Paying a General Contractor for a Scope of work

[Dante Moore]

I'm new to flipping and wanted to know should I be paying a general contractor to provide me with a scope of work?  I have a potential deal on the table and my lender is requesting a scope of work.  So I went to a GC that was recommended and he wanted to charge me $500.00 to deliver the scope of work.  Is this normal?    

[J Scott]

Originally posted by @Dante Moore:

I was definitely planning to.  But now I'm not sure.  Just looking at it from the GC's perspective why would he risk a potential 50k job for $500.00 dollars?  I have several rentals that I've rehabbed but not sold and I created a scope of work in around 30 minutes.  I have other contractors I can get a SOW from for free, I was just going to use him because he was recommended.  But now I will definitely get some other estimates.  

A good general contractor is going to spend a good bit longer than 30 minutes putting together a detailed scope of work and estimate.  

As investors, we can typically do our estimates very quickly. But that's because we're familiar with materials for using, and if we're off by a few percent, it's not going to make a difference in terms of whether were profitable or not.

But a good general contractor has to do a whole lot more work to get an accurate estimate for your job.  He's going to want to do takeoffs, he's going to want to size your mechanical equipment appropriately, he's going to want to make sure that stuff that he's not touching is up to code so that he can pass inspections, he's going to want to get an idea of the finish materials you what used and research pricing, etc.

Then he'll probably spend at least an hour writing it up in a format that is consumable by you and your lender.

These are all the things that you are just ballparking, and if you're off by a couple thousand dollars one way or the other, it's not a big deal because you have a larger profit built-in.  If the contractor misses something or is off by a few thousand dollars, that could mean a big waste of his time and potentially loss of money.