Buying Property - What Comes first, Offer or Contractor Estimate?

[Justin McElroy]

Hey all,

I am looking to make an offer on a 4 unit property that needs a lot of work. This will be my first investment property, and I have zero experience with estimating the cost of renovations. I've asked my lender as well as an FHA Consultant for contractor referrals and they both weren't comfortable providing a referral until I put an offer in and have some sort of contingent contract in place.

I live in NJ and it is very competitive in my target market.  The last thing I want to do is put an offer in, guesstimating what the rehab costs will be, only to have to go back later, after a contract is in place to revise my offer. I don't think that is fair to the Seller (I would be upset if someone were to pull that on me, especially if I've had several other offers to choose from at the time, which is definitely the case).

Also, from a contractors perspective, I get it, it could be a huge waste of time going from place to place, providing estimates on jobs where 99% won't come to fruition.  But I also feel as a contractor, it is kind of in your best interest to be getting out there and putting bids in whenever possible.

So what comes first, the offer, or the contractor estimate? What is everyone elses experiences here when working with contractors on purchases?