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Discussion Starter · #1 ·
This question goes to all the remodeling contractors. I've built and sold new homes, Realtors showed only to pre-approved buyers so that was easy.

I've stepped away from that aspect of work and primarily roofed, replaced windows, built decks and sided homes with most customers there in terms of having the funds without me worrying like I am now.

I'm currently pricing out a job for a bonus room addition ie: removing trusses and adding a floor system, stick framing the roof with a shed dormer on the back side and two doghouses on the front, new stairs to the garage level and re-roofing the remaining section of the house.

On our first meeting asking and getting their budget was straightforward and almost aligned with my (almost completed) job costing. Almost aligned translates to $7,000- $11,000 over their budget depending on some fit and finish or less than 20%.

How do you pros bring up the topic of cost overages prior to start up and a solution? We have already discussed the changing of the mind changes the total price, both up and down but it happens, end result being exactly what they intended.
 

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Have Trowel, Do travel
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what do you mean by "cost overages"?
something like, if you pay more for lumber or something?
 

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stacker of sticks
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I usually have a meeting with them and give them a list of what they can have with the money they are willing to spend, usually they come up with extra cash quickly.
 

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Thom
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I always gave a fixed price for a very specific project. Everything was spelled out up front including how much I got and when I got it. Changes were unusual and the customer signs a change order and pays for it before we change anything.

Your customer needs to know all of this up front. I told them it was cheap changing things on paper but once we started changes were expensive. Most of the time that was enough.

Make sure your payment schedule keeps you from getting behind the money. The last payment should be small enough that they won't fight you for it. Make it clear that you expect to be paid when the project is substantially complete, non-payment of that final (small) amount means there will be no warranty.
 

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Discussion Starter · #5 · (Edited)
what do you mean by "cost overages"?
something like, if you pay more for lumber or something?
No, if they upgrade over allowance or make changes.

These folks have an abundance of toys with wheels and those that float, my concern is more they may not have money for things they have expressed interest on, causing the budget to go over the original scope. These toys are all relatively new, vehicles too.

My concern here is they may have the liquid cash, yet if they don't, and they are maxed out on plastic- how am I to verify the funds are readily available aside from hoping?
 

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Do you have a payment schedule as part of your contract with them? This should spell out how much and when they will be paying you.

However, if they are over the original budget, you need to have a converstation with them asap.
 

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Balding quickly
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I had this business idea, that was a contractor driving online mini escrow. So before you start the project you sign up for a joint account. The money is deposited in the account for the entire project, along with the contract. The contractor pays like 15 bucks a month to keep the service available and it costs maybe 20 bucks per project. So the contractor knows when his clients have the money, and they both have to enter for a withdrawal for it to be approved.

Then it would also be less likely that homeowners with hold that money over your head, because they don't have it either and can't retract it without your approval.
 

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I had this business idea, that was a contractor driving online mini escrow. So before you start the project you sign up for a joint account. The money is deposited in the account for the entire project, along with the contract. The contractor pays like 15 bucks a month to keep the service available and it costs maybe 20 bucks per project. So the contractor knows when his clients have the money, and they both have to enter for a withdrawal for it to be approved.

Then it would also be less likely that homeowners with hold that money over your head, because they don't have it either and can't retract it without your approval.
Interesting idea. Isn't there something like this already?
 

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Balding quickly
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There is, but it much more trendy, I can't remember what its called but I remember thinking of it and deciding it would be a tall order to start and about 2 years later hearing about an IPO for a public business thats similar. But I think being contractor specific would be a huge help for most 40 plus contractor guys.
 

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You may be reinventing the wheel--Title companies do this already and have for 60 years or so---call one and see what they charge to handle this project---Mike---
 
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