# Bank wants bid breakdown



## Wood Magician (Apr 13, 2014)

Hey guys. I've only posted a few times but been a long time follower. I currently find myself in a funny spot. I'll be wrapping up our current house and starting a new one within the next 6 weeks. The lender for the next house has asked for a breakdown of my bid. She is very insistent on knowing the labor costs. When I asked why they need this info she said its so that when we reach the end and the money is gone the house will be complete and there won't be a bunch of unbilled labor with no money left to pay. I simply said that this is proprietary info and the price on my contract is what the home will cost turn key. She seemed ok with this until today when she said her mortgage guy who processes everything said its their policy to have a breakdown and there's no exceptions that it a new policy since 6-9 months ago. They want me to rewrite the contract, break everything down and submit reciepts from all subs and possibly vendors. They will share all this with the homeowner. Now I'm not trying to hide anything and I actually came in lower than another guy who bid this. I have a very good and well know reputation in our town the bank knows me well too. I just don't want to jumps through the hoops and I don't feel like this is anyone's business other than mine. They've agreed to my price and they're damn happy with it. 

My current project is using a different bank, a much larger one, and they kinda tried this in the beginning but all I had to do what say the same things about it being turn key and proprietary info and it was dropped. Also I received complements from both banks about my specifications being very detailed and awesome they said they usually don't see that. 

Anyone else had to deal with this lately?


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## 480sparky (Feb 1, 2009)

Two possible responses:

1. Reply that your price does not include a broken-down price. If they want one, you'd be happy to do it for $***x. If you rewrite the contract, the price will go up.

2. No.


If your contract is with the HO, then the bank can go pound sand.


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## tjbnwi (Feb 24, 2009)

I had a bank that wanted the same thing, I laughed at guy when he asked me. I think he got the hint, never asked again.

Tom


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## Wood Magician (Apr 13, 2014)

I've been thinking about it all day and I've read your replies. I still haven't decided how to handle this. The bank acts like the only way they will fund this project is to do it their way. I would tell them to kiss it and I could move on to the next house after this but it's gonna be financed by the same bank!!! She also said that she'll need lien waivers before they hand over a check. I said I would do a conditional waiver with the condition being that the check clears....she didn't think that would work!!?


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## 480sparky (Feb 1, 2009)

The bank is not party to the contract between you and your client. So they have *zero* say in the matter. If they want to press it, it's between the client and the bank. Let them hash it out.


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## blacktop (Oct 28, 2012)

That's not how It works! The only thing the bank and G/C Should have to worry with between each other are the draws !


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## tjbnwi (Feb 24, 2009)

We picked up checks at the title company, they were certified checks issued by the title company. I told the subs when the checks were ready and to bring a waiver when they picked up their checks. I had no problem turning over a waiver under those conditions. 

Tell the bank to issue casher or certified checks.

Tom


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## tjbnwi (Feb 24, 2009)

We did have to complete a sworn construction statement, I filled out the total for each category only. 

Tom


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## Wood Magician (Apr 13, 2014)

I just googled a sworn construction statement. Maybe that's what they are asking for but she just isn't using the correct words. She just said "we need to know how much labor will be and we'll need invoices from subs and waivers". Along with my contract was a payment schedule and that should be all they need. It has been sufficient in the past. I always pay my subs, often they get paid right there on the job when they have completed their task. Or they send a bill and I honor their terms. I really like to pay on time and don't want the bank jerking me around. I have a decent amount of my own hard earned working capital but try to build cash into my payment schedule so I'm not totally financing their project between draws. I may call tomorrow and ask to speak to this "construction mortgage guy" she keep referring to.


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## knucklehead (Mar 2, 2009)

Don't do it.


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## pappagor (Jan 29, 2008)

find a new bank or better yet find a private guy to do the money side of the job.
i do hate banks big time but then i got my own money to do what i want to do.


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## 480sparky (Feb 1, 2009)

pappagor said:


> find a new bank or better yet find a private guy to do the money side of the job.
> i do hate banks big time but then i got my own money to do what i want to do.


If the bank is dealing with the client directly, the OP has no dog in the race. The bank is over-reaching into the agreement between the OP and the client. The OP has nothing to do with the bank.


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## Wood Magician (Apr 13, 2014)

I'm building the home and my clients are securing their own financing. So yes I think the bank is over reaching for some reason. I had this same issue with my current house project the bank (different bank from the one I'm dealing with now) kept telling the homeowner that they needed a cost breakdown of everything. Thankfully the homeowners of my current project are great people and long time friends of mine and the felt weird asking all that of me. We were able to shut it down quickly and it's been smooth sailing. 

The thing that I don't want to happen on this next project is for the homeowners to get suspicious of my not wanting to disclose all this info to the bank and for them to have a lack of trust in me because of this. Maybe it would be easier to just lay it all out there, I have nothing to hide.


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## Wood Magician (Apr 13, 2014)

Talked on the phone to the construction mortgage "chief" today. After a lengthy conversation of my main point of how I'm not going to submit vendor invoices and sub ivoices at time of draw I was left with "it's our policy to have this info submitted to the homeowner and they submit it to us, it's our policy" and "we only get push back from this in our rural areas it's not a problem in the bigger cities". I could go on and on about this (the conversation with was more detailed) but I'm tired and I'm going to bed.


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## Metro M & L (Jun 3, 2009)

Yeah, but who won?


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## fast fred (Sep 26, 2008)

here is my two cents, I've done this before

there is nothing proprietary about your numbers or break down, ok, like I used to think my spreadsheets and numbers were something special and top secret, well there not, the only things special about it is you might be able to do a solid break down of costs while 70% of the contractors out there can't put together a schedule or a break down of costs if their life depended on it, I got over it you can too

banks now want ever cost itemized, why? because again there are so many idiots out there posing as contractors, the bank is just trying to protect themselves thats all, they want to check and double check all their money and where its going, when projects fail and do not get completed for the amount loaned there is a major problem, where is the other 20k coming from to finish the job?

lien waivers are not a big deal either, I have customers who request them, banks, and government work, I get an invoice, draw up a waiver, cut a check, sign the waiver and it goes into a filing cabinet forgotten. 

it's a free market, if you don't want to do business like this, then don't, if you don't mind the extra leg work, ie I have an accountant that does my billing and bs leg work for these types of jobs, he knows how to write things up so the bank is happy, I add in the extra costs to the project and it's not a big deal


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## KAP (Feb 19, 2011)

Wood Magician said:


> Talked on the phone to the construction mortgage "chief" today. After a lengthy conversation of my main point of how I'm not going to submit vendor invoices and sub ivoices at time of draw I was left with "it's our policy to have this info submitted to the homeowner and they submit it to us, it's our policy" and "we only get push back from this in our rural areas it's not a problem in the bigger cities". I could go on and on about this (the conversation with was more detailed) but I'm tired and I'm going to bed.


It may be their policy, but your policy can also state that you charge a large fee to accommodate their policy... this way you give them what they want and get paid to do so...

The fact that this is not how you normally do it, have done business with them before, and have a rep in town, should easily negate any concerns their policy is intended to address... if not, you don't have to just give in without being compensated for your time...

In the meantime, they have draw schedules/progress payments for a reason... if they aren't following up and doing inspections to protect their interests, that's on them IMHO... No fee, no accommodation that it outside your SOP... their choice going forward... 

The example I would use is another item banks finance... cars... asking your mutual customer to get a break down of all the costs for the final product would take some time especially since it's outside your SOP... 

And there's a HECK of a lot more line items, labor controls, etc. for a house...

So the question you want to ask yourself is what precedent do you want to start going forward especially if you have another project in the works with the same bank (negotiating tool BTW)?


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## 480sparky (Feb 1, 2009)

fast fred said:


> here is my two cents, I've done this before
> ...........


Can you give me a breakdown of your two cents worth?












fast fred said:


> ......... banks now want ever cost itemized, why? because again there are so many idiots out there posing as contractors, the bank is just trying to protect themselves thats all, they want to check and double check all their money and where its going, when projects fail and do not get completed for the amount loaned there is a major problem, where is the other 20k coming from to finish the job?............


OK, so if the OP charges, say, $200,000 turnkey to build the house, does his willingness to submit a breakdown of "$100,000 labor, $100,000 material" magically make him a 'legitimate' contractor?

Fakirs can make up all sorts of numbers. That doesn't make them legit either.

If the bank truly wanted to know if the OP is legit, it should ask for the _obvious_: License, insurance certification, WC, bond info et al. 

If I want to know if the bank is legit and legal, I don't ask for a breakdown of the interest costs of my loan.


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## flashheatingand (May 3, 2008)

480sparky said:


> Can you give me a breakdown of your two cents worth?
> 
> 
> 
> ...


Exactly. When we go to the airport and buy a burger, we don't ask for their expense report, or who their suppliers are.


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## AllanE (Apr 25, 2010)

fast fred said:


> here is my two cents, I've done this before
> 
> it's not a big deal


I agree 1000%, none of this is a big deal. Especially the cost breakdown. Group your line items, make it somewhat broad and general, give them what they want. Same for lien waivers. All of this is pretty standard in home building industry.


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