# Clients want breakdown of estimates.



## Willy T. Bagger (Nov 2, 2010)

Warning: This is a Property Preservation post!

This is a continuous problem in our company. A client will request an estimate on a job. We take 30%, and pay our sub.

The problem here is the client wants a breakdown of the estimate. 

For example, if we had to cover a pool for $1000, we would have to charge $1428.57 to the client. 

The $1000 would be for labor and materials. But then the client wants to know where the $428 comes in. If we just charge $1000, our contractor loses $300, because we're not a charity organization. lol

How should we put that in the estimate?


This becomes a huge problem when doing big jobs as a 4th party. We have a $3000 job to paint a house but have to invoice for almost 10k to make up for everyone's cut. We never get these bids approved, for obvious reasons.


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## Diamond D. (Nov 12, 2009)

Simple, Labor and material... $1428.57
If they want it broken down further, then its labor... $1071.43 and material...$357.14

It's not rocket science.

D.


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## DavidC (Feb 16, 2008)

We break down the various elements of the cost for our clients about as much as the grocery breaks down the cost of a can of soup for me. I have discovered that it cost $x.xx for me to purchase a can of soup, I still don't know how much the A&P make on it.

Your first line of defense is your proposal. Does it read like, "Close pool for season - $1.428.57". If so, add some detail to it. Guide them step by step through the entire process so they know exactly what to expect. We just sold a kitchen remodel with a 6 page proposal attached to an 8 page contract. The client knows the entire process we expect to go through on their job, even down to the dumpster will be removed once it's full and the balance of the trash afterward will be removed from the site on a daily basis. I think I could do close to a full page on a pool closure if I knew what was involved.

The details sold the job for us. And the client was so comfortable with the sale that breaking down the cost didn't even come up. Details explain a higher price over a lower one. Lacking details there is mostly just a price to stare at and everyone looks the same. 

Having to defend is trickier, but doable. The information they seek is at least partially proprietary information that you shouldn't normally share with anyone other than your accountant. Don't give the question too much validity. Focus instead on the job they want done and how you're going to get it done for them. 

Good Luck
Dave


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## Willy T. Bagger (Nov 2, 2010)

[Edit] Thanks Dave, that was very helpful!


@D

Actually, one of our newest, and largest, clients require a breakdown of all materials. For example, if we use wood, we give the dimensions and size of each piece, with a cost. 

These clients enter this information in to their bidding software (like PlanSwift), and if the price is too high, there's a problem.

Labor is generally $50/hour. We can't mess with that much.


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## Winchester (Jun 29, 2008)

Willy T. Bagger said:


> [Edit] Thanks Dave, that was very helpful!
> 
> 
> @D
> ...


Well then my suggestion is to get this software.

You won't ever have a problem?


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## Willy T. Bagger (Nov 2, 2010)

Winchester said:


> Well then my suggestion is to get this software.
> 
> You won't ever have a problem?


We have it. But that's not the issue, the issue is finding a way to squeeze in the extra 30% when it's not supposed to be there.

The clients/banks don't understand this concept. They think they are dealing directly with the contractors, but in reality they are dealing with 2-3 middlemen that all need to take a percentage to stay in business. Then they wonder why the bids are so high.


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## katoman (Apr 26, 2009)

I don't understand. Why would they think they are dealing directly with the contractors? 

Don't you tell them they are dealing with you and the contractors are arranged by you, and therefore the markup/fee?

They are paying for your service, no? Or are you somehow not making that clear to them?

On cost plus work for example, the client understands that I mark up the subs. They can see the subs invoice. There is nothing shaddy about this. I provide the right sub for the given task, I oversee them, and ultimately I'm responsible for their work.

Are you not basically doing the same thing? Why are there 2 or 3 middlemen?


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## aptpupil (Jun 12, 2010)

katoman said:


> Why are there 2 or 3 middlemen?


ditto


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## Willy T. Bagger (Nov 2, 2010)

To be more specific. We go through field service clients.

For example.

Sub -> Us -> CoreLogic -> Wells Fargo

Corelogic takes, for example, 30%
We take 30%

We do not deal directly with Wells Fargo. We submit a bid to Corelogic, then Corelogic submits the bid to Wells Fargo.

We have to increase OUR bid to account for Wells Fargo percentage. 

So a $1000 bid from our sub ends up being over $2000.


So should we just write directly on the estimate: "Increased to account for client percentages = 60%" or how should we word this?


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## J F (Dec 3, 2005)

You know about that whole _blood from a stone_ thing, right?


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## katoman (Apr 26, 2009)

So basically Corelogic is hireing you as the general contractor. The contractors under you are your subs. 

What Corelogic bids to Wells Fargo is irrelevant, really. 

I would simply quote to Corelogic, no breakdown, sorry. Take the price or don't.

The only time pricing is brokendown is on cost plus work. 

Don't forget that you are responsible for the work you contractors are doing. Make sure all your ducks are in a row.


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## DavidC (Feb 16, 2008)

Willy T. Bagger said:


> [Edit] Thanks Dave, that was very helpful!


Not very really, I always assume residential settings. My bad.

What I see now is that your real concern should be with CoreLogic. If they take your estimate with no problem then it's up to them to apply a markup and worry what Wells Fargo thinks of them. 

Almost sounds like everybody says this is what we want, here is what we'll pay, then pass it downhill. Do you get bonafide quotes from your subs or do they get a menu with rates from you?

Good Luck
Dave


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## J F (Dec 3, 2005)

From what I've read about the property preservation biz (a large % on here), there's almost no money in it. 

I don't see how you will land much, if any work with an extra layer or two between the bank and the "hands on" people doing the work. And most of the "hands on" people that you see posting feel like they can't make a living at it, or so it seems.

I can see one company that handles a large area for a bank that then hires the "hands-on subs", doing ok if they pay next to nothing to the subs, but that seems like a tough gig if you're always churning subs because they figure out they're going broke trying to work for you.


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## katoman (Apr 26, 2009)

I think it's great. It costs the banks large to maintain these properies.- Soon the banks say "get rid of 30% of our portfolio" - they dump these houses cheap.

We buy them cheap, clean them up and sell when the market improves. I know a GC who would bid 50% of the banks' asking price. He would land maybe one out of ten. Then there was money to be made.


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## cdkyle (Jul 12, 2009)

Isn't this type of arrangement exactly why our country and economy is in the shape it is in now. 

Entirely too many people/companies looking to skim off the top without actually providing any services. No one wants to work anymore. The whole thought of being involved in an arrangement like you speak of would make me feel dirty.

Find another line of work, or cut those blood suckers out of the loop. 

I enjoy providing my customer the best job I can for the fairest price I can. There is nothing better than doing a really good job for a customer for a fair, market reasonable price. 

And, I sleep very well at night. Screw those skimming scum bags.


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## Willy T. Bagger (Nov 2, 2010)

It's very profitable if you know how to play the industry- but yes, it's much easier without the extra layers in between.




katoman said:


> So basically Corelogic is hireing you as the general contractor. The contractors under you are your subs.
> 
> What Corelogic bids to Wells Fargo is irrelevant, really.
> 
> ...


 
That's exactly right. 

But the problem here is the client (any typical Field Service company) takes our bid and doesn't mark it up at all (that we know of) for the bank. So if we bid $1000, the bank sees $1000. Then our client takes 30% and we get $700. 

Sucks right? We bid $1000, we get $700. If we bid over $1000, the bank is like "wow, why is this so expensive?"


That's just reality I guess. lol


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## Willy T. Bagger (Nov 2, 2010)

cdkyle said:


> Isn't this type of arrangement exactly why our country and economy is in the shape it is in now.
> 
> Entirely too many people/companies looking to skim off the top without actually providing any services. No one wants to work anymore. The whole thought of being involved in an arrangement like you speak of would make me feel dirty.
> 
> ...


Yes! 

I completely agree. Unfortunately, I'm an employee (not the owner) just trying to put food on the table. lol We treat our subs well and they appreciate us. I'm proud to work in this company... its pretty much non-profit when you consider how much we're getting screwed.


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## katoman (Apr 26, 2009)

If your company agreed to the arrangement they're not getting "scewed"

They made the deal, live with it. Or just quote $1300.


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## thom (Nov 3, 2006)

That arrangement wouldn't work here. Only a licensed contractor may make a proposal or sign a contract to do the work. It would be a violation of our contracting laws for an unlicensed intermediary to be in a line position. You could work as a consultant for the licensed contractor but the bid would always need to be made by the licensed contractor to the customer.

In any event, it sounds like the customer, Wells Fargo in this case, is being deceived by the process. If that's the case, I wouldn't want to be involved at all.


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## FremontREO (Sep 30, 2009)

Willie Bagger if you think its bad now just wait. Wait when Jan 1 that WFHM and most nationals go to the "direct invoice" and the new estimating software is Super Build Estimating Software. Your price just went down approx 22%. No if and or buts. 

They are stroking you for more detailed breakdowns so you and everyone else is used to the software that is coming. Right now you can get the Super Build software free. I didn't have any luck downloading though...maybe you will have better luck. 

The normal P&P stuff will be handled by Service Companies ie lockchange, wz and boardups. Any repairs or debris removal to be put out to bid for the direct contractors....

Us direct contractors aren't happy knowing we will be losing 22% average across the board from the estimating software but still better than being a sub of a servicer since they will hardly ever get an approval with the required markups to offset discounts.

To make more murky waters....I personally don't think the Gov and/or the banks can do anything this fast for a Jan 1 start but maybe by next June 2011?


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## Willy T. Bagger (Nov 2, 2010)

I'll try to answer your questions:
*
What is our purpose? What is CoreLogic's purpose?*

We hire subs in the area to complete work orders. Sometimes contractors only stick around for a few months then go off and do their own thing, sometimes we have to fire them, but we do have a few that have been with us from the beginning and get paid very well... Corelogic doesn't deal with our subs at all, just us. We provide training, paperwork, insurance/bonding if needed, etc...

Corelogic (and many of our similar clients) hire out to companies like us; they want an established and reliable contracting company rather than Joe Schmoe with this pickup truck and trailor. They establish a long-term relationship.

Corelogic provides an online method of managing work orders for multiple banks, not just WF. They also deal nationally- we are just in 1 state.



katoman said:


> Why? Usually because the client is willing to pay for simplicity. He simply tells the architect what he wants and only has to deal with one person.


^ This


*Why doesn't the bank come to us directly? *

National banks only deal with national field service companies. We could try and deal directly with the bank, but like I said, Core Logic could sue us or terminate our contract at the very least. Also, Core Logic is providing the nice online order management software.

I guess both companies are needed in different ways. 



*Where did I get $10,000 from a $3,000 job?*

That was exaggerated. A *$3,000* job with 2 middlemen taking 30% comes to *$6,123*. Which is still inflated quite a bit. 


This entire topic is kinda leading away from the point though. I guess this is the price the bank is paying for not dealing directly with contracting companies and this is the price we are paying for not being able to deal with national banks.:blink:


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## Mike Finley (Apr 28, 2004)

oteroproperties said:


> That's the bottom line. Too many middle men. But some are needed. It would be more feasible for a home owner to go painter direct then a bank. The banks have no infrastructure to handle this type of thing and it would cost them more if they tried (which I think bank of America is learning) the problem is the business was designed to have a client which is the bank, the contractor which is a national field service company, and a sub which is us. Any other way and the money runs out.


Now shall we discuss even how stupid the whole thing even is?

Why are banks even spending any dollars on fixing up properties??????? 

They are idiots when it comes to this. This all started about 5-7 years ago in Denver. Originally banks were smarter, they would foreclose on a house, if it needed work, the house would sell at a discount to the work needed. An investor would buy it and fix it up and flip it. Suddenly the banks thought they could cut their losses by avoiding the investor by fixing up a bad house and sell it to a homeowner instead of an investor. 

Probably made a lot of sense on paper. Why should we take such a big hit when we can put a few thousand into it and get a homeowner to pay us retail rates instead of those scum bag investors lowballing us all the time. :clap:

Reality was they weren't taking such a big hit as they thought. The whole things logic is flawed, because they hire these national companies to fix the houses, the national companies take a big percentage of the profit to hire local idiot, hacks to do the work. They hacks, hack up the work on the houses and the bank ends up with a pig with some lipstick on it and then can't figure out why they're plans aren't working? :whistling

I can't tell you the number of houses that are REO that I've looked at where the banks have gone in and spent money fixing them up and as an investor I look at it as just like somebodies uncle tried to fix the place up and most of what he did I will have to tear out and do all over anyways. However, now the bank has more cost in the house and can't sell it to me as an investor because they now own it for even more then they should. 

So I have to pass on it because they can't sell it at the right price, they hold onto the thing because no retail buyer wants it cause it's still f'd up and no investor wants it because the bank can't sell it at the right price now.

And around and around the banks go.

If they got dumb and just sold the places as is and didn't sink more money into them they'd end up ahead. But nobody ever accused banks of understanding how to deal with real estate. They aren't in the business of being real estate owners and it shows.:thumbdown


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## Mike Hay (May 7, 2010)

I imagine they just want to know where the money is being directed. Try honesty. Never pretend to be a volunteer there for the good of the world. Just say, I take a 30% cut. Easy. Be proud. They arent looking for a volunteer, just transparency. They know you'd ratther be fishing then standing on their site, and for you to be there you need a paycheck. If you feel like your doing something wrong and cant be honest about it, you need to re-evaluate your fee structure to be in line with where your moral integrity allows you to be comfortable. Just keep in mind, your there because your worth it, now prove it it to your client.


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## jhark123 (Aug 26, 2008)

Warren said:


> To any bankers who may be watching...............
> 
> PM me and I will handle these directly, no middleman markups. All work will be performed by legitimate employees and done to a high standard.


 
Ditto for the NW here. Who are we kidding, that would be too farsighted of a decision for a banker :w00t:


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## Anti-wingnut (Mar 12, 2009)

Willy T. Bagger said:


> That was exaggerated. A *$3,000* job with 2 middlemen taking 30% comes to *$6,123*. Which is still inflated quite a bit.


Actually $ 5,070

Maybe the reason they want to see your pricing is because you can't add


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## DrewD (Jun 10, 2007)

Reading all this just sounds like a pyramid scheme. Why wouldn't the client (Well Fargo) simply hire a GC in area where they have properties and put him in charge of all the work? Cut out all this Corelogic and 3rd level "supervisors", one GC to oversee all the work in an area. If he needs work done he gets an estimate from a sub and submits it for approval to the client (Wells Fargo). If the client thought the GC was simply getting quotes from his buddies they could have an independent company evaluate the estimate using estimating figures adjusted for location. This all sounds fishy to me. Doesn't sit right.


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## oteroproperties (Oct 18, 2009)

Been like this for 20+ years. Not gonna change now. Besides there are very few GC's that have that kind of money to front and if they do they want no part of this. 

I always hear GC's want to take over the preservation industry. GCs are used for claims work and repairs. If you want to do this work start there. Trust me there is not enough money for you in pp.


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## thom (Nov 3, 2006)

Willy T. Bagger said:


> We have it. But that's not the issue, the issue is finding a way to squeeze in the extra 30% when it's not supposed to be there.
> 
> The clients/banks don't understand this concept. They think they are dealing directly with the contractors, but in reality they are dealing with 2-3 middlemen that all need to take a percentage to stay in business. Then they wonder why the bids are so high.



"Defraud: victimize, deprive of by deceit."

It sounds to me like Willie T is part of a conspiracy to defraud. He may have plenty of time to think about this situation someday.


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## oteroproperties (Oct 18, 2009)

Trust me the banks know the pricing structure. There may be some employees that don't but the people that set policy know. 
What everyone who makes a living in this business knows is that you pay your discount for the surety of volume which the nationals have and worked hard to get. If your not getting the work then you cannot stay in business. Please understand that I work in a very concentrated area with multiple companies and brokers so I know this is not a popular reasoning for you guys covering rural areas.

You cannot work for regionals if they don't get their work directly from the bank. Unless that regional negotiates a discount by where the national and the regional get 25 to 30% total. Anymore and you have a net operating loss by the end of the year.


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## D&R Services (Apr 4, 2009)

J F said:


> From what I've read about the property preservation biz (a large % on here), there's almost no money in it.
> 
> I don't see how you will land much, if any work with an extra layer or two between the bank and the "hands on" people doing the work. And most of the "hands on" people that you see posting feel like they can't make a living at it, or so it seems.
> 
> I can see one company that handles a large area for a bank that then hires the "hands-on subs", doing ok if they pay next to nothing to the subs, but that seems like a tough gig if you're always churning subs because they figure out they're going broke trying to work for you.



there's no money in it because all of a sudden there's too many hands in the cookie jar. It's ridicules ! There's no reason why six differnt companies in six different states need to be involved to trash out a house in new jersey??? . This system worked beautifully two years ago when the listing agent had the control over their properties. The vendors were local, the quality of service was great because they got paid for every job in a timely matter. chargebacks??? what is that??? it didnt' happen......Recently every suit with a GED now wants to get their 30% while the vendors/contracts doing the actual work, and paying for all equipment and supplies out of pocket are expected at best to break even. AND that's if they get paid at all or don't get charged back......REFORM is coming very soon in this industry and a lot of people are pushing to eliminate all middlemen and put the control back where it belongs..


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## ERPP (Nov 22, 2009)

D&R Services said:


> there's no money in it because all of a sudden there's too many hands in the cookie jar. It's ridicules ! There's no reason why six differnt companies in six different states need to be involved to trash out a house in new jersey??? it doesn't. This system work beautifully two years ago when the listing agent had the control over their properties. The vendors were local, the quality of service was great because they go paid for every job in a timely matter. Recently every suit with a GED now wants to get their 30% while the vendors/contracts doing the actual work, and paying for all equipment and supplies out of pocket are expected at best to break even. AND that's if they get paid at all or don't get charged back......REFORM is coming very soon in this industry and a lot of people are pushing to eliminate all middlemen and put the control back where it belongs..


 
YES REFORM IS COMING!!!!!!

Claude


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## D&R Services (Apr 4, 2009)

Willy T. Bagger said:


> *Why doesn't the bank come to us directly? *
> 
> National banks only deal with national field service companies. We could try and deal directly with the bank, but like I said, Core Logic could sue us or terminate our contract at the very least. Also, Core Logic is providing the nice online order management software.
> 
> ...


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