Three bids on the same gut, 185 to 268, and I sign one this week

@compass that's not a dumb question, it's the whole question.

Fixed price means fixed scope. If the scope changes because the house had something nobody priced, it's a change order and the price moves. What fixed price actually buys you is protection against the contractor's own inefficiency. His crew being slow is his problem. The stack you found in the wall is yours either way.

@quill, the thing I'd read in GC B's contract before anything else is how change orders get priced. If it says "time and materials at prevailing rates" you've got a fixed price contract that can become cost plus without the 18 percent being disclosed. If it says change orders are priced with a stated markup and require your written approval before work starts, that's a real document.

25 minute walkthrough on a 2,100 foot gut is not a bid, it's a hope. I've written a few of those myself early on and every one of them ended with me asking the owner for more money at week six.

Here's what I'd do with the 185. Send GC A your scope document and ask for the bid broken to trade level with quantities. Not "electrical 22,000". I want panel size, device count, whether the aluminum is being pigtailed or full rewired, whether the service is being upgraded. If he can produce that in two days he's serious. If he can't or won't, he priced from the driveway.

On cost plus versus fixed: I run cost plus with people I've worked with for years and fixed with everyone else. Cost plus without a relationship and without you having the time to audit invoices weekly is just an open tab. 18 percent on 268 means his incentive on every surprise is to find more surprises.

Also your 150 day carry assumption is fine for the model. GC B's 14 week schedule is 98 days and then you list and you're 30 to 45 days to close. You're at 150 with zero slack. Model 180.

@harrow's last line is the one. Everyone models carry to the end of construction and then acts surprised by the 45 days after.

I hold long so my patience is cheap, but yours isn't. At 4,900 a month, 30 extra days is 4,900 straight off your 83.5.

I've been reading these threads for six months without buying anything and the thing that jumps out at me is you closed before you had bids. Is that normal on gut work? It seems like all three of your options are now bad in different ways because the clock started before you knew the number.

@pike it's common on distressed shells because the seller won't give you 45 days to run bids on a house they want gone. Doesn't mean it's comfortable.

@quill, what I'd want to know before I chose: how far apart are A, B and C on scope, or just on price? Three bids on the same written scope document is a comparison. Three bids where each guy wrote his own scope is three different houses. If B included windows and A didn't, your 47k gap just got a lot smaller and a lot more explainable.

Check your rehab facility terms before you sign anything. Most construction draw lines fund in arrears against completed work with an inspection, which means GC A's 30 percent up front is coming out of your own pocket and sitting in his account for weeks. On 185 that's 55,500 of your cash gone on day one against a lender who won't reimburse it until the work exists. Terms vary a lot between lenders so get yours confirmed in writing.

That alone would move me off A even if I believed the number.

Everything in this thread is new to me but the liquidated damages clause in B's contract sounds like the only thing here anyone can actually enforce. Is that unusual?

@rigging it's not unusual on bigger jobs, it's fairly unusual on a single family flip, and a clause that only bites after week 18 when the schedule says 14 is a four week free pass. Still better than nothing.

@quill I do thin fast deals and I'd take B and stop shopping. Your spread at B is 83.5 before anything goes wrong, which is real but it isn't fat. Spending another two weeks re-bidding costs you 2,450 in carry and probably lands you back at B anyway. The 47k you'd save with A is the same 47k you'd spend arguing with him in month three.

I look at this from the capital side, so what I'd want on paper before signing is not the bid, it's what happens at the two failure points.

Failure point one is the surprise. You've already had one (aluminum branch wiring, which depending on how much is intact could be a pigtail job or a full rewire, and those are 6k apart or 25k apart). Budget a contingency line as a real number, not a mental note. On heavy work I'd want 15 percent of the construction number sitting available and untouched. On B's 232 that's 34,800. Do you have it? If your answer is "I'd draw it from the rehab facility" then check whether your facility funds contingency at all, because many fund only against the approved budget schedule and a surprise isn't on it. Confirm that with your lender in writing this week.

Failure point two is the exit. Your 620 ARV is supported by five closes in seven months, which is decent. Run the same house as a rental at today's rents in that subdivision. If the finished house rents for something that covers debt service on a refinance at conservative terms, then a stalled resale is a pivot instead of a fire sale. If it rents for 60 percent of what a refi would need, you have a flip with only one door out and you should be pricing that risk into which GC you pick.

With the contingency funded and a rental floor that works, B at 232 with a real schedule and a change order clause is defensible. Without either of those, none of the three bids is safe and the price difference is beside the point.