Financial Fine Print

Tips 1-5

Prevent money mix-ups on contractor bids with tips for understanding financial fine print.

1. Make sure you're really ready to build.
If you aren't prepared to discuss specifics regarding your project goals, budget, and timeline, take a step back and hire a designer or architect first, not a contractor. Unless it is an integrated design/build firm, a contractor should enter the process only after the basic design has been developed. Without that preliminary step, getting a realistic bid is unlikely.

2. Don't expect to go far for free.
Most contractors offer an initial consultation at no charge, but don't expect more than a nonbinding "ballpark" bid. Many contractors balk at even that, especially for big projects, because they don't want to mislead homeowners or be held to a shoot-from-the-hip quote.

3. Have any crucial money issues resolved up front by having loans or other sources of project funds ready to go.
Most contractors "qualify" clients by making routine calls to your bank or lender to ensure there's money to pay for the work. Don't worry about your financial privacy; contractors don't get details, just a yea or nay.

4. Expect to pay for detailed estimates.
Protest if you will, but it takes time to prepare a comprehensive, specific bid, and it's in your best interest to get such an effort. The fee is typically about 1 percent of the estimated project cost and is applied toward that total if you accept the bid. Don't forget to budget for multiple bids.

5. Get a line-item proposal.
The bid should include a scope-of-work section that spells out exactly what work is and isn't covered, what materials will be used, the dollar amount included for materials purchases (called an allowance), and a project schedule. If you need design services, expect those to be offered and billed separately from construction services, even if the same firm provides both.