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How to Negotiate With a Contractor

Home renovations can be extremely expensive to complete. Not only are you paying for labor, but also the materials, supplies and any extras involved in the project.

However, this does not mean you need to resign yourself to paying the high initial estimate given to you by your contractor. By negotiating the costs involved in the project, you could bring down the amount you spend overall, perhaps by a very significant amount.

Negotiations need to be handled discreetly but confidently, and educating yourself about the work to be done can help you determine where costs could be reduced. You might also find ways to save that do not involve cutting costs directly, such as saving on labor hours instead. Working with, rather than against, the contractor is also important. By researching and planning ahead, you may be able to complete your home project for less money or time than you would expect. More information about how to effectively negotiate with your contractor is covered below.

Shop and Compare

Shopping around for multiple bids is key to a successful negotiation. You can establish the going rate for the jobs you want done by comparing the bids. Five bids are a good minimum to aim for, although more options may be preferable depending on the scope of your project.

Related Article: What is covered by homeowner’s insurance?

Make sure to research every contractor who bids on the project, and do not simply choose the cheapest one, as the quality might be lowered as a result. As well as helping you judge price rates, having several bids can help you to negotiate better savings. If you let each contractor know you are considering different options, then they may offer you more competitive rates.

The bids must be as detailed as possible, including a breakdown of prices for labor costs, supplies and materials. Research every cost to ensure you are getting a fair price. If you see any overly high mark-ups, you can focus your negotiations on lowering costs in these areas.

Stay Open and Cooperative

Throughout the negotiating process of enhancing your living space, remember to stay open and friendly. Be honest about the fact you want to lower the cost of the project and ask the contractor for any suggestions to help you meet your goal. If the contractor is made aware of your budget, then he or she must be willing to work with you to help make sure the project is completed well. Being impolite or demanding can create conflict, which can make the contractor less interested in helping you.

Research the Job

In the same manner knowing average price ranges can help you, knowing as much as possible about what the job entails is important. Knowing how long a task usually takes, for example, means you understand what the labor costs are. If you are aware of the costs of different materials, then you can make informed requests of the contractor to help save money. Educating yourself can also help to prevent you from making unreasonable demands and causing the contractor to become frustrated or defensive.

Use Separate Milestones

If the renovation project is extensive with multiple jobs involved, then consider dividing the work up into separate milestones. You may be able to offer each part of the job to different contractors, lowering the overall price by taking the best bid on each. If you use the same contractor for all parts of the job, then you can ask him or her to commit to the timeline you have established. This can help to lower hourly labor costs and minimize disruption to your home.

Consider Labor Hours

Remember to consider the cost of labor as well as the cost of materials, supplies and extra fees. If you are unable to negotiate on these areas, then you may be able to bring down the cost of labor. This could be done by negotiating the hourly wage of the laborers.

If these are non-negotiable, which they may be, then try bringing down the number of hours the job takes to complete. Always use the bid details of estimated time and labor costs to calculate exactly what you are being asked to pay per hour.

Buy Your Own Materials

Once you have looked over the materials in the bid, consider asking whether you could arrange the purchase and delivery yourself. Because you are not obliged to use any particular suppliers, you could potentially find a better price than the contractor. However, the materials must be approved by the contractor and you need to ensure you do not delay or disrupt the planned work.

Use Your Own Skills

Depending on the type of job being completed, you might be able to help yourself. In larger, extensive jobs, you could offer to perform simple tasks yourself, such as plastering or painting a wall. This can save on the amount of labor required by the contractor and his or her employees.

Time the Negotiation

When a contractor has plenty of work to choose from, he or she may be less likely to consider meeting your requests in a negotiation. During a quieter season, you may have more success. This is generally winter time, and you can use this to your advantage by timing your bidding and negotiation activities accordingly. The price may be more flexible when the contractor does not have any other jobs on offer. A quieter time may also mean your job can be completed more quickly.

Know What You Are Negotiating For

Simply asking whether there is any way of lowering the costs of your project may not be the most helpful way of starting negotiations. Having a defined goal in mind is preferable, as you can research and prepare your negotiations with the goal in mind. This also means you are not asking to cut costs in every area at once, which could frustrate the contractor unnecessarily. Consider asking for one of the following:

  • Lower costs for supplies, perhaps accepting slightly lower quality as a result
  • Upgraded materials for a large project
  • An extra job as part of a large project, completed at no added cost
  • A shorter timeline with fewer labor hours to pay for

Related Article: How to Avoid Overspending on Your Project

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