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Discussion Starter · #1 ·
How do you guys prevent this situation from happening to you?

I get a phone call from a guy that needs a bunch of work done after his home was inspected before completing the sale.

I go down and put together a pretty comprehensive bid on the job, and the guy seems pretty happy with the price. A few days later, the realtor for the buyers tells me that the homeowner basically used my bid and negotiated the selling price down, instead of having me come in and do the work.

I wasted a bunch of time on the estimate for nothing, and I should have known better probably. How in the heck do I handle that next time?
 

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Super Moderator
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You will never know that ahead of time.

This scenario plays out all the time, along with the tried and true HO scheme of getting an estimate for the pure joy of seeing how much he can "save" by doing all the work himself.

It's a necessary evil that is something we just all have to deal with.
 

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Lack Of All Trades
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charge $50 for a "round-the-park", "off-the-dome" estimate (in-home).

charge $150 for a more detailed written estimate + blah, blah...

charge $350 - $450 for a comprehensive estimate with detailed drawings, ecetera, excetera, etc., blah, blah, blah, blah, blah, and oh yeah, blah blah, blah..

This should help cover your cost from these price shopping, idi** a** cus*$u#@*!

Good Luck.

---
 

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Construction Connoissuer
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Similar situations have happened to me before, and I've learned from them. :thumbsup:

One thing I go by now, is that I am really skechy when dealing with realtors, property thats forsale, and buyers.

If any of this is apparant to me I won't do a free written estimate.

I had lots of people want estimates that don't own the homes, they just want estimates as amunition.
Take the arse kicking, and put your game face on next time.
Analyze the situation, if they need the estimate, they pay.
Or they call you crazy, and move on. :laughing:

Either way you aren't out jack. :whistling

This happens alot, soo you really have to set some guidelines, and even then some will surprise you and sneek past. :furious:
 

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Jeff
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The insurance estimate game is famous for this. Oh yeah we're def gonna have you do it all the insurance company needs is an estimate and we'll give you a call. Month later you see the homeowner fixing it then pocketing the rest of the payout.
 

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Discussion Starter · #6 ·
Surely there must be some strategies that smart contractors have come up with.

I was thinking that next time I would suggest to him to try to negotiate the price down first, and when he comes back with a number, I could try to do it for less than that price. At least I wouldn't be doing all his work for him. I guess that is what bothers me the most - that he used my estimate and license for his own benefit for free.
 

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Lack Of All Trades
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1,232 Posts
ok, ok.

You feel used and abused. It won't be the last time. You are not unique to this situation; it happens all the time. To me and you.

This is how I would handle this problem from now on:

First, find out if potential client has a realistic budget. How do you know what their budget is? Ask them! This will give you an idea if they know just how much things really cost.

If they are serious, make them put their money where their mouth is, and get a commitment. A small token. The cost of crunching the numbers of a realistic bid. In the amount of $xxx.xx or $xx.xx. This fee should be deducted from their final bill if you are granted their project.

Giving free in-home estimates is really a shot in the dark, and if you start giving enough of them without response, you will change the way you do business, and start charging for your time.

If they can't give you a commitment, then give them a ballpark over the phone (if possible, but not probable). For Free! Or by email--remember --ballpark!

Your time should have some value. Charge for it or walk.
 

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If they can't give you a commitment, then give them a ballpark over the phone (if possible, but not probable). For Free! Or by email--remember --ballpark!
I think this is a good way to go. But instead of doing it over the phone or email, you might try doing it this way:

Call the potential client and tell them you would like to meet as you have some numbers and other things you'd like to go over with them.

Bring 2 folders, one for them and one for yourself.

From your folder, have a list, showing the costs for individual projects, including material and labor, along with the scope of the work.

Take time to explain the costs and the importance of taking certain steps so that they understand the scope of the work(I always try to educate my customers so they'll feel confident they aren't being taken advantage of). Be very meticulous and explain things thoroughly. Also make sure you're being fair.

Also have your contract ready for them to sign.

From their folder have any other paper work pertaining to the project such as, ordinances and restrictions from planning and zoning, along with costs for permit fees, and possibly any light sketches so that they can get a better visual of the proposed work.

If they choose to sign the contract you're set. If not, then you could also give them a simple peice of paper in their folder with your business card attached, stating a very broad and generic scope of work with a single total price. This is not much info for them to use other than to sleep on the price and get back with you when they're ready to sign.

If they show that peice of paper to other builders trying to get them to match or beat you, chances are other builders will want to see a formal bid. Think about it, the HO could've easily typed up their own price and put your business card on it.

If at the end of the day, you don't get the work; oh well it's happened to the very best of us more than we'd like to think about. You've at least gotten some good practice giving it the good ol' college try!
 

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I like Green things
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I think this is a good way to go. But instead of doing it over the phone or email, you might try doing it this way:

Call the potential client and tell them you would like to meet as you have some numbers and other things you'd like to go over with them.

Bring 2 folders, one for them and one for yourself.

From your folder, have a list, showing the costs for individual projects, including material and labor, along with the scope of the work.

Take time to explain the costs and the importance of taking certain steps so that they understand the scope of the work(I always try to educate my customers so they'll feel confident they aren't being taken advantage of). Be very meticulous and explain things thoroughly. Also make sure you're being fair.

Also have your contract ready for them to sign.

From their folder have any other paper work pertaining to the project such as, ordinances and restrictions from planning and zoning, along with costs for permit fees, and possibly any light sketches so that they can get a better visual of the proposed work.

If they choose to sign the contract you're set. If not, then you could also give them a simple peice of paper in their folder with your business card attached, stating a very broad and generic scope of work with a single total price. This is not much info for them to use other than to sleep on the price and get back with you when they're ready to sign.

If they show that peice of paper to other builders trying to get them to match or beat you, chances are other builders will want to see a formal bid. Think about it, the HO could've easily typed up their own price and put your business card on it.

If at the end of the day, you don't get the work; oh well it's happened to the very best of us more than we'd like to think about. You've at least gotten some good practice giving it the good ol' college try!

Great idea, except for the fact you still did all the damn work for nothing.
 

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Sawdust Sweeper
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690 Posts
This same situation happened to me last month... I like hoof-hearted suggestion on this, the HO gets the information they need to make an informed decision without having to hand over all the ammo to shoot you down with later.
 

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I have to say that I have had just the opposite experience. I have 3 realtors that I work with regularly, and I wind up doing about 5k to 8k a week with them. Yes, the bids can be a pain, and yes they use them to negotiate with the sellers, but I end up doing a lot of work for them (including lender required repairs) , and then the new owners wind up calling. Make friends with the realtors, and they become a great source of refferals.
-robert
 

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Starving Tile Artist
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I think this is a good way to go. But instead of doing it over the phone or email, you might try doing it this way:

Call the potential client and tell them you would like to meet as you have some numbers and other things you'd like to go over with them.

Bring 2 folders, one for them and one for yourself.

From your folder, have a list, showing the costs for individual projects, including material and labor, along with the scope of the work.

Take time to explain the costs and the importance of taking certain steps so that they understand the scope of the work(I always try to educate my customers so they'll feel confident they aren't being taken advantage of). Be very meticulous and explain things thoroughly. Also make sure you're being fair.

Also have your contract ready for them to sign.

From their folder have any other paper work pertaining to the project such as, ordinances and restrictions from planning and zoning, along with costs for permit fees, and possibly any light sketches so that they can get a better visual of the proposed work.

If they choose to sign the contract you're set. If not, then you could also give them a simple peice of paper in their folder with your business card attached, stating a very broad and generic scope of work with a single total price. This is not much info for them to use other than to sleep on the price and get back with you when they're ready to sign.

If they show that peice of paper to other builders trying to get them to match or beat you, chances are other builders will want to see a formal bid. Think about it, the HO could've easily typed up their own price and put your business card on it.

If at the end of the day, you don't get the work; oh well it's happened to the very best of us more than we'd like to think about. You've at least gotten some good practice giving it the good ol' college try!
This is a sound idea when dealing with customers that are price shopping. It doesn't really work with what the OP is having problems with. His customer used his bid to get the price lowered on the house he was buying.

I have been through this with people trying to close on a house as well as by property investors.

The only way to beat this situation is to know they are trying to use your bid to get a cheaper price. How do you know? Ask!

How do you beat them? Charge for estimates!
 

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Any broad scope of work with a price attached should be limited to a time frame and/or have a clause in it that states the price and scope of work is purely for informational purposes and not a contract. Around here there are some aspects to contract law that could allow a commercial company (a bank for instance) to say 'hey, you gave us a price and scope of work, stick to it' even a year or two down the road.

We perform inspections of well water systems for clients which include going through the pumping system electronics/plumbing, doing a flow test, and collecting a sample for bacteria which we bring to a lab. We will often through out some numbers to make repairs to the system - but it almost never turns around. In these cases, I don't really mind, since we get to put our stickers on the site anyway, and we charge $350 plus for our inspections. Trust me in that I definitely do not spend a lot of time on these estimates - 10 to 15 minutes at most.

Any work performed on a property for sale must be pre-paid or have a credit card for security - this includes inspections. There are no lien rights for a company performing work for a person that is not the owner or an agent for the owner of the property, and more often than not, we're working for the buyer. There's a chance that because there's a contract, we could argue the buyer is vested in the property, but we don't really want to hoe that road.

I played the foreclosure work game over the beginning of this year - buyers have you out to look at systems that we're left untended for a year, you spend a long time coming up with the best estimate for them, they turn around, push the bank price down with the estimate, and my competitor is doing the work for $50 cheaper - even though I never got a call to ask about lowering my price at all. Now, work for people that are in anyway involved with properties for sale must pay a 'diagnostic fee' or 'estimate fee' - fully creditable to the final invoice.

Frankly, I've got enough projects to keep me out at least a week or two, so if I lose 5 to 8 hours a week to wasted bids, that means I'm out at least another day or two on signed contracts - in which case, I should expect to get paid for that time.
 

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The Old Master
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You will never know that ahead of time.

This scenario plays out all the time, along with the tried and true HO scheme of getting an estimate for the pure joy of seeing how much he can "save" by doing all the work himself.

It's a necessary evil that is something we just all have to deal with.
Just thinking out loud with this post.

Suppose when a written estimate is given you followed it with ©

And a disclaimer that the wording above is copyrighted and all copyright laws will be enforced. This would work only if you personaly created the text in your estimate ... You could not use a canned program.
http://www.copyright.gov/help/faq/faq-general.html#mywork

??????????? At least in might put fear into some one using yours for others.
 

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This is a sound idea when dealing with customers that are price shopping. It doesn't really work with what the OP is having problems with. His customer used his bid to get the price lowered on the house he was buying.
Actually if you re-read the OP, his customer used his bid to negotiate the price on the house he was SELLING.

If that price was just a few words typed on an otherwise blank sheet of paper, then he could have very well came up with what ever price he wanted and said it was a quote.
 

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Any broad scope of work with a price attached should be limited to a time frame and/or have a clause in it that states the price and scope of work is purely for informational purposes and not a contract. Around here there are some aspects to contract law that could allow a commercial company (a bank for instance) to say 'hey, you gave us a price and scope of work, stick to it' even a year or two down the road.
Again, a simple peice of paper with a few words on it with out your business heading or your signature, just won't uphold anyone's court, let alone the court of law.
 

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Grand Rapids Remodeling
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Again, a simple peice of paper with a few words on it with out your business heading or your signature, just won't uphold anyone's court, let alone the court of law.
I agree with ya..... but, why not have the benefit of your co logo, and contact info on the estimate while including the disclaimer of contract at the bottom.

Presenting a professional appearance while not negotiating a firm price.

www.phbconstruction.com
 

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13 Licenses & Counting
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Again, a simple peice of paper with a few words on it with out your business heading or your signature, just won't uphold anyone's court, let alone the court of law.
That's true. I don't normally give out paperwork without my company header & signature though.

My comments are mainly geared to anyone dealing with commercial clients, municipal projects, PO's from larger contracting firms, etc.
 

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I do a lot of inspection repair work for realtor's clients when they sell their house. Sometimes they have the work done and sometimes they just lower the price on the house. Since the work is always repair work and not renovation or remodels, I just charge a per hour rate. I set this rate higher than my normal rate because sometimes you have to wait until closing to get your money and I feel this wait time is worth something. It also helps to cover the lost time on the estimates where they don't have the work done, but it's really no different from giving a regular customer an estimate and then have them give the job to another contractor.
If you start doing a lot of this type of work for realtors, you will get to know the realtors well and they willl many times give you a heads up on if they think the client is really going to have the work done or not.

One thing I have found is that the more the work cost, (usually anything over $4,000) the more likely they will just lower the price of the house.
 

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Crash Test Dummy
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charge $50 for a "round-the-park", "off-the-dome" estimate (in-home).

charge $150 for a more detailed written estimate + blah, blah...

charge $350 - $450 for a comprehensive estimate with detailed drawings, ecetera, excetera, etc., blah, blah, blah, blah, blah, and oh yeah, blah blah, blah..

This should help cover your cost from these price shopping, idi** a** cus*$u#@*!

Good Luck.

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And offer to apply that amount as a credit to the bill when the work is done.
 
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