If you are considering a renovation or upgrade to your home and you’re not a handy-type of person, then you will need to pay a professional. That means interviewing home renovation contractors and asking for quotes. But before you decide on the right contractor for your home improvement job, you need to choose between contractor quotes.
A professional home renovation contractor’s job quote is the equivalent of a bid. It provides the bottom-line cost on what it will cost you to hire this reno pro to get the job done. But the final price isn’t the only important factor to consider. In order to choose between those contractor quotes and pick the right renovation contractor you also need to learn how to read and assess what details are included in each quote.
The professional in charge of a larger home renovation project is a general contractor (GC) — a company owner or supervisor in a larger company responsible for keeping the schedule and budget on track.
The problem is that no two companies will quote the same way. While one GC or home improvement firm may break out job stages and materials, another company will lump all costs into one general fee and tack on extras, as needed.
To help, here are the basic steps you need to take to break down each home improvement job quote you obtain (assuming you receive more than one, which you should).
What Should a Quote Look Like?
Every professional contractor quote should include a few key components:
- the scope of work the quote pertains to (a description of the work this pro is agreeing to undertake);
- materials and labour costs (sometimes these are broken down, at other times, they may be generic or generalized);
- the total cost of the entire project, based on the scope of work;
- contractor’s company information (including phone numbers and address).
How to Request a Quote From a Contractor?
Believe it or not the easiest and best way is to simply ask. At this point, the general contractor will either provide a quote or not. If they do offer a quote, make sure you get it in writing. Verbal agreements are not sufficient as they can easily be forgotten or altered.
Don’t be surprised if the renovation quotes you get from the home renovation contractors you interviewed don’t all look the same. In general there are three different types of professional home improvement job quotes.
The first type is the standard all-in approach. This quote will offer a lump sum cost, plus tax. With the all-in contract, you pay a company or tradesman one fee to complete the entire job (assuming no changes to the job are introduced and no surprises pop up).
From here, some reno firms will itemize each job stage or component line-by-line, listing estimates for labour and materials included in each stage. Other home renovation contractors will provide general costs that include material and labour costs in one sum. Either way, don’t expect to see granular details. “You may not see the tiny breakdowns of light bulbs, for example, but the quote should spell out the large pieces of the project,” says Andy Kolodgie, co-owner of The House Guys.
The second type is known as “labour only.” If you plan to source, buy and schedule delivery of all the materials yourself, a ‘labour only’ quote may be best. Keep in mind that not all contractors work on labour-only jobs, as each material and finish will require familiarity and expertise. Not all GCs feel comfortable committing to a job where the material selection is left to the homeowner. Still, ‘labour only’ quotes can be quite a bit cheaper — and could save you quite a bit of money — as long as the reno job and the material used is straight-forward and fairly common.
The third option is a “time and material” quote. This is when a contractor agrees to get reimbursed for material purchased for your job (plus a small bit extra for time and gas spent getting materials) as well as time taken to complete the job. Again, this can be a great way to save money on a home reno, but not all companies or tradespeople will take on this type of contract.
To determine the best type of contract for your job, ask the GCs you are interviewing for their opinion. Chances are if you ask enough GCs, there will be a consensus as to what will work best — and this gives you a starting point for assessing each company and each quote.
Finally, each quote should break down the ‘draws’ you are expected to pay and the trigger for when those payments are to be made. A ‘draw’ is a sum of money paid to the GC. Each draw is subtracted from the total amount owed on the contract.
In most standard home reno jobs, expect to pay 10% of the total job cost at the start of a job — before the contractor gets to work. This is the first draw, and the money is used to help pay for materials needed to complete your home improvement project. Following the initial draw, there should be others until you get to the job deadline — the date when your home reno project should be complete. At this point, there should be 10% of the total cost held back — not paid — to the GC. This final 10% is not paid until 30 days after the completion of the job. Why? This is so you can verify that the GC has paid all sub-trades. Fail to do this, and a sub-trade can legally take out a lien on your home — a legal claim that the sub-trade is entitled to a portion of your home’s value unless you pay the money owed to remove the legal claim.
How to Choose a General Contractor?
Before you pull the trigger on your next home improvement project, make sure you get multiple quotes from a few different contractors. “Multiple quotes are encouraged because it allows you to discover whether the price is fair,” says Andy Lindus, COO of Lindus Construction. He also suggests homeowners beware of overly low quotes, as they may be a signal that price changes are imminent because the contractor failed to consider the full scope of work.
“Lowball quotes may also mean that the contractor is cutting corners on critical areas such as insurance or permits,” says Lindus. If you’re unsure, you can always do your own research to see what average prices are for popular home upgrades to see if the lowball quote aligns with how much other homeowners have paid. Lindus says the best place to get these numbers is from ‘trade publications’ or industry sites such as the Canadian Home Builders’ Association (CHBA) Building Excellence Magazine. Another good way is to consider if a quote is realistic is to get multiple bids and find the outliers. If three out of five quotes are all in the same range, chances are the lowballer is cutting corners (or prepping to surprise you with extra costs), and the high-end quote is a contractor that doesn’t want the job unless they earn a very handsome profit.
How to Negotiate a Quote From a Contractor?
Like most things in life, there is always room to negotiate. But, that doesn’t mean the answer will always be an outright yes. Kolodgie says that because general contractors are at the mercy of their sub-trade rates, there isn’t always room to reduce fees. “[Quite often] when you negotiate, you are breaking into their profit margin,” says Kolodgie. Typically, contractors’ profit margins are anywhere from 5% to 15% after completion of the project and include hard costs, such as gas to and from your home, as well as soft costs, such as website upkeep, bookkeeping and cell phone expenses.
Negotiation Tips
The best time to negotiate with a professional GC is during the off-season when they want to line-up work (because they want to pay the bills). For example, winter may be less busy for GCs that specialize in outdoor home improvement jobs, such as hardscaping (putting in patio stones or driveways) or siding experts..
Another option is to ask your favoured GC to compete with a quote from another GC (just don’t use the lowballer quote, as this isn’t a realistic job cost).
Not Just About the Price
Hiring the right general contractor to work on your property is equally important as negotiating the most competitive price. Be sure to check out the GC’s testimonials. Ask if there are previous clients you can speak to or a job portfolio you can review. Most GCs will have a website, at the very least, and should be able to show you the type and scope of work they are capable of completing as well as a history of finished jobs and satisfied customers.
