# "Detailed Bid"



## bcook1979 (Oct 20, 2015)

Im working up a bid for an addition to a house. The homeowners contacted me and said their loan company wants a detailed bid. Fine I have no problem detailing the scope of work and materials being used. The loan officer wants the bid broken down labor and materials, also they are not real fond of overhead and profit. I though about asking the loan officer how much she makes and what they will profit off my clients loan. The loan company will also not release any money until work has started i.e. no down payment. ( homeowner plans to cover this part out of pocket) How would some of you handle this?


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## cwatbay (Mar 16, 2010)

Walk away quickly


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## EricBrancard (Jun 8, 2012)

Did the loan officer request this directly or are the home owners just relaying the info to you?


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## Frank Castle (Dec 27, 2011)

cwatbay said:


> Walk away quickly


Sounds like you're bid is about to be knocked around until there is nothing left for you.


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## bcook1979 (Oct 20, 2015)

I have a bid information sheet from the loan officer given to me by the homeowner that details what they want. It states the bid needs to be broken down labor and materials and that they "limit markup on materials". Homeowner said that the loan officer would be contacting me. Just thinking about a game plan as to how to handle this. I have never had a situation like this one with a loan before.


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## mako1 (Sep 1, 2013)

I usually look for the exit door unless there are other circumstances,


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## griz (Nov 26, 2009)

Give them a schedule of values with your O&P included and not broken out.


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## bcook1979 (Oct 20, 2015)

Frank Castle said:


> Sounds like you're bid is about to be knocked around until there is nothing left for you.


My bid is my bid. I want to do the project for the homeowners as they are nice people that I have worked for and known for a long time but if there is not going to be anything left I will withdraw my bid. I am not working for free.


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## bcook1979 (Oct 20, 2015)

I guess partly I am mad and wanted to vent. I can't understand why other "professionals" seem to think tradesmen are not supose to make anything. One would think that others in the business world would understand the concept of overhead and profit. If I charge $50/hr I don't make $50/hr. Id like to see them pay for our tools, insurance, advertising, and work outside when it is 10 degrees to 110 degrees. I know preching to the choir sorry


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## EricBrancard (Jun 8, 2012)

Is this a 203K loan?


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## bcook1979 (Oct 20, 2015)

EricBrancard said:


> Is this a 203K loan?


hardly. The town I live only has a 5 or 6 houses that would cost that much to build.


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## EricBrancard (Jun 8, 2012)

bcook1979 said:


> hardly. The town I live only has a 5 or 6 houses that would cost that much to build.


No, I don't mean $203K, I mean is it an FHA 203K loan.


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## mako1 (Sep 1, 2013)

bcook1979 said:


> I guess partly I am mad and wanted to vent. I can't understand why other "professionals" seem to think tradesmen are not supose to make anything. One would think that others in the business world would understand the concept of overhead and profit. If I charge $50/hr I don't make $50/hr. Id like to see them pay for our tools, insurance, advertising, and work outside when it is 10 degrees to 110 degrees. I know preching to the choir sorry


I imagine the loan officer at the bank understands this.They have certain guidelines they have to follow.Right or wrong.I know it suxs but they are just trying to do their job as the higher ups tell them to.
One of the main reasons the costs are so high these days is because of all of the paperwork and the suits who demand it.


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## bcook1979 (Oct 20, 2015)

EricBrancard said:


> No, I don't mean $203K, I mean is it an FHA 203K loan.


I don't believe so.


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## bcook1979 (Oct 20, 2015)

mako1 said:


> I imagine the loan officer at the bank understands this.They have certain guidelines they have to follow.Right or wrong.I know it suxs but they are just trying to do their job as the higher ups tell them to.
> One of the main reasons the costs are so high these days is because of all of the paperwork and the suits who demand it.


I know. Just rubbed me the wrong way I guess.


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## EricBrancard (Jun 8, 2012)

I guess I just don't understand the point of needing a broken down bid for a loan. When you apply for an auto loan does the bank send a worksheet to Toyota to fill out so they can determine the labor and materials required to build a Camry?


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## bcook1979 (Oct 20, 2015)

EricBrancard said:


> I guess I just don't understand the point of needing a broken down bid for a loan. When you apply for an auto loan does the bank send a worksheet to Toyota to fill out so they can determine the labor and materials required to build a Camry?


That is exactly what I told the homeowner.


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## The Coastal Craftsman (Jun 29, 2009)

I was told I would need to supply info like this if I was being the GC on the house in planning to build for us. They said i would be better of using a 3rd party to be a GC as there's way less restrictions.


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## bcook1979 (Oct 20, 2015)

BCConstruction said:


> I was told I would need to supply info like this if I was being the GC on the house in planning to build for us. They said i would be better of using a 3rd party to be a GC as there's way less restrictions.


I could understand if I was building my own house and was also the person getting the loan.


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## BamBamm5144 (Jul 12, 2008)

I'm doing one of these right now with a 35% net margin.

It isn't that difficult and its so they can wrote the check. If you and the homeowner agreed already to the scope, don't worry about it.

I originally broke down labor materials and Profit and their only response was to take out the profit and put it into the labor portion.

I got the down payment check from the title company two days after they closed on the house.


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## CarpenterSFO (Dec 12, 2012)

Look closely at the fine print of any paperwork that you get from the bank. I think a few Contractor Talk members have posted about being asked for materials receipts by the bank, and getting into payment issues, after the project was done, and the justification was in the fine print - some clause that said the contractor agreed to all terms of the 203K program, or some other such thing.

Call the loan officer and ask questions.


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## bcook1979 (Oct 20, 2015)

Thanks for the heads up. I will definitely do that. I appreciate all the good advice everyone has given me.


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## mako1 (Sep 1, 2013)

We remodeled a complete house last year where the widow of a man killed on the job was selling their home.She got around a $4M settlement.It was her money but went thru some kind of management thing.
We had to send all of the receipts for materials and labor to this company which then went thru the accountant which then had to be approved by the lawyers.This bunch also came to the job a couple times to see the progress and what we were doing in general.
In the end we got our money,they never balked at the price of anything but it was a real PITA.We added some for that but not enough.
We have picked up more work from them for the quality of work we did and being patient with the system.


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## FrankSmith (Feb 21, 2013)

My two thought on the matter

-Many times these seemingly overwhelming requests from the bank turn out to be nothing. Give the anything on paper so they can check the box and its done. 

-Otherwise, I often tell a customer that , I deal with them. If they need to involve additional people I don't want to be involved. If the standard bid is not doing the trick, its might be time to walk or to charge for the unusual process of biding. Most importantly the price should not go down because a bank, insurance or anyone else is involved. It's not your fault they don't have the money.


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## sailfish27 (Jan 25, 2014)

I think you are probably taking this too personally. The loan officer just wants to make a commission. That doesn't happen unless the loan goes through. In order for that to happen, they need to complete the required paper work for the bank. 

I doubt either one really cares how much you charge within reason. The banks main concern is if they inherit the property (foreclosure) they're not under water. They do after all have a financial interest in the property.


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## SamM (Dec 13, 2009)

I've had that happen (canada, no 203k here). I didn't give em the info and I didn't get the job.
I told the customer that it was none of the banks business.


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## jhark123 (Aug 26, 2008)

Give them a cost for each phase with OH&P included.

I would draw the line at separating labor and materials, that's setting yourself up to get screwed.


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## Windwash (Dec 23, 2007)

You will want to ask the bank what the requirements for getting paid are and find out how much additional paperwork will be required. You may have to submit lien waiver releases from subs, material suppliers and your company before you will receive any progress payments from the bank which means you are the bank until you get paid.


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## LI-Remodeler (Feb 3, 2015)

BamBamm5144 said:


> I'm doing one of these right now with a 35% net margin./QUOTE]
> 
> 
> 
> What's the total project cost with that net?


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## Philament (Dec 9, 2014)

I don’t understand the dislike for the banks expressed so far, they have completely different motives than a customer does. I did one of these back in the summer, though Canadian lending institutions are a bit different than the US, the same principles apply. The bank wants to know that they'll get back what they've loaned if the homeowner ends up not being able to pay the mortgage. It seems reasonable to me that you would have to prove that the value of the renovation you're adding is going to add as much or more value to house within a loan to value range. 

It's not like selling to a customer, the bank is essentially gambling on you, of course they want to hedge their bet. Charge extra for the overhead involved in dealing with them. 

Just make sure to check with the bank or homeowner what the banks comfort level of loan to value is before your start to set a working budget or it will get shot down regardless of what you do. 

Unlike the vehicle example above every renovation is custom, so it’s a lot more difficult to objectively compare value of the finished product. Knowing the type and quality of materials going into the renovation is one way to attempt to gauge value. The other part is the quality of the contractor doing the work, so the more professional and detailed the proposal looks, the more confidence it gives them that the workmanship will be likewise. If you were lending $50k secured against the house to a relative to do a renovation, you'd want to know that it’s not their buddy the plumber doing the framing and tiling. 

In my case I wasn't required to provide receipts for materials afterwards, but I could see why they would want to and wouldn’t have any problem providing them to a lending official. You say on your bid that you're putting tiger wood floors in then you cut a deal with the homeowner and go and buy laminate faux tiger wood. It doesn't seem terribly unreasonable that a lender would ask you to prove that you've done what you've said you would do. Sharing that same information with the homeowner...well that's a different story. 

I wouldn't be so worried if I was dealing directly with the lending institution because I can understand their motives, they don't necessarily care how much it costs, as long as it lands within their comfortable loan to value range. They just want to be able to do a risk assessment on their gamble. They probably have a ratio that they feel comfortable with, something like labour being 2-5 times as much as materials. Once you reach some threshold, they investigate more or outright disqualify you. O&P to them is as intangible as labour cost, same as markup. Just put it all in labour. 

Is it possible to have one cost break down for the bank and a separate payment schedule for the homeowners?

You’ve alluded to the deposit already, but most lending institutions I’ve dealt with on renos won’t pay anything until the whole job is done, unlike new home construction mortgages where they pay at different stages of construction. The last one I did, the homeowners had to foot the entire bill until it was completed. So it’s a good idea to know what the payment terms are from the lending institution and make sure the homeowners can pay not only the deposit, but the progress payments.


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## BamBamm5144 (Jul 12, 2008)

LI-Remodeler said:


> BamBamm5144 said:
> 
> 
> > I'm doing one of these right now with a 35% net margin./QUOTE]
> ...


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## Stephen H (Feb 18, 2011)

Philament,
my dislike for a bank stems from this.........
I work for the customer.
customer asks for a quote---- I provide one----- they can either accept or decline.

but suddenly there is a BANK involved????? I am already locked in on price---- but suddenly there is a seemingly endless amount of "other" people to be satisfied---- and now I am answering the same questions over and over and over---- submitting forms--- re-submitting forms that the bank lost---and so forth
all for that first,original price.
At a certain level---- it's not worth it.
Look at Bams situation.
$7900 job.--- no problem
suddenly there is a bank involved for a $7900 job?
Me personally ????--- in the amount of time spent jumping through hoops for the bank on a $7900 job----- I could instead quote 4 OTHER $7900 jobs, close 2 of them and have way less hassle in my life

stephen


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## BamBamm5144 (Jul 12, 2008)

Paperwork only took me about 20 minutes.


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## LI-Remodeler (Feb 3, 2015)

BamBamm5144 said:


> LI-Remodeler said:
> 
> 
> > Only a little over $7900.
> ...


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## builditguy (Nov 10, 2013)

I understand about being upset with the bank. I've dealt with this a few times. Just go with the flow and you won't have any problems.

I don't like disclosing anything either. First the customer will want you to drive 50 miles because 2x4 are on sale. Then they think you are making a fortune off of them. Don't even think about having a new tool on the job. Quote from a customer, "I bought that." 

It's just part of the world now. If Savings and Loans hadn't been handing out money like it came from a Pez dispenser, we wouldn't have to deal with it.


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## Philament (Dec 9, 2014)

Stephen H said:


> Philament,
> my dislike for a bank stems from this.........
> I work for the customer.
> customer asks for a quote---- I provide one----- they can either accept or decline.
> ...


Fair. I can see how an after the fact situation is a little different and could be frustrating and not worth it. On the other hand if you are providing an additional service of dealing with the bank, could you not just broach it with the client that you would gladly deal with the bank for a rate? Then they could take it or leave it. Sounds like an opportunity to make extra income. A change order of sorts. 

My experience was more like Bam's. Talk with them up front, find out the rules of engagement and do a little extra paperwork. Went smooth.


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## Tom M (Jan 3, 2007)

The bank is going on the house as an collateral asset maybe the loan officer doesn't want to back a loan on toys. IDK. I used to break down, framing, plumbing,electrical etc to outline what we are including with lump costs then add my O&H at the end. The results were more often than not favorable. I since started moving the o&h into the lumps.
Still rough but better.


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## tedanderson (May 19, 2010)

Give them what they want. Just don't back down on your price.

When I bid to the larger GC's I am required to itemize everything so that they can justify what they are paying me for. 

To give you a perspective from their end, let's say that you discover that the job is going to require more work than you previously anticipated. You opened up the side of the house for where you're building the addition and discovered that some of the structural framing was rotting out and needed to be rebuilt. 

When your bid is itemized, it's easier for them to wrap their heads around what the additional costs will be because you already established your labor rate and the markup on materials. When you come back with change a order for $25,000 it's less of a headache for them because they can say, "This will take 175 hours to fix? OK. Since we agreed to your labor rate, this is doable." and then they'll say, "This requires $4500 in materials? OK. Since we find your markup to be acceptable, this is doable."

It's been my experience that they aren't trying to give anyone a hard time. It's just that they want to understand things the way that THEY want to understand them. So you have to work within the parameters of their mindset.


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## Stephen H (Feb 18, 2011)

Philament said:


> Fair. I can see how an after the fact situation is a little different and could be frustrating and not worth it. On the other hand if you are providing an additional service of dealing with the bank, could you not just broach it with the client that you would gladly deal with the bank for a rate? Then they could take it or leave it. Sounds like an opportunity to make extra income. A change order of sorts.
> 
> My experience was more like Bam's. Talk with them up front, find out the rules of engagement and do a little extra paperwork. Went smooth.


 this information doesn't come to us up front.
in my line of work--- I may have 3 customers in a year ( if that many)--- that have a bank involved.
the info is never up front--- and it's ALWAYS a pain in the ass and a whole nother level of hoops to jump through.
Stephen


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## Stephen H (Feb 18, 2011)

BamBamm5144 said:


> Paperwork only took me about 20 minutes.


 Bam--- maybe the paperwork only took you 20 minutes--- maybe not.
to me--- it's basically a 3rd party inserting them self into the process--- with no additional compensation for me.

Just like an insurance company
I work for the customer for an agreed upon price
suddenly an insurance company steps in the picture--- and now there is a whole nother level of paperpushing pickleweasels to make happy----- and no additional money for old Stephen.
Example of 3rd party bull **** 
could be a bank--- could be a insurance company
in the case I am going to relate---- it's a charity/public resource that we deal with

1) customer A calls for a quote

2) I provide the quote

3) I get a call from "charity Z"--- customer A has applied for a grant from charity Z---- charity Z is also funded by City C where customer A resides

4) charity Z is going to issue a grant to customer A--- but charity Z has it's own requirements---- one of which is that a building permit and is required and a building inspector MUST sign off on the work

5) this is a problem--- because City C does not require a permit for the work---and they don't want to be bothered with doing inspections for work for which a permit is not required---- but I still have to get a permit pulled( there is an hour gone)---and I have to wait around after the work is done for a scheduled inspection. the inspector yanks my chain FOR DAYS--- because he knows full well this work doesn't require a permit or an inspection---- it's a level of bull**** inserted into the process by charity Z( you could easily substitute a bank or an insurance company for charity Z)

6) I have yet to get one of these inspected on the first appointment--- they are always Re-scheduled
9 but only after I waste an hour or so waiting for the inspector to show up

7)--- I never find out about charity Z being involved--- untill weeks after step 2----and it means 4-6 hours of additional bull****---AND it means I am out $80 for a permit that wasn't included in Step 2--- because it's not really needed.
Frankly--- I can't personally think of a single case where a 3rd party enters the process after step 2 is complete---and it only adds 20 minutes of bull****--- it's always HOURS.
stephen


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

Stephen H said:


> Bam--- maybe the paperwork only took you 20 minutes--- maybe not.
> to me--- it's basically a 3rd party inserting them self into the process--- with no additional compensation for me.
> 
> Just like an insurance company
> ...


Adding the charity after submission of a proposal and the permit and the time for the inspection is a CHANGE ORDER. Bill them for every minute.


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## Philament (Dec 9, 2014)

You know your business better than I do and I can totally understand taking a pass on any job that has extra aggravation when you are already have jobs lined up and you're turning work away. If on the other hand you need or want the work and the third parties are as difficult to deal with as you've experienced, I don't fully understand why you wouldn't just say to the customer something like "The scope of work covered in my quote does not include interfacing with third party and sharing the details of how I operate my business. I will gladly take care of that for you at a rate of $***/hr with a retainer of $*** paid up front before proceeding. How would you like to proceed?" 
A two minute conversation could be another source of revenue.


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## Stephen H (Feb 18, 2011)

Philament said:


> You know your business better than I do and I can totally understand taking a pass on any job that has extra aggravation when you are already have jobs lined up and you're turning work away. If on the other hand you need or want the work and the third parties are as difficult to deal with as you've experienced, I don't fully understand why you wouldn't just say to the customer something like "The scope of work covered in my quote does not include interfacing with third party and sharing the details of how I operate my business. I will gladly take care of that for you at a rate of $***/hr with a retainer of $*** paid up front before proceeding. How would you like to proceed?"
> A two minute conversation could be another source of revenue.


 you would think things could work that way
but in fact they won't
by the time charity Z calls----- in fact the homeowner has ceased to be the customer---and charity Z has become the defacto customer..

In 2016 we will end up doing well into 6 figures of business with this one organization----and they ,in fact refer us directly to a department of City C which we ALSO do business with.
when either of these organizations call to accept our previously written proposal---- I don't want to be in the position of informing them that the proposal they have in their hand--- is now, no longer good----and that they are gonna owe me another $600.
what I need to know--- is at step #1---if either of those organizations is going to be involved. they don't volunteer this information--- it just never occurrs to them.
what I need to do--- starting in 2016--- when I get a request for a quote from a prospective customer in that city--- is politely ask up front if either of those organizations will be involved---and then I can proceed accordingly

BTW--- it's good business for us.--- the houses are valuable homes in EXCELLENT areas---- but there is an income requirement for the grant( which the homeowner naturally doesn't want to talk about up front)---- but the city is really commited to maintaining the neighborhoods and the property values---- so the whole program is good for the homeowner, good for the city good for the neighbors, good for the taxpayers--- and good for me personally and the profit sharing payout to our employees.......( It would just be better for me personally--- to the tune of $400-$600 bucks each--- if I knew up front that a 3rd party was going to be involved.)

stephen

As long As I know up front--- I am happy to do the work and I am even happier to see people get the grant.


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## Creter (Oct 13, 2009)

Stephen H said:


> paperpushing pickleweasels


That's a new one...


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## Philament (Dec 9, 2014)

Interesting situation. I can't say I fully understand the situation, but if you run into that frequently and don't want to put a change order, would a simple line item in the proposals for those neighborhoods alleviate the problem for those clients that are not upfront about it? 
"Engaging the services of Charity Z for remuneration of this project will incur an additional administrative fee of $600"


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## Stephen H (Feb 18, 2011)

Philament said:


> Interesting situation. I can't say I fully understand the situation, but if you run into that frequently and don't want to put a change order, would a simple line item in the proposals for those neighborhoods alleviate the problem for those clients that are not upfront about it?
> "Engaging the services of Charity Z for remuneration of this project will incur an additional administrative fee of $600"


 that's an interesting idea---- but I doubt i would adopt that solution.

It's a matter of " Beware of un-intended consequences"

that line item would almost certainley end our work with that organization---and with the branch of the city which also sends work our way----and ultimately would affect our work with a nearby homeowners association which sends a LOT of work our way----an d also affect our work with the county land bank which is beginning to send work our way........
it's interesting how numbers can simultaneously distill down-----and also there are ripples which spread OUTWARD.

We cover 5 counties with a total population of over 2.5 million people
not everyone is equal to us business wise---- professionally we are only interested in the people with slate or tile houses.......

out of those 5 counties---our work is grouped primarily in 4 distinct areas---- We work in ONE of those 4 areas more than 3 days out of every 5---- within that one area--- there are 3-4 distinct small cities( you might call them suburbs--- but they are distinct areas with their own building departments, police,fire,street departments,town halls etc.

One of those smaller cities has a population of over 43,000--- THAT is the area I call city C--- it's ethnically,racially,religously diverse--- economically it ranges from solid middle class on up to rediculously affluent---- this area has outsize importance to us.......
we have 35 productive weeks a year---- during the working season I can get over 20 calls a day----we turn down much more work than we accept( only interested in slate,tile,copper work)

On any given day during the work season--- I am going to average several calls from city C It's located an hour from my home--- but it provides us with about 40% of our work(2 days out of 5 we are working in city C--- maybe 10 days a month---- but only a small portion of THAT work is actually for "charity Z".---a small but GROWING proportion)

so I make changes to how we handle things there---conservatively. city C is very lucrative for us--- but I am still just feeling my way through how to handle things most effectively there.--- on average it's MUCH more affluent than the customer base i spent 20-25 years with--- it's much more diverse--- it has a VERY high ratio of jewish customers and all in all things are quite different there--- than in the predominately catholic(irish,italian,polish )neighborhood I grew up in.
for "charity Z--- our work is in the $2,000 to $12,000 range--- usually one small crew for one or 2 days.

the participation of "charity Z" can add---what is to me---$600 in my personal time plus the un-needed permit.( for a small one day project)

for 30 years or so--- I have operated from a philosophy of "my price is my price"--- I don't want to enter into an arrangement NOW-- where I have to tell anyone " that proposal you are agreeing to???--- that's not the real price--- you actually are gonna owe me $600 more" 

I hate it when people do that to me--- I don't want to do that to anyone myself.
however--- that $600 a pop---adds up over the year to low 5 figures--- which would be handy for defraying the medical insurance costs of our employees, or topping up the profit sharing pool for the employees etc.

what I will probably do--- is institute a practice similar to what I started doing about wood replacement 30 years ago. I just internally accounted for replacing 5-10% of roof decking on EVERY job---and priced accordingly. some roofs required Zero wood replacement--- rarely did it ever exceed 10%---and that policy eliminated the " you owe me extra for 96 feet of 1x8" conversation.

so-- I think I will just add a nominal amount to EVERY project we quote within the borders of "city C " and include it but not separate it out. that way I don't have to ask people who are actually pretty wealthy--- if their income is actually so low that they will be getting a grant from the city for a $4600 tile repair.

I do apologize to the O.P for the thread derail.
stephen


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## bcook1979 (Oct 20, 2015)

I want to thank everyone for the good advice. I am going to start by submitting my normal bid with a very detailed scope and go from there. My price is going to be my price


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## hbiss (May 23, 2007)

> I don’t understand the dislike for the banks expressed so far, they have completely different motives than a customer does. I did one of these back in the summer, though Canadian lending institutions are a bit different than the US, the same principles apply. The bank wants to know that they'll get back what they've loaned if the homeowner ends up not being able to pay the mortgage. It seems reasonable to me that you would have to prove that the value of the renovation you're adding is going to add as much or more value to house within a loan to value range.


My dislike for banks is because they are the scum of the earth and deserve to be screwed as much as possible just like they screw us. That said I don't agree with this quote at all. Doesn't the customer have any equity? Is the cost of the renovation a large percentage of the equity/property value? Usually a customer applies for a home improvement or equity loan and receives a line of credit. The amount they are qualified for depends on his or her's finances and equity/property value. That money can be spent as they see fit. 

I can understand if this were new construction with the bank doing progress payments but for a $7900 job? What's next, the bank telling the customer that they can't have that fancy kitchen because it's overpriced for the house? 

-Hal


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## Philament (Dec 9, 2014)

Different lending institutions have different products for how and when the loan is financed and gets paid, it's not exclusively a Home Equity Line of Credit, but that's the most common. The best example that comes to mind is when someone is in the process of buying a house that is sold considerably under market value (usually have something very wrong with them), like a foreclosure. Some lending institutions will mortgage up to a certain percentage loan to value of the appraised value, say 80%, of the house if you plan to renovate before moving in. The condition being that the homeowner needs to provide estimates and have the work done by a qualified contractors. The cost of the renovation can be up to 80%(for example) of appraised value minus sell price. Upon completion of the renovation, they will roll the renovation cost into the mortgage at the much lower interest rate than a HELOC. 
Some lending institutions will give a much higher loan to value in this scenario than the value of a HELOC because they're essentially protecting their investment. A fixed up house is easier to sell than than a beat up one in the event that that the homeowner defaults. They also don't want to be on the hook for a half finished renovation if something comes up, so they generally wont pay out until complete. 

From a business point of view this all makes sense, but I can understand your disdain for banks. When dealing with these situations I always try to remember the Golden Rule: "Those who have the gold make the rules" ...accept it, or don't deal with them.


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## Jaws (Dec 20, 2010)

Banks ask for a breadown everytime for large remodels or new construction. I rarely have customers who are borrowing but when i do and the bank requests it i send a generic schedule of values broken down into 4 things or so, Super Structure ( foundation, framing, roof, exterior, windows and doors ), MEP ( i include insulationin with MEPs), Fixtures( Lighting, Plumbing, Appliances) Finishes ( Trim, Flooring, Paint, countertops, glass ect...) sometimes it varies from that. If there is landscaping or a pool I throw it in a seperate line item. I include all general conditions and supervision along with my mark up in each number, but as one number for each category, i dont show my mark up or general conditions to the bank. Thats it. 

Then the bank says we need a breakdown. 

Then i say no, thats proprietary and not or system. 

Then i remind the client they already signed a contract with me and their bank isnt part of it, and the PSA money is non refundable. 

Then the bank sends my paperwork. Just finished a project that was over 700k on fixed price with the same method in December. 

The banks just need to be able to check the box, and have a good appraisal. Ive lost several jobs because of appraisals in the last few years.


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## CLTCommercial (Dec 16, 2015)

I run into this in the commercial world all the time. Our standard overhead and profit that we need on our work is probably double what most owners think it should be. When asked for a breakout, I always ask the contractor for which I am working what percentage OH&P is allowed (or sometimes it is in our contract). I formulate my estimate the way I normally would to find my selling price. Then, I back into my selling price and break out my schedule of values accordingly to show the OH&P that they wanted. Labor estimates specifically are a GUESS. The number is the number, no matter how you slice it.


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## Windwash (Dec 23, 2007)

Jaws said:


> Banks ask for a breadown everytime for large remodels or new construction. I rarely have customers who are borrowing but when i do and the bank requests it i send a generic schedule of values broken down into 4 things or so, Super Structure ( foundation, framing, roof, exterior, windows and doors ), MEP ( i include insulationin with MEPs), Fixtures( Lighting, Plumbing, Appliances) Finishes ( Trim, Flooring, Paint, countertops, glass ect...) sometimes it varies from that. If there is landscaping or a pool I throw it in a seperate line item. I include all general conditions and supervision along with my mark up in each number, but as one number for each category, i dont show my mark up or general conditions to the bank. Thats it.
> 
> Then the bank says we need a breakdown.
> 
> ...


So the owners were able to pressure the bank to continue with the loan process because they had a large non refundable deposit already paid to you? Were you then paid per your contract from the ho or from the table of values by the bank?


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## Jaws (Dec 20, 2010)

Windwash said:


> So the owners were able to pressure the bank to continue with the loan process because they had a large non refundable deposit already paid to you? Were you then paid per your contract from the ho or from the table of values by the bank?


Not sure what took place, just that we told them it was not in our agreement to deal with a banks demands, no where in the contract. We have great references, credit and build history, and we provided a "breakdown" . Thats all we are willing to do. 

Some rules some banks wont bend on it would seem, had to do 10% retainage on that job which we have never agreed to before. The reason I dont like the total breakdown is you will never be able to get ahead on the draws between the retainage and breakdown. 

The bank deposited the money into our account upon inspection at each milestone. 

The deposit hadnt been paid at that point, but about 3500 for the proffesional service agreement ( scope, proposal and contract ) had. 

I would imagine it would be tougher on an FHA type loan. This was a second home and they have plenty of assets from what i gather.


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