Hi All, I am getting ready to send a bid on some house plans I drew for a client.
The bid will probably be about $185k for a custom 1350 sq ft house which include removing old house and some “big” trees, etc.
The question is: even though I have been a serious hands on remodel contractor for almost 30 years, I have only built one other house from the ground up (my Dad’s)…I feel like I have used all the skills many times over and am not too worried about the construction part.. what I am worried about is the pricing and the way to write the bid? Should I just use the bank’s specification sheet and attach my standard 8×11 proposal with some additional specifications and the total bid? I really would like to see what home building contractors generally use before I write my bid. I feel like the bank is really in control of the money and will protect themselves first, but won’t screw anybody involved. (its’ a very small town bank..) I don’t really want to go the attorney route..unless I would be a complete idiot not to? thanks for your imputs!
RIP (ps. I have done some remodels over the 180K range, how hard can a small house be???)
Replies
I'm not entirely clear on the question. Are you concerned about your bid being accurate? How to handle a payment schedule with a bank involved? You seem to already have a price in mind... $185K. How did you arrive at that number, and how confident are you that you can build it for that and make an appropriate profit? You need to make sure that your bid is accurate, and if you've been remodeling for 30 years you should have a good sense of that. You also need to make sure that the bank draws will cover the cash flow needed to build the house, or that you can front the money until the bank pays, which is usually on completed work. Does the client have any money ready to get the project started?
the whole thing is a little different than getting paid directly by the client. I have done a little work with a bank draw situation but nothing like 185k. the client hasn't said he has money to give me up front - is that customary? or do I wait for my first draw? I think there is some money to be made at 185k, I figure the house at: $120k and the site work at 15K, and 10k for my inexperience at bigger job bidding -but I think I should make maybe 40k after expenses. (labor, materials, etc.) my real question centers around what my bid format should look like compared to the usually proposal I normally work with... NEBS products. My motivation is: to grow the business a little by starting to build complete houses. I don't have to do this job - it's just enticing...
it's done both ways- can get upfront money from ho or bank, or put yours in each stage, getting paid after bank inspections sure is nice not to tie up your money in someone else's house it's your responsibility to set reasonable terms, advance money being one of them- and no insult to the ho, he's less knowledgeable about this than you complete this project, can go back to the bank for the next
permits for new work are more time consuming than existing which has been your deal; water&sewer hookups, new electrical, wetlands, raw site work... add something in to cover extra running
check into joining home builders assoc. in your area the good ones have a lot of resources, including builders in your region to talk to
I don't follow. Are you asking how to write a proposal, or a contract?
IMHO, the bank doesn't care about your proposal, but they do want to see the agreement for construction between you and the owner.
You should get the "Contractor's Legal Kit" from the JLC website, about $70 by the time they add tax and postage. It is a one-inch-thick book, written by a lawyer turned contractor, and has sample contracts of every kind you will need to do business, and examples of each, with all the blanks filled. There is ample discussion of every variable so you can understand how to tailor the agreements to your own needs.
Inside the back cover, a CD-ROM is holstered, and it contains all the forms, in either MAC or PC format. I use a PC with MS Word, and just blitz away.
For up-front money, you need to call the lending officer at the bank, and ask. My local bank allows the owner to pay his portion ("equity") anyway he wants, and if up front is in the agreement, we do it that way.
You should get, as part of the agreement, a "deposit" payment at time of signing, and then "deposits" as required, for any items you have to pay for in advance of delivery.
Your subcontractors should be told about the bank deal, and need to understand that their payouts from you are dependent on your inbound cashflows from the bank. In other words, "you'll get paid when I get paid."
Your drawings and whatever specifications you have written will be named in the contract, and be a part of the agreement. Whatever is in the job as part of the deal, that is not clearly called out in drawings and specs, needs to be spelled out in the agreement. Brand names, model numbers, colors, everything.
Edited 10/5/2004 9:59 am ET by Bob Dylan
great advice - thanks, all
Just some good reading here...
http://forums.taunton.com/tp-breaktime/messages?msg=38467.1
Rez is our resident wet blanket...
Jon Blakemore
I also like the JLC legal guide and have used parts of it in my contracts. It's still worth going to an attorney to make sure everything you need to cover is covered. For example, here in WA we are required to give the HO a pre-lien notice in a very specific form... and there may be things like that in your state that you don't want to miss. If you're moving up from NEBS forms and want to get your own contracts on your letterhead, plan on dropping some money for a lawyer. Anyway, get the legal guide and read up thoroughly.
As far as the format of the proposal goes, it will take a few pages to write up an appropriate scope of work and a summary of the terms. I would reference the plans, and then note exclusions (things on the plans you're not going to do), allowances (things on the plans not identified clearly enough to price), and so on. Your contract can reference your proposal, or you can cut and paste the proposal contents into the contract in the "Work" section.
If you're not fluent with the contract side of the work (which is entirely possible even after 30 years if you've been working informally), I would seek out a consultant and get a few pointers. Find one thru your local builder's association, if there is one, or maybe by seeing if the NAHB or NARI has a referral list. Or, ask your attorney or other contractors around town if they know someone who has retired but still consults, or moved out of actively building and become a consultant. When you start doing jobs involving a lot of money, they usually involve a lot of paperwork and it's to your advantage to be the author of that paperwork.