Negotiating with contractors

Recently, I had to replace the roof on my house because the nails in the shingles were backing off.  From the records I received when I purchased my house in 2014, a second layer of shingles were placed on my house in 1998.  After 20 years, I needed to remove both layers of shingles and put new shingles on my roof.  Usually I try and work on home improvement projects myself, but for a larger job like replacing a roof, it is best to leave it to the professionals.  This is when you need to pick up the phone and call a contractor.

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Contractors are out to make money just like anyone else.  Their skill level and price range may vary significantly.  Often skill level and price range are not directly related, so do not be fooled into thinking a higher priced contractor is a more skilled contractor than one that is lower priced.  For this reason, you are going to want to research various local contractors and read as many reviews as possible for each.  This will be crucial to feeling confident in your final selection.  For most of us pricing is going to be one of the biggest factors in selecting a contractor, so I will heavily focus on negotiating for the best price.

Identify your needs

A lot of people do not spend enough time on this step.  No matter if you need a new roof, new windows, kitchen redesign, or new door sweep, you really do need to identify your needs.  In other words, define the scope of the project and understand what work needs to be done.  This will help you communicate to each contractor you ask to bid on the job.

Research and invite several contractors to bid

The first place you will want to look for contractors is on the internet.  It will probably be a google search for local contractors in your area.  Once you find each contractor, you will want to do extensive research on their backgrounds.  This usually means you are looking up reviews and looking for good/bad comments on the contractors you find.  If the contractors pass your criteria, then you should schedule them to come out and look at the job.  You will want to invite at least three contractors out to bid on the job.  You will want to give a brief description of what the job will entail over the phone to make sure the contractor is aligned prior to visiting your home.

In addition to reviewing contractors, you will want to get an average price on the type of work you want done.  There are plenty of websites online, which help you estimate out various projects (i.e., roof replacement, heater replacement, new windows).  Knowing this information ahead of time will further prepare you for future expenses you will need to incur.

Contractor bid meetings

When the contractors come out to review the project and bid, they are probably going to ask you if anyone else is bidding on the job.  You should be transparent and communicate to them that others are bidding on the job.  This will add some pressure to the contractor to give better pricing.  Most of the time the contractor will not give you pricing on the spot and will send an official quote via e-mail.  Do not accept any bids until you have met with all contractors.

Receiving quote and negotiating

At this point, you will have all the quotes from the three or more contractors you met with.  You will also have average costs for the project based on internet research.  You should also have a level of confidence of each contractor based on reviews you looked up on various websites.  Using this information, you will want to respond to the top one or two contractors with a counteroffer.  I rarely would say accept the offer as is because as I mentioned before, contractors are out to make money.  In the case of my roof, I was quoted three different prices from three different companies ranging from $11,500 to $18,000.  I waited a week before responding to anyone because responding too soon shows desperation.

I responded to the company that quoted me $11,500 with a counteroffer of $9,000.  From my research, new roof materials plus installation for a roof my size was on average $12,000.  I was already receiving a deal, but I wanted to push the envelope.  The company counter offered with $9,500.  I went back and said yes as long as they threw in a free door sweep for my front door plus installation for free.  They agreed to install a free door sweep for my front door.

Do not feel shame in asking for a better deal because the contractor companies are still going to make a pretty penny.  In my situation, I was getting a new roof installed in the winter.  It seems like new roof activity is more prominent in the warmer months, so it works out in my favor to give business to a contractor that is not overly busy.  They are more likely to work with you on pricing if they do not have many other projects going on.

You may also want to ask if they will reduce the cost if you pay in cash.  If you do pay in cash, make sure you receive a receipt that reads PAID.  You do not want to end up in a situation where they accuse you of not paying, when you did pay.

Another possible reduction can be issued if you allow the contractor to place their sign on your lawn as advertisement.  This also adds pressure to the contractor to do a good job because people are going to drive by and see the work they did for exterior jobs like siding, roofing, and windows.

Key takeaways

  • Identify you needs and define the scope of the project
  • Research, review, and invite at least three contractors to bid on the job
  • Once quotes are received from ALL contractors start negotiating based on research you did (i.e., quote comparison, average comparison, seasonal considerations)
  • There is no shame in asking for a better price
  • Occasionally, contractors will give you a better price if you pay with cash

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