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5 reasons to always get 3 quotes

If your bathroom is a time machine to the 1950s, you might be a really big fan of Back to the Future. Or maybe you're feeling ready to tackle that remodel. Before you sign that contract with a fancy design-build firm (or hire your neighborhood handyman recommended by your cousin's boyfriend's sister) there's a few things to consider.

Bids for home renovation projects can differ substantially. There is more to choosing the right bid than picking the lowest number.

Dig deeper, asks questions and read the fine print. It not just what is in a quote, but also finding what is missing. These factors together will to help you make sound contracting decisions for your home improvement project.

Here are the 5 reasons to always get 3 quotes:

You need at least three data points to find the outlier. Let's say you get two quotes to tile your bathroom. Your instincts may tell to book the lowest bid, amiright? It's ok, I feel the pull to save a few bucks too. But I encourage you to get at least one more quote. My inner analyst loves this reason, because more data points give you more information.

Let's walk through a bathroom remodel example.

The statement of work includes installing a new tub, shower surround, and floor tile. You already own the tile, so you are looking for someone to replace the tile and install your new toilet.

Quote 1: $9,000

Quote 2: $25,000

Easy decision, right? Well, hold on. Let's add in the 3rd bid. Now which quote is most realistic and reasonable?

Quote 1: $9,000

Quote 2: $25,000

Quote 3: $21,500

Now you have more information. If two bids come in dramatically higher than the third, I wonder what assumptions the contractor made when drafting the bid. Hopefully you're already wondering: are these numbers actually comparable? I get the feeling the bid is missing something or different some how from the other two.

You also need more information to negotiate. Maybe you like the price but not the timing or the terms of one of the quotes. You'll have more leverage and context if you get more than two quotes.

Now that you have three bottom line numbers, it's time to read the fine print and do some comparing. You should just sign the $9,000 contract and move on, right? Maybe not....

You need to closely compare the offers and assumptions and what is included in the work.

Here are a few things to compare:

  • Billing terms: is the contractor offering a firm-fixed price contract or is it based on time and materials?

  • Variable assumptions: e.g. labor and materials - how many man hours are assumed for the work? Who is providing the material?

  • What's included? e.g. Demolition and site prep are labor intensive cost drivers. What about dump fees? I know you're dying to swing a sledge hammer, but it's less glamorous than it seems. If it's a remodel, some repair and improvements may need to be made to the surprises lurking behind the walls.

  • Experience and quality: what is the skill level of the tile layer?

Let's say in that our $9,000 bid is time and materials based and doesn't include demolition or site preparation - but the other bids do. That explains a lot of the big price difference between the lowest bid and the other two.

Time and materials contracts can be a way to low-ball an estimate, and there can be a lot of hidden costs. It's a bit of a gamble. It's also unlikely the final number will be $9,000, it could even surpass the other two.

Sometimes contractors are fully booked. They really don't have sufficient time in their schedules to take on your project (or they reject it because it's too small - ouch.) But, they might provide you a really high bid just in case. Hey, what if you are willing to pay? Getting multiple offers gives you additional context about where the market pricing is.

If they are fully booked, how can you rely on the schedule they provided you? Where does your project reside in their prioritization?

When I bid out our extensive home renovation, I received a quote that was a single, verbal number. Do you see the problem? What was I even supposed to do with that?

It wasn't an actual bid. Those come in writing. They include detailed write ups of materials, labor estimates and documentation of what the contractor is responsible to do.

If your lowest bid is light on the details, get clarity on the assumptions. If it checks out, make sure all the details you discussed are documented and contractually binding.

Some quotes may be too good to be true. Consider the risks of hiring an under qualified plumber. Your house could flood. Or maybe the tile layer doesn't know what he's doing. Will you be satisfied with crooked tile?

Are you really going to all this trouble for it to look like a DIY job? Damages from a pipe bursting are dramatic and sudden, but a slow leak or poorly executed water barrier can slowly penetrate your walls. But it's only water, right? How much damage could it do? (Well from experience I can tell you A LOT and in a short period of time).

When human nature tempts you to just go with the lowest bid, I encourage you to ask more questions. Get at least three quotes, you'll be happy you did. You'll be able to find the outliers, compare the bids in detail and make sure the bid you accept isn't too good to be true.

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