fbpx

News

6 Tips and Tricks for Contractor Negotiations

Everyone loves a deal, and this also applies to the cost of home improvement work. A major project can leave a dent in your savings account. 

You can reduce this cost by negotiating the contract price and terms. Quality work doesn’t come cheap, but if you are smart about it, you should be able to settle on a fair price. If you’re looking for ways to cut the price, consider these helpful negotiation tricks to reduce your financial burden without compromising the quality of your project.

Shop around for a contractor.

It’s difficult to tell whether or not you are getting a good deal on your home improvement project if you don’t have something to compare it to. That’s why it’s always a good idea to get at least three comparable bids or estimates for a project.

Many contractors are willing to lower their cost or negotiate particular contract terms if they’re competing for the work. For example, in a recent Angie’s List poll, more than 80% of contractors indicated they were willing to drop their prices to get a job.

However, make sure you provide each contractor with as many project details as possible, and thoroughly read each estimate to make sure you’re making apples-to-apples comparisons.

Detail is everything.

Choose all of your project’s details such as the type of tile, fixtures, hardware, etc.  You can greatly control the costs and cut out the contractor’s increases if you purchase or at least dictate exactly which features you want used on your job. 

Certain high-end materials like top of the line stainless steel appliances, and italian marble will greatly increase the price of the project. Materials like reclaimed wood, stone veneer, and concrete are more cost efficient when it comes to building.  

Purchase your own supplies.

Most contractors offer to purchase the supplies needed for the project and include their cost in the estimate, or bill you for them later. This contractor usually gets all the supplies from one supplier, which means that he or she probably isn’t shopping around for the best price.

To save yourself a little money, offer to buy the supplies on your own to ensure the best deal on the supplies you need for the project. However, be sure to double-check the needed quantities with your contractor and ensure that you’ll have enough material to finish the work and not cause project delays.

Time is money.

Be clear about your scope of work. Never leave things open for interpretation by the contractor.  And, also be clear about your expected start and finish dates.

Demand itemized bids from your contractors. Ask who will work on your project. Will the individuals be employees or subcontractors? Obtain a list of all subcontractors and suppliers who intend to work on or deliver materials to your property.  Demand itemized bills from the contractor at each payment period too. Compare these bills with the amount of work performed and the itemized bid you received at the beginning of the job.

Avoid overexposure.

When negotiating contract costs, keep your cards close to your chest. You may not necessarily want the contractor to know your entire situation, since particular details may contribute to their willingness to negotiate price. Reveal only the details about the work you need done and let the contractor do the talking.

Be careful with your deposits. 

Don’t pay up front for work that has not happened yet. Deposits should only be made for special order non-returnable items that a contractor may have to purchase for your job, or when your state law requires it.

At First Equity Funding, we not only offer asset-based loans for purchasing your next property, but we walk the complete path with you. Through helping you to assess and identify investable opportunities, ensuring quick approval on loans, and providing construction consultancy, we are here to make sure that your investment is completed on schedule. Get funded on your next investment property with us and get a quote today!