Why contractors are how they are

Do you ever think that you just happen to pick a bad contractor?  Why is it that you always hear horror stories about how they never show up, or they take forever, stick you with change orders or never finish the job?  Well, I don’t feel so bad after watching Flip That House on A&E.  What is amazing to me is that even the high powered TradeMark Properties on that show has trouble getting contractors to show up.  We see the contractor on TV saying that he can do the job and he will start tomorrow. Then the next day nobody shows up.  It’s unbelievable.

Well, I’m going to tell you why they are how they are. 

I know some contractors personally and they are very good and hard working.  I can never get them to do any work for me because they are always busy.  If I want a simple project done, I have to wait 2 months before they can start.  On the other hand, whenever I get bids from other contractors, they all say they can start tomorrow or within a week.

Why does this happen?  Well, it’s easy to understand once you think about it.  The good contractors I know are good people.  They understand that they need to start and complete a job before they move onto another one.  They know that in doing so, they will lose potential bids from impatient customers.  However, they know that they will always have a steady stream of jobs from referrals or repeat customers.  Good contractors do not make promises to get new customers at the expense of current ones.

So what about the contractor that can start tomorrow?  Well, there are usually two reasons he can…

1) He has no other jobs at this moment.  Which during a real estate boom should be a huge red flag. 

2) He is leaving another customer in the middle of a project to start yours.  What do you think he’s going to do to you in about a week?

Think about it.  He starts your job tomorrow and asks you for an initial payment.  Now you’re locked in.  He works for a few days very hard and then doesn’t show up for a week, then shows up for one day, then doesn’t show up for a week.  Guess where he goes when he doesn’t show up for a week?  That’s right, he told someone else he could start tomorrow just to get the job.  A the circle continues…  Meanwhile you’re quick 2 week remodel ends up taking 2 months.

A good contractor bids a competitive price and does not negotiate his price that much.  His price is based on a steady rate and spread.  He does not bid more because he thinks you don’t know what the going rate is, nor does he bid less to get a job.

A bad contractor does both. 

Some bid every project very very high.  You many wonder why sometimes you’ll get bids of $2,000, $2,200, $3,000 and $10,000.  The high bid contractor makes money by winning a super high bid project every once in a while.  He does not rely on volume.  He relies on a couple massively overbid projects a year.  Once in a while, he will get lucky and find an old lady who thinks that $10,000 is the going rate for a carpet install.

Then there are the low bidders.  These guys come in low all the time and then hit you with change orders.  You can usually spot them by their vague contracts that don’t have any detail spelled out.  They may verbally agree to include something, like a new faucet, during your negotiations, but a month later they ask you to pay for that new faucet.  You’ll say you thought that was included and they’ll say “no it wasn’t” or “that was for a standard one, the one you picked out is more expensive.”

Do you ever wonder why some contractors never finish the project?  This is because you’ve paid them too much already.  If you have a $2,000 project and you’ve paid them $1,800 they may not return to collect the $200. This is because there is more than $200 worth of work left to do.  Why would they come back?  To avoid this you must always make sure that you’ve gotten more than you’ve paid for.  If they’ve done $1,800 worth of work and you’ve paid them $1,000, it would be in their best interest to finish the $200 of remaining work to get paid $1,000.  In fact, I used this on my cactus story.

In conclusion, how would I pick a contractor now?  Well, first I would definitely use referrals.  Personal referrals where the contractors are friends of friends are even better.  Any good person would not want to let a friend down.  The lowest bid isn’t always the best bid.  A good contractor won’t have the lowest bid, but it will be close to it.  Plan the job in advance.  Don’t expect to find a good contractor who’s available to start the next day.  It’s well worth the wait to use a good one.  They’ll probably finish faster than the one you hired who can start tomorrow!

About Kenric

My blog about living life to the fullest by generating passive income through real estate, business and online investments.
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