Contractor Bid Evaluation Guide

Selecting the right contractors can make or break your house flipping project’s success and profitability.

Pre-Screening Contractors

Create a standardized evaluation form that includes license numbers, insurance details, and at least three recent reference projects.

  • Verify current state contractor’s license
  • Check liability insurance coverage (minimum $1M recommended)
  • Confirm worker’s compensation insurance
  • Request proof of bonding
  • Review Better Business Bureau ratings

Bid Collection Process

Always get at least three detailed bids for each major project component.

Must-Have Bid Elements Red Flags
Itemized material costs Vague estimates
Labor breakdown No written contract
Project timeline Requesting >50% upfront
Payment schedule Missing license info

Evaluation Criteria

  • Price Analysis: Compare line items across bids, not just total costs
  • Timeline Assessment: Review proposed schedules and milestone dates
  • Material Quality: Check specifications against your renovation budget grade
  • Experience Level: Evaluate past projects similar to yours

Documentation Requirements

Request these essential documents from each bidding contractor:

  • Detailed scope of work
  • Material specifications
  • Payment schedule
  • Project timeline
  • Warranty information
  • Certificate of insurance

Interview Questions

  • How many similar projects have you completed in the last year?
  • What is your typical payment schedule?
  • Who will be the on-site project manager?
  • How do you handle change orders?
  • What is your warranty policy?

References Check

Contact previous clients with these specific questions:

  • Did the contractor complete work on schedule?
  • Were there unexpected cost increases?
  • How was their communication throughout the project?
  • Would you hire them again?

Cost Comparison Sheet

Item Contractor A Contractor B Contractor C
Labor Cost $ $ $
Materials $ $ $
Timeline Days Days Days
Warranty Terms Terms Terms

Resources

Contract Preparation

A comprehensive contract protects both parties and sets clear expectations for the project.

Essential Contract Elements

  • Detailed scope of work with specifications
  • Material quality standards and brands
  • Start and completion dates
  • Payment schedule and terms
  • Change order procedures
  • Dispute resolution process
  • Termination clauses

Project Management

Establish clear communication channels and oversight procedures from day one.

  • Schedule regular progress meetings
  • Document all changes in writing
  • Keep detailed photo records
  • Track expenses against budget
  • Monitor timeline adherence

Quality Control Measures

Inspection Checkpoints

  • Pre-construction documentation
  • Rough-in inspections
  • Progress milestone reviews
  • Final walkthrough protocol
  • Post-completion inspection

Conclusion

Successful contractor selection requires thorough vetting, clear documentation, and ongoing management. Follow these guidelines to minimize risks and maximize project success:

  • Maintain detailed records of all interactions and decisions
  • Never skip the pre-screening process
  • Always get multiple bids and compare thoroughly
  • Ensure all agreements are in writing
  • Monitor progress regularly and address issues promptly

Remember that the lowest bid isn’t always the best choice – consider experience, reliability, and communication skills alongside cost when making your final selection.

FAQs

  1. What are the key factors to look for when evaluating contractor bids for a house flip?
    Key factors include detailed cost breakdowns, timeline estimates, proof of licensing and insurance, past project references, material quality specifications, warranty terms, and payment schedule. Compare at least 3-5 bids and ensure each covers the same scope of work.
  2. How much variation between contractor bids should be considered normal?
    Generally, variations of 10-20% between bids are considered normal. Differences larger than 20% warrant careful scrutiny of the scope, materials, and labor costs. Extremely low bids may indicate cut corners or inexperience.
  3. What documentation should I require from contractors during the bidding process?
    Required documentation includes current contractor’s license, liability insurance certificate, workers’ compensation insurance, business references, detailed project timeline, material specifications, written warranty terms, and a comprehensive contract with payment terms.
  4. How can I verify a contractor’s experience with house flipping projects specifically?
    Request photos and addresses of previous flip projects, contact references from similar projects, verify their experience timeline, ask about their understanding of flip-specific timelines and budgets, and check their experience with local building codes and permits.
  5. What red flags should I watch for in contractor bids?
    Red flags include unusually low prices, lack of detailed cost breakdowns, reluctance to provide references, pressure to decide quickly, large upfront payment requests, no written contract, missing license/insurance documentation, and vague project timelines.
  6. Should the lowest bid always be rejected when flipping houses?
    Not necessarily. While extremely low bids can indicate potential issues, a lower bid from a reputable contractor with detailed documentation, solid references, and clear understanding of the project scope might be legitimate due to lower overhead or better supplier relationships.
  7. What should a proper bid timeline look like for a typical house flip?
    A proper bid should include project phases with specific timeframes: demolition (3-5 days), rough-in work (7-14 days), drywall/painting (5-7 days), fixtures/finishes (7-10 days), and final touches (3-5 days). Total timeline typically ranges from 4-8 weeks depending on scope.
  8. How should material costs be presented in a contractor’s bid?
    Material costs should be itemized with specific quantities, brands, and prices per unit. The bid should distinguish between contractor-supplied and owner-supplied materials, and include allowances for specific items like fixtures or appliances.
  9. What payment schedule is appropriate for a house flip renovation?
    A typical payment schedule includes 10-30% deposit, progress payments tied to specific milestones (25-30% each), and final payment (10-15%) upon completion and inspection. Never pay more than 30% upfront, and always retain at least 10% until final walk-through.
  10. How important are permits in the bidding process?
    Permits are crucial and should be explicitly addressed in the bid. The contractor should specify who will obtain permits, associated costs, and timeline implications. Experienced contractors will include permit costs and processes in their bid and timeline estimates.

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