We were able to negotiate a 50% discount from a Contractor who survived the bidding war we had created with the 3 other contractors! This was for our San Jose Fixer Upper remodel located on Malone Road in San Jose. We had purchased this small home with 800 sqft of living space for $160,000! Granted that figure sounds too cheap by today’s standards, but that during the height of a Real Estate boom in Early 80s and we paid top market dollars for it!!
We were looking to double the size of the property to about 1,500 square feet. Some of the bids differed by $70,000 between different contractors which was strange to us since we were NOT asking them to bid on FINISHED items! So, the natural process selection took over where we eliminated the highest price bids and started working with the one’s that seemed reasonable.
For the 2 remaining contractors we asked for reference and contacted them. We also visited their current projects to see the quality of the work and also interviewed some of their subs who were on site at these locations about the General Contractors payment history since we did NOT want to get stuck with un-paid subs on your project. This process netted us one contractor to negotiate the final price for this fixer upper remodel.
We set up a meeting with him at the house where the work was planned for. We asked for a detail bid on:
1) Rough Framing; This was an itemized bill for Lumber and other material. This bid was for about $15,000!!
2) Rough Mechanical: Same as above, including material and labor costs. This bid included the Plumbing, AC…etc.
3) Rough Electrical: This included the new wiring with canned lights in most of the areas in addition to the labor costs.
4) Roofing: Similar to the other parts of the bid we requested the bid to be broken down into material and labor. Since this was a fixer upper remodel, we needed an estimate for the existing roof removal and replacement as well as the new roof for the addition.
5) Finish Material: This item was not that critical to us since we were going to purchase ALL the finish material, but we only wanted the contractor to bid on the installation.
During our final meeting, we happen to review these bids with this contractor and asked him to assign the number of days associated with the labor cost for each item. For instance, we asked this contractor how many days does he estimate for Rough Framing. His answer was about 7 days! The next obvious question was how many crew member would he use for framing which was not more than 2! So, then the computation that helped us secure massive discount was that we were being charged more than $3,000 per day for framing!!
That was the rate for a Medical Surgeon’s rate on a bad day! So, he soon realized that that kind of rate was NOT going to fly on this project and we were able to reduce the Rough Framing costs by 50% which was a massive saving.
So, contact us if we can help you with your Fixer Upper projects.