# When to give it up



## SWICS (Apr 2, 2008)

Okay group, I am looking for some advice. 
I am a one man show building a house for a client. This is my first home that i have stick built since being on my own. I bid the house out for the client. So it was a set price. Around here most of the builders bid their work, not a cost plus bid. So i bid it that way. Well that is where i went wrong. So now i am close to finishing the home, but i am short on money to pay everyone that needs paid. So here is were you all come in. How do you finish a home and pay everyone when there is not enough money to pay the subs and some materials? I am thinking about filing for bankruptcy, but i don't want to hurt my clients or the subs. Most of them are friends of mine. I really don't want to file, i have been trying to work with the bank, but i don't have enough credit to even try to get a loan to pay the subs and finish the home. Do you have any ideas or suggestions?


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## Teetorbilt (Feb 12, 2004)

Get a loan from your house? Borrow from your IRA?

It looks like you made some big mistakes and might learn from the school of hard knocks.


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## rselectric1 (Sep 20, 2009)

I can't offer any advice from experience because fortunately I have not been in your spot.

But you have the attitude in not trying to cut and run. (like so many do)

I hope there are some viable avenues presented here for you to make it all work out.


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## Mike Finley (Apr 28, 2004)

Maybe have a heart to heart talk with your client. Explain how you under bid the project and how you (and they) are now at a very bad spot in all this. Maybe you can work something out where you finish working at cost and in return they pay everybody off. The alternative unfortunately for them is a buch of leins against their new home.


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## WilsonRMDL (Sep 4, 2007)

Personal Loans. Not that I underbid a basement project by $5k and have been paying for their materials out of my own pocket for the last month. 

I'd sit down with the client and let them know the situation. That you want to make sure their house gets done and everyone else gets paid. 

If your that short on money they probably realized they were getting great deal at the beginning and were wondering why. Now they'll know.


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## SWICS (Apr 2, 2008)

Thanks for the advice. It seems that I have been learning from the school of hard knocks for sometime now. I don't want to cut and run. I put myself in this position and i just want to salvage something from it. I have tried personal loans but i am to new to have any credit with the bank that they wont even look. They told me to file for bankruptcy, but I can't even think about that. I have thought about talking to the homeowners like Mike said and that might be the only option that I have. Once again thanks..


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## thom (Nov 3, 2006)

filing for bankruptcy gets you out of the situation, it does not solve the situation. 

Like others have said, you need to be honest with your customer. The subs and suppliers will file liens against the house and the owner will be forced to pay them anyway.


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## MarkNoV (Apr 29, 2006)

> How do you finish a home and pay everyone when there is not enough money to pay the subs and some materials?


1) Stop immediately, don't finish the house.

2)Take all the money you have and talk to the subs and the suppliers. They will, most likely, settle for less than they are owed. Have them agree (in writing) not to lien.

3) Last, talk to the homie. Tell them you are unable to finish the house, but there will be no liens. The homie has a choice of either keeping you and paying more or hiring someone else and suing. When they sue file for bankruptcy. 

Mark

.


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## Cole82 (Nov 22, 2008)

Are you inexperienced at bidding or did something go horrible wrong? Around here a buffer for a small new house is 30-40gs before we break even. 

Personally I would stop all work have a meeting with the HO and show them the big number of how short on money you are. Explain to them there are a couple of option to get the house finished. 1 they can keep you and they pay the extra money to finish. 2 they don't pay and they get a bunch of leins on there new house. 3. Bankrupt


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## JohnFRWhipple (Oct 20, 2009)

*People will surprise you*

Some great advice in this thread.

I think people will surprise you. If you where one of 3 bids say and you got the work because you where 30K under the client will have an idea what it should have, could have cost them. Now you have the big heart to heart and you figure you need another 25K to finish the job they in this situtation will still be ahead 5K over the closet bid.

If you have struggled and made errors that have cost time and materials the client might not be so willing. 

Seems to me your head and heart are in the right place - leave your pride at home and ask your clients for help. Explain what you have above and I bet you two or three will come to a acceptable agreement.

Clients always surprise me - good and bad.


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## nailman (Sep 4, 2008)

Got respect for you for trying to make it right and not running like most do. Hope it works out for you. Keep us posted on how it works out.


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## jimmys (May 1, 2009)

*btdt*

I imagine many members here have been in your shoes. Those meetings where you humble yourself to the HO are tough but necessary. I hope your project has met their expectations all the way along - that will give you a leg up. If they're unhappy with the workmanship or schedule, or had a fight with one of your subs, it'll be a harder task.
Before you meet, get your ducks aligned. You need to present figures on paper: where you are at, where you need to be to finish, with all permits signed off and bank and contract satisfied. Don't present any number you aren't sure of - you don't want to repeat this meeting! 
Don't mark up anything at this stage - present the numbers that are your cost. You should get a wage but no more. That's your tuition - the hard knocks are the meeting, plus finishing the job. None of this is your subs' fault, and they should be paid in full. I agree with others you may be surprised to find your HO decent about it.
Good luck - it's no fun, but better than running from it.
Jim


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## SWICS (Apr 2, 2008)

Thanks for all the advice. I knew if i posted something I would get some good responses. I wasn't going to post anything at first because of the situation that I am in but I just needed so help. I am currently not stopping work, just want to finish what I started. I have talked to some of the subs and let them know what is going on and that I am trying everything I can to get them paid, because it is not there fault at all. I am relatively new at bidding projects and still learning. This is how new I am, to be honest I bid this home at $110.00/sq ft. and the house is about 1600 sq ft. But I upgraded them to a geothermal heat and added spray foam for the exterior walls. I have never marked up my subs or the materials. I am probably going to talk to the HO and let them know what is going on. I am sure they kind of already know because the subs have been calling them about getting paid. Any way thanks for the support. Matt


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## MAD Renovations (Nov 18, 2007)

Matt .... sorry to hear about the situation you are in. I am curious though.. Here in Alberta, Canada it is not cheap to build a house. I can, however, build a fairly nice house (2 storey) with some nice middle of the road finishings for less than what you are charging your customers / sqft. (COST). I am not trying to be an ahole here but are you in the situation because of the costs that you have incured during the project or because of bad money managment?

I have no idea what finishing you are doing in this house but like I said for $110.00/sqft. I can see that you will not make a ton of cash but if all of the money has been fairly spent on T&M I would take everyone's advice and sit with the ho's and explain the situation. I would be 100% prepaired, however, to justify where the money has gone with a full accounting ledger.

Cheers


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## Bergstrom (Mar 14, 2009)

It's very encouraging to see someone actually try to solve payment issues by being honest. Speaking as someone who spends entirely too much time chasing down my hard earned money from runaway debtors I feel a little better knowing that someone is trying to face a problem head on.

Give your subs a chance to work something out with you for a payment plan, and stick to it. Call them first and for _crying out loud_ don't wait for them to hunt you down before you deal with them,it will only make the situation worse.

Don't tell them what the want to hear, tell them the truth. I hope it works out for you .


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## SWICS (Apr 2, 2008)

Tattoo.. Thanks for the post, the price I gave them was with the geothermal but the sub had a lower grade in his bid and I didn't realize that at the time. So i upgraded to the better one. The spray foam was also added after the bid was done. The part of the problem of the money was that I had to tear down the old house and build the new one in its place. That started with a huge hole to fill. The garage had 8 foot walls instead of 4 foot that I bid. Then to fill the garage and the hole in front of it took 350 ton of rock. So I had costs that I wasn't counting on. Some of it was me because it is taking longer to finish the house than I expected. I was hoping for 5 months not the 8 that i am on now. So in a nut shell that is was happened. I guess I know I should of done change orders for upgrades, but I thought I could get it done in the price. One thing I did wrong on the price was price different subs that were out of town and used some of their pricing but still used my local subs for the job. For example the company that I usually use for the insulation is an out of town company. Their price for the spray foam and insulating the attic was $4650. The local guy that I used for the spray foam, his price was $4500 just for the foam and didn't do the attic and the attic was $1250 more for me to do. So I guess that it is me doing wrong things... Matt


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## Buckknekkid (Feb 10, 2008)

*Bid prep*

When bidding you need the subs to submit written quotes with an EXACT scope of work. The clients need to sign CHANGE ORDERS on everything and pay in advance because your cash flow goes out the window when you add to the contract. This is where you are today.


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## SWICS (Apr 2, 2008)

A follow up on what is going on... I am getting a little help from my family on working with the bank on getting everyone paid. So I am trying to finish the house, got about 3 weeks left. Just cabinets and countertops left when then come in. Then onto working for someone else for awhile. Time to get off my butt and support my family. Well thanks for all the advice, ideas and suggestions. Matt


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## go dart (Dec 6, 2005)

SWICS said:


> Thanks for all the advice. I knew if i posted something I would get some good responses. I wasn't going to post anything at first because of the situation that I am in but I just needed so help. I am currently not stopping work, just want to finish what I started. I have talked to some of the subs and let them know what is going on and that I am trying everything I can to get them paid, because it is not there fault at all. I am relatively new at bidding projects and still learning. This is how new I am, to be honest I bid this home at $110.00/sq ft. and the house is about 1600 sq ft. But I upgraded them to a geothermal heat and added spray foam for the exterior walls. I have never marked up my subs or the materials. I am probably going to talk to the HO and let them know what is going on. I am sure they kind of already know because the subs have been calling them about getting paid. Any way thanks for the support. Matt


Damm Matt you seem like a nice guy but your lookin at getting your ass handed to you. No markup on subs/materials, eating the extra's out of pocket??? Meet with the homeowners immediatly and plead ignorance cause its true.


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## Drywall Meister (Nov 14, 2009)

My friend I'm sorry to hear about your situation, you need to put the ball in the homeowners court. It is the homeowners decision to make this right or not. Go directly to the source (the home owner) with all your facts in order. Put together a breakdown of all change orders, add-on's, unexpected situations that called for additional material & labor. Tell the homeowner that due to these things the price is going to be adjusted by however much is appropriate. Dont eat it on this one, there are always modifications, change orders and add ons. Apologize for not notifying him sooner and hand the guy a bill for these things. Tell him he has to pay. That's it....


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## ArmstrCarpentry (Jan 24, 2009)

Buckknekkid said:


> When bidding you need the subs to submit written quotes with an EXACT scope of work.


Sorry to hear about your situation, personally I will not do anything out of the scope of the original contract without a CO that details additional cost.


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## Electrician (Dec 23, 2009)

SWICS said:


> So I guess that it is me doing wrong things... Matt


In these situations you should do what we've all done at some point in our careers: Fake your own death.

Change your name, move to another state and start over. As much as you love your family, they are the main source of your problems, it's not that you bid the job too low, it's that your family is too expensive. I would loot the bank accounts and abandon them immediately. A wife and kids are a very poor investment, now that you're broke, your wife is already planning to leave you, so beat her to the punch.

As far as the subs go, don't pay those a-holes a dime, they are used to getting stiffed by general contractors.

At first you will find my advice offensive, but that's your emotions talking, over the next few weeks, you'll be PM'ing me, asking for more sage advice.


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## mrmike (Dec 9, 2008)

Electrician said:


> In these situations you should do what we've all done at some point in our careers: Fake your own death.
> 
> Change your name, move to another state and start over. As much as you love your family, they are the main source of your problems, it's not that you bid the job too low, it's that your family is too expensive. I would loot the bank accounts and abandon them immediately. A wife and kids are a very poor investment, now that you're broke, your wife is already planning to leave you, so beat her to the punch.
> 
> ...


You've got to be kidding, Right??? If not, You do not belong here ..........


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## Electrician (Dec 23, 2009)

mrmike said:


> You do not belong here ..........


EDIT: Removed unkind and unwarranted insult to OP. It's too early to make enemies, should pace myself and wait till later this evening to start flame war...


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## nlgutters (Dec 18, 2007)

SWICS said:


> A follow up on what is going on... I am getting a little help from my family on working with the bank on getting everyone paid. So I am trying to finish the house, got about 3 weeks left. Just cabinets and countertops left when then come in. Then onto working for someone else for awhile. Time to get off my butt and support my family. Well thanks for all the advice, ideas and suggestions. Matt



I think it would be best for everyone if you did go work for someone else!


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## Duck042 (Aug 19, 2008)

Electrician said:


> In these situations you should do what we've all done at some point in our careers: Fake your own death.
> 
> Change your name, move to another state and start over. As much as you love your family, they are the main source of your problems, it's not that you bid the job too low, it's that your family is too expensive. I would loot the bank accounts and abandon them immediately. A wife and kids are a very poor investment, now that you're broke, your wife is already planning to leave you, so beat her to the punch.
> 
> ...


Excellent! :laughing:


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## BuiltByMAC (Mar 11, 2006)

Electrician said:


> should pace myself and wait till later this evening to start flame war...


Well Merry Christmas to you too. Any particular reason you feel the need to come on this forum and "start a flame war?"

ya like the drama of being the center of attention?

Mac


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## mrmike (Dec 9, 2008)

Electrician said:


> EDIT: Removed unkind and unwarranted insult to OP. It's too early to make enemies, should pace myself and wait till later this evening to start flame war...


It is not unkind or unwarranted if you really mean this- I don't have or make enemies-just tell it like it is- What you said, if you mean it, Is very unwarranted & unkind and is against what we All Stand for- Integrity- Respect in ourselves & Our Families, Fellow Americans & our Occupations- So if you mean it I will say Again- THIS IS NO PLACE FOR YOU !!!!!!!!!


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## Electrician (Dec 23, 2009)

BuiltByMAC said:


> Well Merry Christmas to you too. Any particular reason you feel the need to come on this forum and "start a flame war?"
> 
> ya like the drama of being the center of attention?
> 
> Mac


Apparently you were absent from school the day they taught sarcasm. :thumbsup:


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## Electrician (Dec 23, 2009)

mrmike said:


> It is not unkind or unwarranted if you really mean this- I don't have or make enemies-just tell it like it is- What you said, if you mean it, Is very unwarranted & unkind and is against what we All Stand for- Integrity- Respect in ourselves & Our Families, Fellow Americans & our Occupations- So if you mean it I will say Again- THIS IS NO PLACE FOR YOU !!!!!!!!!


You're raving now. Sit down and have something cold to drink, take a few deep breaths.


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## rselectric1 (Sep 20, 2009)

Electrician said:


> EDIT: Removed unkind and unwarranted insult to OP. It's too early to make enemies, should pace myself and wait till later this evening to start flame war...


OK I'll bite. You *should* pace yourself here. You obviously have a pretty interesting sense of humor, and we just don't know you well enough here to appreciate it. ??

If you are serious about getting all you can get from homeowners (other thread) and your advice about skipping town to avoid problems is not a joke, then Mr Mike is correct in recommending you bow out honorably from this forum now.

This forum is filled to the gills with mostly honorable, hard working and honest contractors who battle daily with the unfortunate stigma of "all contractors are thieves".

If your intentions are honorable and you are just making jokes, we are all about that and we will get to know you quickly. 

If your previous posts reflect your REAL attitudes, I must warn you that it diametrically opposes the general attitudes here.


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## carpenter uk (Nov 25, 2009)

i read it as a joke, i laughed as i read it then was surprised to read on that others didnt

obviously we all have different senses of humour:whistling


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## abacab (Sep 16, 2009)

I read it as a joke, however the kind of joke that gets old REAL fast.


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## Zinsco (Oct 14, 2009)

I thought it was funny. But his opinions are not aligned with the rest of the forum members so I see why he was banned.


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## BuiltByMAC (Mar 11, 2006)

Zinsco said:


> But his opinions are not aligned with the rest of the forum members so I see why he was banned.


It's not that his views weren't in alignment (there's no way a person would be banned simply for having an opposing viewpoint...any opposing viewpoint). 
However, he broke the Posting Rules multiple times in his first day here. We do not arbitrarily ban people.

Mac


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## Cache (Sep 18, 2007)

This is a bit old, but thought I would throw in my $.02

To the OP,

If you continue on your own, I would seriously suggest ditching the per square foot bidding concept. That process alone will mess you over on almost every house. If you bid tight, you risk your current situation. If you bid high, then you become the over-priced builder and lose a lot of jobs that you are well suited for. 

I'm not giving my contact info so nobody interprets this as advertising. About 1/4 of my time is spent in residential consulting, doing for contractors exactly what it sounds like you struggle with. In short (and very simplified) I prepare construction budgets and time lines. It's very easy for me because of the technology I utilize as well as my history in that aspect of the industry. There are more skilled builders on here than me, but planning and budgeting is where I excel and it takes me far less time. I'm almost always within 2% of the actual cost to build, and the contractors can markup from there however they want. I even provide schedules for man hours and things like that.

There are a lot of others like me who offer these services. My point is that if the bidding and business part of the job isn't your strong point, then admit that to yourself, and hire someone who specializes in that arena. For a very small cost, you could have avoided this problem and you wouldn't have to spend your time bidding out jobs and managing your budget.

I hope the situation works out for you though. I'm feeling for you.


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## plummen (Jan 9, 2010)

that sucks,sounds like youve got more heart than lots of generals ive done work for though! :thumbsup: :thumbsup: :thumbsup: :thumbsup: :thumbsup: youll get through this,maybe try doing smaller jobs till you get enough experiance to take on the bigger work.


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## TPI (Jun 15, 2009)

I read this late. I feel for you I have been there before. Do change orders for upgrades. ask subs for some discounts, with the understanding that you will make it up on other jobs. Banks will only help when you do not need them, look for some private financing like (Prosper.com) not to be advertising for them but it is a site that puts borrowers together with investors that have money to invest. 

Do not ignore this, contact the home owner right away and your subs.

Good luck


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## Ben of Hyde (Jan 3, 2010)

Big Al you are exactly what's wrong with today's contractors...


Listen to the others son, talk to the HO, but don't try to muscle them into paying for what might be your mistake.


Ask of them to help you find a way out, they will respect you for not bailing.


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## SWICS (Apr 2, 2008)

Thanks for all the advice that all of you have given me. It has been a rough couple of weeks but still working on everything. Don't know what i am going to do after i get the house finished but will figure that out after. Thanks Matt


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