Wednesday, January 25, 2006

The Bidding War

Do you pay for bids for work on your house?

A few years ago, I was hearing noises in the walls of my house. I called a "pest control" guy that had fairly good comments on Angie's List (which I belonged to at the time). I suspected bats at the time, but honestly didn't know what it was and wanted a "pro" to fix it. He told me he charged $150 for a bid and applied that towards the work. He promised a 5 year warranty. I absolutely knew I wanted this work done, so stupidly I said ok.

Well, he came and listened to me describe the problem. Then much to my surprise he told me I didn't have anything in my walls because it was impossible for them to get in. He then held out his hand for the $150. When I told him this wasn't fair, he said he could do some investigative work, but there would be no warranty. I already had the $150 check written out and I was so surprised at what had just happened, I handed him the check. He left (the creep).

We know now that I, in fact, did have something in my walls - mice coming in through a hole in the front doorstep. Upon doing more research, I was able to determine myself that the symptoms I described were typical of mice. And after a little more sleuthing, I discovered they were entering the walls via my front doorstep. That contractor simply didn't want the work...and made a living off of coming out for bids.

From that day forward, I promised I would never, ever pay for another bid.

Fast forward to today. I am getting bids for replacing my front doorstep. I generally get two bids for each project (three if the bids have a big range or one of the contractors give me the creeps). I try to be knowledgeable when the contractor comes, and I do my best not to waste their time in any way. I only request bids when I will be actually having the work done.

Yesterday I had a contractor come out to look at the job. He seemed knowlegable and came with good recommendations. He said he would send me a bid later this week.

We have snow on the ground here and it is cold. Too cold for concrete work, so this is off season for most companies and I figured it would be a good time to ask for bids.

This morning I spoke with the second company I was hoping would bid on the project. They are fairly well known around town and the work I have seen that has their sign in front of it looks quite nice. Today the owner called me back and we set up an appointment. As we got ready to hang up the phone, he mentioned that he charged $25 for a bid.

Now $25 is not an outlandish amount to ask. But I have a no-payment-for-bids rule. I told the contractor that and politely canceled the appointment.

On one hand, they spend time with you and provide information as part of the bid. On the other hand, if you received 3 bids and each one charged....this could add $50 to the cost of the job (assuming the selected contractor applied the bid fee to the job). I can see it both ways.

I run a small business and we get many requested for bids. Some of the projects we get, some we don't. Very occasionally we know they are requesting a bid to use as a bargaining chip in talking down the bid of another company. Oh well. We consider it part of doing business. It is built into the fee we bill our clients.

I'm curious. How do other house owners view this topic?

4 comments:

Smurf House said...

I absolutely agree with you! You should stick to your guns.. asking for money so they can come out and tell you how much more money you're going to have to pay?

I think contractors who rely on this type of income are probably not making enough money from the actual work they are performing. And that makes me wonder about their qualifications. A good contractor should have no trouble giving a free bid. After all, if they really know what they're talking about, its very likely you'll hire them.

Laurie said...

I agree. No to paying for bids. At one point we were thinking of having a house built (instead of buying the old house...having one built that looked like an old house) and the builders did charge $100 for a bid - which actually I can understand. You'd at least put 8 hours into drawing up plans viewing the site, etc, and you don't want someone doing it on a whim and wasting your time. However, for anything that would take less than an hour to figure out...no bid cost!

Victor said...

Hi, I wandered over to your blog via houseblogs.net and I thought this was an interesting post.

As a contrast to the previous replies, I would point out that the question of paying for a bid should be a question of what you're paying for (just like paying for a service call would be).

In your first example, the exterminator's attitude would tell me right off the bat that I didn't want to work with him. On the other hand, if he had actually gone out and carefully examined your house and come to the conclusion that you did and then suggested a proper course(s) of treatment then paying for his time would be absolutely reasonable (especially if he gave you a guarantee on the bid). Paying him to go out there and pick up the check is dumb, paying him to go out there and spend the morning finding out what's wrong with your house isn't.

On the other side of the fence, you have people like my father (who has been a plumber for ~50 years) who would often give bids, consulations, and advice to whoever (be it another plumber, a general contractor, or a home owner) asked because they knew that most people would recognize the help they received and reciprocate by giving them the job. Nowadays too many people make a habit of getting people out to jobs just so they can get free advice with no intention of giving them the work.

I've had people do that to me (I'm an engineer and I'm starting up a contracting company). They'll ask for fairly detailed explanations of what you plan to do and what you think is the best possible solution (and often I can come up with unique ideas that they hadn't come up with) and then they'll turn around and use those ideas to get someone else to do the work more cheaply (e.g. cousin Bob). Because of that, I've seriously considered doing something along the lines of having people pay for my time (or for a written design/proposal/estimate). Already I'm being very stingy with what I put down in writing for people because I have had people walk away with designs only to turn around and use them without paying me for any of my time.

I can definitely appreciate how bad contractors can make it look to the homeowner, but it seems to me that there has to be a middle ground where a good contractor can ask for a reasonable payment for the good work that they're doing even if it's a relatively small part of the overall project.

Clearly you shouldn't pay for something that you don't think has any value, but perhaps instead of dismissing someone out of hand because they ask you to pay for a bid you might find out what they're going to provide you for that money (e.g. will they guarantee the estimate, give you a detailed explanation of what the work involves, etc...). Basically are they putting quality time into your job and producing quality results that you can rely on?

Patricia W said...

I don't pay for quotes either. My opinion is, if they are asking $150 for an estimate, they are already making tons of money off of the work and can afford to have the ones they scare off with their consultation quotes. It also has plenty to do with competition. If there is enough, they are more apt to not have estimate charges. Also, the contractors who have no consultation fees know there are lots of folks like us who refuse to pay these fees.

It almost shows a lack of confidence in the contractor in that there is no way they'll give a bid that is competitive enough so they know they won't get the work.

I've never paid for a bid and so far I've come away in good shape with regards to my new old house. I've had a new roof put on and a big plumbing job completed and I'm thrilled with both.

The $25 wasn't much and maybe I would have gone for it. But getting burned for $150 is not an easy pill to swallow so I understand why you didn't bite.

Like Laurie said, if the bid you are asking for is time consuming and extremely involved then it's understandable but on most things around an already built house it seems unfair to ask for pricey estimates.

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