Same 1,450 sf scope bid at $62k, $88k and $141k

First house I've gotten to the bid stage on after way too long looking. 1,450 square feet, 1978 build, three bed two bath, in a suburb where finished comps run $255k to $272k. Purchase would be $141k. My own scope estimate was around $85k, which is why the spread is bothering me.

Bid A: $62,400. Two pages. Line items are room by room with no quantities. Excludes permits, excludes "unforeseen conditions," excludes HVAC pending inspection. Guy has been doing this 20 years, showed me photos of finished work that looked genuinely fine.

Bid B: $88,100. Eleven pages. Quantities on everything, allowances stated for cabinets ($9,200), flooring ($4.85 a foot installed), and plumbing fixtures. Two week float built into a 9 week schedule. Includes permits.

Bid C: $141,000. Nine pages. Similar structure to B but with a full HVAC replacement, a service upgrade, and roughly $18k of framing and subfloor work in the back half of the house that neither of the others mentioned at all.

So either C found something real or C doesn't want the job. I went back to the house with a flashlight and there's definite deflection in the hall floor near the back bath. B walked the same floor and said it was a bad subfloor patch. C says joists.

The decision in front of me is whether to pay a structural engineer $650 to settle the floor question before I commit, given I haven't got the house under contract yet and I'd be spending it on a maybe.

6 replies

0diane_kowalskiPassivePRO9

Spend the $650. You're describing a deal where the difference between two answers is $18,000 and you're weighing whether to spend six hundred to find out which one is true. That's a cheap answer to an expensive question.

Get it under contract first with an inspection period so you're not paying for an engineer on a house someone else buys out from under you.

1paulgrant17PassivePRO5

New to this side so mostly asking, but Bid A excludes unforeseen conditions and HVAC and permits. Doesn't that mean the $62,400 isn't actually comparable to the other two at all? If you added those back in it might land near B.

2kevin_lombardPG1BPRO5

The allowance part took me two reads to follow. So if the cabinets come in at $12k instead of the $9,200 allowance, @pike pays the difference and the bid total was never really the total? Is that normal or is it a way of making the number look smaller?

3dpatel_reCS4A

@juniper it's normal and it's honest as long as the allowance is realistic. The dishonest version is setting an allowance you know is low so the headline number wins the bid, then collecting the overage as a change order later. $9,200 for a 1,450 foot house kitchen is on the tighter side of reasonable, so ask B what specific line of cabinets that buys and go look at it.

@pike, the thing I'd underwrite here is not the bid spread. It's your exit. Purchase at $141k plus $88k of rehab is $229k before closing, carry, or selling costs. If you're carrying at 11 percent for six months that's another $10k or so, and selling costs at 7 all in on $265k is about $18.5k. You're at roughly $258k of cost against a $255k to $272k comp range. That deal doesn't work at bid B, and it definitely doesn't work at bid C.

It works at bid A, which is exactly why bid A is dangerous. Run the numbers on the purchase price you'd need for B to work and go back to the seller with that.

2raj_mehta14CapitalPRO6

@sextant's math is the thing I would have missed entirely. The whole thread is about which contractor is right and the answer might be that none of them matter at $141k purchase.

3megan_doyle15 Get yours

C is the only one who mentioned the floor, and you found the deflection yourself with a flashlight. That seems like the one person who actually looked.

Same 1,450 sf scope bid at $62k, $88k and $141k

6 replies