3. The Project is Undervalued
In some cases, one estimate might come in much lower than others. This does not necessarily mean you’re getting the best price, because it may mean the contractor is charging too little for the work. There are a few reasons why your project might be undervalued.
They are a “Bait and Raise” Contractor: If your estimate is suspiciously low, or vague in drawings and specifications, you could be dealing with a company that uses “bait and raise” tactics. Some contractors deliberately submit a low initial quote to win the job, only to increase the price later through change orders and additional costs. This deceptive practice can leave clients paying far more than they initially expected by the time the project is complete. These contractors may claim unforeseen circumstances or miscalculations as justification for price increases, making it essential to review contract terms carefully and seek transparency in pricing.
They are a “Cost-Plus” Contractor: A cost-plus contract means that the contractor is reimbursed by you for the actual costs of materials, labor, and other expenses incurred during your remodel, plus more to include profit. Be wary of contractors who advertise cost-plus pricing, because without a fixed-price agreement, you’re basically writing a blank check to your contractor. With this contract model, it’s very easy for costs to balloon out of your control.
Seasonal Fluctuations of Work: Depending on the industry, some trades can experience seasonal highs and lows in workload, which can impact their estimates. During slower periods, some contractors may offer unusually low estimates to keep their crews busy, even if it means taking on projects at lower margins. Conversely, pricing during peak season may be inflated due to high demand. Understanding the contractor’s workload and industry trends can provide insight into whether a low estimate is a strategic move or a red flag.
Cash Flow Issues: Contractors facing financial difficulties may quote low simply to secure immediate cash flow. This can be a sign that they are struggling to pay suppliers, employees, or other expenses. While a low estimate might seem appealing, working with a financially unstable contractor poses risks, including project delays, quality issues, and unfinished work.
4. Contractor Experience Levels:
Contractors who employ skilled laborers or specialty tradesmen do so to provide the quality craftsmanship required for custom millwork, tiling, and other one-of-a-kind details you may want for your project. If one contractor has a long history of success with custom projects, they may fall on the higher end of estimates you receive compared to those with inexperienced crews. Look for past client experiences on platforms like GuildQuality, Google, or Houzz to see what real clients say about working with the team you’re considering. If you need additional reassurance, interview recent clients of the contractors you are considering to gain insight into their process.
New to the Industry: New contractors eager to establish themselves may offer low estimates for two main reasons: they lack accurate estimation experience, or they may want to secure quick business and sacrifice margins as they build a client base. Without a thorough understanding of material expenses, labor hours, and project complexities, they might not be able to accurately price your project and air on the low side to secure work. While their enthusiasm may be genuine, hiring an inexperienced contractor can introduce greater risks of project delays, unexpected costs, and lower-quality workmanship.
5. Material Quality Differences
Not all materials are created equal, and each contractor will have their own preferences when it comes to different brands or grades of material. This will impact both the cost and the longevity of your remodel. Larger remodeling firms will likely have stronger connections with direct suppliers for product discounts, while smaller or newer contractors may have higher material costs due to limited purchasing power. Your total investment will be impacted by materials used – locally sourced materials, eco-friendly products, and imported materials will all vary in cost. Even seemingly identical products- a faucet, for example- purchased through discounted “big-box” stores can be made with lower-quality plastic or zinc alloy parts that wear out more quickly than their supplier-grade alternates that may be made with solid brass.
Be sure to ask about the materials being used in your project to make sure you and your contractor are on the same page. Some contractors may use lower-quality materials without clearly stating it in the quote in an effort to lower prices, while other contractors may include materials that will stand the test of time and come with warranties to keep you covered long after the project is complete.
What to do When Quotes Vary
Prioritize your goals: Sit down with all decision-makers for your remodel to discuss your priorities for the project. This will help you weigh which team aligns with your remodeling goals as you compare. Ask yourself questions like these to help clarify what kind of partner you need:
- Are you equipped/have time to manage the project by yourself or do you want an expert to handle all the logistics for you?
- Do you care about the quality of materials used for your project?
- Do you know how to specify and order everything required for your project?
- Does it matter to you whether or not your contractor has a strong reputation?
- Do you want a quick fix or a remodel done right?
- Do you want to know your project cost before construction starts, or are you comfortable with surprise change orders as the project goes along?
Be Honest and Ask Questions: If you feel like an estimate is suspiciously low or high, be honest and ask them why the estimate feels high or low. You will learn a lot about a company from how they answer questions like this.
Look at the Details: Take time to analyze each estimate to see what you can learn about the services, materials, and scopes of each remodeler you are considering.
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