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That 3-Bid Rule?... It's All Wrong!

Updated: Feb 10, 2023

You’ve done it! You’ve made the decision to start that remodel project you’ve been dreaming

of! So now, you’ve begun the search for the right contractor. You’ve asked friends and family

for recommendations, searched the web for local businesses, and maybe even flipped through

the Yellow Pages. You have a list of candidates and it’s time to start the next step—the Bidding

Process! Or…is it?


 

1. Where did the 3-bid rule originate?

Be sure and get a bid from at least three different contractors” is a fairly standard piece of advice that has been given to homeowners for years. But the truth is: this piece of advice is misleading!


This 3-Bid Rule actually originated from the commercial construction industry. In commercial construction, an investor/owner will start with a complete and comprehensive design. Once a design is approved, it is handed off to a Specifier. The Specifier's roll is to source ALL material that will be used in the project. At that point, all of the aforementioned details are provided to three contractors who place competitive bids on the labor needed for completion. With this practice, investors are able to gain a true apples to apples comparison for each bid.



2. Why not with my project?

In the commercial bid example above, the design is already created and there is one person who specs out all materials, only leaving labor to be bid. With a residential remodel, very rarely are designs completed by the time bidding happens and even when they are, it is up to the contractor to source all of the materials for the project. What this means is the approach, labor costs, and material costs can vary significantly from contractor to contractor. This variation only intensifies if a design is not formulated yet, which is often the case. So getting three (or more) bids can get you three prices, but the basis for each number entirely relies on the business practices of each contractor. Long story short, it's nearly impossible for a consumer to accurately compare bids because the base line varies so greatly. One bid for a bathroom remodel comes in at $70,000 and another at $40,000. Is this simply because the first company is expensive, or is it because the other forgot important details? Unfortunately, it's pretty hard to know.


3. Ok, so how do I select contractor?

There are a few different tactics you can utilize to help vet contractors. First, look at their portfolio and/or website. Although a picture can't tell you how smooth the remodel process went, it's a good way to see their design styles and attention to detail. Critic their website, if they have one at all. In today's age, a website that looks good and functions well is a must. If a company does not have a website, or clearly didn't spend time cultivating it, that could tell you they may not be tech friendly. This isn't always a deal-breaker, but it can have a big affect on quick communication, paper trails/written accountability, scheduling, and electronic payments. All things to consider when starting a remodel.


Second, do they have good customer service? Having good customer service is a clear and easy method of identifying how a company will treat you before, during, and even after your remodel. It's simple assessments like: Do they answer their phone the first time you call? If they miss your call, how long does it take for them to call you back? Do they have an office staff to help with client communication and project management? Do they seem organized and thorough? All of these factors can tell you how you can expect to be treated throughout your remodel.


Lastly, go with your gut. A contractor could tick all of the aforementioned boxes but if, during your in-person consultation they give you "bad" vibes, don't go with them. Establishing trust and comfortability with you contractor is extremely important. You need to be able to trust that whoever you choose will be safe in your home, and that their crew is reliable and trustworthy. This, above all else, is fundamental when selecting a contractor.



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