Asked on Mar 5, 2012

How to negotiate bids?

Decorative Concrete SolutionsGlkirk Builders Inc.Sherrie S


I have recently received two bids for the following: a) blacktoping my existing gravel drive and b) adding a third driveway lane on east side of existing drive then blacktop total area. The two companies are not at all close in their bids ($1600+ difference on option "a" alone) for the same details offered on bid A. Both companies had the same fee to complete option B. Is it okay to ask the highter priced company why they are so much higher? Shouldn't the bids state offered guarentees and expectation of completion times? Or is that on the final contract only? A lot of novice questions here - I'm wanting to approach this the right way and enter into the best contract that I possibly can while covering any "what ifs". Any additional feedback would be appreciated!
13 answers
  • Ronica, you may certainly ask all the questions you want of both companies and even get some addtiional bids before/after asking those questions. Feel free to post any questions or concerns here for other Hometalkers (especially contractors) to explain. Not all companies offer guarantees but ask and you should be able to review in advance. Guarantees do not substitute for checking the company out. Every company is different. Some bids are written so that they in effect become the contract if accepted (check that language on the back) and others are merely to see if the price is in the ball park to be accepted and a final contract to follow. Whichever is the final contract, you should review carefully and have your questions answered in writing as part of the contract. Remember, if it is not in the contract, often the contract says that even if discussed before, its not part of the deal so make sure those things that are important are in the contract. One suggestion may be to have a good construction attorney review. If you are spending $5-$10k on a driveway, an attorney may be able to provide a review in an hour to say whether the contract covers the basics and is generally reasonable. A few hundred dollars now can save you a great deal later. You may want to check out some other threads we have had on due diligence and certainy my website.

  • 360 Sod (Donna Dixson)
    360 Sod (Donna Dixson)
    on Mar 5, 2012

    Ronica, Check to make sure you are working off of a bid and not an estimate first. Then, yes you can ask why the second bid is higher to that contractor and also ask the lower bidder why they are so much lower? Are they cutting corners? Check to see if they both have liability insurance and if they have any type contractor's licensing. I don't know your state laws for those type businesses, but you should be able to call your state to find out.

  • The Manly Club
    The Manly Club
    on Mar 5, 2012

    Ronica......this is great advice from Four Seasons and Mr. Veler. I would add one thing since you were asking about negotiating price. You really should consider getting two or even three more bids. This will tell you everything you need to know about the true cost of your project. There is no way for us contractors here on Hometalk to advise on what is a fair price and what isn't since we can't see the project. The thing that will tell you is the range of bids. They will come in leaning in one direction or the other as they almost always do. That will tell you with pretty good confidence how much you really should be paying for your project. From there you can use some of the advice posted on how to make sure you are hiring the right contractor. One more thing that I beg homeowners to do when negotiating it by email! Two reason for this. One, it's human nature, we are bolder to ask for things when it is in writing so you may be more inclined to ask for more of a discount than in person. You should be bold as a lot of contractor pad their bids expecting homeowners to ask for a lower price. If you don't ask you don't get! No bold. Secondly, when you negotiate price by email you have it in writing and there is less chance of things being "misunderstood". Shady contractors will say anything to get invited back out to your home to take another crack at closing the deal so don't let them play that game. If you have more questions feel free to ask!

  • Ronica G
    Ronica G
    on Mar 5, 2012

    Thank you all for your input. I will expound a bit more on my story to clarify. I called three companies as there is not many contractors to choose from. Two agreed to come out and give me a bid on project A and B. The third company returned my call and said they would not be looking for work until closer towards end of March (this was mid-Feb) therefore they were not interested in bidding at this time. Really a bummer beacuase I'd like that third bid to compare against the others. (I want to start as early as possible with finalizing a deal as to build the third driveway and allow for a settlement period. Blacktop is not laid here till end of April/start of May). I was surprised to see the two received bids so far apart in price when both companies wrote on their bids almost the exacting wording of the job/ services provided. Contractor #1 provided me with a bid "Proposal" and at bottom reads "Acceptance of Contract" to be signed. Contractor #2 provided me with a written "Proposal" to be signed if accepted. I feel more comfortable with pointing this out and asking for further clarification based on all of your feedback. Hopefully I will be able to finalize this deal soon.

  • Ronica - in some areas, it's next to impossible to get bids from certain trades because alot of companies have gone under. Pricing is all over the place and may not have anything to do with cost of materials but the lack of work one company might have on the books. I just took a project for $3,800 that we normally would have sold for $7,500. We're not going to make anything on it but it got HandyANDY into a neighborhood I wanted to be in and a good client who is already referring us work. Try to get a third bidder....or call the other company back that declined and ask to speak to their estimator. What's the total cost of what you are doing? It's not a cheap undertaking so you might offer to pay the estimator something to give you a rundown on the do's & don'ts of your project and a ballpark idea on pricing from his firm. With the other two, ask for references from the past several years with addresses and go look at their work. Contact the clients and ask how the project went, costs and whether they would use them again. You wouldn't think contractors would put bad references out but they often never ask the client what they'll be saying before putting them on the list. You can ask either company anything that you want. You can also let one know what the others pricing is and see if you can get a better price. The job I mentioned above had 9 bidders I think and pricing from $1,500 to almost $9,000 for an exterior repaint with repairs. Some bids were very thorough and some were a "paint house" with price. Look for the detail in the bids and make sure they are all inclusive. A big trick with contractors...more so than to go in low and then hit the client with every single add-on. Pricing is going to be higher in your market than Atlanta for instance...because you have a shorter period of the year to complete these types of projects & we have more options to get bids from. Try googling "questions to ask contractors paving a driveway" or some variation to educate yourself some more on the project. LUCK!

  • Handy, points out some good questions. To expand on one point. The more detail you have in the contract regarding the scope of work, generally the better. He used "paint house". I would want it specified in the contract, what brand and grade of paint, pressure washing and preparation details including caulking, how paint applied, etc. In driveways you may want to specifically provide info about creation/thickness of the base, landscaping protections, issues regarding nearby trees and root systems, sprinklers, specific info on thickness of asphalt base, any sealant, edging, etc. The point is to be sure you understand that the contract meets your expectations and if there is a conflict for resolution, that you have more than your word against theirs. If the contract specfies a 4" base and they gave you a 3 inch, it is much clearer. I would also check the manufacturer's recommendations and installation instructions for the materials to be used.

  • Cindy M
    Cindy M
    on Mar 6, 2012

    just make sure it lists everything that is to be done, down to the minute detail. also make sure of the time to get it done.

  • Tamara R P
    Tamara R P
    on Mar 6, 2012

    From a reality standpoint, it could range from a difference in product used, the type of work provided i.e. more professional, etc. Or, it could be a higher mark-up. If you are paying for this work, I'd certainly ask them why there was a $1600. difference. Always nice to have 3 bids. And, read that contract carefully to ensure that the contractor's are not slipping in a term called "binding arbitration" under legal remedies before you sign. Binding arbitration means that if they do the work and totally screw up you cannot legally sue them. You have to go to an arbitration firm, and those firms are owned by the builder! Buyer beware on this!!! Worst single piece of legislation that has come out of Texas and undone the building / contracting industry as we know it!

  • Ronica, I think I can speak for all of us when I say how impressed I am with your willingness to share your concerns and ask for help on this. People think buying a car is a tough process...until they attempt to get remodeling work done on their home...:) Lots of good advice thus far....and there is a whole lot of information out there on the subject. I'm going to limit my input on the price difference between the two, understanding that I am speaking in general terms. $1,600 dollars on an average $3,000 project is a large difference. $1,600 on a $10,000 project is not. We all jumped on the difference but, unless I missed it somewhere, don't know how much overall costs you are working with. Always keep in mind that what you are purchasing, unlike a car or a laptop or a suit, has not been built yet. Therefore, what you are offering to pay for that remodeling or construction work can and will influence how the product is built. Make sure you are comparing apples to apples. The only way to do this is to make sure both companies have explained thoroughly what they are going to do. One company may be taking an extra quality step because they have learned thru experience that it needs to be done in your area and their reputation is important. The other company may blow this step off because it adds $1,600 to the cost and they want to win the bid..... and they are hoping you won't notice the difference. As others have already alluded to, there are a dozen legitimate reasons why the price difference. You aren't purchasing a product. You are investing in a company in good faith that they will come thru for you and deliver what you want at a previously agreed upon price. You absolutely must get as familiar as you can with the companies so you can base your judgement on solid information. References, references, references......

  • Ronica G
    Ronica G
    on Mar 8, 2012

    Thank you everyone. The job is not too large as the drive base is only about 17' wide by 48' long. Company #1 quoted/bid to me to complete the (Option A) blacktop over exisiting gravel at $1450. To add third lane (Option B) is extra $1500. Total bid for A+B = $2950. Company #2 quoted/bid the same defined job (Option A) at $2626. To add third lane (Option B) is an extra $1520 Total bid for A+B = $4146. I have emailed the two companies and one has responded back (Company #2). He did not have an explaination as to why there was such a price range between the two Option A quotes. He offered to reduce his Option A bid by $150. Still waiting for Company #1 email response. And just looking at this further, I wrote on my question to the forum the difference in bid was $1600. I just realized that my math is wrong - I apologize. The difference is $1176. As a new homeowner, its my goal to approach my renovation projects as educated as possible so to make the best decisions possible with hiring the right contractors for my job, but that will also fit into my (limited) budget. I believe I'm on the right track, however, getting bids that vary so greatly back from contractors, as well as, being told by another company they don't want to bid because they aren't looking for work at this time, is very frustrating to this newbie. I appreciate the unbiased/general feedback I am receiving from this forum group.

  • Sherrie S
    Sherrie S
    on Mar 8, 2012

    Ronica G, I can only make one suggestion. If you have any vendor you trust, talk to him/her about your new vendor. Most good vendors will not suggest anyone they are not familiar with nor will they recommend a vendor outside their level of expertise. I've been lucky with this idea.

  • Glkirk Builders Inc.
    Glkirk Builders Inc.
    on Mar 9, 2012

    A contract is supposed to be a meeting of the minds. Unfortunately it is the HO chore to do the research to know what they want. Maybe do some research on their past clients jobs,the grades material, procedures ect.. Don't depend on warantees. Be sure the job will be done right the first time. Probably not best to rush.

  • Maybe you need to ask why company "A" bid is so low. I don't know anything about black top driveways but perhaps company "B's" bid is a more realistic bid and company "A" is just a low baller. I would get a 3rd and maybe a 4th bid just to perhaps get a real feel about the the cost of a job that size. Also ask for references. Always ask for references.

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