Is this a Contractor Red Flag?

Question

Happy Friday Everyone!

So I have a quick question. I am in the process of renovating a property and interviewing contractors. One contractor I spoke with provided a quote of $16,000 to renovate two bathrooms (1 small and 1 medium sized). This quote is for labor and materials. I was asking for the cost of labor and they indicated they do not separate the two. They also indicated that they only use their vendors for materials. This is not such a big deal but I would at least like the option to use Lowe's for example if I am not in love with the company they use or is too expensive and want to go another option.  I just want a breakdown of what I am paying in labor and see what they are charging for materials. They were firm that they do not show the cost for labor and that they only use their vendors. Is this a red flag or common? Look for an outside perspective. Thanks guys and hope you are all kicking a$$.

- Adam

Ryan Normand · Answer

This is fairly common. Just make sure the SoW and contract are clear, detailed, and in-writing before you sign off on anything.

The majority of contractors I know would not provide the level of detail you are requesting, simply because it almost always leads to the customer questioning certain line items and trying to haggle on the price. If you are doubting the fairness of his price, just get a couple more bids and see how they compare.

A note about buying your own materials - you probably won't save as much money as you think, and you may end up spending more. The contractor is still going to charge you for any time wasted as a result of missing, wrong, or damaged materials that you ordered... so you need to bring your A-game to make sure 100% of the materials are compatible with one another, ordered in the right quantities, stored correctly, delivered on time, inspected for damages, etc., etc. You get the picture. There's a reason contractors mark up their materials - there's a lot of work that goes into it, so you need to know what you are doing if you assume this responsibility.

John Clark · Answer

Your concern is the bottom line.  Why do you care what the breakdown is? You're hiring the contractor to remodel, not to be a labor company. Transparency? Rubbish. You set a price, a design, and quality levels. How the contractor gets there is not your concern.

Then there's the point, as others have said, of you buying cheap materials and then blaming the contractor. Why should he open himself up to the grief and expense?

Now put the shoe on your foot. Let's say  you rent out, with the tenant paying for utilities you supply as part of his rent. The tenant comes in and wants to change cable companies (violating your agreement with one company to supply all of the apartments), or electric service, and demands to know what your costs are. Your response is. . . . ? Help us out here.

Patricia Steiner · Answer

It's not so much a red flag as how they do business.  I prefer to purchase the materials separately and then contract with them to do the install.  Generally the contractor will go to a supplier and/or big box store to get the supplies and then have the contractor desk call me for payment.  The materials can then be delivered to the property or the contractor can take them to the job.  This way I can control what is purchased (just what is needed for MY job) without a materials upcharge, avoid any supplier liens should a contractor not pay for the materials purchased on account, and have a full accounting at tax time for deductions.

If you want the convenience of just hiring a contractor to do the whole enchilada, don't expect a cost breakdown.  The contractor is simply pricing the job.  In this case, be clear that if extra materials are needed, how that will affect the cost of the job.

Hope this helps.

Tony Bock · Answer

I agree wit Joh Clark. "Take it or leave it" may sound harsh, but it's an attitude most experienced contractors will handle their business. My advice would be to continue getting quotes from different contractors, vet them by asking questions, let them handle all material, and narrow down your decisions base on your own set of standards (material, finish options, how well you get along with them, price, etc.). Finish it off with a sound contractual agreement and then hold them accountable to that agreement.

Louis Martini · Answer

This is excellent insight from a contractor's perspective. I would advise that you land a couple more quotes from other companies as well to serve as a reference point from which to make a decision. If you value the transparency of knowing every cost involved in the job, perhaps you're better suited working with another company that is willing to provide a breakdown of labor and material costs.

Keep in mind that most contractors may mark up materials not as a way to put one over on you but rather as a way to cover the expense of their time invested in selecting, shopping, purchasing, transporting and delivering the materials in undamaged condition. There is a logistical aspect to material selection and acquisition that very much affects the workflow of a project.

Some homeowners and investors looking to save money by purchasing their own materials neglect to consider the fact that there is almost always a process in which a project must follow in order for it to be completed on time. Not having materials on site can lead to stoppages or delays in work which could equate to higher holding costs on your end.

That being said, if you're unsure of the integrity of who you're looking to work with, don't be afraid to do more research on other local companies. You may discover that the current bid you received is properly priced but may find a company actually willing to show a break down of costs. Trust your gut, and be sure to sign a bulletproof contract with whoever you choose to work with. You got this!

Eliott Elias · Answer

Ask them what they would charge if you provided all material. If they don't do that keep looking.

Nicole Heasley Beitenman · Answer

I don't know if this is common practice in your market; it isn't in mine. I understand their reasoning, though. I'm sure plenty of people get super cheap materials that don't hold up and then blame the contractor for it. However, we use rehab expenses to get free gas from Giant Eagle (haven't paid for gas in, like, 2 years), so I would insist on buying my own materials. I'm happy to go with their recommendations if they're reasonable, but I'm going to insist on paying for them myself.

I DO think it's a red flag that they won't separate the cost of labor from materials. There's never a good reason for lacking transparency. And you'll need that information to make informed decisions on future projects.

William Coet · Answer

Get some reliable references

Adam Gonzalez · Answer

Patricia:

Thank you for your advice! I have some thinking to do. Hope you have an enjoyable weekend :).

Is this a Contractor Red Flag?

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