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Updated almost 7 years ago on . Most recent reply

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Shaun Alexander
  • snohomish, wa
0
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10
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New member with a big problem! Contractor wants more money

Shaun Alexander
  • snohomish, wa
Posted

Hello, I have lurked on this site for a long time and leeched a lot of great information. I finally have something worth registering and posting about.

I made a long winded post regarding a contractor that wants more money beyond our contract price in the new construction forum and it unfortunately didn't get any traction so I will simplify it. I have a fixed price contract for a new home construction that was delayed by a 3rd party by approximately 8 months. The contractor attributed to almost 3 months of the delays. He is now claiming material price and labor increases over 6 months to the tune of $40000 (total project price is $292000). My attorney has reviewed our contract language and strongly believes I am not liable for this additional cost and that the job was significantly underbid. There is no escalation clause or completion deadline. The price increases are 25-55% on most line items (drywall 55%, lumber 45%, electrical 40%, etc). I believe these are unreasonably inflated but unfortunately, legitimate. 

We are currently attempting to resolve this with the contractor. His solution to start with is to cut all of the finishes that we added ($21000ish). He currently has not offered to make any concessions to his profit line except that he's doing the line items that are over "at cost" and is attempting to justify this by the fact that the home will still have significant equity even with the overages.

We are still moving forward, framing is set to begin next week. Does anyone have any advice for me as I'm feeling taken advantage of. I do not have any prior real estate investment experience. Any advice on how to proceed by anyone with experience in this field would be incredibly valuable!

Most Popular Reply

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180
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Gary Siver
Pro Member
  • Flipper/Rehabber
  • Orange Park, FL
83
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180
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Gary Siver
Pro Member
  • Flipper/Rehabber
  • Orange Park, FL
Replied

Always have a completion date with penalties if the deadline is not reached.  If the contractor underbid it that is his problem and he has to make it work.  If he is a small one or two person contractor he will probably not be able to make up the costs.  Can you cut costs in some other areas if needed?  The percentage you have said the items went up are not realistic numbers,  they don't go up that much in that short of time.  55% increase for drywall, the material has gone up maybe 10% in the last 6 months.  Find your own drywall company, electrician and save money that way.  I obviously don't know the contractor but those trades are probably being subcontracted out and he is adding money on top of that.

  • Gary Siver
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