by ProWallGuy

There is your first RED FLAG. He probably would've failed the qualifying process at this point. Why do you think his last contractor decided to start charging for estimates? I doubt it was because he read Mike Finley's thread on this issue, and highly likely he didn't want to deal with the BS anymore, or was tired of doing estimates with no return.

As demonstrated in my reply email, I handled the situation with tack and respect, I believe.
I was leary of the proposed situation from the start. Someone on CT suggested i TRY it and see if the guy was bogus. I did so. He was.
Only thing i'm out is a bit of time.
Funny part is, I am currently doing 2 jobs for another "flipper" this guy is up and up all the way. No arguements, no hemhawing when pay is due.
All i can say is. "it's his loss".

philner · 01-18-2008, 03:04 PM

wizend, Thought you handled the whole situation from start to end perfectly ( Might have cut off the free bids at three) Phil

BuildingHomes · 01-18-2008, 04:30 PM

Quote:

Originally Posted by wizendwizard

As demonstrated in my reply email, I handled the situation with tack and respect, I believe.

Let's see the response when you get one.

**BuiltByMAC** · 01-18-2008, 04:38 PM

Sounds like some "heads up" playing on your end - nicely handled.

fyi- it's tact, not tack...not jumping ya, just mentioning it!

Mac

wizendwizard · 01-18-2008, 05:21 PM

Quote:

Originally Posted by BuiltByMAC

Sounds like some "heads up" playing on your end - nicely handled.

fyi- it's tact, not tack...not jumping ya, just mentioning it!

Mac

Thanks Mac, I normally try to watch my spelling more closely.

Here is his final response. I hope.

Received your response!! I don't know that much about the contractor protocol and standards...I just know that's where my money comes from, and I have to follow their rules..I appreciate your assistance with the houses you've seen. but I've got to move on

Thanks,

wizendwizard · 01-18-2008, 05:30 PM

To amend 1 part of this on my part. I wasn't doing completely "FREE" estimates. I was charging a $25 trip fee for each estimate. This trip fee was to be reimbursable if contract for location was signed. I was traveling up to 50 miles each way to do the inspections. I wasn't about to use other clients or my own money to cover fuel cost.

This has been very educational for me, and hopefully as I have documented it here, it will be educational to others in the future.

This should be 1 of those "Let the contractor beware" articles. IMO

NC-SC, GC · 01-18-2008, 05:42 PM

Flippers are a nightmare, always looking to squeeze you at the end of the job, I did work for a few and figured out they are not the type customer I'm willing to work for.
I have one who still owes me $15k and I have a lien on the property, some day I will see my money I guess.

masterk · 01-18-2008, 05:46 PM

WIZ
I have done some work for investors where I have not recieved a deposit.
They have want they call 203k loans. The bank pays draws to the contractors after the work was performed. I have never been burned, but when I give an estimate and the customer tell me that this is one of those loans I ask for the loan company's info. along with a contact person. If your customer is leget this would not be a problem. If they don't comply than walk. Hope this help's you, everybody else said run, but as long as you do your homework their is no reason to worry about not getting paid.

Brock · 01-18-2008, 06:27 PM

I'm not in the banking business. I don't give credit. My customers are upside down to me for at least 1/2 to start and continue upside down with two more payments as work progresses with no more than 5% on the end. THIS IS KEY.

Often they won't agree to those terms, and when that happens I am very nice and simply tell them thanks for the oppurtunity and if you change your mind give me a shout,and sometimes they do.

Remember flippers are always one bad deal away from bancrupt city, and when your owed money from them when this happens you aint gettin nuthin.

**Double-A** · 01-18-2008, 06:34 PM

Quote:

Originally Posted by wizendwizard

Received your response!! I don't know that much about the contractor protocol and standards...I just know that's where my money comes from, and I have to follow their rules..I appreciate your assistance with the houses you've seen. but I've got to move on

Thanks,

Translated into plain speak, "Opps, my bad, I was expecting someone dumber than you. I'll move on to the next sucker."